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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
(Rule 14D-101)
Solicitation/Recommendation Statement Under Section 14(d)(4)
of the Securities Exchange Act of 1934
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WESLEY JESSEN VISIONCARE, INC.
(Name of Subject Company)
WESLEY JESSEN VISIONCARE, INC.
(Name of Person(s) Filing Statement)
Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
951018100
(CUSIP Number of Class of Securities)
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EDWARD J. KELLEY
Chief Financial Officer
Wesley Jessen VisionCare, Inc.
333 East Howard Avenue
Des Plaines, IL 60018-5903
Telephone: (847) 294-3000
(Name, address and telephone number of person authorized to receive notice and
communication on behalf of the person(s) filing statement).
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
With a Copy to:
Roger S. Aaron, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036-6522
(212) 735-3000
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Item 1. Subject Company Information.
(a) The name of the subject company to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
relates is Wesley Jessen VisionCare, Inc., a Delaware corporation ("Wesley
Jessen"). The address of the principal executive offices of Wesley Jessen is
333 East Howard Avenue, Des Plaines, Illinois 60018-5903. The telephone number
of the principal executive offices of Wesley Jessen is (847) 294-3000.
(b) The title of the class of equity securities to which this statement
relates is the common stock, par value $0.01 per share, of Wesley Jessen (the
"Common Stock"), including the associated rights to purchase preferred stock
(the "Rights" and, together with the Common Stock, the "Shares") issued
pursuant to the Rights Agreement, dated as of November 16, 1999 (as amended by
Amendment No. 1 to Rights Agreement, dated March 20, 2000, the "Rights
Agreement"), between Wesley Jessen and American Stock Transfer & Trust
Company/Inc., as Rights Agent (the "Rights Agent"). As of April 7, 2000, there
were 18,175,585 shares of Common Stock issued of which 17,642,312 shares were
outstanding and 533,273 shares were held in the treasury of Wesley Jessen.
Item 2. Identity and Background of Filing Person.
(a) The name, address and telephone number of Wesley Jessen, which is the
person filing the Schedule 14D-9, are set forth in Item 1(a) above.
(b) This Schedule 14D-9 relates to the tender offer by Dylan Acquisition
Inc., a New York corporation ("Purchaser") and a wholly owned subsidiary of
Bausch & Lomb Incorporated, a New York corporation ("Bausch & Lomb"),
disclosed in a Tender Offer Statement on Schedule TO (the "Schedule TO"),
dated April 3, 2000, to purchase all outstanding Shares at a purchase price of
$34.00 per Share, net to the seller in cash (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
April 3, 2000 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together with any amendments and supplements thereto
collectively constitute the "Bausch & Lomb Offer").
As set forth in the Schedule TO, the principal executive offices of Bausch
& Lomb and Purchaser are located at One Bausch & Lomb Place, Rochester, New
York 14604-2701.
According to the Schedule TO, the purpose of the Bausch & Lomb Offer is to
acquire control of, and ultimately the entire equity interest in, Wesley
Jessen. Bausch & Lomb discloses in the Schedule TO that it is seeking to enter
into negotiations with Wesley Jessen with respect to a merger with Purchaser
(the "Proposed Bausch & Lomb Merger"). According to the Schedule TO, promptly
after completion of the Bausch & Lomb Offer, Purchaser intends to seek to have
Wesley Jessen effect a merger between Wesley Jessen and Purchaser or its
subsidiary, pursuant to which each then outstanding Share not owned by Bausch
& Lomb or Purchaser (other than Shares held by Wesley Jessen shareholders who
perfect their appraisal rights under Delaware law), would be converted
pursuant to the terms of the Proposed Bausch & Lomb Merger into the right to
receive an amount in cash equal to the per Share price paid pursuant to the
Bausch & Lomb Offer, without interest.
According to the Schedule TO, the Bausch & Lomb Offer is subject to the
fulfillment of various conditions, including among other things, the tender of
a majority of the outstanding Shares and the redemption of Rights.
In addition, according to the Schedule TO, Purchaser will not be required
to accept for payment or, subject to any applicable rules and regulations of
the Securities and Exchange Commission (the "SEC"), pay for, and may delay the
acceptance for payment or, subject to any applicable rules and regulations of
the SEC, the payment for any tendered Shares, and may terminate the Bausch &
Lomb Offer as to any Shares not then paid for, if, in the sole judgment of
Bausch & Lomb or Purchaser, at or prior to the expiration date of the Bausch &
Lomb Offer any one or more of the conditions in the Bausch & Lomb Offer has
not been satisfied.
On March 27, 2000, Bausch & Lomb notified Wesley Jessen of Bausch & Lomb's
intention to nominate three individuals as directors to the Board of Directors
of Wesley Jessen (the "Wesley Jessen Board") at Wesley
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Jessen's annual meeting of shareholders to be held in 2000 (the "Bausch & Lomb
Nomination"). The Wesley Jessen Board has set June 23, 2000, as the date for
its annual meeting of shareholders. Shareholders of record as of May 1, 2000
will be eligible to vote at the meeting.
Item 3. Past Contacts, Transactions, Negotiations and Agreements.
Except as set forth herein or under the headings "Certain Relationships and
Related Transactions," "Stock Incentive Plan" and "Non-Employee Director Stock
Option Plan" in Wesley Jessen's proxy statement, filed April 22, 1999, to the
knowledge of Wesley Jessen, there are no material agreements, arrangements or
understandings and no actual or potential conflicts of interest between Wesley
Jessen or its affiliates and (1) Wesley Jessen's executive officers, directors
or affiliates, or (2) Bausch & Lomb or Purchaser, or their respective
executive officers, directors or affiliates.
Arrangements with Executive Officers, Directors or Affiliates of Wesley
Jessen
If the directors and executive officers of Wesley Jessen who own Shares
tender their Shares in the Bausch & Lomb Offer or their Shares are acquired in
the Proposed Bausch & Lomb Merger, they will receive the Offer Price for their
Shares on the same terms as the other public shareholders. As of March 31,
2000, the directors and executive officers of Wesley Jessen owned in the
aggregate 1,176,456 Shares and, if they tender all of their Shares in the
Bausch & Lomb Offer or their Shares are acquired in the Proposed Bausch & Lomb
Merger, they will receive a payment for their Shares in the aggregate amount
of $39,999,504. See Schedule I attached hereto for a listing of ownership of
Shares by the directors and executive officers of Wesley Jessen.
As of March 31, 2000, the directors and executive officers of Wesley Jessen
held options under Wesley Jessen's option plans ("Options") to acquire an
aggregate of 1,907,574 Shares, with exercise prices ranging from $ 0.03 to $
29.88. Under the plans under which unvested Options have been granted, the
unvested Options will vest upon a change in control of Wesley Jessen.
Advisory Agreement
In June 1995, Wesley Jessen entered into an Advisory Agreement with Bain
Capital, Inc. ("Bain Capital"), which was amended and restated in October 1996
(the "Advisory Agreement"), pursuant to which Bain Capital agreed to provide
management consulting, advisory services and support, negotiation and analysis
of financial alternatives, acquisitions and dispositions and other services
agreed upon by Wesley Jessen and Bain Capital. In exchange for such services,
Bain Capital receives: (i) a quarterly management fee of not more than
$500,000, plus reasonable out-of-pocket expenses, and (ii) a transaction fee
in connection with the consummation of each acquisition, divestiture or
financing by Wesley Jessen or its subsidiaries in an amount equal to 1.0% of
the aggregate value of such transaction. The Advisory Agreement has an initial
term ending on January 31, 2004, subject to automatic one-year extensions
unless Wesley Jessen or Bain Capital provides written notice of its desire not
to extend such term.
Each of Messrs. Kirsch, Maki, O'Malley and Pagliuca, each a director of
Wesley Jessen, is a general partner of BCIP Associates and BCIP Trust
Associates, L.P. Mr. Pagliuca is a managing director of the general partner of
Bain Capital Fund IV, L.P. and Bain Capital Fund IV-B, L.P.
Employment Agreements
Effective October 1, 1999, Wesley Jessen and Mr. Kevin Ryan, Wesley
Jessen's Chairman, President and Chief Executive Officer, entered into an
employment agreement (the "Ryan Employment Agreement") pursuant to which Mr.
Ryan is eligible to receive severance benefits in the event of a qualifying
termination of his employment within one year following a "change in control"
(as defined in the Ryan Employment Agreement) of Wesley Jessen.
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A qualifying termination of employment under the Ryan Employment Agreement
means (1) a termination by Wesley Jessen within one year following the date of
the change in control of Wesley Jessen without Cause (as defined in the Ryan
Employment Agreement) or (2) a termination by Mr. Ryan for Good Reason. A
termination for Good Reason under the Ryan Employment Agreement means:
. assignment to Mr. Ryan of any duties inconsistent with his role as chief
executive officer and president of Wesley Jessen or a successor company,
failure to maintain him in the position of chief executive officer or a
substantial adverse alteration in the nature of his authority or
responsibilities under the Ryan Employment Agreement;
. reduction by Wesley Jessen in Mr. Ryan's Base Salary (as defined in the
Ryan Employment Agreement), in effect on the date of the Ryan Employment
Agreement or as the same may be increased from time to time, except for
across-the-board salary reductions similarly affecting all senior
executives of Wesley Jessen or of any person in control of Wesley Jessen;
. reduction or other adverse changes in the bonus opportunity available to
Mr. Ryan (with respect to the level of bonus opportunity, the applicable
performance criteria and otherwise the manner in which bonuses are
determined) in the aggregate from those available as of the date of the
Ryan Employment Agreement, excluding changes resulting from material
adverse changes in the financial condition of Wesley Jessen;
. Wesley Jessen's failure to pay Mr. Ryan any amounts otherwise vested and
due him under the Ryan Employment Agreement or under any plan or policy
of Wesley Jessen;
. relocation of Wesley Jessen's principal executive offices to a location
more than 50 miles from the location of such offices on the date of the
Ryan Employment Agreement or a requirement that Mr. Ryan be based
anywhere other than at Wesley Jessen's principal executive offices except
for necessary travel on Wesley Jessen's business to an extent
substantially consistent with Mr. Ryan's business travel obligations on
the date of the Ryan Employment Agreement; or
. failure by Wesley Jessen to continue to provide Mr. Ryan with benefits
substantially similar to those enjoyed by him under any of the plans
described in the Ryan Employment Agreement in which he was a participant
at the time of any such failure.
