<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
CIRCON CORPORATION
(NAME OF SUBJECT COMPANY)
USS ACQUISITION CORP.
UNITED STATES SURGICAL CORPORATION
(BIDDERS)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
172736100
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
THOMAS R. BREMER
USS ACQUISITION CORP.
C/O UNITED STATES SURGICAL CORPORATION
150 GLOVER AVENUE
NORWALK, CONNECTICUT 06856
TELEPHONE: (203) 845-1000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF BIDDERS)
----------------
COPY TO:
PAUL T. SCHNELL, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, N.Y. 10022
TELEPHONE: (212) 735-3000
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION AMOUNT OF
VALUATION* FILING FEE
------------ ----------
<S> <C>
$242,765,874 $48,553.17
</TABLE>
- --------
* For purposes of calculating fee only. This amount assumes the purchase at a
purchase price of $18 per Share of an aggregate of 13,486,993 Shares. The
amount reflects the purchase of 12,588,677 outstanding Shares, and
1,898,416 Shares issuable with respect to options and warrants, less
1,000,100 Shares owned by Parent. The amount of the filing fee, calculated
in accordance with Regulation 240.0-11 of the Securities Exchange Act of
1934, as amended, equals 1/50th of one percentum of the value of Shares
purchased.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(A)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: NONE
Filing Party: N/A
Form or Registration No.: N/A
Date Filed: N/A
<PAGE>
This Schedule 14D-1 Tender Offer Statement (this "Statement") relates to the
offer by USS Acquisition Corp., a Delaware corporation (the "Purchaser"), and
a wholly owned subsidiary of United States Surgical Corporation, a Delaware
corporation ("Parent"), to purchase all outstanding shares of common stock,
par value $0.01 per share (the "Shares"), of Circon Corporation, a Delaware
corporation (the "Company"), at a price of $18 per Share, net to the seller in
cash, without interest thereon (the "Offer Price"), upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated August 2, 1996
(the "Offer to Purchase") and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"). Copies of the
Offer to Purchase and the Letter of Transmittal are annexed hereto as Exhibits
(a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Circon Corporation, a Delaware
corporation with its principal executive offices at 6500 Hollister Avenue,
Santa Barbara, California 93117.
(b) The information set forth in the Introduction of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a-d, g) This Statement is being filed on behalf of Parent and the Purchaser
for purposes of the Schedule 14D-1. The information set forth in the
Introduction, Section 9 and Schedule I of the Offer to Purchase is
incorporated herein by reference.
(e-f) During the last five years, neither Parent nor the Purchaser, nor, to
the best knowledge of Parent and the Purchaser, the persons listed in Schedule
I of the Offer to Purchase, has been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii) a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree, or final order enjoining future violation of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a-b) The information set forth in the Introduction and Section 11 of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a-c) The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a-b) The information set forth in the Introduction, and Sections 11 and 12
of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Sections 11 and 12 of the Offer to Purchase
is incorporated herein by reference.
(d-e) The information set forth in Sections 7, 12 and 13 of the Offer to
Purchase is incorporated herein by reference.
1
<PAGE>
(f-g) The information set forth in Sections 7 and 12 of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction, Sections 8 and 9 and
Schedule II of the Offer to Purchase is incorporated herein by reference.
(b) The information set forth in Schedule II of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Sections 11, 12 and 16 of
the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 of the Offer to
Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a shareholder of the Company whether to sell, tender or hold
Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Sections 11 and 12 of the Offer to Purchase
is incorporated herein by reference.
(b-c, e) The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Sections 7 and 12 of the Offer to Purchase
is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated August 2, 1996.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
2
<PAGE>
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement, dated August 2, 1996.
(a)(8) Press Release, dated August 2, 1996.
(b)(1) Commitment Letter, dated July 30, 1996, among United States Surgical
Corporation, J.P. Morgan Securities Inc., BA Securities Inc., The Bank of New
York and NationsBank Capital Markets, Inc.
(b)(2) Credit Agreement, dated as of December 20, 1995, among Parent,
certain of Parent's subsidiaries, NationsBank, N.A., as Administrative Agent,
The Bank of New York, as Yen Administrative Agent, Morgan Guaranty Trust
Company Of New York, as Documentation Agent, and the signatory banks thereto.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
3
<PAGE>
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this Statement is true, complete and correct.
Dated: August 2, 1996
USS ACQUISITION CORP.
By: /s/ Thomas R. Bremer
-------------------------------
Name: Thomas R. Bremer
Title: President
UNITED STATES SURGICAL
CORPORATION
By: /s/ Thomas R. Bremer
-------------------------------
Name: Thomas R. Bremer
Title: Senior Vice President and
General Counsel
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
EXHIBIT EXHIBIT NAME NUMBER
------- ------------ ------
<C> <S> <C>
(a)(1) Offer to Purchase, dated August 2, 1996.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Summary Advertisement, dated August 2, 1996.
(a)(8) Press Release, dated August 2, 1996.
(b)(1) Commitment Letter, dated July 30, 1996, among United States
Surgical Corporation, J.P. Morgan Securities Inc., BA
Securities Inc., The Bank of New York and NationsBank Capital
Markets, Inc.
(b)(2) Credit Agreement, dated as of December 20, 1995, among
Parent, certain of Parent's subsidiaries, NationsBank, N.A.,
as Administrative Agent, The Bank of New York, as Yen
Administrative Agent, Morgan Guaranty Trust Company Of New
York, as Documentation Agent, and the signatory banks
thereto.*
</TABLE>
- --------
* Incorporated by reference to Exhibit (4) (a) to Parent's 1995 Form 10-K.
5
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CIRCON CORPORATION
AT
$18 NET PER SHARE
BY
USS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
UNITED STATES SURGICAL CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 29, 1996, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE
OFFER TO PURCHASE) THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES
BENEFICIALLY OWNED BY PURCHASER AND ITS AFFILIATES, WOULD REPRESENT 67% OF THE
OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE AND (II)
THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER HAVING
BEEN APPROVED PURSUANT TO SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
("SECTION 203") OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT
THE PROVISIONS OF SECTION 203 ARE OTHERWISE INAPPLICABLE TO THE ACQUISITION OF
SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER. THE OFFER IS ALSO
SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE
SECTION 14. THE OFFER IS NOT CONDITIONED ON THE RECEIPT OF FINANCING.
----------------
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
----------------
August 2, 1996
<PAGE>
IMPORTANT
THE PURCHASER IS CURRENTLY REVIEWING ITS OPTIONS WITH RESPECT TO THE OFFER
AND MAY CONSIDER, AMONG OTHER THINGS, CHANGES TO THE MATERIAL TERMS OF THE
OFFER. IN ADDITION, PARENT AND THE PURCHASER INTEND TO SEEK TO NEGOTIATE WITH
THE COMPANY WITH RESPECT TO THE ACQUISITION OF THE COMPANY BY PARENT OR THE
PURCHASER. THE PURCHASER RESERVES THE RIGHT TO AMEND THE OFFER UPON ENTERING
INTO A SECOND-STEP MERGER AGREEMENT WITH THE COMPANY OR TO NEGOTIATE A MERGER
AGREEMENT WITH THE COMPANY NOT INVOLVING A TENDER OFFER PURSUANT TO WHICH THE
PURCHASER WOULD TERMINATE THE OFFER AND THE SHARES WOULD, UPON CONSUMMATION OF
SUCH MERGER, BE CONVERTED INTO CASH, PARENT COMMON STOCK, OTHER SECURITIES
AND/OR ANY COMBINATION THEREOF IN SUCH AMOUNTS AS ARE NEGOTIATED BY PARENT AND
THE COMPANY.
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed if required
by Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile) and any other required documents to the
Depositary and either deliver the certificates for such Shares to the
Depositary along with the Letter of Transmittal (or facsimile) or deliver such
Shares pursuant to the procedure for book-entry transfer set forth in Section
2 or (ii) request such shareholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such shareholder. A
shareholder having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such shareholder
desires to tender such Shares.
If a shareholder desires to tender Shares and such shareholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such shareholder's tender may be effected by following the procedure for
guaranteed delivery set forth in Section 2.
Questions and requests for assistance may be directed to Salomon Brothers
Inc, the Dealer Manager, or to Kissel-Blake Inc., the Information Agent, at
their respective addresses and telephone numbers set forth on the back cover
of this Offer to Purchase. Additional copies of this Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and other related
materials may be obtained from the Information Agent or the Dealer Manager or
from brokers, dealers, commercial banks and trust companies.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION............................................................ 1
THE TENDER OFFER........................................................ 4
SECTION 1. TERMS OF THE OFFER......................................... 4
SECTION 2. PROCEDURES FOR TENDERING SHARES............................ 5
SECTION 3. WITHDRAWAL RIGHTS.......................................... 8
SECTION 4. ACCEPTANCE FOR PAYMENT AND PAYMENT......................... 9
SECTION 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................... 10
SECTION 6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES............. 11
SECTION 7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS...................... 11
SECTION 8. CERTAIN INFORMATION CONCERNING THE COMPANY................. 12
SECTION 9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER.... 14
SECTION 10. SOURCE AND AMOUNT OF FUNDS................................. 17
SECTION 11. BACKGROUND OF THE OFFER.................................... 19
SECTION 12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY................ 20
SECTION 13. DIVIDENDS AND DISTRIBUTIONS................................ 22
SECTION 14. CERTAIN CONDITIONS OF THE OFFER............................ 22
SECTION 15. CERTAIN LEGAL MATTERS...................................... 26
SECTION 16. FEES AND EXPENSES.......................................... 29
SECTION 17. MISCELLANEOUS.............................................. 29
SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE
PURCHASER................................................. S-1
SCHEDULE II TRANSACTIONS IN SHARES DURING THE PAST 60 DAYS BY PURCHASER
AND PARENT................................................ S-3
</TABLE>
<PAGE>
To the Holders of Shares of Common Stock of CIRCON CORPORATION:
INTRODUCTION
USS Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of United States Surgical Corporation, a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $0.01 per share (the "Shares"), of Circon Corporation, a Delaware
corporation (the "Company"), at a price of $18 per Share, net to the seller in
cash, without interest thereon (the "Offer Price"), upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. The Purchaser will pay all charges and expenses of Salomon Brothers Inc
("Salomon Brothers"), as Dealer Manager (in such capacity, the "Dealer
Manager"), First Chicago Trust Company of New York, as Depositary (the
"Depositary"), and Kissel-Blake Inc., as Information Agent (the "Information
Agent"), incurred in connection with the Offer. See Section 16.
The purpose of the Offer and the Proposed Merger (as defined herein) is to
acquire control of, and the entire equity interest in, the Company. Parent
currently intends to propose and seek to have the Company consummate, as soon
as practicable following the consummation of the Offer, a merger or similar
business combination with the Purchaser (the "Proposed Merger"), pursuant to
which each then outstanding Share (other than Shares owned by the Purchaser or
Parent and Shares owned by shareholders who perfect any available appraisal
rights under the Delaware General Corporation Law (the "DGCL")), would be
converted into the right to receive an amount in cash equal to the price per
Share paid pursuant to the Offer and the Company would become a wholly owned
subsidiary of Parent. See Sections 11 and 12.
Parent intends to seek to negotiate with the Company with respect to the
acquisition of the Company. If such negotiations result in a definitive merger
agreement between the Company and Parent, certain material terms of the Offer
may change. Accordingly, such negotiations could result in, among other
things, termination of the Offer and submission of a different acquisition
proposal to the Company's shareholders for their approval.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S SHAREHOLDERS. ANY SUCH SOLICITATION WILL BE MADE ONLY PURSUANT
TO PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), AND THE
RULES AND REGULATIONS THEREUNDER.
Certain Conditions to the Offer
The Offer is subject to the fulfillment of a number of conditions including,
without limitation, the following:
MINIMUM CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1 BELOW) THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES
BENEFICIALLY OWNED BY PURCHASER AND ITS AFFILIATES, WOULD REPRESENT 67% OF THE
SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION"). FOR PURPOSES OF THIS OFFER, "ON A FULLY DILUTED BASIS"
MEANS, AS OF ANY DATE, THE NUMBER OF SHARES OUTSTANDING, TOGETHER WITH SHARES
THAT THE
<PAGE>
COMPANY IS THEN REQUIRED TO ISSUE PURSUANT TO OBLIGATIONS OUTSTANDING AT THAT
DATE UNDER CONVERTIBLE SECURITIES, EMPLOYEE STOCK OPTIONS, WARRANTS OR BENEFIT
PLANS OR OTHERWISE (ASSUMING ALL SUCH OPTIONS AND WARRANTS ARE THEN
EXERCISABLE).
As of the date of this Offer to Purchase, Parent beneficially owns 1,000,100
Shares (approximately 8% of the Shares outstanding). According to the
Company's Proxy Statement, dated June 17, 1996, relating to the Company's 1996
Annual Meeting of Shareholders (the "Company Proxy Statement"), as of May 13,
1996, there were 12,588,677 Shares outstanding. According to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the
"Company 10-K"), options to purchase 1,669,649 Shares were outstanding under
the Company's stock option plans and warrants to purchase 228,767 Shares had
been issued. Accordingly, based on this information, as of the date of this
Offer to Purchase, there were 14,487,093 Shares outstanding on a fully diluted
basis, assuming (i) that no Shares were issued (other than those reserved on
December 31, 1995, for options and warrants then outstanding) or acquired by
the Company after May 13, 1996, (ii) the exercise of all of the options and
warrants outstanding as of December 31, 1995 and (iii) that as of the date of
this Offer to Purchase there are no other obligations to issue Shares. Based
on the foregoing information and assumptions, the Minimum Condition would be
satisfied if at least 8,706,253 Shares are validly tendered pursuant to the
Offer and not withdrawn. However, the Minimum Condition will depend on the
facts as they exist on the date on which Shares are purchased pursuant to this
Offer to Purchase.
If the Minimum Condition is satisfied and the Offer is consummated, the
Purchaser believes that it would beneficially own slightly in excess of 85% of
the Shares outstanding (excluding 1,418,142 Shares owned as of May 13, 1996 by
persons who are directors and also officers of the Company as reported in the
Company Proxy Statement) at the time the Offer commenced (based on 12,588,677
Shares outstanding as of May 13, 1996, assuming that no Shares have been
issued since May 13, 1996, and assuming no Shares have been purchased or sold
since that date by persons who are directors and also officers of the
Company), and, accordingly, based on such information and assumptions, the
Business Combination Condition would be satisfied. However, based on the
actual facts and circumstances, it is possible that even if the Minimum
Condition is satisfied the Business Combination Condition may not be
satisfied. See "Business Combination Condition" below and Section 14.
BUSINESS COMBINATION CONDITION. THE OFFER IS CONDITIONED UPON THE
ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER HAVING
BEEN APPROVED PURSUANT TO SECTION 203 OR THE PURCHASER BEING SATISFIED, IN ITS
SOLE DISCRETION, THAT THE PROVISIONS OF SECTION 203 ARE OTHERWISE INAPPLICABLE
TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER
(THE "BUSINESS COMBINATION CONDITION"). THE PROVISIONS OF SECTION 203 ARE
DESCRIBED MORE FULLY IN SECTION 15.
Section 203, in general, prohibits a Delaware corporation such as the
Company from engaging in a Business Combination (as defined in Section 15)
with an Interested Stockholder (as defined in Section 15) for a period of
three years following the date that such person became an Interested
Stockholder unless (a) prior to the date that such person became an Interested
Stockholder, the board of directors of the corporation approved either the
Business Combination or the transaction that resulted in the Interested
Stockholder becoming an Interested Stockholder, (b) upon consummation of the
transaction that resulted in the Interested Stockholder becoming an Interested
Stockholder, the Interested Stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced,
excluding stock held by directors who are also officers of the corporation and
employee stock plans that do not provide employees with the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer, or (c) on or subsequent to the date such person
became an Interested Stockholder, the Business Combination is approved by the
board of directors of the corporation and authorized at a meeting of
shareholders and
2
<PAGE>
not by written consent, by the affirmative vote of the holders of at least 66
2/3% of the outstanding voting stock of the corporation not owned by the
Interested Stockholder. See Section 15.
The Purchaser is hereby requesting that the Company's Board of Directors
adopt a resolution approving the Offer and the Proposed Merger for purposes of
Section 203. However, there can be no assurance that the Board of Directors of
the Company will do so.
If the Purchaser purchases 8,706,253 Shares pursuant to the Offer (assuming
no Shares have been issued since May 13, 1996 and assuming no Shares have been
purchased or sold by persons who are directors and also officers of the
Company since such date), the Purchaser believes that it would beneficially
own at least 85% of the Shares outstanding at the time the Offer commenced
(excluding 1,418,142 shares owned as of May 13, 1996 by persons who are
directors and also officers of the Company, as reported in the Company Proxy
Statement) and the Business Combination Condition would be satisfied. However,
there can be no assurance as to whether any Shares have been issued since May
13, 1996 or as to whether Shares have been purchased or sold by persons who
are directors and also officers of the Company since that date and, to the
extent that Shares have been issued since such date or shares have been
purchased or sold by persons who are directors and also officers of the
Company since that date, the purchase of 8,706,253 Shares by the Purchaser
pursuant to the Offer may not result in the Business Combination Condition
being satisfied. Based on the actual facts and circumstances, it is possible
that the Business Combination Condition may not be satisfied even if the
Minimum Condition is satisfied.
Certain other conditions to the Offer are described in Section 14. The
Purchaser expressly re-serves the right, in its sole discretion, to waive any
one or more of the conditions to the Offer. See Sections 14 and 15. The Offer
is not conditioned on the receipt of financing.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
3
<PAGE>
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares
validly tendered and not withdrawn prior to the Expiration Date. The term
"Expiration Date" means 12:00 midnight, New York City time, on Thursday,
August 29, 1996, unless and until the Purchaser, in its sole discretion, shall
have extended the period of time during which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by the Purchaser, will expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF THE
MINIMUM CONDITION, THE BUSINESS COMBINATION CONDITION, THE EXPIRATION OR
TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR
ACT") AND THE SATISFACTION OF THE OTHER CONDITIONS SET FORTH IN SECTION 14.
THE OFFER IS NOT CONDITIONED ON THE RECEIPT OF FINANCING.
