<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 23, 1996
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
JOHNSON & JOHNSON
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEW JERSEY 2844 22-1024240
(State or other jurisdiction
of
incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification No.)
</TABLE>
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NJ 08933
908-524-0400
(Address, including zip code, and telephone number including area code, of
Registrant's principal executive offices)
JOSEPH S. ORBAN, ESQ.
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NJ 08933
908-524-0400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
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ROBERT A. KINDLER, ESQ. WILLIAM E. CURBOW, ESQ.
CRAVATH, SWAINE & MOORE SIMPSON THACHER & BARTLETT
WORLDWIDE PLAZA 425 LEXINGTON AVENUE
825 EIGHTH AVENUE NEW YORK, NY 10017
NEW YORK, NY 10019 (212) 455-2000
(212) 474-1000
</TABLE>
------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED(1) REGISTERED(2) PER SHARE OFFERING PRICE FEE(3)
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Common Stock, par value
$1.00 per share................. 25,492,440 Not applicable Not applicable $248,221
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(1) The Registration Statement relates to securities of the Registrant issuable
to holders of common stock of Cordis Corporation, a Florida corporation
("Cordis"), in the proposed merger of a wholly owned subsidiary of the
Registrant with and into Cordis.
(2) The number of shares to be registered is based upon the product of (a) the
number of shares of Common Stock, par value $1.00 per share, of Cordis
("Cordis Common Stock") outstanding as of January 22, 1996, assuming the
exercise of all Cordis stock options (whether or not currently exercisable)
multiplied by (b) $109 divided by the average per share closing price of
Registrant's Common Stock for the 10 trading days immediately preceding
October 19, 1995 (the date on which the Registrant's intention to commence a
tender offer for all outstanding shares of Cordis Common Stock was first
publicly announced).
(3) Pursuant to Rule 457(f), the registration fee was computed on the basis of
the market value of the Cordis Common Stock to be exchanged in the proposed
merger, computed in accordance with Rule 457(c) on the basis of the average
of the high and low prices per share of such stock on the Nasdaq National
Market on January 18, 1996. In accordance with Rule 457(b), the total
registration fee of $622,500 has been reduced by $374,279, which was paid on
November 21, 1995, at the time of the filing under the Securities Exchange
Act of 1934, as amended, of preliminary copies of Cordis's proxy materials
included herein. Therefore, the registration fee payable upon filing of this
Registration Statement is $248,221.
------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
JOHNSON & JOHNSON
------------------
CROSS-REFERENCE SHEET BETWEEN ITEMS IN
FORM S-4 AND PROSPECTUS PURSUANT TO
ITEM 501(B) OF REGULATION S-K
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ITEM
NO. FORM S-4 ITEM LOCATION IN PROSPECTUS
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A. Information About the Transaction
Item 1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus.............................. Outside Front Cover Page
Item 2. Inside Front and Outside Back Cover Pages
of Prospectus........................... Table of Contents; Available
Information; Incorporation of Certain
Documents by Reference
Item 3. Risk Factors, Ratio of Earnings to Fixed
Charges, and Other Information.......... Summary
Item 4. Terms of the Transaction.................. Summary; The Special Meeting; The
Merger; The Merger Agreement;
Comparison of Rights of Holders of
Common Stock of J&J and Cordis
Item 5. Pro Forma Financial Information........... Not Applicable
Item 6. Material Contacts with the Company Being
Acquired................................ The Merger
Item 7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters...................... Not Applicable
Item 8. Interests of Named Experts and Counsel.... Experts; Legal Matters
Item 9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Not Applicable
B. Information About the Registrant
Item 10. Information With Respect to S-3
Registrants............................. Available Information; Incorporation of
Certain Documents by Reference;
Summary; The Merger; Comparative
Stock Prices and Dividends
Item 11. Incorporation of Certain Information by
Reference............................... Incorporation of Certain Documents by
Reference
Item 12. Information With Respect to S-2 or S-3
Registrants............................. Not Applicable
Item 13. Incorporation of Certain Information by
Reference............................... Not Applicable
Item 14. Information With Respect to Registrants
Other Than S-3 or S-2 Registrants....... Not Applicable
C. Information About the Company Being Acquired
Item 15. Information With Respect to S-3
Companies............................... Available Information; Incorporation of