If Mr. Ryan incurs a qualifying termination of employment he will be
entitled to receive the following:
. his Base Salary through the Date of Termination (as defined in the Ryan
Employment Agreement);
. payment in lieu of any unused vacation, in accordance with Wesley
Jessen's vacation policy and applicable laws;
. any annual bonus earned but not yet paid to him for any calendar year
prior to the year in which his termination occurs;
. any deferred compensation under any incentive compensation plan of Wesley
Jessen or any deferred compensation agreement then in effect;
. any other compensation or benefits, including without limitation long-
term incentive compensation, benefits under equity grants and awards and
employee benefits, that have vested through the Date of Termination or to
which he may then be entitled in accordance with the applicable terms and
conditions of each grant, award or plan;
. reimbursement of any business and medical expenses incurred by Mr. Ryan
or his Spouse (as defined in the Ryan Employment Agreement), as
applicable, through the Date of Termination but not yet paid to him;
. continued medical reimbursement for the remainder of the Term (which is
five years from the date of the agreement, provided, however, that at the
end of each 12-month period after the date of the agreement, unless
either Mr. Ryan or Wesley Jessen gives Notice of Termination (as defined
in the Ryan Employment Agreement) to the other, the Term shall thereafter
extend automatically for an additional 12-month period, but in no event
shall the Term extend beyond September 30, 2012) and thereafter
hospitalization
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insurance, surgical insurance, major and excess major medical insurance
and dental insurance in accordance with the most favorable plans,
policies, programs and practices of Wesley Jessen and its subsidiaries as
in effect from time to time;
. continued participation in all employee benefit plans or programs
available to Wesley Jessen employees generally in which Mr. Ryan was
participating on the Date of Termination for the remainder of the Term
(or the after-tax economic equivalent thereof if Mr. Ryan is precluded
from continuing his participation in any employee benefit plan or program
as provided above);
. a SERP benefit, determined as if Mr. Ryan's employment with Wesley Jessen
had continued until his retirement at age 72, with payment commencing on
the first day of the month next following payment to him of the amount
specified in the next paragraph; and
. the present value of the sum of (i) Mr. Ryan's Base Salary payable for
the remainder of the Term at the rate in effect immediately before such
termination and (ii) annual bonuses for the remainder of the Term
(including a prorated bonus for any partial calendar year) equal to the
average of the three highest annual bonuses awarded to him during the ten
years preceding the year of termination, payable to Mr. Ryan in a cash
lump sum not later than five business days after the Date of Termination.
Under the Ryan Employment Agreement, if Wesley Jessen's independent
auditors determine that the amount due Mr. Ryan will exceed the amount
permissible under Section 280G of the Internal Revenue Code without imposition
of the excise tax imposed by Section 4999 of the internal revenue code (the
"280G Limit"), Wesley Jessen must pay the greater of (i) the after-tax amount
and (ii) the 280G Limit in lieu of the amount due Mr. Ryan as described above.
If a change in control of Wesley Jessen were to occur on April 28, and if
Mr. Ryan was to incur a qualifying termination of employment immediately
following that date, the approximate amount of the cash for the present value
of his Base Salary and bonus for the remaining term of $4.4 million and for
his SERP benefits of $5.4 million. Additionally, Mr. Ryan would be entitled to
accelerated vesting of his unvested options, a five year consulting agreement
with payments totaling $2 million and other perquisites.
Effective upon termination of Mr. Ryan's employment, unless termination was
(i) by reason of Mr. Ryan's death or disability, (ii) by Wesley Jessen for
Cause, or (iii) by Mr. Ryan without Good Reason before age 65, Mr. Ryan will
become a consultant to Wesley Jessen. Unless earlier terminated, the
Consulting Period (as defined in the Ryan Employment Agreement) shall continue
for five years. During the Consulting Period, Mr. Ryan will consult with
Wesley Jessen and its senior executive officers regarding business and
operations. Such consulting services shall not require more than 50 days in
any calendar year, nor more than one day in any week, and Mr. Ryan shall have
the right to engage in full-time or part-time employment with any business
enterprise that is not a competitor of Wesley Jessen. During the Consulting
Period, Mr. Ryan will not be obligated to serve as a member of the Wesley
Jessen Board or to occupy any office on behalf of Wesley Jessen or any of its
subsidiaries. During the Consulting Period, Mr. Ryan shall receive from Wesley
Jessen each year an amount equal to the applicable percentage of his Base
Salary upon termination of employment, as follows: (i) 100% of Base Salary in
year 1, (ii) 90% of Base Salary in year 2, (iii) 80% of Base Salary in year 3,
(iv) 70% of Base Salary in year 4 and (v) 60% of Base Salary in year 5. During
the Consulting Period, Mr. Ryan will be entitled to the same expense
reimbursement, perquisites and medical benefits he was entitled to while
employed, and group business travel and accidental death and dismemberment
insurance equivalent to the coverage he received as a senior-level employee
while employed.
The Ryan Employment Agreement also prohibits Mr. Ryan from competing with
Wesley Jessen during the Term and any Consulting Period and for 12 months
thereafter.
The Ryan Employment Agreement requires Wesley Jessen to indemnify Mr. Ryan
to the fullest extent permitted by applicable law consistent with Wesley
Jessen's Restated Certificate of Incorporation (the "Restated Certificate")
and By-laws with respect to any action or failure to act on his part while he
is an officer, director or employee of Wesley Jessen or any subsidiary. Wesley
Jessen is required to cause Mr. Ryan to be covered at all
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times by directors' and officers' liability insurance. Wesley Jessen is also
required to continue to indemnify Mr. Ryan as provided above and maintain such
liability insurance coverage for him after the Term and, if applicable, the
Consulting Period, for any claims that may be made against him with respect to
his service as a director or officer of Wesley Jessen or any of its
subsidiaries or as a consultant to Wesley Jessen.
Effective as of June 28, 1995, Wesley Jessen and Mr. Edward Kelley, Wesley
Jessen's Vice President, Finance and Chief Financial Officer, entered into an
employment agreement (the "Kelley Employment Agreement"). Pursuant to the
Kelley Employment Agreement, Mr. Kelley's employment period may be terminated
by Wesley Jessen at any time for Cause or without Cause.
Cause under the Kelley Employment Agreement means:
. the commission of a felony or any other act or omission involving
dishonesty, disloyalty or fraud with respect to Wesley Jessen or any of
its subsidiaries or any of their customers or suppliers;
. conduct tending to bring Wesley Jessen or any of its subsidiaries into
substantial public disgrace or disrepute;
. substantial and repeated failure to perform duties as reasonably directed
by the Wesley Jessen Board;
. gross negligence or willful misconduct with respect to Wesley Jessen or
any of its subsidiaries; or
. any other material breach of the Kelley Employment Agreement.
If the employment period is terminated by Wesley Jessen without Cause, Mr.
Kelley will be entitled to receive his (i) Base Salary (as defined in the
Kelley Employment Agreement) and benefits under employee benefit programs for
which senior executive employees of Wesley Jessen are generally eligible, in
each case for 12 months after the date of such termination, and (ii) bonus for
the fiscal year in which such termination occurs (prorated based upon the
number of days elapsed prior to Mr. Kelley's date of termination if the date
of such termination occurs prior to the last day of the fiscal year in respect
of which such bonus is awarded) if Mr. Kelley would have otherwise been
entitled to receive such bonus had he not been terminated. The amounts
otherwise payable as provided above will be reduced by the amount of any
compensation Mr. Kelley receives with respect to any other employment during
the 12 month period commencing on the date of Mr. Kelley's termination, and
shall be payable at such times as such amounts would have been payable had Mr.
Kelley not been terminated. If the employment period is terminated by Wesley
Jessen for Cause or by Mr. Kelley's resignation, Mr. Kelley will be entitled
to receive his Base Salary through the date of termination.
The Kelley Employment Agreement also prohibits Mr. Kelley from competing
with Wesley Jessen during the employment period and for a period of one year
thereafter.
Indebtedness of Management
On May 7, 1997, Wesley Jessen loaned Mr. Ryan $1.2 million pursuant to the
terms of an unsecured promissory note bearing interest at an annual rate of
8%, payable quarterly. The note is due on the earlier of (i) May 9, 2002, (ii)
the date Mr. Ryan ceases to be employed by Wesley Jessen, or (iii) the date
Mr. Ryan disposes of any holdings of his Common Stock. The Wesley Jessen Board
has previously waived the requirement under (iii) above. As of April 7, 2000,
an aggregate of $ 1.2 million in principal was outstanding under the note.
Arrangements with Bausch & Lomb
Wesley Jessen and Bausch & Lomb have entered into four confidentiality
agreements since February 1996. The terms of such confidentiality agreements
generally provide that information provided pursuant to those confidentiality
agreements must be held confidentially for a certain period of time. Such
period of time is still applicable with respect to three of the
confidentiality agreements. The most recent confidentiality agreement between
Wesley Jessen and Bausch & Lomb was the Bilateral Confidentiality Agreement,
effective February 28, 2000 (the "2000 Bilateral Confidentiality Agreement").
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Item 4. The Solicitation or Recommendation.
Recommendation of the Wesley Jessen Board
After careful consideration, the Wesley Jessen Board has unanimously
determined that the Bausch & Lomb offer is inadequate, is not in the best
interests of Wesley Jessen and its shareholders and does not adequately
reflect the value or prospects of Wesley Jessen. As more fully described
below, the Wesley Jessen Board unanimously recommends that Wesley Jessen
shareholders reject the Bausch & Lomb Offer and not tender any of their shares
to Bausch & Lomb.
Background
Wesley Jessen has, at various times over the past several years, considered
various strategic acquisitions of or combinations with companies in the
contact lens industry, including, among others, the potential acquisition of
Bausch & Lomb's contact lens division and the combination with Ocular
Sciences, Inc. ("Ocular"). Beginning with a visit by Bausch & Lomb to Wesley
Jessen in 1996, Wesley Jessen and Bausch & Lomb have had various discussions
regarding potential business relationships and entered into confidentiality
agreements in February and November of 1996, December of 1998 and February of
2000 in order to more freely exchange information in connection with the
exploration of such business relationships. During the same period, Wesley
Jessen continued to acquire other companies in the contact lens industry and
pursue its corporate strategies.
In the early fall of 1999, Wesley Jessen was approached by Ocular regarding
the potential merger of Ocular with Wesley Jessen.
Also during 1999 and similar to 1996, 1997 and 1998, executive officers of
Wesley Jessen continued to have discussions with Bausch & Lomb regarding
various possible business relationships. During these same periods, investment
bankers have contacted Wesley Jessen and, Wesley Jessen believes, Bausch &
Lomb regarding various potential transactions and business relationships
between the two companies. In December 1999, Mr. Alan Farnsworth, Vice
President--Business Development of Bausch & Lomb, telephoned Mr. Ryan and
inquired as to whether Mr. Ryan would be willing to meet with Mr. William
Carpenter, Chairman and Chief Executive Officer of Bausch & Lomb. Mr. Ryan
indicated that he would and, in January, the parties arranged for a lunch
meeting between Mr. Ryan and Mr. Carpenter to be held in Rochester, New York.
Messrs. Carpenter and Ryan met on February 3, 2000, and had a general
discussion about the contact lens industry, their respective companies and the
potential for business arrangements between their respective companies. As
part of the discussion, Mr. Ryan indicated Wesley Jessen's desire to continue
to build its business through acquisitions while pooling treatment is still
available. When asked about the value and performance of Wesley Jessen's
stock, Mr. Ryan stated that the analysts had projected near term price targets
for Wesley Jessen at $42 to $45 per share. While the companies' discussions
over the last four years had not resulted in the development of any
significant business relationships, Messrs. Carpenter and Ryan concluded that
mutual interest in pursuing discussions still existed. Following the February
3 meeting, Mr. Carpenter telephoned Mr. Ryan to request an additional meeting
between representatives of the respective companies. Messrs. Carpenter and
Ryan agreed to have a small group meet to further discuss various aspects of
potential business arrangements.