Subject to the applicable rules and regulations of the Securities Exchange
Commission (the "Commission"), the Purchaser reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or
not any of the events set forth in Section 14 hereof shall have occurred or
shall have been determined by the Purchaser to have occurred, to (a) extend
the period of time during which the Offer is open, and thereby delay
acceptance for payment of and the payment for any Shares, by giving oral or
written notice of such extension and delay to the Depositary and (b) waive any
condition or amend the Offer in any other respect by giving oral or written
notice of such waiver or amendment to the Depositary. During any such
extension, all Shares previously tendered and not properly withdrawn will
remain subject to the Offer, subject to the right of a tendering shareholder
to withdraw such shareholder's Shares. See Section 3. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR
NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
If by the Expiration Date any or all of the conditions to the Offer have not
been satisfied or waived, the Purchaser reserves the right (but shall not be
obligated), subject to the applicable rules and regulations of the Commission,
to (a) terminate the Offer and not accept for payment or pay for any Shares
and return all tendered Shares to tendering shareholders, (b) waive all the
unsatisfied conditions and accept for payment and pay for all Shares validly
tendered prior to the Expiration Date, (c) extend the Offer and, subject to
the right of shareholders to withdraw Shares until the Expiration Date, retain
the Shares that have been tendered during the period or periods for which the
Offer is extended or (d) amend the Offer.
The rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights pursuant to Section 14. There can be no
assurance that the Purchaser will exercise its right to extend the Offer. Any
extension, amendment or termination will be followed as promptly as
practicable by public announcement. In the case of an extension, Rule 14e-1(d)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that the announcement be issued no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date, in accordance with the public announcement requirements of Rule 14d-4(c)
under the Exchange Act. Subject to applicable law (including Rules 14d-4(c)
and 14d-6(d) under the Exchange Act, which require that any material change in
the information published, sent or given to shareholders in connection with
the Offer be promptly disseminated to shareholders in a manner reasonably
designed to inform shareholders of such change), and without limiting the
manner in which the Purchaser may choose to make any public announcement, the
Purchaser will not have any obligation
4
<PAGE>
to publish, advertise or otherwise communicate any such public announcement
other than by making a release to the Dow Jones News Service. As used in this
Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance
for payment of Shares) for Shares or it is unable to pay for Shares pursuant
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to withdrawal rights as described in Section 3.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Exchange Act
requires the Purchaser to pay the consideration offered or return the Shares
tendered promptly after the termination or withdrawal of the Offer and (ii)
the Purchaser may not delay acceptance for payment of, or payment for (except
in order to comply with applicable law), any Shares upon the occurrence of any
of the events specified in Section 14 without extending the period of time
during which the Offer is open.
If the Purchaser makes a material change in the terms of the Offer or waives
a material condition of the Offer, the Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which the Offer must remain open following material changes in the terms of
the Offer or information concerning the Offer, other than a change in price or
a change in the percentage of securities sought, will depend upon the facts
and circumstances then existing, including the relative materiality of the
changed terms or information. With respect to a change in price or a change in
the percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination to shareholders and
investor response.
Requests are being made to the Company pursuant to Rule 14d-5 of the
Exchange Act and Section 220 of the DGCL for the use of the Company's
shareholder lists and security position listings for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares, and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the shareholder lists, or, if applicable,
who are listed as participants in a clearing agency's security position
listing, for subsequent transmittal to beneficial owners of Shares, by the
Purchaser following receipt of such lists or listings from the Company, or by
the Company if it so elects.
2. PROCEDURES FOR TENDERING SHARES
Valid Tender. For a shareholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or,
in the case of a book-entry transfer, an Agent's Message (as defined below),
and any other required documents, must be received by the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date and either certificates for tendered Shares ("Share
Certificates") must be received by the Depositary at one of such addresses or
such Shares must be delivered pursuant to the procedures for book-entry
transfer set forth below (and a Book-Entry Confirmation (as defined below)
received by the Depositary), in each case prior to the Expiration Date, or (b)
the tendering shareholder must comply with the guaranteed delivery procedures
set forth below.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at The Depositary Trust Company and The Philadelphia Depositary
Trust Company (the "Book-Entry Transfer Facilities") for purposes of the Offer
within two business days after the date of this Offer to Purchase.
5
<PAGE>
Any financial institution that is a participant in any of the Book-Entry
Transfer Facilities' systems may make book-entry delivery of Shares by causing
a Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with such Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message (as defined below), and any other required documents, must, in any
case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering shareholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at a Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." DELIVERY
OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-
ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgement from the participant in such Book-
Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER.
SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(an "Eligible Institution"). In all other cases, all signatures on the Letter
of Transmittal must be guaranteed by an Eligible Institution. See Instructions
1 and 5 to the Letter of Transmittal. If Share Certificates are registered in
the name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made or Share Certificates for Shares not tendered or not
accepted for payment are to be returned to a person other than the registered
holder of the Share Certificates surrendered, the tendered Share Certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders appear on the
Share Certificates, with the signatures on the Share Certificates or stock
powers guaranteed as described above. See Instructions 1 and 5 to the Letter
of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or the procedure for book-entry transfer
6
<PAGE>
cannot be completed on a timely basis or time will not permit all required
documents to reach the Depositary prior to the Expiration Date, such
shareholder's tender may be effected if all the following conditions are met:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the Share Certificates, representing all tendered Shares, in proper
form for transfer (or a Book-Entry Confirmation with respect to all such
Shares), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the Nasdaq is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) Share Certificates for (or a timely Book-
Entry Confirmation with respect to) such Shares, (b) a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering shareholders may be paid at different
times depending upon when Share Certificates or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
The Purchaser's acceptance for payment of Shares validly tendered pursuant
to the Offer will constitute a binding agreement between the tendering
shareholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of the Purchaser
as such shareholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such shareholder's rights with respect to the Shares tendered by
such shareholder and accepted for payment by the Purchaser and with respect to
any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after August 1, 1996 (the "Applicable Date"). All
such proxies will be irrevocable and considered coupled with an interest in
the tendered Shares. Such appointment will be effective when, and only to the
extent that, the Purchaser accepts such Shares for payment pursuant to the
Offer. Upon such acceptance for payment, all prior powers of attorney, proxies
and consents given by such shareholder with respect to such Shares or other
securities or rights will, without further action, be revoked and no
subsequent powers of attorney, proxies, consents or revocations may be given
(and, if given, will not be deemed effective). The designees of the Purchaser
will thereby be empowered to exercise all voting and other rights with respect
to such Shares and other securities or rights in respect of any annual,
special, adjourned or postponed meeting of the Company's shareholders, actions
by written consent in lieu of any such meeting or otherwise, as they in their
sole discretion deem proper. The Purchaser reserves the right to require that,
in order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such Shares, the Purchaser must be able
to exercise full voting, consent
7
<PAGE>
and other rights with respect to such Shares and other securities or rights,
including voting at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by the Purchaser, in its sole discretion,
whose determination will be final and binding on all parties. The Purchaser
reserves the absolute right to reject any or all tenders determined by it not
to be in proper form or the acceptance for payment of or payment for which
may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser
also reserves the absolute right to waive any defect or irregularity in the
tender of any Shares of any particular shareholder whether or not similar
defects or irregularities are waived in the case of other shareholders. No
tender of Shares will be deemed to have been validly made until all defects or
irregularities relating thereto have been cured or waived. None of the
Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any
such notification. The Purchaser's interpretation of the terms and conditions
of the Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding on all parties.
Backup Withholding. In order to avoid "backup withholding" of federal income
tax on payments of cash pursuant to the Offer or the Proposed Merger, a
shareholder surrendering Shares in the Offer must, unless an exemption
applies, provide the Depositary with such shareholder's correct taxpayer
identification number ("TIN") on a Substitute Form W-9 and certify under
penalties of perjury that such TIN is correct and that such shareholder is not
subject to backup withholding. If a shareholder does not provide such
shareholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a penalty on such
shareholder and the payment of cash to such shareholder pursuant to the Offer
or the Proposed Merger may be subject to backup withholding of 31% of the
amount of such payment. All shareholders surrendering Shares pursuant to the
Offer should complete and sign the main signature form and the Substitute Form
W-9 included as part of the Letter of Transmittal to provide the information
and certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and
the Depositary). Noncorporate foreign shareholders should complete and sign
the main signature form and a Form W-8, Certificate of Foreign Status, a copy
of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after September 30,
1996 (or such later date as may apply in case the Offer is extended).
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If Share Certificates have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such Share Certificates, the serial numbers shown on such Share Certificates
must be submitted to the Depositary and, unless such Shares have been tendered
by an Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant
to the procedure for book-entry transfer as set forth in Section 2, any notice
8
<PAGE>
of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by again following
one of the procedures described in Section 2 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of the Purchaser, Parent, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability
for failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all
Shares validly tendered and not withdrawn promptly after the Expiration Date.
All questions as to the satisfaction of such terms and conditions will be
determined by the Purchaser, in its sole discretion, whose determination will
be final and binding on all parties. See Sections 1 and 14. The Purchaser
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of or payment for Shares in order to comply in whole or in part with
any applicable law, including, without limitation, the HSR Act. See Section
15. Any such delays will be effected in compliance with Rule 14e-1(c) under
the Exchange Act (relating to a bidder's obligation to pay for or return
tendered securities promptly after the termination or withdrawal of such
bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) Share
Certificates for (or a timely Book-Entry Confirmation with respect to) such
Shares, (b) a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and (c) any other documents
required by the Letter of Transmittal. The per Share consideration paid to any
shareholder pursuant to the Offer will be the highest per Share consideration
paid to any other shareholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered to the Purchaser as,
if and when the Purchaser gives oral or written notice to the Depositary of
the Purchaser's acceptance for payment of such Shares. Payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
validly tendering shareholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering shareholders. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT. Upon the deposit of funds with the Depositary for the
purpose of making payments to tendering shareholders, the Purchaser's
obligation to make such payment shall be satisfied and tendering shareholders
must thereafter look solely to the Depositary for payment of amounts owed to
them by reason of the acceptance for payment of Shares pursuant to the Offer.
The Purchaser will pay any stock transfer taxes with respect to the transfer
and sale to it or its order pursuant to the Offer, except as otherwise
provided in Instruction 6 of the Letter of Transmittal, as well as any charges
and expenses of the Dealer Manager, the Depositary and the Information Agent.
9
<PAGE>
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange
Act), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering shareholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, Share Certificates for any such unpurchased Shares will be returned,
without expense to the tendering shareholder (or, in the case of Shares
delivered by book-entry transfer of such Shares into the Depositary's account
at a Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, such Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility), as promptly as practicable after
the expiration, termination or withdrawal of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant
to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering shareholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Proposed Merger will be a
taxable transaction for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for federal income tax purposes, a tendering shareholder will recognize gain
or loss equal to the difference between the amount of cash received by the
shareholder pursuant to the Offer or the Proposed Merger and the aggregate tax
basis in the Shares tendered by the shareholder and purchased pursuant to the
Offer or converted in the Proposed Merger, as the case may be. Gain or loss
will be calculated separately for each block of Shares tendered and purchased
pursuant to the Offer or converted in the Proposed Merger, as the case may be.
If Shares are held by a shareholder as capital assets, gain or loss
recognized by the shareholder will be capital gain or loss, which will be
long-term capital gain or loss if the shareholder's holding period for the
Shares exceeds one year. Under present law, long-term capital gains recognized
by an individual shareholder will generally be taxed at a maximum federal
marginal tax rate of 28%, and long-term capital gains recognized by a
corporate shareholder will be taxed at a maximum federal marginal tax rate of
35%.
THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY
NOT BE APPLICABLE WITH RESPECT TO SHARES RECEIVED PURSUANT TO THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION OR WITH RESPECT TO HOLDERS
OF SHARES WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE CODE, SUCH AS
NON-U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND
FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF SHARES IN LIGHT OF
INDIVIDUAL CIRCUMSTANCES. SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS
TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE
APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX
LAWS) OF THE OFFER AND THE PROPOSED MERGER.
10
<PAGE>
6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES
The Shares are listed and traded on The Nasdaq National Market ("Nasdaq")
under the symbol CCON. According to the Company 10-K, as of December 31, 1995,
the Shares were held by approximately 1,237 holders of record. The following
table sets forth the high and low sales prices per Share as reported on the
Dow Jones Historical Stock Quote Reporter Service. According to the Company
10-K and the Company 10-Qs (as defined herein), the Company has not paid
dividends on the Shares during the periods covered.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1994:
First quarter............................................. 14 1/4 11
Second quarter............................................ 13 3/4 8 3/4
Third quarter............................................. 13 3/4 8 1/2
Fourth quarter............................................ 13 3/4 10 3/4
1995:
First quarter............................................. 19 1/2 11
Second quarter............................................ 24 1/4 15 1/2
Third quarter............................................. 21 3/4 16 3/4
Fourth quarter............................................ 23 1/2 17 1/2
1996:
First quarter............................................. 20 1/4 10 3/4
Second quarter............................................ 15 5/8 10 3/4
Third quarter (through August 1).......................... 13 8 5/8
</TABLE>
On August 1, 1996, the last full trading day before commencement of the
Offer, the closing sale price for the Shares was $12 1/8 per share. The Offer
Price of $18 per Share represents a premium of 83% over the average closing
sale price for the Shares over the ten trading day period ended on August 1,
1996. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Depending upon the aggregate market value and per share price of any Shares
not purchased pursuant to the Offer, the Shares may no longer meet the
standards of the National Association of Securities Dealers, Inc. (the "NASD")
for continued inclusion in the Nasdaq, which require that an issuer have at
least 200,000 publicly held shares with a market value of $1 million, and have
net tangible assets of at least $1 million, $2 million or $4 million depending
on profitability levels during the issuer's four most recent fiscal years. If
these standards are not met, the Shares might nevertheless continue to be
included in the NASD's Nasdaq Stock Market with quotations published in the
Nasdaq "additional list" or in one of the "local lists." However, if the
number of holders of Shares falls below 300, or if the number of publicly held
Shares falls below 100,000, or if there are not at least two market makers for
the Shares, NASD rules provide that the securities would no longer be
"qualified" for Nasdaq Stock Market reporting, and the Nasdaq Stock Market
would cease to provide any quotations. Shares held directly or indirectly by
an officer or director of the Company, or by any beneficial owner of more than
10 percent of the Shares, ordinarily will not be considered as being publicly
held for this purpose. If, as a result of the purchase of Shares pursuant to
the Offer or otherwise, the Shares no longer meet the NASD requirements for
continued inclusion in any tier of the Nasdaq National Market or in any other
tier of the Nasdaq Stock Market, and the Shares are no longer included in any
tier of the Nasdaq Stock Market, the market for Shares could be adversely
affected.
11
<PAGE>
In the event the Shares no longer meet the requirements of the NASD for
inclusion in any tier of the Nasdaq Stock Market, quotations might still be
available from other sources. The extent of the public market for the Shares
and availability of such quotations would, however, depend upon the number of
holders of Shares remaining at such time, the interest in maintaining a market
in the Shares on the part of securities firms, the possible termination of
registration under the Exchange Act, as described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its shareholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b)
of the Exchange Act, the requirement of furnishing a proxy statement pursuant
to Section 14(a) of the Exchange Act in connection with shareholders' meetings
and the related requirement of furnishing an annual report to shareholders and
the requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act
of 1933, as amended, may be impaired or eliminated. The Purchaser intends to
seek to cause the Company to apply for termination of registration of the
Shares under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
If registration of the Shares is not terminated prior to the Proposed
Merger, then the Shares will be delisted from all stock exchanges and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Proposed Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal offices at 6500
Hollister Avenue, Santa Barbara, California 93117. According to the Company
10-K, on August 28, 1995 the Company completed a merger with Cabot Medical
Corporation ("Cabot"), creating the largest U.S. publicly-traded minimally
invasive surgery company in the fields of urology and gynecology.
According to the Company 10-K, the Company designs, manufactures and markets
medical endoscope and electrosurgery systems for diagnosis and minimally
invasive surgery. According to the Company 10-K, the Company's systems are
used for a growing number of medical specialties, including urology,
arthroscopy, laparoscopy, gynecology, thoracoscopy and plastic surgery.
According to the Company 10-K, the Company also designs, assembles and markets
miniature color video systems used with endoscope systems.
According to the Company 10-K, Cabot designs, manufactures and markets
medical devices, ureteral stents, urological diagnostic equipment, related
products and systems principally for use in general surgery and gynecological
diagnosis and surgery.
12
<PAGE>
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted or derived from the
information contained in the Company 10-K and the Company's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1995 and 1996 (the "Company 10-
Qs"). More comprehensive financial information is included in the Company 10-
K, the Company 10-Qs and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by
reference to such information. The Company 10-K, the Company 10-Qs and such
other documents should be available for inspection and copies thereof should
be obtainable in the manner set forth below under "Available Information."
CIRCON CORPORATION
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CIRCON CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED FISCAL YEAR ENDED
MARCH 31, DECEMBER 31,
-----------------------------------------------
1996 1995 1995(1) 1994 1993(2)
--------- ------------------ -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales.................... $ 39,962 $ 37,921 $ 160,447 $157,041 $156,861
Gross Profit................. 22,198 20,523 83,640 88,569 80,972
Operating Income (Loss)...... 3,578 2,063 3,820 13,753 (1,454)
Net Income (Loss)............ 1,659 621 (5,393) 6,509 (6,212)
Net Income (Loss) per Share.. 0.13 0.05 (0.41) 0.51 (0.50)
Weighted Average Shares
Outstanding................. 13,114 12,778 13,237 12,738 12,418
BALANCE SHEET DATA:
Total Assets................. $ 168,921 * $ 181,399 $184,129 $177,301
Total Debt................... 59,509 * 72,292 73,483 74,184
Total Shareholders' Equity... 89,502 * 87,172 86,965 81,768
</TABLE>
- --------
No cash dividends have been paid during the periods presented.
(1) In connection with the merger of the Company and Cabot, $13,369 (pre-tax)
of merger costs and non-recurring combination expenses were incurred and
charged to expense in the third quarter of 1995. These costs include
$8,433 associated with the elimination of duplicative, excess, and
obsolete inventories and related production equipment, and reorganizing
and cross training the sales force, and $4,936 of fees and other expenses
specifically associated with the merger process.