Certain Documents by Reference;
Summary; The Merger; Comparative
Stock Prices and Dividends
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<PAGE> 3
<TABLE>
<CAPTION>
ITEM
NO. FORM S-4 ITEM LOCATION IN PROSPECTUS
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Item 16. Information With Respect to S-2 or S-3
Companies............................... Not Applicable
Item 17. Information With Respect to Companies
Other Than S-2 or S-3 Companies......... Not Applicable
D. Voting and Management Information
Item 18. Information if Proxies, Consents or
Authorization are to be Solicited....... Summary; The Special Meeting; The
Merger
1. Date, Time and Place Information....... Outside Front Cover Page; Summary
2. Revocability of Proxy.................. The Special Meeting
3. Dissenters' Rights of Appraisal........ Summary; Absence of Dissenters' Rights
4. Persons Making the Solicitation........ Summary; The Special Meeting
5. Interest of Certain Persons in Matters
to be Acted Upon and Voting
Securities and Principal Holders
Thereof........................... Incorporation of Certain Documents by
Reference; Summary; The Special
Meeting; The Merger; The Merger
Agreement; Officers and Directors
After the Merger
6. Vote Required for Approval............. The Special Meeting
7. Directors and Executive Officers,
Executive Compensation and Certain
Relationships and Related
Transactions...................... Incorporation of Certain Documents by
Reference
Item 19. Information if Proxies, Consents or
Authorizations are not to be Solicited,
or in an Exchange Offer................. Not Applicable
</TABLE>
<PAGE> 4
[LETTERHEAD OF CORDIS]
January 25, 1996
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders
(the "Special Meeting") of Cordis Corporation ("Cordis"), which will be held on
Friday, February 23, 1996, at 9:00 a.m., local time, at the Miami Airport Hilton
Hotel and Towers, 5101 Blue Lagoon Drive, Miami, Florida 33126, Key Biscayne
Meeting Room.
At the Special Meeting, holders of shares of the Common Stock, par value
$1.00 per share, of Cordis ("Cordis Common Stock"), will be asked to consider
and vote upon a proposal to approve an Agreement and Plan of Merger among
Johnson & Johnson, a subsidiary of Johnson & Johnson and Cordis (the "Merger
Agreement"), with respect to the merger of the Johnson & Johnson subsidiary with
and into Cordis as provided for in the Merger Agreement (the "Merger"). In the
Merger, each outstanding share of Cordis Common Stock, together with the
associated right under Cordis's Rights Agreement, will be converted into the
right to receive that number of shares of Common Stock, par value $1.00 per
share, of Johnson & Johnson ("J&J Common Stock"), equal to the amount obtained
by dividing $109 by the average of the closing prices per share of J&J Common
Stock on the New York Stock Exchange for the 10 trading days immediately
preceding the closing date of the Merger, as described in the accompanying Proxy
Statement/Prospectus, and Cordis will become a wholly owned subsidiary of
Johnson & Johnson. Cordis shareholders will receive cash in lieu of any
fractional shares which would otherwise be issued in the Merger.
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), Cordis's financial
advisor, has rendered its opinion that, as of the date of the Proxy
Statement/Prospectus, the consideration to be received by the holders of Cordis
Common Stock (other than Johnson & Johnson and its affiliates) pursuant to the
Merger Agreement is fair from a financial point of view to such holders. A copy
of such opinion, which sets forth the assumptions made, procedures followed,
matters considered and limitations on the review undertaken by Morgan Stanley,
appears as Annex 2 to the Proxy Statement/Prospectus.
You should read carefully the accompanying Notice of Special Meeting of
Shareholders and the Proxy Statement/Prospectus for details of the Merger and
additional related information.
THE BOARD OF DIRECTORS OF CORDIS HAS ADOPTED THE MERGER AGREEMENT,
DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF CORDIS AND ITS
SHAREHOLDERS, AND RECOMMENDS THAT THE SHAREHOLDERS OF CORDIS VOTE FOR THE
APPROVAL OF THE MERGER AGREEMENT.
The affirmative vote of holders of a majority of the outstanding shares of
Cordis Common Stock is necessary to approve the Merger Agreement.
I look forward to meeting with those shareholders who are able to be
present at the Special Meeting; however, whether or not you plan to attend the
Special Meeting, please complete, sign and date the enclosed proxy card and
return it promptly in the enclosed postage-paid envelope. If you attend the
Special Meeting, you may vote in person if you wish, even though you previously
have returned your proxy card. Your prompt cooperation will be greatly
appreciated.
<PAGE> 5
Please do not send your stock certificates with your proxy card. If the
Merger Agreement is approved by the Cordis shareholders and the Merger is
consummated, you will receive a transmittal form and instructions for the
surrender and exchange of your shares.