In connection with the meeting to be held on February 28, 2000, Wesley
Jessen and Bausch & Lomb entered into the 2000 Bilateral Confidentiality
Agreement. The 2000 Bilateral Confidentiality Agreement states that, whereas
the parties desire to explore the possibility of entering into a business
relationship, and are willing to provide each other access to certain ideas,
concepts, data, or other information which in whole or in part is or will be
considered by them to be proprietary and confidential, the receiving party
will take all reasonable steps to preserve any and all confidential
information received from the disclosing party pursuant to such agreement.
On February 28, 2000, a small working group, consisting of Mr. Ryan, Mr.
Edward Kelley, Vice President--Finance and Chief Financial Officer of Wesley
Jessen, Mr. Farnsworth, Mr. Carl Sassano, President and Chief Operating
Officer of Bausch & Lomb, and Mr. Efrain Rivera, Vice President and Controller
of Bausch & Lomb's
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Global Vision Care business, met and discussed various public information
regarding Wesley Jessen and potential synergies with respect to their
respective companies, although Messrs. Ryan and Kelley at no time endorsed any
particular amount of synergies that could be achieved between the two
companies. When asked at one point what he thought Wesley Jessen's stock was
worth, Mr. Ryan again referred to the analysts' price targets of $42 to $45
per share.
Throughout this period, Wesley Jessen continued to pursue its merger with
Ocular and other long-term strategic plans.
On March 7, 2000, Mr. Carpenter called Mr. Ryan to report his understanding
that the February 28th meeting had gone well, and that, while there appeared
to be the potential for a transaction between Bausch & Lomb and Wesley Jessen,
he would not get strategic credit in the stock market for any transaction
between the companies. Mr. Carpenter stated that a business combination would
need to be a cash transaction that was nondilutive to Bausch & Lomb. He stated
further that Bausch & Lomb did not agree with the values for Wesley Jessen
Common Stock discussed at the February 28th meeting and asked Mr. Ryan again
what he thought Wesley Jessen's stock was worth. Mr. Ryan reiterated that the
analysts that cover Wesley Jessen had price targets between $42 and $45 per
share. Mr. Carpenter responded that Mr. Ryan would have to help find further
synergies for Bausch & Lomb to get Mr. Carpenter comfortable with such price
range. Mr. Ryan does not recall the statement attributed to Mr. Carpenter in
Bausch & Lomb's Offer to Purchase that "Bausch & Lomb would offer a cash
transaction in the high $30s range on a per share basis for Wesley Jessen if
the parties could continue the collaborative efforts, find further synergies
and assure the business fit."
Mr. Carpenter again called Mr. Ryan on March 13, 2000. Mr. Carpenter stated
that he was still uncomfortable with the analysts' price range previously
expressed by Mr. Ryan, and inquired as to whether Mr. Ryan had any additional
thoughts on the matter. Mr. Ryan responded that he did not. Mr. Carpenter said
that he hoped they could continue to have further discussions.
On March 19, 2000, Wesley Jessen and Ocular signed the merger agreement
(the "Ocular Merger Agreement"), whereby Wesley Jessen agreed to issue
approximately 16.9 million shares of its Common Stock to Ocular shareholders
who will receive .721 shares of Wesley Jessen Common Stock for each share of
Ocular stock held. Pursuant to the Ocular Merger Agreement, Ocular is to
become a wholly owned subsidiary of Wesley Jessen. Mr. Ryan, currently the
Chairman, President and CEO of Wesley Jessen, will remain President and CEO of
Wesley Jessen, while John Fruth, the founder and current Chairman of Ocular,
will serve as non-executive Chairman of Wesley Jessen.
On March 20, 2000, Wesley Jessen and Ocular announced that the two
companies had signed the Ocular Merger Agreement, which would create the
world's second largest soft contact lens producer with the broadest product
range in the industry. The merger of Ocular with Wesley Jessen would be
accounted for as a pooling of interests and is expected to be accretive to
Wesley Jessen's fully diluted earnings per share excluding one-time charges in
the first full, fiscal year following the combination.
On March 23, 2000, while traveling on company business, Mr. Ryan was
surprised when, with no prior indication of Bausch & Lomb's heightened
interest, he learned through the news media that Bausch & Lomb had publicly
released a letter to Mr. Ryan stating that Bausch & Lomb was offering to
acquire Wesley Jessen in a cash transaction for $34 per share, and offering to
meet with Mr. Ryan and Wesley Jessen's advisors to finalize a definitive
agreement between the two companies.
Mr. Ryan called Mr. Carpenter on March 23, 2000, and twice on March 24,
2000, but failed to reach Mr. Carpenter on each occasion.
On Monday, March 27, 2000, the last day on which nominees for election to
the Wesley Jessen Board in 2000 could be put forward in accordance with Wesley
Jessen's bylaws, Bausch & Lomb delivered a notice to
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Wesley Jessen of its intent to nominate three independent directors, William
Balderston III, Joseph P. Clayton and Charles I. Plosser, for election to the
three positions on the Wesley Jessen Board to be filled at the Wesley Jessen
2000 Annual Meeting of Shareholders. On the same date, Cede & Co., the record
holder of 100 shares beneficially owned by Bausch & Lomb, at the request of
Bausch & Lomb, delivered a similar notice to Wesley Jessen. Bausch & Lomb
issued a press release describing the foregoing.
Also on Monday, March 27, 2000, Mr. Ryan called Mr. Carpenter. They did not
discuss the substance of Bausch & Lomb's March 23, 2000 proposal but Mr. Ryan
informed Mr. Carpenter that he would attempt to phone Mr. Carpenter again
later.
On Wednesday, March 29, 2000, Wesley Jessen received a letter from Mr.
Carpenter asking to meet with Mr. Ryan and threatening to launch a tender
offer.
On Thursday, March 30, 2000, the Wesley Jessen Board met and unanimously
rejected Bausch & Lomb's unsolicited proposal to acquire Wesley Jessen for $34
per share in cash. The Wesley Jessen Board stated that Wesley Jessen was not
for sale and remained firmly committed to its pending strategic merger with
Ocular, which it believes will create substantial shareholder value. The
Wesley Jessen Board noted that Wesley Jessen traded at $40 per share less than
three months ago and that many analysts had stand-alone price targets of $40
or more even before the accretive merger with Ocular was announced. The Wesley
Jessen Board determined that the Bausch & Lomb proposal was not superior to
the merger of Ocular with Wesley Jessen. Wesley Jessen issued a press release
which described the Wesley Jessen Board's determination and further disclosed
that Wesley Jessen and Ocular had already identified $30 million of synergies
and expect EPS accretion of $0.35-0.38 per share in 2001.
On Friday, March 31, 2000, Bausch & Lomb released a press release
announcing its intention to commence a tender offer on Monday, April 3, 2000
for all of the outstanding shares of Wesley Jessen at a price of $34 per share
in cash. On Monday, April 3, 2000, Bausch & Lomb commenced the Bausch & Lomb
Offer.
Also on April 3, 2000, Bausch & Lomb commenced litigation against Wesley
Jessen, the Wesley Jessen Board and Ocular in the Court of Chancery of the
State of Delaware, where both Wesley Jessen and Ocular are incorporated.
Bausch & Lomb's complaint alleges that the merger of Ocular with Wesley Jessen
was entered into in breach of the Wesley Jessen Board's fiduciary duties to
act on a fully informed basis and to advance the best interests of Wesley
Jessen's shareholders. The complaint seeks injunctive relief against the
Ocular Merger Agreement, seeks to require Wesley Jessen's Board to redeem the
Rights to permit shareholders to accept the Bausch & Lomb Offer and requests a
declaration that any break-up fee Ocular receives it holds as a constructive
trustee.
Wesley Jessen's Board met on April 7, 2000, and, after careful
consideration as described below, unanimously determined that Bausch & Lomb's
Offer is inadequate, is not in the best interests of Wesley Jessen and its
shareholders and does not adequately reflect the value or prospects of Wesley
Jessen. Nevertheless, the Wesley Jessen Board concluded that there is a
reasonable likelihood that Bausch & Lomb's proposal could result in a Superior
Proposal (as defined in the Ocular Merger Agreement) and, therefore,
instructed the management of Wesley Jessen and its advisors to undertake a
process whereby they would commence discussions with Bausch & Lomb with the
objective of eliciting Bausch & Lomb's best proposal. Any acquisition proposal
from Bausch & Lomb will be evaluated in comparison to the significant
shareholder value that the Wesley Jessen Board believes can be achieved in a
strategic business combination with Ocular.
Factors Considered
In reaching the conclusions stated above, the Wesley Jessen Board took into
account a variety of factors, including, but not limited to, the following:
1. The business, financial condition, results of operations, current
business strategy and future prospects of Wesley Jessen and whether the
Bausch & Lomb Offer was reflective thereof, including the opinion of Wesley
Jessen's management that the financial terms of the Bausch & Lomb Offer are
inadequate. The
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opinion of management was based on various factors, including its knowledge
of Wesley Jessen's business and operations and of its strategic objectives
and corporate policies and its views as to the future earnings, financial
condition and prospects of Wesley Jessen. In this regard, management noted
the record revenues and strong revenue growth achieved by Wesley Jessen in
the first quarter of 2000 which management expects to result in diluted
earnings per share of $0.43 to $0.44.
2. The presentations by Bear, Stearns & Co. Inc. ("Bear Stearns") at the
meeting of the Wesley Jessen Board held on April 7, 2000 concerning Wesley
Jessen and the financial aspects of the Bausch & Lomb Offer and the advice
of Bear Stearns that the consideration of $34.00 per Share being offered to
the holders of Wesley Jessen pursuant to the Bausch & Lomb Offer is
inadequate from a financial point of view to such shareholders (other than
Bausch & Lomb and its affiliates).
3. The advice of Bear Stearns, that based on the $30 million in
synergies that Bausch & Lomb has projected and the analysts' consensus
earnings estimates for Wesley Jessen and Bausch & Lomb, Bausch & Lomb could
pay in excess of $42 per share without diluting Bausch & Lomb's 2001 and
2002 earnings per share.
4. The fact that, according, to Section 10 "Background of the Offer;
Contacts with Wesley Jessen" of the Offer to Purchase, which is part of the
Bausch & Lomb Offer, Mr. Carpenter has stated that "Bausch & Lomb would
offer a cash transaction in the high $30s range on a per-share basis for
Wesley Jessen if the parties could continue the collaborative efforts, find
further synergies and assure the business fit." While Mr. Ryan has no
recollection that Mr. Carpenter had previously expressed the above intent,
the inclusion of such statement in the Bausch & Lomb Offer leads the Wesley
Jessen Board to believe that, whether Mr. Carpenter actually made such
statement to Mr. Ryan or not, Bausch & Lomb would be willing to pay
significantly in excess of its current $34 per Share offer for Wesley
Jessen.