(2) During 1993, in response to anticipated changes in the health care
industry caused by proposed health care reform legislation, both the
Company and Cabot recorded special charges. This included $6,521 charged
to cost of sales for write-down of inventory related to product
restructuring, and $4,867 charged to operating expense, consisting of 1)
$2,034 write-off of salesmen's demonstration equipment and 2) $2,833 for
organization streamlining and facility rationalization program including
severance, relocation, disposal costs and other related charges.
* Information has not been restated by the Company for the applicable period
to reflect the merger of the Company and Cabot.
13
<PAGE>
Recent Developments. On July 22, 1996, the Company announced its results for
the three month period ended on June 30, 1996. According to the Company's
announcement, for the six month period ended June 30, 1996, the Company's
sales totaled $77 million, compared with $79.8 million for the same period in
1995, and the Company's gross profit was $42.9 million, compared with $43
million for the same period in 1995. For the three month period ended June 30,
1996, the Company's sales totaled $37 million, compared with $41.8 million for
the same period in 1995, and the Company's gross profit was $20.7 million,
compared with $22.5 million for the same period in 1995.
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports 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 and other matters, 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 should be
available for inspection at the public reference facilities of the Commission
at 450 Fifth Street, N.W., Washington, DC 20549, and at the regional offices
of the Commission located at Seven World Trade Center, 13th Floor, New York,
NY 10048 and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago,
IL 60661. Such reports, proxy statements and other information may also be
obtained at the Web site that the Commission maintains at http://www.sec.gov.
Copies of such information should be obtainable, by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal
office at 450 Fifth Street, N.W., Washington, DC 20549.
Company Information. The information concerning the Company contained in
this Offer to Purchase has been taken from or based upon publicly available
documents on file with the Commission and other publicly available
information. Although Parent and the Purchaser do not have any knowledge that
any such information is untrue, neither the Purchaser nor Parent takes any
responsibility for the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER
Parent is a Delaware corporation primarily engaged in developing,
manufacturing and marketing a proprietary line of technologically advanced
surgical wound management products to hospitals throughout the world. Parent
currently operates domestically and internationally through subsidiaries,
divisions and distributors.
Parent is a leading multinational developer, manufacturer and marketer of
innovative surgical wound closure products. In this category, principal
products consist of a series of surgical stapling instruments (both disposable
and reusable), disposable surgical clip appliers and disposable loading units
(DLUs) for use with stapling instruments. The instruments are an alternative
to manual suturing techniques utilizing needle/suture combinations and enable
surgeons to reduce blood loss, tissue trauma and operating time while joining
internal tissue, reconstructing or sealing off organs, removing diseased
tissue, occluding blood vessels and closing skin, either with titanium,
stainless steel, or proprietary absorbable copolymer staples or with titanium,
stainless steel, or proprietary absorbable copolymer clips. Surgical stapling
also makes possible several surgical procedures which cannot be achieved with
surgical needles and suturing materials. The disposable instruments and DLUs
are expended after a single use or, in the case of reloadable disposable
instruments, after a single surgical procedure.
Parent is a leading manufacturer and marketer of specialized wound
management products designed for use in the field of minimally invasive
surgery. This surgical technique (also referred to as
14
<PAGE>
laparoscopic or endoscopic surgery) requires incisions of up to one half inch
through which various procedures are performed using laparoscopic instruments
and optical devices, known as laparoscope or endoscopes, for viewing inside
the body cavity. Laparoscopy generally provides patients with significant
reductions in post-operative hospital stay, pain, recuperative time and
hospital costs, with improved cosmetic results, and with the ability to return
to work and normal life in a shorter time frame. Parent has developed and
markets disposable surgical clip appliers and stapling instruments designed
for laparoscopic uses in a variety of sizes and configurations. Parent's
products in this area also include trocars, which provide entry ports to the
body in laparoscopic surgery, and a line of instruments which allows the
surgeon to see, cut, clamp, retract, suction, irrigate or otherwise manipulate
tissue during a laparoscopic procedure. Parent also designs and markets
laparoscopes. Application for minimally invasive surgery currently include
cholecystectomy (gall bladder removal), hysterectomy, hernia repair, bladder
suspension for urinary stress incontinence, anti-reflux procedures for
correction of heartburn, and various forms of bowel, stomach, gynecologic,
urologic, and thoracic (chest) surgery. Parent believes that laparoscopy can
also be used effectively in many other surgical procedures.
Parent offers certain of its products in both disposable and reusable
versions. Disposable instruments reduce the user's capital investment,
eliminate the risks and costs associated with maintenance, sterilizing and
repair of reusable instruments, and provide the surgeon with a new sterile
instrument for each procedure, offering more efficacious and safer practice
for both patients and operating room personnel. Reusable instruments provide
an alternative for surgeons and hospitals preferring this approach.
Parent also manufactures and markets a line of sutures products, which was
introduced in 1991. Parent believes that sutures, which represent a major
portion of the wound closure market, are a natural complement to its other
wound management products.
Parent has taken steps to diversify beyond the general surgery market and
explore new growth areas in surgery where it can utilize its manufacturing
expertise, research and development experience and the skills of its sales
force. To this end, Parent is building a line of surgical specialty
instrumentation and technology for cardiovascular, oncological, urological and
orthopedic procedures. Parent believes that minimally invasive instrumentation
and more advanced techniques can be applied to these specialty practices.
Parent plans to obtain such technologies through internal research and
development and by acquiring, investing in, or creating alliances with, other
firms or persons who have developed such technology.
The Purchaser is a newly incorporated Delaware corporation and a wholly
owned subsidiary of Parent which to date has not conducted any business other
than in connection with the Offer and the Proposed Merger. The principal
executive offices of Parent and the Purchaser are located at 150 Glover
Avenue, Norwalk, Connecticut 06856.
15
<PAGE>
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted or derived from the
information contained in Parent's Annual Report on Form 10-K for the year
ended December 31, 1995 (the "Parent 10-K") and Parent's Quarterly Reports on
Form 10-Q for the three month periods ended June 30, 1995 and 1996 (the
"Parent 10-Qs"). More comprehensive financial information is included in the
complete financial statements of Parent contained in the Parent 10-K and the
Parent 10-Qs on file with the Commission, and such financial statements are
incorporated herein by reference.
UNITED STATES SURGICAL CORPORATION
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, DECEMBER 31,
--------------------- --------------------------------
1996 1995 1995(1) 1994(2) 1993(3)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales.............. $ 549,600 $ 504,200 $1,022,300 $ 918,700 $1,037,200
Income (loss) before
income taxes.......... 62,400 43,500 89,800 32,700 (137,400)
Net income (loss)...... 48,100 33,500 79,200 19,200 (138,700)
Net income (loss) per
common share and
common share
equivalent (primary
and fully diluted).... $0.66 $0.42 $1.05 $.08 $(2.48)
Average number of
common shares and
common share
equivalents
outstanding........... 58,100 56,900 57,000 56,600 56,000
Dividends declared per
common share.......... $.04 $.04 $.08 $.08 $.245
BALANCE SHEET DATA:
Total assets........... $1,373,700 $1,114,000 $1,265,500 $1,103,500 $1,170,500
Long-term debt......... 150,700 199,500 256,500 248,500 505,300
Stockholders'
equity(4)............. 942,500 698,500 741,100 662,000 443,900
</TABLE>
- --------
(1) In the third quarter of 1995, Parent reached an agreement with respect to
the settlement of all issues raised by the Internal Revenue Service in the
examination of the Parent's income tax returns for the years 1984 through
1990. As a result of the agreement, Parent recognized a net credit to the
tax provisions of $10 million ($.18 per common share) in the third quarter
of 1995.
(2) In the fourth quarter of 1994, Parent signed a letter of intent to
purchase certain assets of its independent distributor in Japan, which
included inventory of Parent's products purchased by the independent
distributor but not yet sold to third parties at December 31, 1994. Sales
and Net Income were reduced by $17 million and $8 million ($.14 per common
share), respectively, in anticipation of the pending reacquisition of
these products and valuing these products at the Parent's cost.
(3) Income (loss) before income taxes and net income (loss) for 1993 include
restructuring charges of $137.6 million and $129.6 million ($2.31 per
share), respectively.
(4) Included in Stockholders' equity in 1996, 1995 and 1994 is $191.5 million
of convertible preferred stock which has liquidation value of $200.0
million.
16
<PAGE>
Available Information. Parent is subject to the informational requirements
of the Exchange Act and, in accordance therewith, files reports relating to
its business, financial condition and other matters.
Information, as of particular dates, concerning Parent's directors and
officers, their remuneration, stock options and other matters, the principal
holders of Parent's securities and any material interest of such persons in
transactions with Parent is required to be disclosed in proxy statements
distributed to Parent's shareholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the Commission and copies thereof should be obtainable from the
Commission and on-line through EDGAR in the same manner as is set forth with
respect to the Company in Section 8.
Contacts, etc. with the Company. Schedule II hereto sets forth transactions
in the Shares effected during the past 60 days by Parent and its affiliates.
Except as set forth in this Offer to Purchase and Schedule II hereto, none of
Parent or the Purchaser, or, to the best knowledge of Parent or the Purchaser,
any of the persons listed in Schedule I hereto, or any associate or majority-
owned subsidiary of such persons, beneficially owns any equity security of the
Company, and none of Parent, the Purchaser, or, to the best knowledge of
Parent or the Purchaser, any of the other persons referred to above, or any of
the respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the Company
during the past 60 days.
Except as set forth in this Offer to Purchase, none of Parent or the
Purchaser, or, to the best knowledge of Parent and the Purchaser, any of the
persons listed in Schedule I hereto has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or
the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, none of Parent or the Purchaser, or, to the best knowledge of Parent
and the Purchaser, any of the persons listed in Schedule I hereto has had any
transactions with the Company, or any of its executive officers, directors or
affiliates that would require reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between Parent or the Purchaser, or their
respective subsidiaries, or, to the best knowledge of Parent and the
Purchaser, any of the persons listed in Schedule I hereto, on the one hand,
and the Company or its executive officers, directors or affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors, or a sale or other
transfer of a material amount of assets that would require reporting under the
rules of the Commission.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of the
Shares pursuant to the Offer and to pay fees and expenses related to the Offer
and the Proposed Merger is estimated to be approximately $250 million. The
Purchaser plans to obtain all funds needed for the Offer and the Proposed
Merger through a capital contribution or loan from Parent. Certain covenants
in agreements relating to outstanding debt of the Company could require
prepayment by the Company of such debt in the event the Offer is consummated.
In such event, the Purchaser would intend to negotiate waivers of such
covenants or to refinance such debt.
Parent plans to obtain the funds for such capital contribution or loan from
its available cash and working capital and pursuant to one or more credit
facilities as described below.
17
<PAGE>
Parent has entered into a commitment letter (the "Commitment Letter"), dated
July 30, 1996, among Parent, J.P. Morgan Securities Inc., BA Securities Inc.,
The Bank of New York and NationsBank Capital Markets, Inc. (collectively, the
"Arrangers") to provide Parent and the Purchaser with a credit facility (the
"New Credit Facility"). The New Credit Facility will provide for up to $175
million in borrowings in addition to Parent's existing $325 million credit
facility which is described below. The commitment of the banks pursuant to the
Commitment Letter is subject to negotiation and execution of a definitive
credit agreement with respect to the New Credit Facility and related
documents. The Commitment Letter is subject to certain specified conditions
including, among other things (i) satisfactory completion of due diligence;
(ii) the absence of adverse changes in the relevant markets or in the
regulatory environment that in the judgment of the Arrangers are likely to
materially and adversely affect the syndication of the New Credit Facility;
and (iii) the absence of adverse changes in the financial condition, business,
assets or results of operations of Parent or the business to be acquired by
Parent. The Commitment Letter terminates on November 27, 1996, unless
extended.
The final maturity of the New Credit Facility will be January 5, 2001. The
definitive credit documentation is expected to have terms generally similar to
those of the Credit Agreement (as defined herein). The New Credit Facility is
expected to provide Parent with a choice of interest rates based upon the CD
rate, the prime rate, or the London Interbank Offered Rate ("LIBOR"), for U.S.
dollar borrowings. Prime rate loans are expected to bear interest at the
higher of the prime rate as established by NationsBank, N.A. and the sum of
the federal funds rate plus .5%. The actual interest charges paid by the
Company for LIBOR and CD rate loans are expected to be determined by a pricing
schedule which will consider the ratio of consolidated debt at each calendar
quarter end to consolidated earnings before interest, taxes, depreciation and
amortization for the trailing twelve months. It is expected that the initial
borrowings will be LIBOR borrowings, and the initial interest rate under the
New Credit Facility will be approximately 6.112%.
Parent has entered into the Commitment Letter in order to obtain funds to be
used to purchase shares in the Offer. In addition to the funds to be borrowed
pursuant to the New Credit Facility, Parent will obtain the funds to be
contributed or loaned to Purchaser from its available cash and working capital
and pursuant to its existing credit agreement (the "Credit Agreement"), dated
as of December 20, 1995, among Parent, certain of Parent's subsidiaries,
NationsBank, N.A., as Administrative Agent, The Bank of New York, as Yen
Administrative Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and the signatory banks thereto. The Credit Agreement
provides for up to $325 million in borrowings, and as of July 30, 1996, $25
million in borrowings were outstanding. The Credit Agreement provides Parent
with a choice of interest rates based upon the CD rate, the prime rate, or the
LIBOR, for U.S. dollar borrowings. Prime rate loans bear interest at the
higher of the prime rate as established by NationsBank, N.A. and the sum of
the federal funds rate plus .5%. The actual interest charges paid by the
Company for LIBOR and CD rate loans are determined by a pricing schedule which
considers the ratio of consolidated debt at each calendar quarter end to
consolidated earnings before interest, taxes, depreciation and amortization
for the trailing twelve months. Additional borrowings under the Credit
Agreement are subject to the satisfaction of certain conditions contained
therein. Parent expects that future borrowings under the Credit Agreement will
be LIBOR based. Under the Credit Agreement, the interest rate at August 1,
1996 for a three month LIBOR borrowing would be 5.987%. Parent is also subject
to facility fees (ranging from 15 to 35 basis points per annum). The Credit
Agreement includes representations and warranties, covenants, events of
default and other terms customary to financings of that type.
Copies of the Commitment Letter and the Credit Agreement are filed as
Exhibits (b)(1) and (b)(2) to the Schedule 14D-1 and are incorporated herein
by reference.
18
<PAGE>
It is anticipated that the indebtedness incurred by Parent under such loans
will be repaid from funds generated internally by Parent and its subsidiaries
(including, after the Proposed Merger, if consummated, dividends paid by the
Company and its subsidiaries), through additional borrowings, through
application of proceeds of dispositions or through a combination of two or
more such sources. No final decisions have been made concerning the method
Parent will employ to repay such indebtedness. Such decisions when made will
be based on Parent'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.
11. BACKGROUND OF THE OFFER
During the winter of 1994-1995, Leon C. Hirsch, Chairman, President and
Chief Executive Officer of Parent met with Richard A. Auhll, Chairman,
President and Chief Executive Officer of the Company. Mr. Hirsch expressed an
interest in exploring a possible acquisition of the Company by Parent. Mr.
Auhll indicated that he was not interested in exploring such a transaction.
During the spring of 1995, Parent held preliminary discussions concerning
the possible acquisition of a company which was later acquired by the Company.
During July and August 1996, Parent acquired 1,000,100 Shares (approximately
8% of the Shares outstanding) in open market transactions. See Schedule II.
On August 1, 1996, Mr. Hirsch telephoned Mr. Auhll to advise him, among
other things, of the commencement of the Offer.
On August 1, 1996, Mr. Hirsch sent the following letter to Mr. Auhll:
Dear Richard:
I am glad I had the opportunity to discuss with you the prospect of
combining U.S. Surgical and Circon prior to releasing our tender offer
tomorrow. I believe everybody will be best served if we can promptly sit down
together to discuss this prospect.
We at U.S. Surgical have been carefully looking at the advantages of a
merger of Circon and U.S. Surgical. We have concluded that the combination of
our businesses will provide significant benefits to both companies and
respective shareholders. We sincerely believe the clear business logic of
combining our operations should not be ignored.
Our cash offer of $18/share, which represents a premium of 83% over the
average closing price of Circon common stock during the last ten trading days,
is a price your shareholders should find extremely attractive.
The synergies between our two companies are obvious, particularly in the
sales and marketing area. Our market presence, with over $500 million in
laparoscopic sales, should prove to be a tremendous asset in marketing your
products through your sales organization.
I think another big plus is that U.S. Surgical is a worldwide company with
approximately 50% of its sales outside the United States. Our international
strength can significantly increase Circon's international sales, which are
now less than 20% of your total. In addition, our extensive professional,
training, education and marketing infrastructure can bolster Circon's efforts
with its customers and add opportunities for its employees.
Together, we can increase our capabilities to better serve our respective
customer bases as they seek more cost-effective, one-stop purchasing of
advanced medical products.
We hope that you and your Board will share our enthusiasm for this merger
and the benefits U.S. Surgical's offer provide for both your company and all
its shareholders. We look forward to your response.
Leon C. Hirsch
On August 2, 1996 the Purchaser commenced the Offer.
19
<PAGE>
12.PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
Purpose. The purpose of the Offer and the Proposed Merger is to enable
Parent to acquire control of, and the entire equity interest in, the Company.
The Offer, as the first step in the acquisition of the Company, is intended to
facilitate the acquisition of all the Shares. Parent currently intends to
propose and seek to consummate, as soon as practicable following the
consummation of the Offer, the Proposed Merger. The purpose of the Proposed
Merger is to acquire all Shares not purchased pursuant to the Offer or
otherwise. Pursuant to the Proposed Merger, each then outstanding Share (other
than Shares owned by Parent or any of its subsidiaries and Shares owned by
shareholders who perfect any available dissenters' rights they may have under
the DGCL) would be converted into the right to receive an amount in cash equal
to the price per Share paid by the Purchaser pursuant to the Offer. Although
it is the Purchaser's current intention to propose and seek to enter into a
definitive merger agreement with the Company with respect to the Proposed
Merger and to consummate the Proposed Merger as promptly as practicable, there
can be no assurance that the Proposed Merger will be consummated or, if
consummated, of the timing or terms thereof. Consummation of the Proposed
Merger will require the adoption of a resolution by the Company's board of
directors approving the Proposed Merger and the affirmative vote of the
holders of a majority of the outstanding Shares. Alternatively, if the
Purchaser purchases 90% or more of the Shares, the Proposed Merger could be
consummated without the approval of the shareholders through a Short-Form
Merger (described below under "The Proposed Merger").