Thank you for your cooperation.
Sincerely,
/s/ Robert C. Strauss
--------------------------------------
Robert C. Strauss
Chairman, President and Chief
Executive Officer
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD.
<PAGE> 6
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 23, 1996
TO THE SHAREHOLDERS OF CORDIS CORPORATION:
A special meeting of the shareholders (the "Special Meeting") of Cordis
Corporation, a Florida corporation ("Cordis"), will be held on Friday, February
23, 1996, at 9:00 a.m., local time, at the Miami Airport Hilton Hotel and
Towers, 5101 Blue Lagoon Drive, Miami, Florida 33126, Key Biscayne Meeting Room,
for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and
Plan of Merger dated as of November 12, 1995, as amended on December 27,
1995 (the "Merger Agreement"), among Johnson & Johnson, a New Jersey
corporation ("J&J"), JNJ Merger Corp., a Florida corporation and wholly
owned subsidiary of J&J ("Merger Sub"), and Cordis with respect to the
merger of Merger Sub with and into Cordis upon the terms and subject to the
conditions thereof (the "Merger"). Pursuant to the Merger Agreement, Cordis
will become a wholly owned subsidiary of J&J, and each share of Common
Stock, par value $1.00 per share, of Cordis ("Cordis Common Stock") issued
and outstanding at the effective time of the Merger, together with the
associated right under Cordis's Rights Agreement, will be converted into
the right to receive that number of shares of Common Stock, par value $1.00
per share, of J&J ("J&J Common Stock") equal to the amount obtained by
dividing $109 by the average of the closing prices per share of J&J Common
Stock on the New York Stock Exchange for the 10 trading days immediately
preceding the closing date of the Merger. THE MERGER IS MORE COMPLETELY
DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, AND A COPY OF THE
MERGER AGREEMENT IS ATTACHED AS ANNEX 1 THERETO.
2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
Only holders of record of shares of Cordis Common Stock at the close of
business on January 22, 1996, the record date for the Special Meeting (the
"Record Date"), are entitled to notice of, and to vote at, the Special Meeting
and any adjournments or postponements thereof.
The affirmative vote of the holders of a majority of the outstanding shares
of Cordis Common Stock is necessary to approve the Merger Agreement.
HOLDERS OF CORDIS COMMON STOCK WILL NOT BE ENTITLED TO DISSENTERS' RIGHTS
AS A RESULT OF THE MERGER. Under Florida law, dissenters' rights are unavailable
to holders of Cordis Common Stock because Cordis Common Stock was, on the Record
Date, designated and quoted for trading as a Nasdaq National Market security.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.
YOUR PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY SIGNING AND
RETURNING A LATER DATED PROXY WITH RESPECT TO THE SAME SHARES, BY FILING WITH
THE SECRETARY OF CORDIS A WRITTEN REVOCATION BEARING A LATER DATE OR BY
ATTENDING AND VOTING AT THE SPECIAL MEETING.
By Order of the Board of Directors
/s/ ANA MARIA GONZALEZ
----------------------------------------
Ana Maria Gonzalez, Esq.
Secretary
Miami, Florida
January 25, 1996
<PAGE> 7
CORDIS CORPORATION
PROXY STATEMENT
------------------------------------
JOHNSON & JOHNSON
PROSPECTUS
This Proxy Statement/Prospectus is being furnished to the shareholders of
Cordis Corporation, a Florida corporation ("Cordis"), in connection with the
solicitation of proxies by the Board of Directors of Cordis (the "Cordis Board")
for use at the special meeting of shareholders of Cordis to be held on Friday,
February 23, 1996, at 9:00 a.m., local time, at the Miami Airport Hilton Hotel
and Towers, 5101 Blue Lagoon Drive, Miami, Florida 33126, Key Biscayne Meeting
Room, including any adjournments or postponements thereof (the "Special
Meeting").
At the Special Meeting, the holders of shares of the Common Stock, par
value $1.00 per share, of Cordis ("Cordis Common Stock") will consider and vote
upon the approval of the Agreement and Plan of Merger dated as of November 12,
1995, as amended on December 27, 1995 (the "Merger Agreement"), among Johnson &
Johnson ("J&J"), JNJ Merger Corp., a wholly owned subsidiary of J&J ("Merger
Sub"), and Cordis with respect to the merger of Merger Sub with and into Cordis
upon the terms and subject to the conditions thereof (the "Merger"). Pursuant to
the Merger Agreement, each share of Cordis Common Stock issued and outstanding
immediately prior to the effective time of the Merger, together with the
associated Right (as defined herein), will be converted into the right to
receive that number of shares of the Common Stock, par value $1.00 per share, of
J&J ("J&J Common Stock") equal to the amount obtained by dividing $109 by the
average of the closing prices per share of J&J Common Stock as reported on the
New York Stock Exchange Composite Transactions Tape for the 10 trading days
immediately preceding the closing date of the Merger (the "Closing Date") and
rounding to the nearest ten-thousandth of a share.