5. The fact that Wesley Jessen's proposed strategic merger with Ocular,
which the Bausch & Lomb Offer threatens to disrupt, creates the second
largest soft contact lens company in the world with the broadest product
line in the industry. The combined company will have (i) significant
operational synergies, including significant sales, marketing,
manufacturing, and distribution scale, (ii) the opportunity to leverage
Wesley Jessen's global direct sales force to expand Ocular's market
penetration, (iii) access to all of the lens wearer market with excellent
opportunities to cross sell color and clear lenses, (iv) an exceptional
position for additional worldwide organic and acquisition growth, (v)
expected 2001 earnings per share accretion of approximately $0.35-$0.38,
leading to earnings per share growth in excess of 30% in that year, (vi) an
accelerated revenue growth rate, (vii) combined (1999) sales of nearly $500
million, (viii) a projected stock price for Wesley Jessen Shares in excess
of $34 per Share based upon the projected combined earnings and historical
average price/earnings multiples, and (ix) significantly broader stock
liquidity. In addition, the Wesley Jessen Board considered possible
modifications to the terms of the Ocular merger which the Wesley Jessen
Board believes would be favorable to the shareholders of Wesley Jessen.
6. The Wesley Jessen Board's belief that the Bausch & Lomb Offer is an
attempt by Bausch & Lomb to usurp for itself the future growth in revenues,
net income and cash flow and stock price appreciation that are only
beginning to result from Wesley Jessen's recent initiatives aimed at making
Wesley Jessen the premier global contact lens company. In this regard, the
Wesley Jessen Board noted the following completed and pending initiatives:
(i) the announced strategic Ocular merger, (ii) the entering into of a
strategic alliance with the U.S. Consumer Products Division of Alcon
Laboratories, one of the most highly regarded companies in the lens
solution industry, (iii) the launch of a new line of soft lenses designed
to enhance sports performance, called ProSoft(TM), (iv) the introduction of
new lines of disposable bifocal lenses and frequent-replacement toric color
blend lenses, (v) the recent acquisitions of three additional lens
companies outside the United States and other potential strategic
initiatives, (vi) the acquisition of a 23.2% interest in Inoveon
Corporation and the exclusive right to market a proprietary national system
to help optometrists manage diabetic retinopathy, and (vii) the completion
of the integration of the $117.6 million contact lens business of
Pilkington plc which Wesley Jessen acquired in 1996.
7. The historical trading prices of Wesley Jessen's Shares which have
been as high as $40 per Share as recently as January 7, 2000, and the
Wesley Jessen Board's belief that, while the stock markets have been
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highly volatile, there have been no material adverse changes in the
business, financial condition, results of operations, current business
strategy and future prospects of Wesley Jessen. Moreover, many analysts had
stand-alone price targets ranging from $40 to $45 per share or more even
before the strategic Ocular merger was announced.
8. The Bausch & Lomb Offer fails to take into consideration the critical
value of Wesley Jessen in the contact lens industry and the value of
removing a growing, aggressive competitor that would, with the completion
of the pending strategic Ocular merger, become the second largest soft
contact lens company with the broadest product line in the industry.
9. The significant uncertainties and contingencies associated with the
Bausch & Lomb Offer, including conditions which (i) are in the sole
discretion of Bausch & Lomb, (ii) are subject to external events not
directly related to Wesley Jessen or (iii) are not within the control of
Wesley Jessen or Bausch & Lomb.
10. The fact that, since disclosure of the Bausch & Lomb Offer at $34
per Share, Wesley Jessen's stock price has traded above $34 per Share,
indicating to the Wesley Jessen Board that the shareholders believe that
$34 per Share is an inadequate amount and, possibly, that another party may
be willing to pay in excess of $34 per Share.
In light of the above factors, the Wesley Jessen Board determined that the
Bausch & Lomb Offer is not in the best interests of Wesley Jessen and Wesley
Jessen's shareholders. ACCORDINGLY, THE WESLEY JESSEN BOARD UNANIMOUSLY
RECOMMENDS THAT WESLEY JESSEN'S SHAREHOLDERS REJECT THE BAUSCH & LOMB OFFER
AND NOT TENDER THEIR SHARES PURSUANT TO THE BAUSCH & LOMB OFFER.
The foregoing discussion of the information and factors considered by the
Wesley Jessen Board is not intended to be exhaustive but addresses all of the
material information and factors considered by the Wesley Jessen Board in its
consideration of the Bausch & Lomb Offer. In view of the variety of factors
and the amount of information considered, the Wesley Jessen Board did not find
it practicable to provide specific assessments of, quantify or otherwise
assign any relative weights to the specific factors considered in determining
to recommend that shareholders reject the Bausch & Lomb Offer. Such
determination was made after consideration of all the factors taken as a
whole. In addition, individual members of the Wesley Jessen Board may have
given differing weights to different factors. Throughout its deliberations,
the Wesley Jessen Board received the advice of Bear Stearns and Skadden, Arps,
Slate, Meagher & Flom LLP, who were retained to advise the Wesley Jessen Board
in connection with the Bausch & Lomb Offer, and Sweeney Lev & Blinkoff LLP,
Wesley Jessen's regular counsel.
No Intention to Tender
To Wesley Jessen's knowledge after reasonable inquiry, none of Wesley
Jessen's executive officers, directors and affiliates currently intend to
either (i) tender any of the Shares held of record or beneficially by them
pursuant to the Bausch & Lomb Offer, or (ii) vote any of the Shares held of
record or beneficially by them for the approval and adoption of the Proposed
Bausch & Lomb Merger. The foregoing does not include any Shares over which, or
with respect to which, any such executive officer, director or affiliate acts
in a fiduciary or representative capacity or is subject to the instructions of
a third party with respect to such tender.
Item 5. Person/Assets, Retained, Employed, Compensated or Used.
Bear Stearns
Bear Stearns was retained pursuant to the terms of a letter agreement dated
as of January 5, 2000 (the "Bear Stearns Letter Agreement I"), initially, to
serve as Wesley Jessen's financial advisor with respect to the merger of
Ocular with Wesley Jessen. Pursuant to the Bear Stearns Letter Agreement I,
Wesley Jessen has agreed to pay Bear Stearns the following compensation:
(a) if Bear Stearns renders any opinion relating to any transaction, a
cash fee of $500,000 for the first such opinion (with each additional
opinion being without additional fee);
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(b) if a transaction is consummated, an additional cash fee equal to
$3,100,000 (against which fee there will be credited any fees paid to Bear
Stearns pursuant to clause (a) above);
(c) if a transaction is not consummated, but Wesley Jessen receives a
"break-up" fee or any other payment as a result of the termination or
cancellation of Wesley Jessen's efforts to effect a transaction, a judgment
for damages or an amount in settlement of any dispute relating to a
transaction, or any payment from Ocular not otherwise described in this
sub-paragraph (c), a cash fee equal to 15% of such fee, payment, judgment
or amount.
The foregoing fees will be payable upon the occurrence, during the term of
the Bear Stearns Letter Agreement I or within one year of its termination, of
any event specified above, or upon the occurrence of any event specified above
with respect to which an agreement was executed by Wesley Jessen during the
term of the Bear Stearns Letter Agreement I or within one year of its
termination.
Following the commencement of the Bausch & Lomb Offer, Bear Stearns was
retained pursuant to the terms of a letter agreement dated as of March 28,
2000 (the "Bear Stearns Letter Agreement II"), to serve as Wesley Jessen's
exclusive financial advisor with respect to the Bausch & Lomb Offer. Pursuant
to the Bear Stearns Letter Agreement II, Wesley Jessen has agreed to pay Bear
Stearns the following compensation:
(a) upon execution of the Bear Stearns Letter Agreement II, an initial
non-refundable cash fee in the amount of $1,000,000;
(b) upon the earlier of (i) rendering an opinion (oral or written) or
(ii) the execution by Wesley Jessen of any agreement relating to a Sale
Transaction (as defined below) or recapitalization, an additional cash fee
of $1,000,000;
(c) if a Sale Transaction (other than the sale of Wesley Jessen's voting
securities representing less than 50% of the voting power of the then
outstanding securities, in which case the fee payable to Bear Stearns shall
be consistent with compensation arrangements customarily agreed to by Bear
Stearns in similar circumstances) is consummated, an additional cash fee
equal to 0.70% of the aggregate transaction value (against which fee there
will be credited any fees paid to Bear Stearns pursuant to clauses (a) and
(b) above);
(d) if a recapitalization is consummated, an additional cash fee equal
to 0.70% of the sum of (i) the aggregate principal amount of any debt
securities exchanged by Wesley Jessen with its shareholders, (ii) the
aggregate value of any Shares repurchased by Wesley Jessen, (iii) the
aggregate value of any dividend, spin-off, split-off, or other distribution
by Wesley Jessen of cash, debt or Shares or other assets or property and
(iv) the aggregate value of any Shares retained by Wesley Jessen's
shareholders in connection with the recapitalization;
(e) in the event that Wesley Jessen shall neither (i) have entered into
a Sale Transaction or recapitalization prior to November 30, 2000, nor (ii)
have any "Non-Approved Significant Stockholder" on November 30, 2000, an
additional cash fee of $5,000,000 (against which fee there will be credited
any fees paid to Bear Stearns pursuant to clauses (a) and (b) above and any
amounts which become payable pursuant to the Bear Stearns Letter Agreement
I).
The foregoing fees will be payable upon the occurrence, during the term of
the Bear Stearns Letter Agreement II or within one year of its termination, of
any event specified above, or upon the occurrence of any event specified above
with respect to which an agreement was executed by Wesley Jessen during the
term of the Bear Stearns Letter Agreement II or within one year of its
termination.
The term "Sale Transaction" in the Bear Stearns Letter Agreement II means:
(i) any merger, consolidation, reorganization, recapitalization,
restructuring, leveraged buyout, business combination or other transaction
pursuant to which Wesley Jessen is acquired by, or combined with, a third
party (other than any business combination with Ocular where Wesley Jessen's
shareholders continue to own a majority of the combined company), or (ii) the
acquisition, directly or indirectly, by a third party, in a single transaction
or series of transactions, of any assets or operations of Wesley Jessen or any
outstanding shares of Wesley Jessen's capital stock (or securities convertible
into such stock). The term "recapitalization" in the Bear Stearns Letter
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Agreement II includes (w) any extraordinary dividend or distribution paid by
Wesley Jessen to its shareholders, (x) a purchase by Wesley Jessen of 5% or
more of its Common Stock, (y) a sale or spin-off of all or substantially all
of the assets of, or 5% or more of the capital stock of, any subsidiary or
division of Wesley Jessen, and (z) any transaction or series of transactions
which has the effect of significantly altering the capitalization of
Wesley Jessen.
Under the terms of each of the Bear Stearns Letter Agreements I and II,
Wesley Jessen has also agreed to reimburse Bear Stearns for all fees, costs
and expenses (including all legal and other expenses of counsel and other
consultants and advisors) and to indemnify Bear Stearns and certain related
parties against certain liabilities relating to or arising out of Bear
Stearns' engagement.
Bear Stearns has provided investment banking services to Wesley Jessen from
time to time in the past for which it has received customary compensation.
BT Alex. Brown Incorporated
BT Alex. Brown Incorporated ("BT Alex. Brown") was retained pursuant to the
terms of a letter agreement dated as of October 5, 1998 (the "BT Letter
Agreement"), to provide advisory and investment banking services with respect
to the exploration of strategic alternatives that could lead to a transaction.
Wesley Jessen was notified by BT Alex. Brown in late March, 2000, that BT
Alex. Brown believes that Wesley Jessen would owe BT Alex. Brown a fee
pursuant to the BT Letter Agreement in the event a transaction is concluded
with Bausch & Lomb. Wesley Jessen has stated that it does not believe such a
fee would be due BT Alex Brown under the BT Letter Agreement. Such fee, if
payable, would be 0.95% of the aggregate consideration payable to Wesley
Jessen or its shareholders.