Plans for the Company. Based upon publicly available information, Parent
believes that significant operating and sales synergies may be achievable by
the combined entity, which could include both increases in sales and margins
and reduced expenses. If and to the extent that the Purchaser acquires control
of the Company or otherwise obtains access to the books and records of the
Company, Parent and the Purchaser intend to conduct a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and consider and
determine what, if any, changes would be desirable in light of the
circumstances which then exist. Such strategies could include, among other
things, changes in the Company's business, corporate structure, Certificate of
Incorporation, By-laws, capitalization, management or dividend policy.
Except as described in this Offer to Purchase, Parent and the Purchaser have
no present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, consolidation, reorganization, liquidation or
sale or transfer of a material amount of assets, involving the Company or any
of its subsidiaries, or any material changes in the Company's present
capitalization, dividend policy, corporate structure or business or any
material changes or reductions in the composition of its management or
personnel.
The Proposed Merger. In general, under the DGCL, the Proposed Merger
requires the approval of the Company's Board of Directors and the approval by
the holders of a majority of the outstanding Shares.
Accordingly, if the Purchaser acquires more than a majority of the
outstanding Shares and the Company's Board of Directors approves the Proposed
Merger, the Purchaser would have the voting power to approve the Proposed
Merger without the vote of any other shareholders and could effect the
Proposed Merger by so voting.
Further, the DGCL would permit the Proposed Merger to occur without a vote
of the Company's shareholders (a "Short-Form Merger") only if the Purchaser
were to acquire at least 90% of the outstanding shares in the Offer.
Accordingly, if the Purchaser owns 90% or more of the outstanding Shares after
consummation of the Offer, a Short-Form Merger could be effected by the
Purchaser without the approval of the Company's shareholders or Board of
Directors.
20
<PAGE>
If, following the consummation of the Offer, the members of the Company's
Board of Directors in office at such time were to refuse to approve the
Proposed Merger (or any other transaction or corporate action proposed by the
Purchaser that required the approval of the Company's Board of Directors), the
Purchaser, in order to consummate the Proposed Merger (or any such other
transaction or corporate action), would first have to replace at least a
majority of the Company's Board of Directors with its own nominees. As a
result of the classified board provisions contained in the Company's
Certificate of Incorporation, at least two annual meetings of the Company's
stockholders could be required to enable nominees of the Purchaser to comprise
a majority of the Company's Board of Directors.
Neither Parent nor the Purchaser can give any assurance as to whether, as a
result of information hereafter obtained by either Parent or the Purchaser,
changes in general economic or market conditions or in the business of the
Company, or other presently unforeseen factors, the Proposed Merger will be
submitted to the Company's shareholders or whether the Proposed Merger will be
delayed or abandoned. Whether or not the Proposed Merger is consummated,
Parent and the Purchaser reserve the right to acquire additional Shares
following the expiration of the Offer through private purchases, market
transactions, tender or exchange offers or otherwise on terms and at prices
that may be more or less favorable than those of the Offer or, subject to any
applicable legal restrictions, to dispose of any or all Shares acquired by
Parent and the Purchaser.
Dissenters' Rights. Each shareholder of record (as of the date fixed for
determining shareholders entitled to notice of the meeting of shareholders of
the Company at which the Proposed Merger is to be submitted or, if the
Proposed Merger is not subject to a vote of shareholders, the date on which an
agreement of merger with respect to the Proposed Merger is adopted by the
Board of Directors of the Company) will have the right to receive fair cash
value for such shareholder's Shares if such shareholder objects to the
Proposed Merger and otherwise properly exercises such shareholder's
dissenters' rights and the Proposed Merger is consummated. If the statutory
procedures for exercising or perfecting dissenters' rights are complied with
in accordance with the DGCL, then a judicial determination will be made as to
the fair cash value required to be paid to the dissenting shareholders for
their Shares. Any such judicial determination of fair cash value would be
based on the amount that a willing seller, under no compulsion to sell, would
be willing to accept, and a willing buyer, under no compulsion to purchase,
would be willing to pay (excluding any appreciation or depreciation in the
market value resulting from the Proposed Merger), and the value so determined
could be more or less than the price per share to be paid in the Offer or the
Proposed Merger.
From the time written demand for payment of the fair cash value is given
until either the termination of the rights and obligations arising from such
demand or the purchase of the Shares related thereto by the Company, all
rights accruing to the objecting shareholder, including voting and dividend or
distribution rights, will be suspended. If any dividend or distribution is
paid on Shares during the suspension, an amount equal to the dividend or
distribution which would have been payable on the Shares, but for such
suspension, shall be paid to the holder of record of the Shares as a credit
against the fair cash value of the Shares. If the right to receive the fair
cash value is terminated otherwise than by the purchase of the Shares by the
Company, all rights will be restored to the objecting shareholder and any
distribution that would have been made to the holder of record of the Shares,
but for the suspension, will be made at the time of such termination.
The foregoing summary of the rights of dissenting shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise their dissenters' rights. The preservation
and exercise of dissenters' rights are conditioned on strict adherence to the
applicable provisions of the DGCL.
"Going Private" Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions
and which may under certain
21
<PAGE>
circumstances be applicable to the Proposed Merger. However, Rule 13e-3 would
be inapplicable if (i) the Shares are deregistered under the Exchange Act
prior to the Proposed Merger or other business combination or (ii) the
Proposed Merger or other business combination is consummated within one year
after the purchase of the Shares pursuant to the Offer and the amount paid per
Share in the Proposed Merger or other business combination is at least equal
to the amount paid per Share in the Offer. If applicable, Rule 13e-3 requires,
among other things, that certain financial information concerning the fairness
of the proposed transaction and the consideration offered to minority
shareholders in such transaction be filed with the Commission and disclosed to
shareholders prior to the consummation of the transaction.
13.DIVIDENDS AND DISTRIBUTIONS
If, on or after the Applicable Date (August 1, 1996), the Company should (a)
split, combine or otherwise change the Shares or its capitalization, (b)
acquire or otherwise cause a reduction in the number of outstanding Shares or
other securities or (c) issue or sell additional Shares (other than the
issuance of Shares under option or subject to warrants prior to the Applicable
Date, in accordance with the terms of such options or warrants as publicly
disclosed prior to the Applicable Date), shares of any other class of capital
stock, other voting securities or any securities convertible into, or rights,
warrants or options, conditional or otherwise, to acquire, any of the
foregoing, then, subject to the provisions of Section 14, the Purchaser, in
its sole discretion, may make such adjustments as it deems appropriate in the
Offer Price and other terms of the Offer, including, without limitation, the
number or type of securities offered to be purchased.
If, on or after the Applicable Date, the Company should declare or pay any
cash dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to shareholders of record on a date prior
to the transfer of the Shares purchased pursuant to the Offer to the Purchaser
or its nominee or transferee on the Company's stock transfer records, then,
subject to the provisions of Section 14, (a) the Offer Price may, in the sole
discretion of the Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (b) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering shareholders will (i)
be received and held by the tendering shareholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering shareholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (ii) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will promptly be remitted to the Purchaser.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term or provision of the Offer, the Purchaser will
not be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer), to pay
for any Shares not theretofore accepted for payment or paid for, and may
terminate the Offer, unless (1) the Minimum Condition shall have been
satisfied, (2) the Business Combination Condition shall have been satisfied
and (3) any waiting period under the HSR Act applicable to the purchase of
Shares pursuant to the Offer shall have expired or been terminated.
Furthermore, notwithstanding any other term or provision of the Offer, the
Purchaser will not be required to accept for payment or, subject as aforesaid,
to pay
22
<PAGE>
for any Shares not theretofore accepted for payment or paid for, and may
terminate or amend the Offer if, at any time on or after the Applicable Date,
and before the acceptance of such Shares for payment or, subject to any
applicable rules and regulations of the Commission, the payment therefor, any
of the following events or facts shall have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding, application or counterclaim by any government or governmental,
regulatory or administrative authority or agency, domestic, foreign or
supranational (each, a "Governmental Entity"), or by any other person,
before any court or Governmental Entity, (i)(A) challenging or seeking to,
or which is reasonably likely to, make illegal, delay or otherwise directly
or indirectly restrain or prohibit, or seeking to, or which is reasonably
likely to, impose voting, procedural, price or other requirements, in
addition to those required by Federal securities laws and the DGCL, in
connection with, the making of the Offer, the acceptance for payment of, or
payment for, some of or all the Shares by the Purchaser, Parent or any
other affiliate of Parent or the consummation by the Purchaser, Parent or
any other affiliate of Parent of a merger or other similar business
combination with the Company, (B) seeking to obtain, or which is reasonably
likely to result in, material damages or (C) otherwise directly or
indirectly relating to the transactions contemplated by the Offer or any
such merger or business combination, (ii) seeking to, or which is
reasonably likely to, prohibit the ownership or operation by the Purchaser,
Parent or any other affiliate of Parent of all or any portion of the
business or assets of the Company and its subsidiaries or of the Purchaser,
Parent or any other affiliate of Parent or to compel the Purchaser, Parent
or any other affiliate of Parent to dispose of or hold separate all or any
portion of the business or assets of the Company or any of its subsidiaries
or of the Purchaser, Parent or any other affiliate of Parent or seeking to
impose, or which is reasonably likely to result in, any limitation on the
ability of the Purchaser, Parent or any other affiliate of Parent to
conduct such business or own such assets, (iii) seeking to, or which is
reasonably likely to, impose limitations on the ability of the Purchaser,
Parent or any other affiliate of Parent effectively to exercise full rights
of ownership of the Shares, including, without limitation, the right to
vote any Shares acquired or owned by the Purchaser, Parent or any other
affiliate of Parent on all matters properly presented to the Company's
shareholders, (iv) seeking to, or which is reasonably likely to, require
divestiture by the Purchaser, Parent or any other affiliate of Parent of
any Shares, (v) seeking, or which is reasonably likely to result in, any
material diminution in the benefits expected to be derived by the
Purchaser, Parent or any other affiliate of Parent as a result of the
transactions contemplated by the Offer or any merger or other similar
business combination with the Company, (vi) otherwise directly or
indirectly relating to the Offer or which otherwise, in the sole judgment
of the Purchaser, might materially adversely affect the Company or any of
its subsidiaries or the Purchaser, Parent or any other affiliate of Parent
or the value of the Shares or (vii) in the sole judgment of the Purchaser,
materially adversely affecting the business, properties, assets,
liabilities, capitalization, shareholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of the Company or any of its subsidiaries;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
the Purchaser, Parent or any other affiliate of Parent or the Company or
any of its subsidiaries or (ii) the Offer or any merger or other similar
business combination by the Purchaser, Parent or any other affiliate of
Parent with the Company, by any government, legislative body or court,
domestic, foreign or supranational, or Governmental Entity, other than the
routine application of the waiting period provisions of the HSR Act to the
Offer, that, in the sole judgment of the Purchaser, might, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (vii) of paragraph (a) above;
23
<PAGE>
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, shareholders' equity,
condition (financial or otherwise), operations, licenses or franchises,
results of operations or prospects of the Company or any of its
subsidiaries that, in the sole judgment of the Purchaser, is or may be
materially adverse to the Company or any of its subsidiaries, or the
Purchaser shall have become aware of any facts that, in the sole judgment
of the Purchaser, have or may have material adverse significance with
respect to either the value of the Company or any of its subsidiaries or
the value of the Shares to the Purchaser, Parent or any other affiliate of
Parent;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) any extraordinary or material adverse change in the
financial markets or major stock exchange indices in the United States or
abroad or in the market price of Shares, (iii) any change in the general
political, market, economic or financial conditions in the United States or
abroad that could, in the sole judgment of the Purchaser, have a material
adverse effect upon the business, properties, assets, liabilities,
capitalization, shareholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
the Company or any of its subsidiaries or the trading in, or value of, the
Shares, (iv) any material change in United States currency exchange rates
or any other currency exchange rates or a suspension of, or limitation on,
the markets therefor, (v) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (vi) any
limitation (whether or not mandatory) by any government, domestic, foreign
or supranational, or Governmental Entity on, or other event that, in the
sole judgment of the Purchaser, might affect, the extension of credit by
banks or other lending institutions, (vii) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or (viii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(e) the Company or any of its subsidiaries shall have (i) split, combined
or otherwise changed, or authorized or proposed a split, combination or
other change of, the Shares or its capitalization, (ii) acquired or
otherwise caused a reduction in the number of, or authorized or proposed
the acquisition or other reduction in the number of, outstanding Shares or
other securities, (iii) issued or sold, or authorized or proposed the
issuance, distribution or sale of, additional Shares (other than the
issuance of Shares under options or subject to warrants prior to the
Applicable Date in accordance with the terms of such options or warrants as
publicly disclosed prior to the Applicable Date), shares of any other class
of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, conditional or otherwise, to acquire,
any of the foregoing, (iv) declared or paid, or proposed to declare or pay,
any dividend or other distribution, whether payable in cash, securities or
other property, on or with respect to any shares of capital stock of the
Company, (v) altered or proposed to alter any material term of any
outstanding security, (vi) incurred any debt other than in the ordinary
course of business or any debt containing burdensome covenants, (vii)
authorized, recommended, proposed or entered into an agreement with respect
to any merger, consolidation, liquidation, dissolution, business
combination, acquisition of assets, disposition of assets, release or
relinquishment of any material contractual or other right of the Company or
any of its subsidiaries or any comparable event not in the ordinary course
of business, (viii) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into, any
agreement or arrangement with any
person or group that in the sole judgment of the Purchaser could adversely
affect either the value of the Company or any of its subsidiaries or the
value of the Shares to the Purchaser, Parent or any other affiliate of
Parent, (ix) entered into any employment, severance or similar agreement,
arrangement or plan with or for the benefit of any of its employees other
than in the ordinary course of business or entered into or amended any
agreements, arrangements or plans so as to
24
<PAGE>
provide for increased or accelerated benefits to the employees as a result
of or in connection with the transactions contemplated by the Offer, (x)
except as may be required by law, taken any action to terminate or amend
any employee benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended) of the Company or any
of its subsidiaries, or the Purchaser shall have become aware of any such
action that was not disclosed in publicly available filings prior to the
Applicable Date, (xi) amended, or authorized or proposed any amendment to,
its Certificate of Incorporation or its By-laws, or the Purchaser shall
become aware that the Company or any of its subsidiaries shall have
proposed or adopted any such amendment that was not disclosed in publicly
available filings prior to the Applicable Date or (xii) otherwise acted out
of the ordinary course of business, consistent with past practice;
(f) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including the Company or
any of its subsidiaries or affiliates), or it shall have been publicly
disclosed or the Purchaser shall have otherwise learned that (i) any
person, entity (including the Company or any of its subsidiaries) or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall
have acquired or proposed to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), other than acquisitions for bona fide arbitrage purposes only and
other than as disclosed in a Schedule 13D or 13G on file with the
Commission prior to the Applicable Date, (ii) any such person, entity or
group that prior to the Applicable Date, had filed such a Schedule with the
Commission has acquired or proposes to acquire, through the acquisition of
stock, the formation of a group or otherwise, beneficial ownership of 1% or
more of any class or series of capital stock of the Company (including the
Shares), or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of 1% or more of
any class or series of capital stock of the Company (including the Shares),
(iii) any person or group shall have entered into a definitive agreement or
an agreement in principle or made a proposal with respect to a tender offer
or exchange offer or a merger, consolidation or other business combination
with or involving the Company or (iv) any person shall have filed a
Notification and Report Form under the HSR Act (or amended a prior filing
to increase the applicable filing threshold set forth therein) or made a
public announcement reflecting an intent to acquire the Company or any
assets or subsidiaries of the Company;
(g) the Purchaser shall become aware (i) that any contractual right of
the Company or any of its subsidiaries shall be impaired or otherwise
adversely affected or that any amount of indebtedness of the Company or any
of its subsidiaries shall become accelerated or otherwise become due or
become subject to acceleration prior to its stated due date, in any case
with or without notice or the lapse of time or both as a result of or in
connection with the transactions contemplated by the Offer or the Proposed
Merger or any other business combination involving the Company, which, in
the aggregate, would be material, (ii) of any covenant, term or condition
in any of the Company's or any of its subsidiaries' instruments or
agreements that has or may have, in the aggregate, a material adverse
effect on (x) the business, properties, assets, liabilities,
capitalization, shareholders' equity, condition (financial or otherwise),
operations, management, key personnel, licenses, franchises, results of
operations or prospects of the Company or any of its subsidiaries
(including, but not limited to, any event of default that may result from
the consummation of the Offer, the acquisition of control of the Company or
any of its subsidiaries or the Proposed Merger or any other business
combination involving the Company) or (y) the value of the Shares in the
hands of Parent, the Purchaser or any of their respective affiliates or (z)
the consummation by Parent, the Purchaser or any of their respective
affiliates of the Offer and the Proposed Merger or any other business
combination involving the Company or (iii) that any report, document or
instrument of the Company or any of its subsidiaries filed with the
Commission contained, when filed, an untrue statement of a material fact or
omitted to state a material fact
25
<PAGE>
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading or that the Company or any of its subsidiaries shall have failed
to file any such report, document or instrument;
(h) any approval, permit, authorization, favorable review or consent of
any Governmental Entity (including those described or referred to in
Section 15) shall not have been obtained on terms satisfactory to the
Purchaser in its sole discretion; or
(i) the Purchaser shall have reached an agreement or understanding with
the Company providing for termination of the Offer, or the Purchaser,
Parent or any other affiliate of Parent shall have entered into a
definitive agreement or announced an agreement in principle with the
Company providing for a merger or other business combination with the
Company or the purchase of stock or assets of the Company; which, in the
sole judgment of the Purchaser in any such case, and regardless of the
circumstances (including any action or inaction by the Purchaser, Parent or
any other affiliate of Parent) giving rise to any such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment
or payment.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by the Purchaser in whole
or in part at any time and from time to time in its sole discretion. The
failure by the Purchaser at any time to exercise any of the foregoing rights
will not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances will not be deemed a waiver
with respect to any other facts and circumstances and each such right will be
deemed an ongoing right that may be asserted at any time and from time to
time. Any determination by the Purchaser concerning the events described in
this Section 14 will be final and binding upon all parties.