The Cordis Board is recommending that the shareholders of Cordis vote for
the approval of the Merger Agreement, pursuant to which Cordis would become a
wholly owned subsidiary of J&J and shareholders of Cordis would become
shareholders of J&J.
This Proxy Statement/Prospectus also serves as a Prospectus of J&J under
the Securities Act of 1933 (the "Securities Act") relating to the shares of J&J
Common Stock issuable in connection with the Merger.
This Proxy Statement/Prospectus and the accompanying form of proxy are
first being mailed to shareholders of Cordis on or about January 25, 1996.
------------------------
THE SECURITIES TO BE ISSUED IN THE MERGER HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS JANUARY 24, 1996.
<PAGE> 8
TABLE OF CONTENTS
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PAGE
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Available Information................................................................. 1
Incorporation of Certain Documents by Reference....................................... 1
Summary............................................................................... 3
Special Meeting..................................................................... 3
Votes Required...................................................................... 3
The Merger.......................................................................... 3
Certain Litigation.................................................................. 6
Market Price Data................................................................... 6
Recent Developments................................................................. 7
Certain Selected Financial Data..................................................... 7
The Special Meeting................................................................... 9
Special Meeting..................................................................... 9
Record Date; Shares Entitled to Vote; Vote Required................................. 9
Proxies; Proxy Solicitation......................................................... 9
Johnson & Johnson..................................................................... 10
Cordis Corporation.................................................................... 10
The Merger............................................................................ 10
Background of the Merger............................................................ 10
Recommendation of the Cordis Board and Reasons for the Merger....................... 14
Opinion of Financial Advisor........................................................ 14
Effective Time...................................................................... 20
Merger Consideration................................................................ 20
Exchange Agent; Exchange Procedures; Distributions with Respect to Unexchanged
Shares; No Further Ownership Rights in Cordis Common Stock; No Fractional
Shares........................................................................... 20
Stock Exchange Listing.............................................................. 21
Expenses............................................................................ 22
Certain Federal Income Tax Consequences............................................. 22
Anticipated Accounting Treatment.................................................... 23
Effect on Employee Benefit and Stock Plans.......................................... 23
Interests of Certain Persons in the Merger.......................................... 24
Resale of J&J Common Stock.......................................................... 25
No Solicitation..................................................................... 25
Right of the Cordis Board to Withdraw Recommendation................................ 26
Certain Fees and Expenses........................................................... 26
The Merger Agreement.................................................................. 27
The Merger.......................................................................... 27
Representations and Warranties...................................................... 27
Business of Cordis Pending the Merger............................................... 28
Certain Additional Agreements....................................................... 29
Conditions to the Consummation of the Merger........................................ 31
</TABLE>
i
<PAGE> 9
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PAGE
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Termination, Amendment and Waiver................................................... 31
Officers and Directors After the Merger............................................... 33
Comparative Stock Prices and Dividends................................................ 33
Comparison of Rights of Common Shareholders of J&J and Cordis......................... 34
Other Matters......................................................................... 40
Regulatory Approvals Required....................................................... 40
Certain Litigation.................................................................. 40
Absence of Dissenters' Rights......................................................... 41
Voting Securities and Principal Holders Thereof....................................... 41
Security Ownership of Directors and Executive Officers................................ 41
Experts............................................................................... 41
Legal Matters......................................................................... 42
ANNEXES
Annex 1 Agreement and Plan of Merger, as amended
Annex 2 Opinion of Morgan Stanley & Co. Incorporated
</TABLE>
ii
<PAGE> 10
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS,
IN CONNECTION WITH THE SOLICITATION AND THE OFFERING MADE BY THIS PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY OR AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES IN ANY
JURISDICTION IN WHICH SUCH SOLICITATION OR OFFERING MAY NOT LAWFULLY BE MADE.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL IMPLY THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF J&J OR CORDIS
SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
J&J and Cordis are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
with the Exchange Act, J&J and Cordis file proxy statements, reports and other
information with the Securities and Exchange Commission (the "SEC"). This filed
material can be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, DC
20549, and at the following Regional Offices of the SEC: Chicago Regional Office
(Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661)
and New York Regional Office (Seven World Trade Center, 13th Floor, New York,
New York 10048). Copies of such material can be obtained by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Washington, DC 20549, at
prescribed rates. In addition, such material can be inspected at the offices of
the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New
York 10005 for J&J, and the National Association of Securities Dealers, Inc.