Bain Capital, Inc.
For a description of the Advisory Agreement, which may involve a possible
fee in connection with the Bausch & Lomb Offer or the Merger of Ocular with
Wesley Jessen, see "Advisory Agreement" under item 3 above.
Innisfree M&A Incorporated
Wesley Jessen has retained Innisfree M&A Incorporated ("Innisfree") as its
proxy solicitor in connection with the Bausch & Lomb Offer, the Bausch & Lomb
Nomination and related matters. Wesley Jessen will pay Innisfree reasonable
and customary fees for its services, reimburse it for its reasonable out-of-
pocket expenses and provide customary indemnities.
Sard Verbinnen
Wesley Jessen has retained Sard Verbinnen & Co. ("Sard Verbinnen") as its
public relations advisor in connection with the Bausch & Lomb Offer, the
Bausch & Lomb Nomination and related matters. Wesley Jessen will pay Sard
Verbinnen reasonable and customary fees for its services, reimburse it for its
reasonable out-of-pocket expenses and provide customary indemnities.
Except as disclosed herein, neither Wesley Jessen nor any person acting on
its behalf currently intends to employ, retain or compensate any other person
to make solicitations or recommendations to security holders on its behalf
concerning the Bausch & Lomb Offer.
Item 6. Interest in Securities of the Subject Company.
Except for 192 Shares purchased under the Wesley Jessen VisionCare, Inc.
Employee Stock Discount Purchase Plan and 758 Shares purchased under the
Wesley Jessen Savings and Retirement Plan, no transactions in Shares have been
effected during the past 60 days by Wesley Jessen or any subsidiary of Wesley
Jessen or, to the best of Wesley Jessen's knowledge, by any executive officer,
director or affiliate of Wesley Jessen.
Item 7. Purposes of the Transaction and Plans or Proposals.
(a) Except as indicated in Items 3 and 4 above, no negotiations are being
undertaken or are underway by Wesley Jessen in response to the Bausch & Lomb
Offer which relate to a tender offer or other acquisition of Wesley Jessen's
securities by Wesley Jessen, any subsidiary of Wesley Jessen or any other
person.
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(b) Except as indicated in Items 3 and 4 above, no negotiations are being
undertaken or are underway by Wesley Jessen in response to the Bausch & Lomb
Offer which relate to, or would result in, (i) an extraordinary transaction,
such as a merger, reorganization or liquidation, involving Wesley Jessen or
any subsidiary of Wesley Jessen, (ii) a purchase, sale or transfer of a
material amount of assets by Wesley Jessen or any subsidiary of Wesley Jessen,
or (iii) any material change in the present dividend rate or policy, or
indebtedness or capitalization of Wesley Jessen.
(c) Except as indicated in Items 3 and 4 above, there are no transactions,
board resolutions, agreements in principle or signed contracts in response to
the Bausch & Lomb Offer that relate to or would result in one or more of the
matters referred to in this Item 7.
Item 8. Additional Information.
DGCL 203
Section 203 of the Delaware General Corporation Law (the "DGCL") purports
to regulate certain business combinations of a corporation organized under
Delaware law, such as Wesley Jessen, with a stockholder beneficially owning
15% or more of the outstanding voting stock of such corporation (an
"Interested Stockholder"). Section 203 provides, in relevant part, that the
corporation shall not engage in any business combination for a period of three
years following the date such stockholder first becomes an Interested
Stockholder unless (i) prior to the date the stockholder first becomes an
Interested Stockholder, the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an Interested Stockholder, (ii) upon 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, or (iii) on or subsequent to the date the stockholder becomes an
Interested Stockholder, the business combination is approved by the board of
directors and authorized at an annual or special meeting of stockholders by
the affirmative vote of at least two-thirds of the outstanding voting stock
which is not owned by the Interested Stockholder. The Wesley Jessen Board has
not approved a business combination or other transaction which would result in
Bausch & Lomb becoming an Interested Stockholder. Accordingly, Section 203 of
the DGCL is applicable to the Bausch & Lomb Offer and the Proposed Bausch &
Lomb Merger and the transactions contemplated thereby.
DGCL 253
Under Section 253 of the DGCL, if Purchaser acquires, pursuant to the
Bausch & Lomb Offer or otherwise, at least 90% of the outstanding Shares,
Purchaser will be able to effect the Proposed Bausch & Lomb Merger after
consummation of the Bausch & Lomb Offer without a meeting of Wesley Jessen's
shareholders. However, if Purchaser does not acquire at least 90% of the
outstanding Shares pursuant to the Bausch & Lomb Offer or otherwise, a meeting
of Wesley Jessen's shareholders will be required under the DGCL to effect the
Proposed Bausch & Lomb Merger.
Antitrust--United States
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the rules 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 United States Department of Justice (the "Antitrust Division")
and the FTC and certain waiting period requirements have been satisfied. The
acquisition of Shares by Purchaser pursuant to the Bausch & Lomb Offer is
subject to such requirements.
Under the provisions of the HSR Act applicable to the Bausch & Lomb Offer,
the purchase of Shares under the Bausch & Lomb Offer may not be consummated
until the expiration of a 15-calendar day waiting period following the filing
by Bausch & Lomb of a Notification and Report Form with respect to the Bausch
& Lomb
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Offer. To Wesley Jessen's knowledge, Purchaser had not filed its Notification
and Report Forms with respect to the Bausch & Lomb Offer and the Proposed
Bausch & Lomb Merger with the Antitrust Division and the FTC as of April 10,
2000. The Antitrust Division or the FTC may extend the waiting periods of such
filing by requesting additional information or documentary material relevant
to the acquisition. If such a request is made, the waiting period will be
extended until 11:59 P.M., New York City time, on the tenth day after Bausch &
Lomb has substantially complied with such request. Thereafter, such waiting
periods can be extended only by court order or consent. Although Wesley Jessen
is required to file certain information and documentary material with the
Antitrust Division and the FTC in connection with the Bausch & Lomb Offer,
neither Wesley Jessen's failure to make such filings nor a request to Wesley
Jessen from the Antitrust Division for additional information or documentary
material will extend the waiting period.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by
Purchaser pursuant to the Bausch & Lomb Offer. At any time before or after the
consummation of any such transactions, the Antitrust Division or the FTC
could, notwithstanding termination of the waiting period, take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Bausch & Lomb Offer or seeking divestiture of Shares so acquired or
divestiture of substantial assets of Bausch & Lomb or Wesley Jessen or any of
their respective subsidiaries. State attorneys general may also bring legal
actions under the antitrust laws, and private parties may bring such actions
under certain circumstances.
Non-U.S. Regulatory Approvals
Certain other countries have regulatory requirements that may be applicable
to the Bausch & Lomb Offer and/or the Proposed Bausch & Lomb Merger. The
parties are in the process of determining whether and to what extent such
requirements are applicable and, if so, what impact such requirements would
have on the timing of the Bausch & Lomb Offer and/or the Proposed Bausch &
Lomb Merger.
Appraisal Rights
No appraisal rights are available to holders of Shares in connection with
the Bausch & Lomb Offer. However, if the Proposed Bausch & Lomb Merger is
consummated, holders of Shares may have certain rights under Section 262 of
the DGCL to dissent and demand appraisal of, and payment in cash for the fair
value of, their Shares. Such rights, if the statutory procedures are complied
with, could lead to a judicial determination of the fair value (excluding any
element of value arising from accomplishment or expectation of the Proposed
Bausch & Lomb Merger) required to be paid in cash to such dissenting holders
for their Shares. Any such judicial determination of the fair value of Shares
could be based upon considerations in addition to the applicable offer price
and the market value of Shares, including asset values and the investment
value of Shares. The value so determined could be more or less than the Offer
Price.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his or her right to
appraisal, as provided in the DGCL, each of the Shares of such holder will be
converted into the Offer Price in accordance with the Bausch & Lomb Offer. A
shareholder may withdraw his or her demand for appraisal by delivery to
Purchaser of a written withdrawal of his or her demand for appraisal and
acceptance of the Proposed Bausch & Lomb Merger.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
Preferred Share Purchase Rights.
The following description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement which is
filed as exhibit 1.1 to Wesley Jessen's registration statement on Form 8-A
filed with the SEC on November 22, 1999.
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On November 16, 1999, the Wesley Jessen Board authorized the issuance of
one Right for each outstanding share of Common Stock, and all shares of Common
Stock that become outstanding after November 26, 1999 and prior to the
earliest of the Distribution Date (as defined below), the redemption of the
Rights, the exchange of the Rights, and the expiration of the Rights (and, in
certain cases, following the Distribution Date). Each Right entitles the
registered holder to purchase from Wesley Jessen one one-thousandth of a share
of Junior Participating Preferred Stock, Series A, par value $.01 per share,
of Wesley Jessen (the "Preferred Shares") at a price of $180.00 per one one-
thousandth of a Preferred Share (the "Purchase Price"), subject to adjustment.
The Rights will be evidenced by Common Stock certificates and not by
separate certificates until the earlier to occur of (i) the tenth day after a
person or group other than certain "Exempt Persons" (an "Acquiring Person"),
together with persons affiliated or associated with that Acquiring Person, has
acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding shares of Common Stock (a "Triggering Event") and (ii)
the tenth business day (subject to delay by action of the Wesley Jessen Board
in certain cases) after the commencement or public disclosure of an intention
to commence a tender offer or exchange offer by a person other than an exempt
person if, upon consummation of the offer, such person could acquire
beneficial ownership of 15% or more of the outstanding Shares (the earlier of
such dates being called the "Distribution Date").
Until the Distribution Date (or earlier redemption, exchange or expiration
of the rights), the Rights will be transferred with and only with the shares
of Common Stock, and the surrender for transfer of any certificate for shares
of Common Stock will also constitute the transfer of the Rights associated
with such shares of Common Stock. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the shares of Common
Stock as of the close of business on the Distribution Date, and those separate
Right Certificates alone will evidence the Rights.
The Rights will first become exercisable after the Distribution Date
(unless sooner redeemed or exchanged). Until a Right is exercised, the holder
of that Right, as such, will have no rights as a shareholder of Wesley Jessen,
including, without limitation, the right to vote or to receive dividends. The
Rights will expire at the close of business on November 26, 2009 (the
"Expiration Date"), unless earlier redeemed or exchanged by Wesley Jessen as
described below.
In the event that a person becomes an Acquiring Person, each Right (other
than Rights that are or were beneficially owned by the Acquiring Person and
certain related persons and transferees, which will thereafter be void) shall
thereafter be exercisable not for Preferred Shares, but for a number of shares
of Common Stock having a market value of two times the exercise price of the
Right. In the event that, at the time or after a person becomes an Acquiring
Person, Wesley Jessen is involved in a merger or other business combination in
which (i) Wesley Jessen is not the surviving corporation, (ii) shares of
Common Stock are changed or exchanged, or (c) 50% or more of Wesley Jessen's
consolidated assets or earning power are sold, then each Right (other than
Rights that are or were owned by the Acquiring Person and certain related
persons and transferees, which will thereafter be void) shall thereafter be
exercisable for a number of shares of Common Stock of the acquiring company
having a market value of two times the exercise price of the Right.