15. CERTAIN LEGAL MATTERS
General. Except as otherwise disclosed herein, based on a review of publicly
available information filed by the Company with the Commission, neither the
Purchaser nor Parent is aware of (i) any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of
Shares by the Purchaser pursuant to the Offer or the Proposed Merger or (ii)
any approval or other action, by any governmental, administrative or
regulatory agency or authority, domestic, foreign or supranational, that would
be required for the acquisition or ownership of Shares by the Purchaser as
contemplated herein. Should any such approval or other action be required, the
Purchaser currently contemplates that such approval or action would be sought.
While the Purchaser does not currently intend to delay the acceptance for
payment of Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or action, if
needed, would be obtained or would be obtained without substantial conditions
or that adverse consequences might not result to the business of the Company,
the Purchaser or Parent or that certain parts of the businesses of the
Company, the Purchaser or Parent might not have to be disposed of in the event
that such approvals were not obtained or any other actions were not taken. The
Purchaser's obligation under the Offer to accept for payment and pay for
Shares is subject to certain conditions. See Section 14.
Antitrust. Under the HSR Act, and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. Parent filed a Notification and Report Form with respect to
the Offer and the Proposed Merger on August 2, 1996.
26
<PAGE>
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares under the Offer may not be consummated until the expiration of a 15-
calendar day waiting period following the filing by Parent. Accordingly, the
waiting period with respect to the Offer will expire at 11:59 p.m., New York
City time, on August 17, 1996 unless Parent receives a request for additional
information or documentary material, or the Antitrust Division and the FTC
terminate the waiting period prior thereto. If, within such 15-day period,
either the Antitrust Division or the FTC requests additional information or
material from Parent concerning the Offer, the waiting period will be extended
and would expire at 11:59 p.m., New York City time, on the tenth calendar day
after the date of substantial compliance by Parent with such request. Only one
extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may
be extended only by court order or with the consent of Parent. The Purchaser
will not accept for payment Shares tendered pursuant to the Offer unless and
until the waiting period requirements imposed by the HSR Act with respect to
the Offer have been satisfied. See Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of
Shares pursuant to the Offer and the Proposed Merger. At any time before or
after the Purchaser's acquisition of Shares, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition
of Shares pursuant to the Offer or otherwise or seeking divestiture of Shares
acquired by the Purchaser or divestiture of substantial assets of Parent or
its subsidiaries. Private parties and state attorneys general may also bring
action under the antitrust laws under certain circumstances. Based upon an
examination of publicly available information relating to the businesses in
which Parent and the Company are engaged, Parent and the Purchaser believe
that the acquisition of Shares by the Purchaser will not violate the antitrust
laws. Nevertheless, there can be no assurance that a challenge to the Offer or
other acquisition of Shares by the Purchaser on antitrust grounds will not be
made or, if such a challenge is made, of the result. See Section 14 for
certain conditions to the Offer, including conditions with respect to
litigation and certain governmental actions.
Section 203 of the DGCL. Section 203, in general, prohibits a Delaware
corporation such as the Company from engaging in a "Business Combination"
(defined as a variety of transactions, including mergers, as set forth below)
with an "Interested Stockholder" (defined generally as a person that is the
beneficial owner of 15% or more of a corporation's outstanding voting stock)
for a period of three years following the date that such person became an
Interested Stockholder unless (a) prior to the date such person became an
Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder, (b) upon consummation of the
transaction that resulted in the stockholder becoming an Interested
Stockholder, the Interested Stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced,
excluding stock held by directors who are also officers of the corporation and
employee stock ownership plans that do not provide employees with the right to
determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer or (c) on or subsequent to the date
such person became an Interested Stockholder, the Business Combination is
approved by the board of directors of the corporation and authorized at a
meeting of stockholders, and not by written consent, by the affirmative vote
of the holders of at least 66 2/3% of the outstanding voting stock of the
corporation not owned by the Interested Stockholder.
Under Section 203, the restrictions described above do not apply if, among
other things (a) the corporation's original certificate of incorporation
contains a provision expressly electing not to be governed by Section 203; (b)
the corporation, by action of its stockholders, adopts an amendment to its
certificate of incorporation or by-laws expressly electing not to be governed
by Section 203, provided that, in addition to any other vote required by law,
such amendment to the certificate of
27
<PAGE>
incorporation or by-laws must be approved by the affirmative vote of a
majority of the shares entitled to vote, which amendment would not be
effective until 12 months after the adoption of such amendment and would not
apply to any Business Combination between the corporation and any person who
became an Interested Stockholder of the corporation on or prior to the date of
such adoption; (c) the corporation does not have a class of voting stock that
is (1) listed on a national securities exchange, (2) authorized for quotation
on an inter-dealer quotation system of a registered national securities
association or (3) held of record by more than 2,000 stockholders, unless any
of the foregoing results from action taken, directly or indirectly, by an
Interested Stockholder or from a transaction in which a person becomes an
Interested Stockholder; or (d) a stockholder becomes an Interested Stockholder
"inadvertently" and thereafter divests itself of a sufficient number of shares
so that such stockholder ceases to be an Interested Stockholder.
Section 203 provides that, during such three-year period, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate
or associate thereof, and also may not engage in certain other transactions
with an Interested Stockholder or any affiliate or associate thereof,
including, without limitation, (a) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of assets (except proportionately as a
stockholder of the corporation) having an aggregate market value equal to 10%
or more of the aggregate market value of all assets of the corporation
determined on a consolidated basis or the aggregate market value of all the
outstanding stock of a corporation; (b) any transaction which results in the
issuance or transfer by the corporation or by certain subsidiaries thereof of
any stock of the corporation or such subsidiaries to the Interested
Stockholder, except pursuant to a transaction which effects a pro rata
distribution to all stockholders of the corporation; (c) any transaction
involving the corporation or certain subsidiaries thereof which has the effect
of increasing the proportionate share of the stock of any class or series, or
securities convertible into the stock of any class or series, of the
corporation or any such subsidiary which is owned directly or indirectly by
the Interested Stockholder (except as a result of immaterial changes due to
fractional share adjustments) or (d) any receipt of the Interested Stockholder
of the benefit (except proportionately as a stockholder of such corporation)
of any loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
PURSUANT TO THE BUSINESS COMBINATION CONDITION, THE OFFER IS CONDITIONED
UPON THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER
HAVING BEEN APPROVED PURSUANT TO SECTION 203 OR THE PURCHASER BEING SATISFIED,
IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF SECTION 203 ARE OTHERWISE
INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE
PROPOSED MERGER. SEE "INTRODUCTION--CERTAIN CONDITIONS TO THE OFFER".
Other State Laws. 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 1982, in Edgar v. 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 Indiana Control Share Acquisition Act was
constitutional. Such Act, by its terms, is applicable only to corporations that
have a substantial number of shareholders in Indiana and are incorporated there.
Subsequently, a number of Federal courts ruled that various state takeover
statutes were unconstitutional insofar as they apply to corporations
incorporated outside the state of enactment.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. The Purchaser does not
28
<PAGE>
know whether any of these laws will, by their terms, apply to the Offer and
has not complied with any such laws. Should any person seek to apply any state
takeover law, the 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 is applicable to the Offer or the Proposed Merger,
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the Offer or the Proposed Merger, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer. In such case, the Purchaser
may not be obligated to accept for payment any Shares tendered. See Section
14.
16. FEES AND EXPENSES
Salomon Brothers is acting as Dealer Manager in connection with the Offer
and serving as financial advisor to the Purchaser and Parent in connection
with the proposed acquisition of the Company. As compensation for such
services, Parent has agreed to pay Salomon Brothers an initial fee of
$750,000, payable upon commencement of the Offer. In addition, Parent has also
agreed to pay Salomon Brothers a fee of $2,500,000 (less any fees theretofore
paid) contingent upon consummation of the acquisition by merger, tender offer
or otherwise by Parent of the Company or the purchase by Parent of all or
substantially all of the assets, or more than 50% of the equity securities, of
the Company (collectively, "Acquisition Transaction"). If no Acquisition
Transaction is consummated, Parent has agreed to pay Salomon Brothers a fee
(in addition to the initial $750,000 fee) equal to 11.1% of the sum of the
aggregate profit received by Parent from sales of Shares owned by Parent plus
any "break-up," termination, expense reimbursement or similar fees or payments
received by Parent, but in no event in excess of an additional $1 million. In
addition, Parent has agreed to reimburse Salomon Brothers for its reasonable
out-of-pocket expenses, including, without limitation, reasonable fees and
disbursements of its counsel, incurred in connection with the Offer and the
Proposed Merger or otherwise arising out of Salomon Brothers' engagement, and
has also agreed to indemnify Salomon Brothers (and certain affiliated persons)
against certain liabilities and expenses, including, without limitation,
certain liabilities under the federal securities laws. Salomon Brothers also
acted as the Parent's agent for the acquisition in the open market of Shares
prior to the date hereof, for which it received customary fees, and has
rendered, and may from time to time in the future render, various investment
banking services to Parent and its affiliates, for which it has received and
is expected to receive customary fees.
Kissel-Blake Inc. has been retained by the Purchaser as Information Agent in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee shareholders to forward material relating
to the Offer to beneficial owners of Shares. The Purchaser will pay the
Information Agent reasonable and customary compensation for all such services
in addition to reimbursing the Information Agent for reasonable out-of-pocket
expenses in connection therewith. The Purchaser has agreed to indemnify the
Information Agent against certain liabilities and expenses in connection with
the Offer, including, without limitation, certain liabilities under the
federal securities laws.
First Chicago Trust Company of New York has been retained as the Depositary.
The Purchaser will pay the Depositary reasonable and customary compensation
for its services in connection with the Offer, will reimburse the Depositary
for its reasonable out-of-pocket expenses in connection therewith and will
indemnify the Depositary against certain liabilities and expenses in
connection therewith, including, without limitation, certain liabilities under
the federal securities laws.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks
and trust companies and other nominees will, upon request, be reimbursed
29
<PAGE>
by Parent or the Purchaser for customary clerical and mailing expenses
incurred by them in forwarding offering materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. Neither the Purchaser
nor Parent is aware of any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser or Parent becomes aware of any state
law that would limit the class of offerees in the Offer, the Purchaser will
amend the Offer and, depending on the timing of such amendment, if any, will
extend the Offer to provide adequate dissemination of such information to such
holders of Shares prior to the expiration of the Offer. In any jurisdiction
the securities, blue sky or other laws of which require the Offer to be made
by a licensed broker or dealer, the Offer is being made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THE PURCHASER AND PARENT HAVE FILED WITH THE COMMISSION A TENDER OFFER
STATEMENT ON SCHEDULE 14D-1 (THE "SCHEDULE 14D-1") PURSUANT TO RULE 14D-3
UNDER THE EXCHANGE ACT, TOGETHER WITH EXHIBITS, FURNISHING CERTAIN ADDITIONAL
INFORMATION WITH RESPECT TO THE OFFER, AND MAY FILE AMENDMENTS THERETO. SUCH
SCHEDULE 14D-1 AND ANY AMENDMENTS THERETO, INCLUDING EXHIBITS, MAY BE
INSPECTED AND COPIES MAY BE OBTAINED IN THE MANNER SET FORTH IN SECTION 8 WITH
RESPECT TO THE COMPANY (EXCEPT THAT SUCH MATERIAL WILL NOT BE AVAILABLE AT THE
REGIONAL OFFICES OF THE COMMISSION).
USS ACQUISITION CORP.
AUGUST 2, 1996
30
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER
Parent. Set forth below are the name, business address and present principal
occupation or employment, and material occupations, positions, offices or
employments for the past five years of each director and executive officer of
Parent. Except as otherwise noted, the business address of each such person is
150 Glover Avenue, Norwalk, Connecticut 06856, and, except as otherwise noted,
each such person is a United States citizen. In addition, except as otherwise
noted, each director and executive officer of Parent has been employed in his
or her present principal occupation listed below during the last five years.
Directors of Parent are indicated by an asterisk.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT,
NAME 5-YEAR EMPLOYMENT HISTORY
---- -----------------------------------
<S> <C>
Julie K. Blake*.............. 1992-1994, Executive Vice President and Chief
Operating Officer, Flavin, Blake & Co., Inc.;
Vice President, J.P. Morgan & Co. Incorporated,
1970-1992.
John A. Bogardus, Jr.*....... Director, Alexander & Alexander Services Inc.,
insurance brokerage and financial services
firm, New York, N.Y., from 1988 to May 1995;
prior thereto, its Chairman of the Board and
Director since 1987; prior thereto, its
Chairman of the Board, Chief Executive Officer
and Director.
Thomas R. Bremer*............ Senior Vice President and General Counsel since
January 1, 1994 of Parent; Vice President and
General Counsel since 1989; prior thereto,
General Counsel since 1988.
Peter Burtscher.............. Mr. Burtscher is Group Vice President of
Parent. He has held such position since 1993.
Mr. Burtscher is a citizen of Austria.
Leon C. Hirsch*.............. Chairman of the Board and Chief Executive
Officer since July 1996; prior thereto,
Chairman of the Board, President and Chief
Executive Officer since 1987.
Richard A. Douville.......... Mr. Douville is Vice President and Treasurer,
and Chief Financial Officer, of Parent since
July, 1996; prior thereto, Vice President and
Treasurer since 1993.
Richard N. Granger........... Mr. Granger is Vice President, Research and
Development of Parent. He has held such
position since 1993.
Thomas D. Guy................ Mr. Guy is Senior Vice President, Operations of
Parent. He has held such position since 1994.
Charles E. Johnson........... Mr. Johnson is Vice President, Education of
Parent. He has held such position since 1994.
Turi Josefsen*............... Executive Vice President and, since July, 1994
President, International Operations; prior
thereto, Executive Vice President and
President, Auto Suture Companies.
Douglas L. King*............. President and Director, Smyth, Sanford & Gerard
Reinsurance Intermediaries, Inc., insurance and
reinsurance brokers. Director, Healthplex, Inc.
a dental administration service company, New
York, N.Y.
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PRINCIPAL OCCUPATION OR EMPLOYMENT,
NAME 5-YEAR EMPLOYMENT HISTORY
---- -----------------------------------
Robert A. Knarr.............. Mr. Knarr is Senior Vice President and General
Manager, U.S. and Canada of Parent. He has held
such position since 1994.
Pamela Komenda............... Ms. Komenda is Corporate Secretary of Parent.
She has held such position since 1989.
William F. May*.............. Chairman of the Board, Statue of Liberty-Ellis
Island Foundation, Inc., New York, N.Y., since
1995, prior thereto, its Chairman and Chief
Executive Officer; Director, Salomon Inc, New
York, N.Y.; Trustee, University of Rochester;
Trustee, American Museum of Natural History;
Director, Lincoln Center; Trustee, Columbia
Presbyterian Hospital; Trustee, Committee for
Economic Development.
Louis J. Mazzarese........... Mr. Mazzarese is Vice President, Quality and
Regulatory Affairs of Parent. He has held such
position since 1992.
Eitan Nahum.................. Mr. Nahum is Vice President, Strategic Planning
& Business Development of Parent. He has held
such position since 1995. Mr. Nahum is a
citizen of Israel.
Barry D. Romeril*............ Executive Vice President and Chief Financial
Officer, Xerox Corporation. Mr. Romeril is a
citizen of the United Kingdom.
Howard M. Rosenkrantz*....... President and Chief Operating Officer since
July, 1996; prior thereto, Senior Vice
President, Finance and Chief Financial Officer
since 1992; prior thereto, Vice President,
Finance; Trustee, Committee for Economic
Development.
Joseph C. Scherpf............ Mr. Scherpf is Vice President and Controller of
Parent. He has held such position since 1984.
Jeffrey B. Sciallo........... Mr. Sciallo is Vice President, Information
Services of Parent. He has held such position
since 1995.
Marianne Scipione*........... Vice President, Corporate Communications since
1981; Member, Board of Trustees, Norwalk
Hospital Association, Director, The Norwalk
Community-Technical College Foundation, Inc.
John R. Silber*.............. President, Boston University; Director,
Seragen, Inc. and Mutual of America
Institutional Funds Inc.
Wilson F. Smith, Jr. ........ Mr. Smith is Vice President, Corporate Accounts
& Distribution of Parent. He has held such
position since 1995.
</TABLE>
The Purchaser. The name and position with the Purchaser of each director and
executive officer of the Purchaser are set forth below. The business address,
present principal occupation or employment, five-year employment history and
citizenship of each such person is set forth above.
<TABLE>
<CAPTION>
<S> <C>
NAME POSITION WITH THE PURCHASER
- ---- ---------------------------
<S> <C>
Thomas R. Bremer.................................... Director, President
Richard A. Douville................................. Director, Treasurer
Pamela Komenda...................................... Secretary
</TABLE>
S-2
<PAGE>
SCHEDULE II
TRANSACTIONS IN SHARES DURING THE PAST 60 DAYS BY THE PURCHASER AND PARENT
<TABLE>
<CAPTION>
SHARES PRICE
TRANSACTION DATE ACQUIRED PER SHARE
---------------- -------- ---------
<S> <C> <C>
7-2-96 5,000 12.50
7-8-96 75,000 12.88
7-8-96 15,000 12.38
7-8-96 25,000 12.25
7-8-96 55,000 12.38
7-8-96 45,000 12.44
7-9-96 50,000 12.13
7-10-96 35,000 12.00
7-11-96 75,000 11.75
7-12-96 10,000 10.38
7-12-96 10,000 10.63
7-12-96 5,000 11.00
7-12-96 20,000 11.25
7-12-96 20,000 11.38
7-15-96 15,000 10.00
7-15-96 100,000 10.13
7-15-96 30,000 10.88
7-15-96 5,000 10.00
7-15-96 5,000 10.13
7-23-96 5,000 8.88
7-23-96 20,000 9.00
7-23-96 30,000 9.13
7-23-96 60,000 9.25
7-24-96 10,000 8.88
7-24-96 10,000 9.00
7-25-96 5,000 9.00
7-25-96 5,000 9.88
7-25-96 10,000 10.13
7-25-96 25,000 10.25
7-25-96 10,000 10.38
7-25-96 35,000 10.44
7-26-96 25,000 10.50
7-26-96 35,000 10.25
7-26-96 45,000 10.38
7-30-96 55,000 9.75
7-31-96 5,000 9.75
8-1-96 5,000 11.63
8-1-96 5,100 12.00
</TABLE>
S-3
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, commercial bank, trust company
or other nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
First Chicago Trust Company of New York
By Mail: Facsimile Transmission: By Hand or By Overnight
Courier:
Tenders & Exchanges (201) 222-4720
P.O. Box 2569--Suite or Tenders & Exchanges
4660 (201) 222-4721 14 Wall Street
Jersey City, New Jersey Suite 4680--8th Floor--CR
07303-2559 New York, New York 10005
Confirm Receipt of Notice of Guaranteed Delivery by Telephone
(201) 222-4707
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses or telephone numbers
set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and all other tender offer materials may be obtained from the
Information Agent or the Dealer Manager as set forth below, and will be
furnished promptly at the Purchaser's expense. You may also contact your
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF KISSEL BLAKE INC.]