(the "NASD"), 1935 K Street, N.W., Washington, DC 20006 for Cordis.
J&J has filed a Registration Statement on Form S-4 (the "Registration
Statement") with the SEC under the Securities Act with respect to the J&J Common
Stock to be issued upon consummation of the Merger. This Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto, certain portions of which have
been omitted as permitted by the rules and regulations of the SEC. Copies of the
Registration Statement (including such omitted portions) are available from the
SEC upon payment of prescribed rates. For further information, reference is made
to the Registration Statement and the exhibits filed therewith. Statements
contained in this Proxy Statement/Prospectus or in any document incorporated by
reference in this Proxy Statement/Prospectus relating to the contents of any
contract or other document referred to herein or therein are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following J&J documents are incorporated by reference in this Proxy
Statement/Prospectus: (i) J&J's Annual Report on Form 10-K for the year ended
January 1, 1995, (ii) J&J's Form 10-K/A relating to the year ended January 1,
1995, (iii) J&J's Quarterly Reports on Form 10-Q for the quarterly periods ended
April 2, 1995, July 2, 1995, and October 1, 1995, and (iv) the description of
J&J Common Stock set forth in J&J's Registration Statements filed pursuant to
Section 12 of the Exchange Act, and any amendment or report filed for the
purpose of updating any such description.
1
<PAGE> 11
The following Cordis documents are incorporated by reference in this Proxy
Statement/Prospectus: (i) Cordis's Annual Report on Form 10-K for the year ended
June 30, 1995, (ii) Cordis's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1995, and (iii) Cordis's Current Reports on Form 8-K
dated October 12, 1995, October 23, 1995, November 12, 1995, and December 27,
1995.
A copy of the documents incorporated herein by reference (excluding
exhibits unless such exhibits are specifically incorporated by reference into
the information incorporated herein) that are not presented herein or delivered
herewith will be provided by first-class mail without charge to each person,
including any beneficial owner, to whom a Proxy Statement/Prospectus is
delivered, upon oral or written request of any such person. With respect to
J&J's documents, requests should be directed to Office of the Corporate
Secretary, One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933
(telephone (908) 524-2455). With respect to Cordis's documents, requests should
be directed to Ana Maria Gonzalez, Secretary, 14201 N.W. 60th Avenue, Miami
Lakes, Florida 33014 (telephone (305) 824-2000). In order to ensure timely
delivery of the documents in advance of the meeting to which this Proxy
Statement/Prospectus relates, any such request should be made by February 16,
1996.
All reports and definitive proxy or information statements filed by J&J and
Cordis pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
subsequent to the date of this Proxy Statement/Prospectus and prior to the date
of the Special Meeting shall be deemed to be incorporated by reference into this
Proxy Statement/Prospectus from the dates of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated in
this Proxy Statement/Prospectus shall be deemed to be modified or superseded for
purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein or in any other subsequently filed document that also is or is
deemed to be incorporated by reference modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement/Prospectus.
All information contained in this Proxy Statement/Prospectus relating to
J&J or Merger Sub has been supplied by J&J, and all information relating to
Cordis has been supplied by Cordis.
2
<PAGE> 12
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained elsewhere
in this Proxy Statement/Prospectus, in the attached Annexes and in the documents
incorporated herein by reference. Shareholders are urged to read carefully this
Proxy Statement/Prospectus and the attached Annexes in their entirety.
SPECIAL MEETING
The Special Meeting will be held at 9:00 a.m., local time, on Friday,
February 23, 1996, at the Miami Airport Hilton Hotel and Towers, 5101 Blue
Lagoon Drive, Miami, Florida 33126, Key Biscayne Meeting Room. Only holders of
record of Cordis Common Stock at the close of business on January 22, 1996 (the
"Record Date"), will be entitled to notice of, and to vote at, the Special
Meeting. At the Special Meeting, holders of Cordis Common Stock will be asked to
consider and vote upon the approval of the Merger Agreement, a copy of which is
attached as Annex 1 to this Proxy Statement/Prospectus, pursuant to which Merger
Sub will be merged with and into Cordis. Cordis will be the surviving
corporation in the Merger (the "Surviving Corporation") and will become a wholly
owned subsidiary of J&J. Holders of Cordis Common Stock will also transact such
other business as may properly come before the Special Meeting.