In addition, at any time after a person has become an Acquiring Person, but
before a person has acquired beneficial ownership of 50% or more of the
outstanding shares of Common Stock, Wesley Jessen may elect to exchange all or
part of the Rights (excluding void Rights held by an Acquiring Person and
certain related persons and transferees) for shares of Common Stock on a one-
for-one basis.
The Purchase Price payable, and the number and kind of securities, cash or
other property issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend or
distribution on, or a subdivision or combination of, the shares of Common
Stock, (ii) upon the grant to holders of the shares of Common Stock of rights,
options or warrants to subscribe for shares of Common Stock or securities
convertible into shares of Common Stock at less than the current market price,
(iii) upon the distribution to holders of the shares of Common Stock of
securities, cash, evidences of indebtedness or assets
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(excluding regular periodic cash dividends out of earnings or retained
earnings) and (iv) in connection with recapitalizations of Wesley Jessen or
reclassifications of the shares of Common Stock.
No fractional Preferred Shares will be issued (other than fractions that
are integral multiples of one one-thousandth of a Preferred Share, which may,
at the election of Wesley Jessen, be evidenced by depositary receipts) and, in
lieu of those fractional Preferred Shares, Wesley Jessen will make an
adjustment in cash based on the market price of the Preferred Shares on the
last trading date prior to the date of exercise.
At any time prior to the earlier of (i) the tenth day after the public
announcement that a person has become an Acquiring Person and (b) the
Expiration Date, the Wesley Jessen Board may redeem the Rights in whole, but
not in part, at a price of $0.001 per Right (the "Redemption Price"). The
Redemption Price will be payable in cash, shares (including fractional shares)
of Common Stock or any other form of consideration deemed appropriate by the
Wesley Jessen Board. Immediately upon action of the Wesley Jessen Board
ordering redemption of the Rights, the ability of holders to exercise the
Rights will terminate and the only rights of such holders will be to receive
the Redemption Price.
At any time prior to the public announcement that a person has become an
Acquiring Person, the Wesley Jessen Board may amend or supplement the Rights
Agreement without the approval of the Rights Agent or any holder of the
Rights. Thereafter, the Rights Agreement may not be amended or changed in any
manner that would adversely affect the interests of the holders of the Rights
(other than an Acquiring Person or an affiliate or associate of that Acquiring
Person).
The Preferred Shares purchasable upon exercise of the Rights are not
redeemable. Each Preferred Share is entitled to a minimum preferential
quarterly dividend payment equal to the greater of $25 per share and 1,000
times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment equal to the greater of $100 per share and
1,000 times the payment made per share of Common Stock. Each Preferred Share
will have 1,000 votes per share, voting together with the shares of Common
Stock. In the event of any merger, consolidation or other transaction in which
shares of Common Stock are exchanged, each Preferred Share will be entitled to
receive 1,000 times the amount received per share of Common Stock.
In connection with the pending merger of Ocular with Wesley Jessen, the
Wesley Jessen Board approved an amendment to the Rights Agreement to exempt
the option issued to Ocular from the terms and provisions of the Rights
Agreement by adding Ocular to the definition of "Exempt Person" thereunder.
Amendment No. 1 to the Rights Agreement, dated March 20, 2000, is filed as an
exhibit to Wesley Jessen's Form 8-K/A, filed on April 7, 2000.
The Wesley Jessen Board has concluded that there is a reasonable likelihood
that the Bausch & Lomb Offer could result in a Superior Proposal under the
Ocular Merger Agreement and, therefore, has deferred the Distribution Date for
the Rights until 12:00 midnight, Eastern time, on Thursday, April 27, 2000.
Certain Litigation
On April 3, 2000, Bausch & Lomb commenced litigation against Wesley Jessen,
the Wesley Jessen Board and Ocular in the Court of Chancery of the State of
Delaware, where both Wesley Jessen and Ocular are incorporated. Bausch &
Lomb's complaint states that the Ocular Merger Agreement was entered into in
breach of the Wesley Jessen Board's fiduciary duties to act on a fully
informed basis and to advance the best interests of Wesley Jessen
shareholders. The complaint seeks injunctive relief against the Ocular Merger
Agreement, seeks to require the Wesley Jessen Board to redeem the preferred
share purchase rights to permit shareholders to accept the Bausch & Lomb Offer
and requests a declaration that any break-up fee Ocular receives will be held
by it as a constructive trustee. The foregoing summary is qualified in its
entirety by reference to the complaint, which is filed as Exhibit (a)(9) to
Amendment No. 1 to the SC TO/A filed by Bausch & Lomb on April 4, 2000, and
incorporated herein by reference.
17
<PAGE>
On March 23, and March 24, 2000, respectively, Ari Parnes and Royla Cochran
commenced separate lawsuits, on behalf of themselves and all other holders of
Wesley Jessen Common Stock other than the defendants and their affiliates,
against Wesley Jessen and the Wesley Jessen Board in the Court of Chancery of
the State of Delaware, where Wesley Jessen is incorporated. On April 6, 2000,
Mr. Parnes and Ms. Cochran filed an amended complaint which joined their
separate actions. The amended complaint alleges that the Wesley Jessen Board
breached their fiduciary duties of care, loyalty and good faith toward Wesley
Jessen shareholders by approving the merger of Ocular with Wesley. The amended
complaint seeks certification as a class action, injunctive relief against the
Ocular Merger Agreement and a direction that the Wesley Jessen Board (i) give
due consideration to any proposed business combination and (ii) ensure that no
conflicts exist between the interests of the Wesley Jessen directors and those
of the Wesley Jessen public shareholders or resolve any conflicts in favor of
the best interests of Wesley Jessen's public shareholders.
Pursuant to Section 27A(b)(2)(C) of the Securities Act, the safe harbor for
forward looking statements under the Private Securities Litigation Reform Act
of 1995 is not applicable to a forward looking statement made in connection
with a tender offer.
Item 9. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
1. Letter to Shareholders from Kevin Ryan dated April 10, 2000*.
2. Letter to Ocular from Kevin Ryan dated April 10, 2000.
3. Bilateral Confidentiality Agreement, dated February 28, 2000,
between Wesley Jessen VisionCare, Inc. and Bausch & Lomb .
4. Press Release issued by Wesley Jessen VisionCare, Inc. on
April 10, 2000.
5. Amended and Restated Advisory Agreement, dated as of October
2, 1996, between Wesley Jessen Corporation and Bain Capital,
Inc. (1)
6. Wesley Jessen's Proxy Statement for the 1999 Annual Meeting,
filed April 22, 1999.
7. Employment Agreement, dated October 1, 1999, between Wesley
Jessen and Kevin Ryan. (2)
8. Employment Agreement, dated June 28, 1995, between Wesley J.
Jessen and Edward J. Kelley. (1)
9. Unsecured Promissory Note, dated as of May 7, 1997, by Kevin
J. Ryan in favor of Wesley-Jessen Corporation. (3)
</TABLE>
- --------
(1) Incorporated by reference to the applicable exhibit to Wesley Jessen's
Registration Statement on Form S-1, Registration No. 333-17353.
(2) Incorporated by reference to the applicable exhibit to Wesley Jessen's
Annual Report on Form 10-K for the annual period ended December 31, 1999,
File No. 0-22033.
(3) Incorporated by reference to the applicable exhibit to Wesley Jessen's
Registration Statement on Form S-1, Registration No. 333-32493.
*Included in the copy of the Schedule 14D-9 mailed to Wesley Jessen's
shareholders.
18
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
/s/ Kevin J. Ryan
By: _________________________________
Kevin J. Ryan
Chairman and Chief Executive
Officer
Dated: April 10, 2000
19
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Security
Ownership
-----------------
Common
Name Position Stock Options
- ---- -------- ------ ---------
<S> <C> <C> <C>
Kevin J. Ryan........... Chairman of the Board, 47,058 1,021,600
President and Chief Executive Officer
Edward J. Kelley........ Vice President, Finance, Chief 44,943 158,770
Financial Officer and Director
Raleigh S. Althisar, Vice President, Worldwide Manufacturing 505 115,316
Jr.....................
Ronald J. Artale........ Vice President and Controller -- 28,623
Lawrence L. Chapoy...... Vice President, Research & Development 14,940 70,778
William M. Flynn........ Vice President, Pan Asia 8,553 52,958
Joseph F. Foos.......... Vice President, Scientific Affairs 12,422 68,357
George H. McCrary....... Vice President, Americas 41,913 38,482
Daniel M. Roussel....... Vice President, Europe 12,563 166,890
Thomas F. Steiner....... Vice President, Marketing 7,199 105,800
Michael A. D'Amato...... Director -- 12,000
Adam W. Kirsch (1)...... Director 94,644 14,000
Sol Levine.............. Director 15,000 12,000
John W. Maki (1)........ Director 94,644 14,000
John J. O'Malley (1).... Director 94,644 14,000
Stephen G. Pagliuca Director 687,428 14,000
(1)(2).................
</TABLE>
- --------
(1) Includes 44,240 shares of Common Stock held by BCIP Associates ("BCIP")
and 50,404 shares of Common Stock held by BCIP Trust Associates, L.P.
("BCIP Trust"). Each of Messrs. Kirsch, Maki, O'Malley and Pagliuca are
general partners of BCIP and BCIP Trust. Each disclaims beneficial
ownership of such shares except to the extent of his respective pecuniary
interest therein.
(2) Includes 276,432 shares of Common Stock held by Bain Capital Fund IV, L.P.
and 316,352 shares of Common Stock held by Bain Capital Fund IV-B, L.P.
Mr. Pagliuca is a Managing Director of the general partner of such funds.
Mr. Pagliuca disclaims beneficial ownership of such shares except to the
extent of his pecuniary interest therein.
20
<PAGE>
Exhibit 1
[Wesley Jessen VisionCare, Inc. letterhead]
April 10, 2000
To Fellow Shareholders:
On April 3, 2000, Bausch & Lomb Incorporated, through its wholly owned
subsidiary, Dylan Acquisition Inc., commenced an unsolicited tender offer for
all outstanding shares of common stock of Wesley Jessen VisionCare, Inc. at
$34 per share in cash.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY
DETERMINED THAT BAUSCH & LOMB'S OFFER IS INADEQUATE, IS NOT IN THE BEST
INTERESTS OF WESLEY JESSEN AND ITS SHAREHOLDERS AND DOES NOT ADEQUATELY
REFLECT THE VALUE OR PROSPECTS OF WESLEY JESSEN. ACCORDINGLY, THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU REJECT BAUSCH & LOMB'S OFFER AND NOT TENDER
ANY OF YOUR SHARES TO BAUSCH & LOMB.
In recommending that shareholders reject Bausch & Lomb's offer, your Board
has taken into account a variety of factors, including:
. the Board's and your management's views that the Bausch & Lomb offer is
inadequate and does not reflect the future earnings, financial condition
and prospects of Wesley Jessen and that the Bausch & Lomb offer is an
attempt by Bausch & Lomb to usurp for itself the future growth in
revenues, net income, cash flow and stock price appreciation that is only
beginning to result from Wesley Jessen's recent initiatives aimed at
making Wesley Jessen the premier global contact lens company. In this
regard, the Board noted, among others, the following completed and
pending initiatives: (i) the announced strategic merger with Ocular
Sciences, Inc., (ii) the announced strategic alliance with the U.S.