110 Wall Street
New York, New York 10005
Call Toll-Free (800) 554-7733
Brokers and Banks, please call (212) 344-6733
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-7292 (Call Collect)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
CIRCON CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED AUGUST 2, 1996
BY
USS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
UNITED STATES SURGICAL CORPORATION
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, AUGUST 29, 1996,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK, as Depositary
By Mail: By Hand or Overnight Delivery:
First Chicago Trust Company First Chicago Trust Company
of New York of New York
Tenders & Exchanges Tenders & Exchanges
Suite 4660 Suite 4680
P.O. Box 2569 14 Wall Street, 8th Floor--CIR
Jersey City, NJ 07303-2569 New York, New York 10005
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED
BELOW.
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES)
OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF
BLANK, EXACTLY AS
NAME(S) APPEARS SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ---------------------------------------------------------------------------
SHARES EVIDENCED
SHARE CERTIFICATE BY SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
<S> <C> <C> <C>
TOTAL SHARES
</TABLE>
- --------------------------------------------------------------------------------
* Need not be completed by shareholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares
evidenced by each Share Certificate delivered to the Depositary are
being tendered hereby. See Instruction 4.
1
<PAGE>
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company ("DTC") or the
Philadelphia Depositary Trust Company ("PDTC") (each a "Book-Entry Transfer
Facility" and collectively, the "Book-Entry Transfer Facilities") pursuant to
the book-entry transfer procedure described in Section 2 of the Offer to
Purchase (as defined below). Delivery of documents to a Book-Entry Transfer
Facility does not constitute delivery to the Depositary.
Shareholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis and who
wish to tender their Shares must do so pursuant to the guaranteed delivery
procedure described in Section 2 of the Offer to Purchase. See Instruction 2.
[_]CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
- -------------------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE) [_] DTC [_] PDTC
Account Number _______________________ Transaction Code Number ______________
[_]CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY:
Name(s) of Registered Holder(s)
- -------------------------------------------------------------------------------
Window Ticket No. (if any)
- -------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
- -------------------------------------------------------------------------------
Name of Institution which Guaranteed Delivery
- -------------------------------------------------------------------------------
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to USS Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of United States
Surgical Corporation, a Delaware corporation ("Parent"), the above-described
shares of Common Stock, par value $0.01 per share (the "Shares"), of Circon
Corporation, a Delaware corporation (the "Company"), pursuant to the
Purchaser's offer to purchase all outstanding Shares, at $18 per Share, net to
the seller in cash, without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
August 2, 1996 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, as amended from time
to time, together constitute the "Offer"). The undersigned understands that
the Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates, the right to purchase all
or any portion of the Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension
or amendment), the undersigned hereby sells, assigns and transfers to, or upon
the order of, Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby and all dividends, distributions (including,
without limitation, distributions of additional Shares) and rights declared,
paid or distributed in respect of such Shares on or after August 1, 1996
(collectively, "Distributions"), and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Share Certificates evidencing such Shares and all
Distributions, or transfer ownership of such Shares and all Distributions on
the account books maintained by a Book-Entry Transfer Facility, together, in
either case, with all accompanying evidences of transfer and authenticity, to
or upon the order of Purchaser, (ii) present such Shares and all Distributions
for transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints Thomas R. Bremer and Pamela Komenda of the Purchaser as proxies of
the undersigned, each with full power of substitution, to the full
extent of the undersigned's rights with respect to the Shares tendered by the
undersigned and accepted for payment by the Purchaser (and any and all
Distributions). All such proxies shall be considered coupled with an interest
in the tendered Shares. This appointment will be effective if, when, and only
to the extent that the Purchaser accepts such Shares for payment pursuant to
the Offer. Upon such acceptance for payment, all prior proxies given by the
undersigned with respect to such Shares (and such other Shares and securities)
will, without further action, be revoked, and no subsequent proxies may be
given nor any subsequent written consent executed by the undersigned (and, if
given or executed, will not be deemed to be effective) with respect thereto.
The designees of the Purchaser named above will, with respect to the Shares
and other securities for which the appointment is effective, be empowered to
exercise all voting and other rights of the undersigned as they in their sole
discretion may deem proper at any annual or special meeting of the
shareholders of the Company or any adjournment or postponement thereof, by
written consent in lieu of any such meeting or otherwise, and the Purchaser
reserves the right to require that, in order for Shares or other securities to
be deemed validly tendered, immediately upon the Purchaser's acceptance for
payment of such Shares, the Purchaser must be able to exercise full voting
rights with respect to such Shares.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, and that when such Shares are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title thereto and to all Distributions, free and clear of all liens,
restrictions, charges and encumbrances, and that none of such
3
<PAGE>
Shares and Distributions will be subject to any adverse claim. The
undersigned, upon request, shall execute and deliver all additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly
to the Depositary for the account of Purchaser all Distributions in respect of
the Shares tendered hereby, accompanied by appropriate documentation of
transfer, and, pending such remittance and transfer or appropriate assurance
thereof, Purchaser shall be entitled to all rights and privileges as owner of
each such Distribution and may withhold the entire purchase price of the
Shares tendered hereby or deduct from such purchase price, the amount or value
of such Distribution as determined by Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as otherwise stated in the Offer to Purchase, this tender
is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer, including, without
limitation, the undersigned's representation and warranty that the undersigned
owns the Shares being tendered.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased
or not tendered, in the name(s) of the registered holder(s) appearing above
under "Description of Shares Tendered." Similarly, unless otherwise indicated
in the box entitled "Special Delivery Instructions," please mail the check for
the purchase price of all Shares purchased and all Share Certificates
evidencing Shares not tendered or not purchased (and accompanying documents,
as appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares
purchased and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of, and mail such check and Share Certificates to,
the person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any
Shares from the name of the registered holder(s) thereof if Purchaser does not
purchase any of the Shares tendered hereby.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5 AND 7)
To be completed ONLY if the To be completed ONLY if the
check for the purchase price of check for the purchase price of
Shares purchased or Share Certif- Shares purchased or Share Certif-
icates evidencing Shares not ten- icates evidencing Shares not ten-
dered or not purchased are to be dered or not purchased are to be
issued in the name of someone mailed to someone other than the
other than the undersigned. undersigned, or to the under-
signed at an address other than
that shown under "Description of
Shares Tendered."
Issue [_] check [_] Share Cer- Mail [_] check [_] Share Certif-
tificate(s) to: icate(s) to:
Name: ____________________________ Name: ____________________________
(PRINT) (PRINT)
Address: _________________________ Address: _________________________
__________________________________ __________________________________
__________________________________ __________________________________
(ZIP CODE) (ZIP CODE)
__________________________________
TAXPAYER IDENTIFICATION OR SOCIAL
SECURITY NUMBER
(See Substitute Form W-9 on
reverse side)
5
<PAGE>
IMPORTANT
SHAREHOLDERS: SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X______________________________________________________________X
X______________________________________________________________X
(SIGNATURE(S) OF HOLDER(S))
Dated: _____________________, 1996
Must be signed by registered holder(s) exactly as name(s)
appear(s) on Share Certificates or on a security position
listing or by a person(s) authorized to become registered
holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or
representative capacity, please provide the following
information. See Instruction 5.
Name(s):________________________________________________________
_________________________________________________________
(PLEASE PRINT)
Capacity (full title): _________________________________________
Address:________________________________________________________
_________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ___________________________________
Taxpayer Identification or Social Security No.: ________________
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
GUARANTEE OF SIGNATURE(S) (IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., or by a financial institution (including most commercial banks, savings
and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(an "Eligible Institution"), unless (i) this Letter of Transmittal is signed
by the registered holder(s) of the Shares (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares)
tendered hereby and such holder(s) has (have) completed neither the box
entitled "Special Payment Instructions" nor the box entitled "Special Delivery
Instructions" on the reverse hereof or (ii) such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to
the procedure set forth in Section 2 of the Offer to Purchase. Share
Certificates evidencing all physically tendered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility of all Shares delivered by book-entry transfer as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by this Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth on the reverse hereof
prior to the Expiration Date (as defined in Section l of the Offer to
Purchase). If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal must
accompany each such delivery. Shareholders whose Share Certificates are not
immediately available, who cannot deliver their Share Certificates and all
other required documents to the Depositary prior to the Expiration Date or who
cannot complete the procedure for delivery by book-entry transfer on a timely
basis may tender their Shares pursuant to the guaranteed delivery procedure
described in Section 2 of the Offer to Purchase. Pursuant to such procedure:
(i) such tender must be made by or through an Eligible Institution; (ii) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, must be received by the
Depositary prior to the Expiration Date; and (iii) the Share Certificates
evidencing all physically delivered Shares in proper form for transfer by
delivery, or a confirmation of a book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility of all Shares delivered by book-
entry transfer, in each case together with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three Nasdaq National
Market trading days after the date of execution of such Notice of Guaranteed
Delivery, all as described in Section 2 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of
Transmittal (or a facsimile hereof), all tendering shareholders waive any
right to receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
7
<PAGE>
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of
Shares Tendered." In such cases, new Share Certificate(s) evidencing the
remainder of the Shares that were evidenced by the Share Certificates
delivered to the Depositary herewith will be sent to the person(s) signing
this Letter of Transmittal, unless otherwise provided in the box entitled
"Special Delivery Instructions" on the reverse hereof, as soon as practicable
after the expiration or termination of the Offer. All Shares evidenced by
Share Certificates delivered to the Depositary will be deemed to have been
tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the Share Certificates evidencing such Shares without
alteration, enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate
stock powers are required, unless payment is to be made to, or Share
Certificates evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), in which case,
the Share Certificate(s) evidencing the Shares tendered hereby must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on such Share
Certificate(s). Signatures on such Share Certificate(s) and stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on
such Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of such person's authority so to act
must be submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or
Share Certificate(s) evidencing Shares not tendered or not purchased are to be
issued in the name of, a person other than the registered holder(s), the
amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer
to such other person will be deducted from the purchase price of such Shares
purchased, unless evidence satisfactory to Purchaser of the payment of such
taxes, or exemption therefrom, is submitted. Except as provided in this
Instruction 6, it will not be necessary for transfer tax stamps to be affixed
to the Share Certificates evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to
8
<PAGE>
be issued, in the name of a person other than the person(s) signing this
Letter of Transmittal or if such check or any such Share Certificate is to be
sent to someone other than the person(s) signing this Letter of Transmittal or
to the person(s) signing this Letter of Transmittal but at an address other
than that shown in the box entitled "Description of Shares Tendered" on the
reverse hereof, the appropriate boxes on the reverse of this Letter of
Transmittal must be completed.
8. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Dealer Manager or the
Information Agent at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information
Agent or the Dealer Manager or from brokers, dealers, commercial banks or
trust companies.
10. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and
that such shareholder is not subject to backup withholding of federal income
tax. If a tendering shareholder has been notified by the Internal Revenue
Service that such shareholder is subject to backup withholding, such
shareholder must cross out item (2) of the Certification box of the Substitute
Form W-9, unless such shareholder has since been notified by the Internal
Revenue Service that such shareholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering shareholder to 31% federal income tax withholding on the
payment of the purchase price of all Shares purchased from such shareholder.
If the tendering shareholder has not been issued a TIN and has applied for one
or intends to apply for one in the near future, such shareholder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute
Form W-9, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part l and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% on all payments of the purchase price
to such shareholder until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES
AND SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION
DATE (AS DEFINED IN THE OFFER TO PURCHASE).
9
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the
shareholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such shareholder with respect
to Shares purchased pursuant to the Offer may be subject to backup withholding
of 31%.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a Form W-8, Certificate of Foreign
Status, signed under penalties of perjury, attesting to such individual's
exempt status. Forms of such statements can be obtained from the Depositary.
See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN), and (b) that
(i) such shareholder has not been notified by the Internal Revenue Service
that such shareholder is subject to backup withholding as a result of a
failure to report all interest or dividends or (ii) the Internal Revenue
Service has notified such shareholder that such shareholder is no longer
subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the
name of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance
on which number to report. If the tendering shareholder has not been issued a
TIN and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for
the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For"
is written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% of all payments of the purchase price
to such shareholder until a TIN is provided to the Depositary.
10
<PAGE>
ALL TENDERING SHAREHOLDERS MUST COMPLETE THE FOLLOWING:
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
PART I--Taxpayer
Identification Number--
SUBSTITUTE
FOR ALL Enter taxpayer ----------------------
ACCOUNTS identification number in Social Security
the box at right. (For most Number
individuals, this is your
social security number. If
you do not have a number,
see Obtaining a Number in ----------------------
the enclosed Guidelines.)
Certify by signing and Employer
dating below. Note: If the Identification Number
account is in more than one
name, see the chart in the
enclosed Guidelines to
determine which number to
give the payer.
FORM W-9
DEPARTMENT OF
THE TREASURY
INTERNAL PART II--For Payees Exempt From Backup Withholding,
REVENUE see the enclosed Guidelines and complete as
instructed therein.
--------------------------------------------------------
OR CERTIFICATION--Under penalties of perjury, I certify
that:
NUMBER
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me), and
PAYER'S REQUEST
FOR TAXPAYER IDENTIFICATION NUMBER
(2) I am not subject to backup withholding either
because I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to
backup withholding as a result of failure to
report all interest or dividends, or the IRS has
notified me that I am no longer subject to backup
withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2)
above if you have been notified by the IRS that you
are subject to backup withholding because of
underreporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you were subject to backup withholding you
received another notification from the IRS that you
are no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the
enclosed Guidelines.)
--------------------------------------------------------
SIGNATURE: ________________________ DATE: ______, 1996
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO OF KISSEL BLAKE INC.]
110 Wall Street
New York, New York 10005
Call Toll-Free (800) 554-7733
Brokers and Banks, please call (212) 344-6733
THE DEALER MANAGER FOR THE OFFER IS:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-7292 (Call Collect)
August 2, 1996
11
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
CIRCON CORPORATION
TO
USS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
UNITED STATES SURGICAL CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if (i) certificates
("Share Certificates") evidencing shares of common stock, par value $0.01 per
share (the "Shares") of Circon Corporation, a Delaware corporation (the
"Company"), are not immediately available, (ii) time will not permit all
required documents to reach First Chicago Trust Company of New York, as
Depositary (the "Depositary"), prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase (as defined below)) or (iii) the procedure
for book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or transmitted by telegram,
facsimile transmission or mail to the Depositary. See Section 2 of the Offer
to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
BY Mail: Facsimile Transmission: By Hand or by Overnight
Tenders & Exchanges (201) 222-4720 Courier:
P.O. Box 2569--Suite 4660 or Tenders & Exchanges
Jersey City, New (201) 222-4721 14 Wall Street
Jersey 07303-2569 Confirm Receipt of Suite 4680--8th Floor-CIR
Notice of Guaranteed New York, New York 10005
Delivery by Telephone:
(201) 222-4707
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to USS Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of United States
Surgical Corporation, a Delaware corporation ("Parent"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated August 2,
1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer"), receipt of
each of which is hereby acknowledged, the number of Shares specified below
pursuant to the guaranteed delivery procedures described in Section 2 of the
Offer to Purchase.