Consumer Products Division of Alcon Laboratories, (iii) the launch of a
new line of soft lenses designed to enhance sports performance, (iv) the
introduction of new lines of disposable bifocal lenses and frequent-
replacement toric color blend lenses and (v) the recent acquisitions of
three additional lens companies outside the United States and other
potential strategic initiatives.
. the record revenues and strong revenue growth achieved by Wesley Jessen
in the first quarter of 2000 which Wesley Jessen expects to result in
diluted earnings per share of $0.43 to $0.44.
. the advice of Bear, Sterns & Co. Inc., Wesley Jessen's financial advisor,
that Bausch & Lomb's offer price is inadequate from a financial point of
view to Wesley Jessen shareholders (other than Bausch & Lomb and its
affiliates).
. the advice of Bear, Stearns & Co. Inc., that, based on the $30 million in
synergies that Bausch & Lomb has projected and the analysts' consensus
earnings estimates for Wesley Jessen and Bausch & Lomb, Bausch & Lomb
could pay in excess of $42 per share without diluting Bausch & Lomb's
2001 and 2002 earnings per share.
. the disclosure in Bausch & Lomb's Offer to Purchase of Bausch & Lomb's
willingness to pay significantly in excess of its current $34 per share
offer for Wesley Jessen.
E-1
<PAGE>
. the significant anticipated benefits to Wesley Jessen's shareholders from
the completion of Wesley Jessen's previously announced strategic merger
with Ocular Sciences which Bausch & Lomb's offer threatens to disrupt. In
particular, among other things, the Ocular merger would create the second
largest soft contact lens company in the world with the broadest product
line in the industry. The combined company would have (i) significant
operational synergies, (ii) the opportunity to leverage Wesley Jessen's
global direct sales force to expand Ocular Sciences' market penetration,
(iii) access to all of the lens wearer market with excellent
opportunities to cross sell color and clear lenses, (iv) expected 2001
earnings per share accretion of approximately $0.35-$0.38, leading to
earnings per share growth in excess of 30% in that year, and (v) a
projected stock price for Wesley Jessen shares in excess of $34 per share
based upon the projected combined earnings and historical average
price/earnings multiples.
. the historical price of Wesley Jessen's common stock which has been as
high as $40 per share as recently as January 7, 2000 and the Board's
belief that, while the stock markets have been highly volatile, there
have been no material adverse changes in the business, financial
condition, results of operations and future prospects of Wesley Jessen
and that the Bausch & Lomb offer is opportunistically timed to exploit
Wesley Jessen's recent stock price in relation to recent historical
trading patterns. Moreover, many analysts had stand-alone price targets
ranging from $40 to $45 per share or more even before the Ocular Sciences
strategic merger was announced.
. the Bausch & Lomb offer fails to take into account the critical value of
Wesley Jessen in the contact lens industry and the value of removing a
growing, aggressive competitor that would, with the completion of the
pending strategic merger with Ocular Sciences, become the second largest
soft contact lens company with the broadest product line in the industry.
Nevertheless, the Board has concluded that there is a reasonable likelihood
that the Bausch & Lomb proposal could result in a Superior Proposal (as
defined in the merger agreement with Ocular Sciences) and, therefore, has
instructed the management of Wesley Jessen and its advisors to undertake a
process whereby they would commence discussions with Bausch & Lomb with the
objective of eliciting Bausch & Lomb's best proposal. Any acquisition proposal
from Bausch & Lomb will be evaluated in comparison to the significant
shareholder value that the Board believes can be achieved in a strategic
business combination with Ocular Sciences.
Additional information with respect to the Board's decision to recommend
that shareholders reject Bausch & Lomb's offer and the matters considered by
the Board in reaching such decision is contained in the attached Schedule 14D-
9. We urge you to read it carefully and in its entirety.
In closing, Wesley Jessen has a proven track record of revenue and earnings
growth as well as a history of creating shareholder value. Your management and
I plan to continue such efforts on your behalf and we greatly appreciate your
continued support and encouragement.
Sincerely,
Kevin J. Ryan
Chairman of the Board and
Chief Executive Officer
E-2
<PAGE>
Exhibit 2
---------
[Wesley Jessen VisionCare, Inc. letterhead]
April 10, 2000
VIA FACSIMILE AND HAND DELIVERY
- -------------------------------
Ocular Sciences, Inc.
475 Eccles Avenue
South San Francisco, CA 94080
Attn: John Fruth, Chairman of the Board
Dear John:
Pursuant to Section 5.5 of the Agreement and Plan of Merger (the
"Merger Agreement"), dated as of March 19, 2000, among Wesley Jessen VisionCare,
Inc. ("WJ"), OSI Acquisition Corp. and Ocular Sciences, Inc. ("Ocular"), this is
to notify you that the Board of Directors of WJ has determined that there is a
reasonable likelihood that the tender offer made by Dylan Acquisition Inc., a
wholly-owned subsidiary of Bausch & Lomb Incorporated ("B&L"), which commenced
on April 3, 2000, for all of the outstanding shares of the common stock of WJ at
$34.00 per share, subject to the terms and conditions contained therein, could
result in a Superior Proposal (as defined in Section 8.11(j) of the Merger
Agreement). Consistent with this determination, the Board of Directors has
instructed the management of WJ to inform B&L of its decision and to begin
discussions with B&L. In addition, prior to providing any information regarding
WJ to B&L, WJ will obtain from B&L a confidentiality agreement containing terms
at least as stringent as those contained in the Confidentiality Agreement
<PAGE>
April 10, 2000
Page 2
between WJ and Ocular. If you have questions, regarding the foregoing, please
call me.
Sincerely,
Kevin J. Ryan
Chairman of the Board and
Chief Executive Officer
cc: Nathaniel M. Cartmell, III, Esq.
Pillsbury Madison & Sutro
50 Fremont Street
San Francisco, CA 94105
Stephen Fraidin, Esq.
Fried, Frank, Harris, Shriver
& Jacobson
Gerald B. Sweeney, Esq.
Sweeney, Lev & Blinkoff LLP
Dennis M. Myers, Esq.
Kirkland & Ellis
<PAGE>
Exhibit 3
BILATERAL CONFIDENTIALITY AGREEMENT
-----------------------------------
THIS AGREEMENT, effective February 28, 2000, by and between Bausch & Lomb
Incorporated, with an office at One Bausch & Lomb Place, Rochester, New York,
and Wesley Jessen Visioncare, Inc., with an office at 333 East Howard Avenue,
Des Plaines, Illinois.
The parties desire to explore the possibility of entering into a business
relationship, and are willing to provide each other access to certain ideas,
concepts, data or other information which in whole or in part is or will be
considered by them to be proprietary and confidential (hereinafter referred to
as "Confidential Information").
NOW, THEREFORE, in consideration of the premises, and the mutual covenants
contained herein, the parties agree as follows:
1. This Agreement provides only for the handling and protecting of
Confidential Information and shall not be construed as a teaming, joint venture,
or any other such arrangement.
2. The receiving party shall take all reasonable steps to preserve any
and all Confidential Information received from the disclosing party pursuant to
this Agreement. The receiving party will disclose the Confidential Information
only to those employees, agents and consultants whose work requires such
disclosure and who have agreed in writing to maintain such Confidential
Information in confidence. The receiving party shall not otherwise use, copy,
or disclose (either internally or to third parties) such Confidential
Information.
3. Notwithstanding any other provisions of this Agreement, the receiving
party shall not be liable for disclosure of any Confidential Information of the
disclosing party and the non-use obligations shall not apply to any such
Confidential Information if the same:
a. is now in or hereafter comes into the public domain without
breach of this Agreement and through no fault of the receiving
party, or
b. is properly and lawfully known to the receiving party prior to
the effective date of this Agreement without an obligation of
confidentiality to the other party, or
c. subsequent to disclosure hereunder, is lawfully received by the
receiving party from a third party whose rights therein are
without any restriction to disseminate the Confidential
Information, or
d. is developed by employees, agents, or consultants of the
receiving
<PAGE>
party independently of and without reference to any Confidential
Information of the disclosing party, or
e. is communicated by the disclosing party to a third party free of
any obligation of confidence.
4. The disclosure of Confidential Information by the parties shall not
result in any obligation on the part of either party to enter into any future
agreement relating to such Confidential Information or to undertake any other
obligation not set forth in a written agreement signed by the parties hereto.
Neither the execution and delivery of this Agreement nor the delivery of any
Confidential Information hereunder shall be construed as granting by
implication, estoppel or otherwise, any right in or license under any present or
future invention, trade secret, trademark, copyright, or patent, now or
hereafter owned or controlled by either party hereto.
5. This Agreement may be terminated by either party by giving thirty (30)
days written notice to the other party, and, unless sooner terminated, shall
automatically terminate twelve (12) months from the effective date hereof.
However, the receiving party's obligation to protect previously received
Confidential Information shall survive for three (3) years from the date of
receipt of such Confidential Information.
6. All Confidential Information shall remain the property of the
disclosing party and shall be returned to the disclosing party, or destroyed,
upon written request, provided that each party may retain one copy of the
disclosing party's Confidential Information for legal archival purposes only.
The disclosing party's failure to request such return or destruction, shall not
relieve the receiving party of its confidentiality obligations under this
Agreement.
7. This Agreement contains the entire understanding relative to the
protection of Confidential Information covered by this Agreement and supersedes
all prior and collateral communications, reports, and understandings, if any,
between the parties regarding such Confidential Information. No modification,
or addition to any provision hereof shall be binding unless in writing and
signed by the parties. This Agreement shall apply in lieu of and
notwithstanding any specific terms contained in any legend or statement
associated with any particular Confidential Information exchanged, and the
duties of the parties shall be determined exclusively by the terms and
conditions herein.
8. This Agreement is non-assignable and any attempt or purported
assignment of any rights hereunder by either party shall be null and void,
except that either party may assign the Agreement to a successor or assignee of
its business division to which this Agreement pertains, provided that
appropriate notice is given to the other party.
9. This Agreement shall be governed by and interpreted in accordance with
<PAGE>
the laws of the State of New York without reference to its conflict of law or
choice of law rules.
WESLEY JESSEN VISIONCARE, INC. BAUSCH & LOMB INCORPORATED
/s/ Kevin J. Ryan /s/ Robert B. Stiles
- --------------------------------- --------------------------------------
Signature Signature
Kevin J. Ryan Robert B. Stiles
- --------------------------------- Senior Vice President and General Counsel
Named Printed
CEO
- ---------------------------------
Title
(Authorized Representative)
<PAGE>
Exhibit 4
---------
Contact: George Sard/David Reno/Tina
Johnson
Sard Verbinnen & Co.
(212) 687-8080
WESLEY JESSEN BOARD REJECTS BAUSCH & LOMB'S $34 PER SHARE OFFER
DIRECTS MANAGEMENT TO HOLD EXPLORATORY DISCUSSIONS
WITH BAUSCH & LOMB
______________________________________________
DES PLAINES, IL, April 10, 2000 - Wesley Jessen VisionCare, Inc. (NASDAQ:
WJCO), the world's leading manufacturer of specialty soft contact lenses, today
announced that its Board of Directors has unanimously rejected Bausch & Lomb,
Inc.'s (NYSE: BOL) unsolicited cash tender offer for all of Wesley Jessen's
outstanding common stock at $34 per share. The Board determined that the $34
offer is inadequate and not in the best interest of the Company's stockholders,
and it recommends Wesley Jessen's stockholders reject the offer and not tender
their shares to Bausch & Lomb.