1
<PAGE>
Number of Shares:
- ------------------------------------------
Certificate Nos. (if available):
- ------------------------------------------
Check ONE box if Shares will be tendered by book-entry transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depositary Trust
Company
Account Number:
- ------------------------------------------
Dated:
____________________________________, 1996
Name(s) of Record Holder(s):
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PLEASE PRINT
Address(es):
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ZIP CODE
Company Area Code and Tel. No.:
- ------------------------------------------
Area Code and Tel. No.:
- ------------------------------------------
Signature(s):
- -------------------------------------------------------------------------------
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a commercial bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing
of the Securities Transfer Agents Medallion Program, the New York Stock
Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion
Program hereby (a) represents that the tender of Shares effected hereby
complies with Rule 14e-4 of the Securities Exchange Act of 1934, as amended,
and (b) guarantees delivery to the Depositary, at one of its addresses set
forth above, of Share Certificates evidencing the Shares tendered hereby in
proper form for transfer, or confirmation of book-entry transfer of such
Shares into the Depositary's accounts at The Depository Trust Company or the
Philadelphia Depositary Trust Company, in each case with delivery of a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) with any required signature guarantees, or an Agent's Message (as
defined in Section 2 of the Offer to Purchase), and any other documents
required by the Letter of Transmittal, within three Nasdaq National Market
trading days after the date of execution of this Notice of Guaranteed
Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
Share Certificates to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
- -------------------------------------------------------------------------------
NAME OF FIRM
- -------------------------------------------------------------------------------
ADDRESS
- -------------------------------------------------------------------------------
ZIP CODE
Area Code and Tel. No.:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AUTHORIZED SIGNATURE
- -------------------------------------------------------------------------------
TITLE
Name:
- -------------------------------------------------------------------------------
PLEASE PRINT
Date:
____________________________________, 1996
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
SALOMON BROTHERS INC
-----------------
SALOMON BROTHERS
-----------------
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CIRCON CORPORATION
AT
$18 NET PER SHARE
BY
USS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
UNITED STATES SURGICAL CORPORATION
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, AUGUST 29, 1996,
UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
August 2, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by USS Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of United States Surgical
Corporation, a Delaware corporation ("Parent"), to act as Dealer Manager in
connection with the Purchaser's offer to purchase all outstanding shares of
common stock, par value $0.01 per share (the "Shares") of Circon Corporation,
a Delaware corporation (the "Company"), at a price of $18 per Share, net to
the seller in cash, without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
August 2, 1996 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer") enclosed herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE
OFFER TO PURCHASE) THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES
BENEFICIALLY OWNED BY THE PURCHASER AND ITS AFFILIATES, WOULD REPRESENT 67% OF
THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE AND
(II) THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER
HAVING BEEN APPROVED PURSUANT TO SECTION 203 OF THE DELAWARE GENERAL
CORPORATION LAW ("SECTION 203") OR THE PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE PROVISIONS OF SECTION 203 ARE OTHERWISE INAPPLICABLE TO
THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER. SEE
SECTION 14 OF THE OFFER TO PURCHASE. THE OFFER IS NOT CONDITIONED ON THE
RECEIPT OF FINANCING.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
<PAGE>
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following
documents:
1. The Offer to Purchase, dated August 2, 1996;
2. The Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;
3. The Notice of Guaranteed Delivery to be used to accept the Offer if
the certificates evidencing such Shares (the "Share Certificates") are not
immediately available or time will not permit all required documents to
reach the Depositary (as defined in the Offer to Purchase) prior to the
Expiration Date (as defined in the Offer to Purchase) or the procedure for
book-entry transfer cannot be completed on a timely basis;
4. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominees, with space
provided for obtaining such clients' instructions with regard to the Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to the Depositary.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be
sent to the Depositary and certificates representing the tendered Shares
should be delivered, or such Shares should be tendered by book-entry transfer,
all in accordance with the instructions set forth in the Letter of Transmittal
and the Offer to Purchase. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), the Purchaser will purchase,
by accepting for payment, and will pay for the Shares validly tendered and not
withdrawn prior to the Expiration Date promptly after the Expiration Date. For
purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares as, if and when the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance
of such Shares for payment pursuant to the Offer. In all cases, payment for
Shares purchased pursuant to the Offer will be made only after timely receipt
by the Depositary of (i) the Share Certificates or timely confirmation of a
book-entry transfer of such Shares, if such procedure is available, into the
Depositary's account at The Depository Trust Company or the Philadelphia
Depositary Trust Company pursuant to the procedures set forth in Section 2 of
the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message (as defined in Section 2 of the Offer to
Purchase) and (iii) any other documents required by the Letter of Transmittal.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person (other than the Dealer Manager, the Information Agent and
the Depositary as described in Section 16 of the Offer to Purchase) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
The Purchaser will, however, upon request, reimburse you for customary mailing
and handling expenses incurred by you in forwarding the enclosed materials to
your clients.
The Purchaser will pay any stock transfer taxes incident to the transfer to
it of validly tendered Shares, except as otherwise provided in Instruction 6
of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 29, 1996, UNLESS THE OFFER
IS EXTENDED.
2
<PAGE>
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Depositary, and certificates evidencing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and
the Offer to Purchase.
If holders of Shares wish to tender Shares, but it is impracticable for them
to forward their Share Certificates or other required documents to the
Depositary prior to the Expiration Date or to comply with the procedures for
book-entry transfer on a timely basis, a tender may be effected by following
the guaranteed delivery procedures specified under Section 2 of the Offer to
Purchase.
Any inquiries you may have with respect to the Offer should be addressed
to,Salomon Brothers Inc, the Dealer Manager, or Kissel-Blake Inc., the
Information Agent, at their respective addresses and telephone numbers set
forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained by calling
Kissel-Blake Inc., the Information Agent, collect at (212) 344-6733 or toll-
free at (800) 554-7733, from the undersigned, Salomon Brothers Inc, telephone
(212) 783-7292, or from brokers, dealers, commercial banks or trust companies.
Very truly yours,
SALOMON BROTHERS INC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF PARENT, THE PURCHASER, THE COMPANY, THE
DEPOSITARY, THE INFORMATION AGENT OR THE DEALER MANAGER, OR ANY AFFILIATE OF
ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT
OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER
OTHER THAN THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CIRCON CORPORATION
AT
$18 NET PER SHARE
BY
USS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
UNITED STATES SURGICAL CORPORATION
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, AUGUST 29, 1996,
UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
August 2, 1996
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated August 2,
1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer") in connection
with the Offer by USS Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of United States Surgical
Corporation, a Delaware corporation ("Parent"), to purchase all outstanding
shares of common stock, par value $0.01 per share (the "Shares") of Circon
Corporation, a Delaware corporation (the "Company"), at a price of $18 per
Share, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in the Offer
to Purchase.
THE MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD BY
US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER OF
RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE
MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT
BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms
and subject to the conditions set forth in the Offer to Purchase.
<PAGE>
Your attention is invited to the following:
1. The tender price is $18 per Share, net to the seller in cash, without
interest thereon.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, August 29, 1996, unless the Offer is extended.
3. The Offer is being made for all outstanding Shares.
4. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED
IN THE OFFER TO PURCHASE) THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE
SHARES BENEFICIALLY OWNED BY THE PURCHASER AND ITS AFFILIATES, WOULD
REPRESENT 67% OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS (AS
DEFINED IN THE OFFER TO PURCHASE) ON THE DATE OF PURCHASE AND (II) THE
ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER HAVING
BEEN APPROVED PURSUANT TO SECTION 203 OF THE DELAWARE GENERAL CORPORATION
LAW ("SECTION 203") OR THE PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE PROVISIONS OF SECTION 203 ARE OTHERWISE INAPPLICABLE
TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER.
SEE SECTION 14 OF THE OFFER TO PURCHASE.
5. The Offer is not conditioned on the receipt of financing.
6. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Shares in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. Neither the Purchaser
nor Parent is aware of any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser or Parent becomes aware of any state
law that would limit the class of offerees in the Offer, the Purchaser will
amend the Offer and, depending on the timing of such amendment, if any, will
extend the Offer to provide adequate dissemination of such information to such
holders of shares prior to the expiration of the Offer. In any jurisdiction
the securities, blue sky or other laws of which require the Offer to be made
by a licensed broker or dealer, the Offer is being made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form contained in this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
OF
CIRCON CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated August 2, 1996, and the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"), in
connection with the Offer by USS Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of United States Surgical
Corporation, a Delaware corporation ("Parent"), to purchase all outstanding
shares of common stock, par value $0.01 per share (the "Shares"), of Circon
Corporation, a Delaware corporation (the "Company"), at a price equal to $18
per Share, net to the seller in cash.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) held by you
for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase.
Number of Shares to be Tendered*
___________________________________ Shares
Account Number: __________________________
Dated: _____________________________, 1996
SIGN HERE
- -------------------------------------------------------------------------------
Signature(s)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please type or print name(s)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please type or print address(es) here
- ------------------------------------------
Area Code and Telephone Number
- ------------------------------------------
Taxpayer Identification or
Social Security Number(s)
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF --
- --------------------------------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner
of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint account) The actual owner
of the account
or, if joint
funds, either
person(1)
4. Custodian account of a minor (Uniform Gift to Minors Act) The minor(2)
5. Adult and minor (joint account) The adult or, if
the minor is the
only
contributor, the
minor(1)
6. Account in the name of guardian or committee for a The ward, minor,
designated ward, minor, or incompetent person or incompetent
person(3)
7. a The usual revocable savings trust account (grantor is The grantor-
also trustee) trustee(1)
b So-called trust account that is not a legal or valid The actual
trust under State law owner(1)
8. Sole proprietorship account The owner(4)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
- ------------------------------------------------------------------------------
<S> <C>
9. A valid trust, estate, or pension trust The legal entity
(Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational organization The organization
account
12. Partnership account held in the name of the business The partnership
13. Association, club, or other tax-exempt organization The organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of Agriculture in the name The public
of a public entity (such as a State or local government, entity
school district, or prison) that receives agricultural
program payments
</TABLE>
- -------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your num-
ber, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a)
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDEN-
TIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.-- Section 6109 requires most recipients of dividends, in-
terest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identifica-
tion purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividends, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Cer-
tain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of
an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
August 2, 1996 and the related Letter of Transmittal. The Offer is not being
made to (nor will tenders be accepted from or on behalf of) holders of Shares in
any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the securities, blue sky or other laws of such
jurisdiction. However, the Purchaser may, in its discretion, take such action as
it may deem necessary to make the Offer in any jurisdiction and extend the Offer
to holders of Shares in such jurisdiction. In those jurisdictions where
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of USS
Acquisition Corp. by Salomon Brothers Inc (the "Dealer Manager") or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
Notice of Offer to Purchase for Cash All Outstanding Shares of Common
Stock of Circon Corporation at $18 Net Per Share by USS Acquisition Corp. a
wholly owned subsidiary of United States Surgical Corporation USS Acquisition
Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of
United States Surgical Corporation, a Delaware corporation ("Parent"), is
offering to purchase all outstanding shares of Common Stock, par value $0.01 per
share (the "Shares"), of Circon Corporation, a Delaware corporation (the
"Company"), at a price of $18 per Share, net to the seller in cash, without
interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated August 2, 1996 (the "Offer
to Purchase"), and in the related Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, AUGUST 29, 1996, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the Expiration Date (as defined in
the Offer to Purchase) that number of Shares which, when added to the Shares
beneficially owned by the Purchaser and its affiliates, would represent 67% of
the outstanding Shares on a fully diluted basis on the date of purchase and (ii)
the acquisition of Shares pursuant to the Offer and the Proposed Merger having
been approved pursuant to Section 203 of the Delaware General Corporation Law
("Section 203") or the Purchaser being satisfied, in its sole discretion, that
the provisions of Section 203 are otherwise inapplicable to the acquisition of
Shares pursuant to the Offer and the Proposed Merger. See Section 14 of the
Offer to Purchase. The Offer is not conditioned on the receipt of financing.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. The Parent currently intends to propose and seek to
have the Company consummate, as soon as practicable following the consummation
of the Offer, a merger or similar business combination with the Purchaser (the
"Proposed Merger"), pursuant to which each then outstanding Share (other than
Shares owned by Parent or any of its subsidiaries and Shares owned by
shareholders who perfect their appraisal rights under applicable law) would be
converted into the right to receive an amount in cash equal to the price per
Share paid by the Purchaser pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of the Purchaser's acceptance
of such Shares for payment pursuant to the Offer. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering shareholders for the purpose
of receiving payments from the Purchaser and transmitting such payments to
validly tendering shareholders. Under no circumstances will interest on the
purchase price for Shares be paid by the Purchaser, regardless of any delay in
making such payment. In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) the certificates evidencing such Shares (the "Share
Certificates"), or timely confirmation of a book-entry transfer of such Shares
into the Depositary's account at one of the Book-Entry Transfer Facilities (as
defined in Section 2 of the Offer to Purchase) pursuant to the procedures set
forth in Section 2 of the Offer to Purchase, (ii) the Letter of Transmittal (or
a facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in Section 2 of the Offer
to Purchase) and (iii) any other documents required by the Letter of
Transmittal. The Purchaser expressly reserves the right, in its sole discretion,
at any time or from time to time, to extend for any reason the period of time
during which the Offer is open, including the occurrence of any condition
specified in Section 14 of the Offer to Purchase, by giving oral or written
notice of such extension to the Depositary. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the rights of a tendering shareholder to withdraw his Shares. Any
such extension will be followed as promptly as practicable by public
announcement thereof, such announcement to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date of the Offer.
<PAGE>
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 midnight, New York City
time, on Thursday, August 29, 1996 (or, if the period of time for which the
Offer is open, the latest time and date at which the Offer, as so extended by
the Purchaser, shall expire) and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
September 30, 1996. For a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder of such Shares, if different from that of the
person who tendered such Shares. If Share Certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such Share Certificates, the serial numbers
shown on such Share Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in Section 2 of the Offer to Purchase), unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in Section 2 of the Offer to Purchase, any notice of withdrawal must also
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be determined
by the Purchaser, in its sole discretion, whose determination will be final and
binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
Requests are being made to the Company for the use of the Company's
shareholder list and security position listings for the purpose of disseminating
the Offer to holders of Shares and communicating with shareholders in connection
with the Offer. The Offer to Purchase and the related Letter of Transmittal and,
if required, other relevant materials will be mailed to record holders of Shares
whose names appear on the Company's shareholder list and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the shareholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares by
the Purchaser following receipt of such lists or listings from the Company, or
by the Company if it so elects.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance may be directed to the Dealer
Manager or the Information Agent at their respective addresses and telephone
numbers as set forth below. The Purchaser will not pay any fees or commissions
to any broker or dealer or to any other person (other than the Dealer Manager
and the Information Agent) for soliciting tenders of Shares pursuant to the
Offer. Additional copies of the Offer to Purchase, the Letter of Transmittal and
all other tender offer materials may be obtained from the Information Agent or
the Dealer Manager or from brokers, dealers, commercial banks and trust
companies, and will be furnished promptly at the Purchaser's expense.
The Information Agent for the Offer is:
Kissel Blake Inc.
110 Wall Street
New York, New York 10005
Call Toll-Free (800) 554-7733
Brokers and Banks, please call (212) 344-6733
The Dealer Manager for the Offer is:
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
(212) 783-7292
(Call Collect)
August 2, 1996
<PAGE>
Exhibit (a)(8)
FOR IMMEDIATE RELEASE: August 2, 1996
INVESTOR CONTACT: MEDIA CONTACT: U.S. SURGICAL HOME PAGE:
Marianne Scipione Steve Rose http://www.ussurg.com
Vice President Director
Corporate Communications Media Relations
203-845-1404 203-845-1732
U.S. SURGICAL MAKES TENDER OFFER OF
$18 PER SHARE FOR CIRCON
NORWALK, Conn.--United States Surgical Corporation (NYSE:USS) announced
today that the company has commenced a cash tender offer for all of the
outstanding common shares of Circon Corporation (NASDAQ:CCON)) at $18 per share.
Following the completion of the tender offer, U.S. Surgical intends to
consummate a merger in which all remaining shareholders will also receive $18
per share.
Leon C. Hirsch, Chairman and Chief Executive Officer of U.S. Surgical,
said, "We believe that U.S. Surgical's offer is a highly attractive opportunity
for Circon shareholders, representing a premium of 83% over the average closing
price of Circon's common stock during the last ten trading days. We are hopeful
that the Board of Directors of Circon will recognize the significant benefits to
Circon and its shareholders in this proposal."
U.S. Surgical currently owns 1,000,100 shares of Circon common stock,
representing approximately 8% percent of Circon's outstanding shares.
This stock was obtained through open market purchases. U.S. Surgical will
file Schedules 14D-1 and 13D with the Securities and Exchange Commission (SEC)
today.
Mr Hirsch stated, "The sales and operating synergies between U.S. Surgical
and Circon are significant. Circon is the largest producer of laparoscopic
scopes, video systems and endoscopic suction irrigation devices in the United
States. These products represent an ideal complement to U.S. Surgical's $500
million minimally invasive product lines. Circon will also
(more)
<PAGE>
Page Two of Three
provide a major platform for U.S. Surgical to expand its presence in the areas
of urology and gynecology. Circon is the largest producer of ureteral stents in
the United States and number one in gynecological sterilization products.
"U.S. Surgical's strong international position, 52% of sales in the
second quarter, will provide a platform for a significant increase in Circon's
current international business, which represents less than 20% of their sales.
Further synergies will be realized through U.S. Surgical's presence in major
hospital chains throughout the United States. We also believe that U.S.
Surgical's state-of-the-art manufacturing capabilities combined with Circon's
personnel can significantly reduce the cost of producing Circon's products."
Mr. Hirsch added, "U.S. Surgical believes that once fully integrated the
transaction will be accretive to our earnings within twelve months as a result
of both sales and operating synergies."
U.S. Surgical's tender offer is conditioned on, among other things, the
acquisition of at least 67% of Circon's shares on a fully diluted basis and the
inapplicability of Section 203 of the Delaware General Corporation Law to the
offer. The tender offer and withdrawal rights expire at midnight (E.D.T.) on
August 29, 1996, unless extended. The offer is not contingent on the receipt of
financing.
The terms and conditions of the offer will be set forth in tender offer
materials being filed today with SEC to be mailed promptly to Circon
shareholders.
Salomon Brothers Inc is acting as Dealer Manager for the offer, and
Kissel-Blake Inc. is acting as Information Agent.
United States Surgical Corporation is a diversified surgical products
company specializing in technologies that improve patient care and lower health
care costs.
Following is the complete text of a letter Mr. Hirsch sent to Mr.
Richard A. Auhll, Chairman, President and Chief Executive Officer of Circon
Corporation on August 1, 1996:
(more)
<PAGE>
Page Three of Three
Dear Richard,
I am glad I had the opportunity to discuss with you the prospect of
combining U.S. Surgical and Circon prior to releasing our tender offer tomorrow.
I believe everybody will be best served if we can promptly sit down together to
discuss this prospect.
We at U.S. Surgical have been carefully looking at the advantages of a
merger of Circon and U.S. Surgical. We have concluded that the combination of
our businesses will provide significant benefits to both companies and
respective shareholders. We sincerely believe the clear business logic of
combining our operations should not be ignored.
Our cash offer of $18/share, which represents a premium of 83% over the
average closing price of Circon common stock during the last ten trading days,
is a price your shareholders should find extremely attractive.
The synergies between our two companies are obvious, particularly in the
sales and marketing area. Our market presence, with over $500 million in
laparoscopic sales, should prove to be a tremendous asset in marketing your
products through your sales organization.
I think another big plus is that U.S. Surgical is a worldwide company
with approximately 50% of its sales outside the United States. Our international
strength can significantly increase Circon's international sales, which are now
less than 20% of your total. In addition, our extensive professional, training,
education and marketing infrastructure can bolster Circon's efforts with its
customers and add opportunities for its employees.
Together, we can increase our capabilities to better serve our
respective customer bases as they seek more cost-effective, one-stop purchasing
of advanced medical products.
We hope that you and your Board will share our enthusiasm for this
merger and the benefits U.S. Surgical's offer provide for both your company and
all its shareholders. We look forward to your response.