Wesley Jessen is a party to a pending merger agreement with Ocular Sciences,
Inc. (NASDAQ: OCLR) which was announced on March 20, 2000. On March 31, 2000,
Wesley Jessen's Board rejected Bausch & Lomb's previous proposal to acquire
Wesley Jessen for $34 in cash and stated that it remained committed to the
accretive strategic merger with Ocular Sciences.
Wesley Jessen also announced that its Board of Directors has instructed the
Company's management and its advisors to undertake a process whereby they would
commence discussions with Bausch & Lomb with the objective of eliciting Bausch &
Lomb's best proposal. Any acquisition proposal from Bausch & Lomb will be
evaluated in comparison to the significant shareholder value that the Board
believes can be achieved in a strategic business combination with Ocular
Sciences. In authorizing discussions, the Board determined that given Bausch &
Lomb's expression of its willingness to pay significantly in excess of its
current $34 per share offer for Wesley Jessen, there is a reasonable likelihood
that such a proposal could result in a "Superior Proposal" under the Wesley
Jessen/Ocular Sciences merger agreement. The Wesley Jessen/Ocular
<PAGE>
Sciences merger agreement remains in full force and effect. Any actions taken by
the Wesley Jessen Board will be consistent with this agreement.
Wesley Jessen noted that its stock traded at $40 per share approximately
three months ago and that many analysts had stand-alone price targets ranging
from $40 to $45 even before the accretive Ocular Sciences merger was announced.
Under the Ocular Sciences merger, Wesley Jessen expects EPS accretion of $0.35-
0.38 per share in 2001, leading to EPS growth in excess of 30% in that year.
Wesley Jessen also set June 23, 2000 as the date for its Annual Meeting of
Stockholders. Stockholders of record as of May 1, 2000 will be eligible to vote
at the meeting.
In connection with the foregoing actions, the Company is today sending the
following letter to its stockholders:
[Wesley Jessen VisionCare, Inc. letterhead]
April 10, 2000
To Fellow Shareholders:
On April 3, 2000, Bausch & Lomb Incorporated, through its wholly owned
subsidiary, Dylan Acquisition Inc., commenced an unsolicited tender offer for
all outstanding shares of common stock of Wesley Jessen VisionCare, Inc. at $34
per share in cash.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY
DETERMINED THAT BAUSCH & LOMB'S OFFER IS INADEQUATE, IS NOT IN THE BEST
INTERESTS OF WESLEY JESSEN AND ITS SHAREHOLDERS AND DOES NOT ADEQUATELY REFLECT
THE VALUE OR PROSPECTS OF WESLEY JESSEN. ACCORDINGLY, THE BOARD UNANIMOUSLY
RECOMMENDS THAT YOU REJECT BAUSCH & LOMB'S OFFER AND NOT TENDER ANY OF YOUR
SHARES TO BAUSCH & LOMB.
<PAGE>
In recommending that shareholders reject Bausch & Lomb's offer, your
Board has taken into account a variety of factors, including:
- the Board's and your management's views that the Bausch & Lomb
offer is inadequate and does not reflect the future earnings, financial
condition and prospects of Wesley Jessen and that the Bausch & Lomb offer is an
attempt by Bausch & Lomb to usurp for itself the future growth in revenues, net
income, cash flow and stock price appreciation that is only beginning to result
from Wesley Jessen's recent initiatives aimed at making Wesley Jessen the
premier global contact lens company. In this regard, the Board noted, among
others, the following completed and pending initiatives: (i) the announced
strategic merger with Ocular Sciences, Inc., (ii) the announced strategic
alliance with the U.S. Consumer Products Division of Alcon Laboratories, (iii)
the launch of a new line of soft lenses designed to enhance sports performance,
(iv) the introduction of new lines of disposable bifocal lenses and frequent-
replacement toric color blend lenses and (v) the recent acquisitions of three
additional lens companies outside the United States and other potential
strategic initiatives.
- the record revenues and strong revenue growth achieved by Wesley
Jessen in the first quarter of 2000 which Wesley Jessen expects to result in
diluted earnings per share of $0.43 to $0.44.
- the advice of Bear, Stearns & Co. Inc., Wesley Jessen's financial
advisor, that Bausch & Lomb's offer price is inadequate from a financial point
of view to Wesley Jessen shareholders (other than Bausch & Lomb and its
affiliates).
- the advice of Bear, Stearns & Co. Inc., that, based on the $30
million in synergies that Bausch & Lomb has projected and the analysts'
consensus earnings estimates for Wesley Jessen and Bausch & Lomb, Bausch &
Lomb could pay in excess of $42 per share without diluting Bausch & Lomb's 2001
and 2002 earnings per share.
- the disclosure in Bausch & Lomb's Offer to Purchase of Bausch &
Lomb's willingness to pay significantly in excess of its current $34 per share
offer for Wesley Jessen.
- the significant anticipated benefits to Wesley Jessen's
shareholders from the completion of Wesley Jessen's previously announced
strategic merger with Ocular Sciences which Bausch & Lomb's offer threatens to
disrupt. In particular, among other things, the Ocular merger would create the
second largest soft contact lens company in the world with
<PAGE>
the broadest product line in the industry. The combined company would have (i)
significant operational synergies, (ii) the opportunity to leverage Wesley
Jessen's global direct sales force to expand Ocular Sciences' market
penetration, (iii) access to all of the lens wearer market with excellent
opportunities to cross sell color and clear lenses, (iv) expected 2001 earnings
per share accretion of approximately $0.35-$0.38, leading to earnings per share
growth in excess of 30% in that year, and (v) a projected stock price for Wesley
Jessen shares in excess of $34 per share based upon the projected combined
earnings and historical average price/earnings multiples.
- the historical price of Wesley Jessen's common stock which has
been as high as $40 per share as recently as January 7, 2000 and the Board's
belief that, while the stock markets have been highly volatile, there have been
no material adverse changes in the business, financial condition, results of
operations and future prospects of Wesley Jessen and that the Bausch & Lomb
offer is opportunistically timed to exploit Wesley Jessen's recent stock price
in relation to recent historical trading patterns. Moreover, many analysts had
stand-alone price targets ranging from $40 to $45 per share or more even before
the Ocular Sciences strategic merger was announced.
- the Bausch & Lomb offer fails to take into account the critical
value of Wesley Jessen in the contact lens industry and the value of removing a
growing, aggressive competitor that would, with the completion of the pending
strategic merger with Ocular Sciences, become the second largest soft contact
lens company with the broadest product line in the industry.
Nevertheless, the Board has concluded that there is a reasonable
likelihood that the Bausch & Lomb proposal could result in a Superior Proposal
(as defined in the merger agreement with Ocular Sciences) and, therefore, has
instructed the management of Wesley Jessen and its advisors to undertake a
process whereby they would commence discussions with Bausch & Lomb with the
objective of eliciting Bausch & Lomb's best proposal. Any acquisition proposal
from Bausch & Lomb will be evaluated in comparison to the significant
shareholder value that the Board believes can be achieved in a strategic
business combination with Ocular Sciences.
<PAGE>
Additional information with respect to the Board's decision to
recommend that shareholders reject Bausch & Lomb's offer and the matters
considered by the Board in reaching such decision is contained in the attached
Schedule 14D-9. We urge you to read it carefully and in its entirety.
In closing, Wesley Jessen has a proven track record of revenue and
earnings growth as well as a history of creating shareholder value. Your
management and I plan to continue such efforts on your behalf and we greatly
appreciate your continued support and encouragement.
Sincerely,
Kevin J. Ryan
Chairman of the Board and
Chief Executive Officer
Wesley Jessen VisionCare, Inc. is the leading worldwide developer,
manufacturer and marketer of specialty contact lenses. Its products include
cosmetic lenses, which change or enhance the wearer's eye color, toric lenses,
which correct astigmatism, and premium lenses, which offer value-added features
such as protection from ultraviolet light.
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SAFE HARBOR STATEMENT
The foregoing communications contain forward-looking statements within the
meaning of the Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995. References made in the foregoing, in particular, statements
regarding the proposed business combination between WJ and OSI are based on
management's current expectations or beliefs and are subject to a number of
factors and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. In particular, the
following factors, among others, could cause actual results to differ materially
from those described in the forward-looking statements: inability to obtain, or
meet conditions imposed for, governmental approvals, the stockholders of either
WJ or OSI fail to approve the business combination; costs related to the
business combination; the risk
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that the WJ and OSI businesses will not be integrated successfully; and other
economic, business, competitive and/or regulatory factors relating to WJ's or
OSI's business generally. WJ and OSI are under no obligation to (and expressly
disclaim any such obligation to) update or alter their forward-looking
statements whether as a result of new information, future events or otherwise.
For a detailed discussion of these and other cautionary statements, please
refer to WJ's filings with the Securities and Exchange Commission (the
"Commission"), especially in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Risk Factors" sections of
WJ's Form S-3 Registration Statement (Commission File No. 333-79293), which
became effective in June 14, 1999. In addition, please refer to OSI's filings
with the Commission, especially the information set forth under the heading
"Factors That May Affect Future Results" in OSI's Quarterly Report on Form 10-Q
for the quarterly period ending September 30, 1999.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
A joint proxy statement/prospectus will be filed by Wesley Jessen VisionCare,
Inc. ("WJ") and Ocular Sciences, Inc. ("OSI") with the Commission as soon as
practicable. WE URGE INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND
ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE COMMISSION, BECAUSE THEY
CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free
copy of the joint proxy statement/prospectus (when available) and other
documents filed by WJ and OSI with the Commission at the Commission's web site
at www.sec.gov. The joint proxy statement/prospectus and other documents filed
with the Commission by WJ may also be obtained for free from WJ by directing a
request to Wesley Jessen VisionCare, Inc., 333 East Howard Avenue, Des Plaines,
IL 60018, telephone: (847) 294-3000. In addition, the joint proxy
statement/prospectus and other documents filed with the Commission by OSI may be
obtained for free from OSI by directing a request to Ocular Sciences, Inc., 475
Eccles Avenue, South San Francisco, California 94080, telephone: (650) 583-1400.
WJ and its officers and directors may be deemed to be participants in the
solicitation of proxies from WJ's stockholders with respect to the transactions
contemplated by the merger agreement. Information regarding such officers and
directors is included in WJ's Current Report on Form 8-K, dated March 21, 2000.
This document is available free of charge at the Commission's web site at
http://www.sec.gov and from WJ at the address set forth above. OSI and its
officers and directors may be deemed to be participants in the solicitation of
proxies from stockholders of OSI with respect to the transactions contemplated
by the merger agreement. Information regarding such officers and directors is
included in OSI's Proxy Statement for its 1999 Annual Meeting of Stockholders
filed with the Commission on April 26, 1999. This document is available free of
charge at the Commission's web site at http://www.sec.gov and from the OSI at
the address set forth above.
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