Leon C. Hirsch
<PAGE>
Exhibit (b)(1)
July 30, 1996
United States Surgical Corporation
150 Glover Avenue
Norwalk, CT 06856
Gentlemen:
United States Surgical Corporation (the "Borrower") has requested J.P. Morgan
Securities Inc., BA Securities Inc., The Bank of New York and NationsBanc
Capital Markets, Inc. (collectively, "Arrangers") to arrange a $175 million
four year term loan credit facility (the "Credit Facility") which shall
be utilized by the Borrower for the acquisition of the company you have
identified to us ("Target"). The Borrower has also requested that Morgan
Guaranty Trust Company of New York, Bank of America Illinois, The Bank of
New York and NationsBank, N.A. (collectively, the "Lead Banks") collectively
provide the full amount of the Credit Facility.
Each Lead Bank severally agrees to provide $43,750,000 of the Credit Facility,
subject to the provisions of this letter. Attached as Exhibit A to this
letter is a Summary of Terms and Conditions (the "Term Sheet") setting forth
the principal terms and conditions on and subject to which each Lead Bank
is willing to make its portion of the Credit Facility available.
Notwithstanding the foregoing, each Lead Bank reserves the right to transfer
all or part of its commitment to one or more other lenders (together with
the Lead Banks, "Lenders") in connection with the syndication of the Credit
Facility.
All commitments will be subject to (i) satisfactory completion of due
diligence: (ii) the absence of adverse changes in the relevant markets or
in the regulatory environment that in our judgment are likely to materially
and adversely affect the syndication of the credit facility; it being
understood that there can be no assurance that such markets or regulatory
environment will not so change in the future; (iii) representations by
the Borrower to us of its willingness to cooperate with us in structuring
and syndicating the Credit Facility, including its willingness to make
reasonable changes to the documents as requested by participants; (iv) our
current understanding of the proposed capital structure after giving effect
to the financing referred to herein; (v) the absence of adverse changes
in the financial condition, business, assets, results of operations, of
the Borrower or the business to be acquired by the Borrower; (vi) our
satisfaction that prior to and during the syndication of the Credit Facility
there shall be no competing offering, placement or arrangement of debt
securities or bank financing on behalf of the Borrower, and (vii) the
negotiation, execution and delivery of mutually acceptable definitive loan
documentation (to be prepared by the Lead Banks' counsel, Davis Polk &
Wardwell, within 120 days of the date hereof.)
<PAGE>
Each Lead Bank will receive an arrangement fee of 50 basis points calculated
on its commitment payable in the following non-refundable installments:
(i) 12.5 basis points payable upon the acceptance of this letter, and (ii)
37.5 basis points payable upon signing of definitive loan documentation.
You agree to assist the Arrangers in forming a syndicate of Lenders and to
furnish the Arrangers and the Lenders, after the public announcement of
the proposed acquisition, promptly upon request, with all information
reasonably deemed necessary by them to complete successfully the syndication,
including, but not limited to, (a) an information package for delivery to
potential syndicate members and participants (the "Information Memorandum")
and (b) information and projections prepared by you relating to the
transactions described herein. You further agree to make appropriate officers
and representatives of the Borrower available to participate in information
meetings for potential syndicate members and participants at such times
and places as the Arrangers may reasonably request up until the date of
closing. The Arrangers will request that every potential syndicate member
sign a confidentiality agreement or return the information package if they
do not sign such a confidentiality agreement.
You agree to pay the costs and expenses (including, without limitation,
the reasonable fees and expenses of one counsel to the Arrangers and the
Lead Banks and each Lead Bank's syndication and other out-of-pocket expenses,
including those for due diligence) arising in connection with the preparation,
execution and delivery of this letter and the definitive financing agreement
and the other transactions contemplated herein. You further agree to indemnify
and hold harmless each Lender and each Arranger, their affiliates and each
director, officer, employee, and agent thereof (each, an "indemnified person")
against, and to reimburse each indemnified person, upon its demand, for
any losses, claims, damages, liabilities or other expenses ("Losses") to
which such indemnified person may become subject insofar as such Losses
arise out of or in any way relate to or result from this letter or the
financing contemplated hereby, or any use of the proceeds thereof including,
without limitation, Losses consisting of legal or other expenses incurred
in connection with investigating, defending or participating in any
investigation, litigation or other proceeding brought or threatened relating
to any of the foregoing (whether or not such indemnified person is a party
thereto); provided that the foregoing will not apply to any Losses of an
indemnified person to the extent they result from gross negligence, willful
misconduct, or a breach of these documents by such indemnified person as
determined by a final judgment or a court of competent jurisdiction. Your
obligations under this paragraph shall remain effective whether or not
definitive financing documentation is executed.
You agree that you will not furnish copies of this letter or disclose in whole
or in part the contents hereof to any person, firm, corporation or other legal
entity other than your advisors or as required by applicable law or compulsory
legal process, without the prior written consent of the Arrangers. Any
disclosure by you not permitted by the preceding sentence shall constitute your
agreement to pay the fee contemplated by clause (i) of the fourth paragraph of
this letter, whether or not you have accepted this
<PAGE>
letter. You shall afford the Arrangers a reasonable opportunity to review
any proposed disclosure of this letter or its contents.
This letter may not be changed except pursuant to a writing signed by each of
the parties hereto. This letter may be executed in any number of counterparts,
each of which shall be an original and all of which, when taken together, shall
constitute one agreement. This letter shall be governed by, and construed in
accordance with, the laws of the State of New York.
If you are in agreement with the foregoing, please sign and return to each
Arranger an enclosed copy of this letter no later than 6:00 p.m., New York
time, on July 31, 1996. This offer shall terminate at such time unless prior
thereto each Arranger shall have received a signed copy of this letter.
We look forward to working with you on this transaction.
Very truly yours,
J.P. MORGAN SECURITIES, INC.
By
_________________________________________________
Title Vice President
_________________________________________________
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
________________________________________________
Title Associate
________________________________________________
BA SECURITIES, INC.
By
________________________________________________
Title
________________________________________________
BANK OF AMERICA ILLINOIS
By
________________________________________________
Title
________________________________________________
<PAGE>
NATIONSBANC CAPITAL MARKETS, INC.
By
__________________________________________
Title
_______________________________________
NATIONSBANK, N.A.
By
__________________________________________
Title
_______________________________________
THE BANK OF NEW YORK
By
__________________________________________
Title
_______________________________________
Accepted and agreement to as of the
date first above written:
United States Surgical Corporation
By
_____________________________________
Title
__________________________________
<PAGE>
SUMMARY OF TERMS AND CONDITIONS
FOR UNITED STATES SURGICAL CORPORATION
Borrower: United States Surgical Corporation ("USSC").
Amount: $175,000,000
Facility: 4.5 year delayed drawdown term loan.
Purpose: Finance the acquisition (the "Acquisition") of
Target (the "Target") to be effected by a
cash tender offer (the "Tender Offer") and a
subsequent merger (the "Merger").
Underwriters: Morgan Guaranty Trust Company of New York,
Bank of America Illinois, NationsBank, N.A.
and The Bank of New York
Lenders: The Facility will be underwritten by the
Underwriters and syndicated by the
Underwriters among certain banks party to
USSC's existing $325 million Credit Facility
and other banks selected by the Underwriters
and reasonably satisfactory to USSC
(collectively, the "Lenders").
Effective Date: August [ ], 1996
Final Maturity: January 5, 2001.
Drawdowns: Minimum amounts of $5 million with additional
increments in whole multiples of $1 million.
Drawdowns require same day notice for Base
Rate Loans, two business days' notice for
Adjusted CD Loans and three business days'
notice for Adjusted LIBOR Loans.
Prepayments: Base Rate Loans may be prepaid at any time on
one business day's notice. Adjusted LIBOR and
Adjusted CD Loans may not be prepaid before
the end of the Interest Period without payment
of the break funding costs of Lenders.
Termination or Reduction of USSC may reduce the unused commitments in
Commitments: amounts of at least $5 million with additional
increments in whole multiples of $1 million at
any time or may terminate the commitments, in
each case on three business days' notice.
Permitted Asset Securitization: Notwithstanding other limitations on asset
sales and liens, USSC will be permitted to
enter into an agreement to securitize its
accounts receivable, provided that (i) the
aggregate principal
July 30, 1996 Page 1
<PAGE>
amount of such financing does not exceed $75
million, (ii) to the extent that the $325
million revolving commitments have terminated
Loans are reduced by an amount equal to 50% of
the proceeds of such financing and (iii) the
terms and conditions of such financing are
acceptable to the Required Banks.
Borrowing Options: The Borrower will have the option to choose
among interest rates based on the Base Rate,
Adjusted LIBOR and Adjusted CD Rate. LIBOR and
CD will be adjusted for reserves and other
regulatory requirements. Base Rate means the
higher of the Administrative Agent's Prime
Rate or the federal funds rate plus 0.50%.
Pricing: Pricing on the loans will vary according to
the Pricing Level commensurate with credit
quality, measured by Total Debt to EBITDA
calculated on a rolling four quarter basis.
Facility Fee: A per annum fee (determined) in accordance
with the attached Pricing Grid), payable
quarterly in arrears and upon termination of
the Facility, calculated on a 360-day basis on
each Bank's commitment. The Facility Fee will
vary according to the ratio of Total Debt to
EBITDA as set forth attached Pricing Grid.
Assignments/Participations: Any Bank may at any time, with the prior
consent of USSC and the Administrative Agent
(which consents will not be unreasonably
withheld) assign all or a portion of its
commitment under the Facility to other banking
institutions meeting specified criteria for an
eligible assignee (minimum assignment amount
of $10,000,000). In addition, each Bank shall
have the right to grant participations in its
commitment and outstanding loans without the
consent of USSC or the Administrative Agent.
Documentation: The Facility will be subject to the execution
of a credit agreement acceptable to USSC and
the Underwriters, which will contain
provisions which are standard for a facility
of this type, including, but not limited to,
the following:
Conditions for Customary and appropriate for similar
Initial Borrowing: financings, including those conditions
appropriate in the context of the proposed
transaction necessary for the initial funding:
1. No material adverse change in financial
condition, business, operations or
properties of USSC and its Subsidiaries
since 6/30/96.
2. Negotiation and execution of satisfactory
closing documentation, including, without
limitation, legal opinions.
3. The conditions to the Tender Offer shall
afford such protections as are usual and
customary or otherwise appropriate to the
Acquisition in the reasonable
July 30, 1996 Page 2
<PAGE>
determination of the Lenders (including,
without limitation, conditions that (i)
any "poison pill" of the Target be
redeemed or otherwise rendered
inapplicable to the Tender Offer, (ii)
Section 203 of the Delaware General
Corporation Law, or any comparable
provision of other applicable law of the
Target's constituent documents, not
prevent the Merger from being consummated
within 180 days after the Tender Offer
Closing Date and (iii) USSC shall own and
control the number of shares of the
Target's common stock as shall be
necessary to approve the Merger without
the affirmative vote or approval of any
other shareholders); all material
conditions to the consummation of the
Tender Offer shall have been satisfied and
shall not have been waived (for which
purpose conditions that must be fulfilled
to the satisfaction of USSC must also be
fulfilled to the satisfaction of the
Lenders in their reasonable
determination); and the tendered shares
shall have been accepted for payment
pursuant to the Tender Offer in accordance
with the terms of the Tender Offer.
4. The Lenders' satisfaction that all
necessary licenses, permits, and
governmental and third party filings,
consents, and approvals for the
Acquisition and the Merger have been
obtained and remain in full force and
effect.
5. The Tender Offer and the financing thereof
shall be in compliance with all laws and
regulations (including, without
limitation, margin regulations).
Conditions for all Borrowings: 1. Representations and warranties true and
correct (including the absence of material
adverse change).
2. No default under the Facility.
Representations and Customary for credit agreements of this
Warranties: nature, with respect to USSC and its
Subsidiaries, including but not limited to:
1. Corporate existence.
2. Corporate and governmental authorization;
no contravention: binding effect.
3. Financial information.
4. No material adverse change in the
financial condition, business, operations
or properties USSC and its Subsidiaries
since June 30, 1996.
5. Compliance with laws, including ERISA.
6. No material litigation except as set forth
in USSC's 1995 Form 10K and 1996 second
quarter Form 10Q.
7. Existence, incorporation, etc. of
subsidiaries.
8. Payment of taxes.
9. Full disclosure.
July 30, 1996 Page 3
<PAGE>
10. No default under other Material Debt
agreements.
11. Environmental matters.
Financial Covenants: USSC will, at all times, maintain:
1. Consolidated Net Worth, excluding
intangibles acquired after 9/30/92, of not
less than the sum of (a) the minimum
required under the existing agreement at
9/30/95 and (b), thereafter, 50% of
quarterly positive net income on a
cumulative basis.
2. Maximum Total Debt to Consolidated Total
Capital of 60%.
3. Fixed Charge Coverage defined as (EBITDA +
Net Rent Expenses - Capex)/(Net Interest
Expense + Net Rent Expense + Preferred
Dividends + Principal and Capital Lease
Payments), all without duplication, but in
any event capturing all cash payments
related to the North Haven Notes (except
for contingent rent payments under the
North Haven Notes), shall not at the end
of any fiscal quarter, for the first four
quarters following the acquisition of
Target, be less than 1.50. Thereafter,
Fixed Charge Coverage shall not at the end
of any fiscal quarter be less than 1.60.
Should the following two events occur,
they will be carved-out from the EBITDA
calculation: (i) the aggregate amount from
the date of closing of $25 million for
settlement and settlement expenses
associated with lawsuits referred to in
USSC's financial statements, and (ii) the
aggregate amount from the date of closing
of $35 million non-cash charges related to
international real estate. The first test
will be at 9/30/96. The test will be
calculated on a rolling four quarter
basis.
Other Covenants: Customary in credit agreements of this
nature, with respect to USSC and its
Subsidiaries, including but not limited
to:
1. Information: quarterly unaudited financial
statements and audited annual financial
statements. In addition, USSC will provide
such other information as any Bank may
reasonably request.
2. Payment of obligations.
3. Maintenance of property; insurance
coverage.
4. Conduct of business; maintenance of
existence.
5. Compliance with laws, including ERISA
and environmental regulations.
6. Inspection of property, books and records.
7. Negative pledge (including subsidiary
stock and assets), with a basket of $15
million, excluding existing liens and
liens created in connection with a
Permitted Asset Securitization.
July 30, 1996 Page 4
<PAGE>
8. Limitations on investments in joint
ventures and in unconsolidated
subsidiaries of 10% of Consolidated
Net Worth.
9. Annual restriction on common dividends
and repurchases of common stock of
20% of annual net income calculated
on a rolling 4 quarter basis until
USSC receives and maintains senior
unsecured debt ratings of at least
BBB- and Baa3 ("Investment Grade
Status").
10. Subsidiary debt limitation of $100
million, excluding existing capital
lease with UIS for the European
headquarters (up to FF545 million).
11. Limitation on Sale of Assets (excluding
sales in the ordinary course of business)
of $50,000,000 per year (excluding
accounts receivable sold in connection
with a Permitted Asset Securitization),
until USSC achieves Investment Grade
Status.
12. Prohibition on consolidations and
mergers where USSC is not the surviving
entity.
13. Transactions with affiliates on arms-
length basis.
14. Limitation on prepayment of other
debt provided that prepayments are
permitted with the net cash proceeds
of (i) debt specifically incurred for
such purpose and containing terms and
conditions substantially similar or
more favorable to USSC and the Banks,
(ii) common stock and (iii) preferred
stock not subject to mandatory redemption
before February 5, 2001.
15. Limitation on use of proceeds. Proceeds
may not be used to purchase any debt
securities other than temporary cash
investments.
Events of Default: Customary and appropriate, including
without limitation the following:
1. Failure to pay principal when due or
any interest or fees payable under
the Credit Agreement within two business
days after due date.
2. Failure to meet covenants (with grace
periods, where appropriate).
3. Representations or warranties false
in any material respect when made.
4. Cross default to other Material Debt
of USSC and its Subsidiaries, which
is triggered by either (i) a matured
event of default or (ii) an unmatured
event of default if the Required Banks
shall have notified USSC that such
unmatured event of default is an Event
of Default under the Credit Agreement,
and USSC has not cured such unmatured
event of default within two business
days thereafter.
July 30, 1996 Page 5
<PAGE>
5. Other usual defaults with respect
to USSC and Subsidiaries, including
but not limited to insolvency,
bankruptcy, ERISA, and judgment defaults.
6. Changes of ownership or control, defined
as 25% of the common equity held or
otherwise controlled by any one investor.
Required Banks: Banks holding 60% of the commitments/loans.
Increased Costs/Change of
Circumstances: The credit agreement will contain customary
provisions protecting Lenders in the event
of unavailability of funding illegality,
increased costs, funding losses, and with-
holding taxes.
Governing Law
and Jurisdiction: State of New York.
Indemnification: USSC will indemnify the Lenders against
all losses, liabilities, claims, damages,
and expenses relating to their loans, the
Borrower use of loan proceeds or the
commitments, including but not limited
to reasonable attorney's fees and settlement
costs (except such as result from the
indemnitee's gross negligence or willful
misconduct).
Other Conditions: Any matters not covered by, or made clear in,
this term sheet are subject to mutual
agreement of the parties.
Confidentiality: The contents of this term sheet are
confidential and are not to be disclosed
to any third party without the prior approval
of the Arrangers.
July 30, 1996 Page 6
<PAGE>
Facility pricing
________________________________________________________________________________
Basis points
________________________________________________________________________________
<TABLE>
<CAPTION>
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6
Total Debt/ 1.50x 2.00xBUT 2.00xBUT 2.50xBUT 3.00xBUT 3.50xBUT
EBITDA and below 1.50x 2.50x 3.00x 3.50x and above
________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Facility fee: 15.0 17.5 20.0 22.5 27.5 35.0
________________________________________________________________________________
LIBOR margin 22.5 32.5 42.5 62.5 60.0 65.0
________________________________________________________________________________
Used pricing 37.5 50.0 62.5 75.0 87.5 100.0
________________________________________________________________________________
Letter of credit:
Letter of
credit fee: 22.5 32.5 42.5 52.5 60.0 65.0
Fronting fee: 12.5 12.5 12.5 12.5 12.5 12.5
________________________________________________________________________________
</TABLE>