VOTES REQUIRED
The affirmative vote of the holders of a majority of the outstanding shares
of Cordis Common Stock is required for the approval of the Merger Agreement. As
of the Record Date, there were 16,523,988 shares of Cordis Common Stock
outstanding, of which 1,235,608 shares (approximately 7.5% of the outstanding
shares of Cordis Common Stock) were beneficially owned by directors and
executive officers of Cordis and their affiliates. See "SECURITY OWNERSHIP OF
DIRECTORS AND EXECUTIVE OFFICERS". All such directors and executive officers of
Cordis and their affiliates have indicated to Cordis that they intend to vote
all such shares in favor of the approval of the Merger Agreement.
The approval of the shareholders of J&J is not required to effect the
Merger.
THE MERGER
The Parties. J&J, incorporated in New Jersey since 1887, employs
approximately 82,000 people worldwide and is engaged in the manufacture and sale
of a broad range of products in the health care field in many countries of the
world. Its principal business segments are consumer products, consisting of
toiletries and hygienic products including dental and baby care products,
first-aid products, non-prescription drugs, sanitary protection products and
adult incontinence products; pharmaceutical products consisting principally of
prescription drugs; and professional products consisting of sutures, mechanical
wound closure products, less invasive surgical instruments, diagnostic products,
medical equipment and devices, surgical instruments, joint replacements and
products for wound management and infection, which professional products are
used principally in the professional fields by physicians, nurses, therapists,
hospitals, diagnostic laboratories and clinics.
The principal executive offices of J&J are located at One Johnson & Johnson
Plaza, New Brunswick, New Jersey 08933. The telephone number is (908) 524-0400.
Merger Sub, a Florida corporation, is a wholly owned subsidiary of J&J
formed solely for the purpose of effecting the Merger.
Cordis, a Florida corporation, is a designer, manufacturer and supplier of
medical devices, primarily angiographic catheters, neuroscience devices and
other related medical devices.
The principal executive offices of Cordis are located at 5200 Blue Lagoon
Drive, Suite 200, Miami, Florida 33126. The telephone number is (305) 824-2900.
3
<PAGE> 13
Merger Consideration. At the effective time of the Merger (the "Effective
Time"), each outstanding share of Cordis Common Stock (together with the
associated right ("Right") issued pursuant to the Rights Agreement dated as of
October 13, 1995, as amended, between Cordis and Chemical Mellon Shareholder
Services L.L.C. (the "Rights Agreement")), other than shares owned by Cordis,
J&J or any subsidiary of J&J, will be converted into the right to receive that
number (the "Exchange Ratio") of validly issued, fully paid and nonassessable
shares of J&J Common Stock equal to the amount obtained by dividing $109 by the
Average J&J Price (as defined herein) and rounding to the nearest ten-thousandth
of a share. If the Closing Date had been January 23, 1996, then the Average J&J
Price would have been $86.3875 and each share of Cordis Common Stock would have
been converted into the right to receive 1.2618 shares of J&J Common Stock.
However, the actual Exchange Ratio will depend on the Average J&J Price at the
actual Closing Date and may be greater or less than the above number. For
example, if the Average J&J Price were to be 15% higher (or $99.3456) or 15%
lower (or $73.4294) at the Closing Date than the average price referred to
above, the Exchange Ratio would be 1.0972 or 1.4844, respectively. If, prior to
the Special Meeting, it appears that the actual Exchange Ratio will differ in a
material respect from the range noted above, Cordis would, if necessary at such
time, determine whether to adjourn the Special Meeting and resolicit proxies
from the shareholders of Cordis. The "Average J&J Price" will be an amount equal
to the average per share closing price of J&J Common Stock, as reported on the
NYSE Composite Transactions Tape, for the 10 trading days immediately preceding
the Closing Date. No fractional shares of J&J Common Stock will be issued in the
Merger and holders of shares of Cordis Common Stock will be entitled to a cash
payment in lieu of any such fractional shares which would otherwise be issued in
the Merger.
Recommendation of the Cordis Board and Reasons for the Merger. THE CORDIS
BOARD HAS ADOPTED THE MERGER AGREEMENT, DETERMINED THAT THE MERGER IS IN THE
BEST INTERESTS OF CORDIS AND ITS SHAREHOLDERS AND RECOMMENDS THAT THE
SHAREHOLDERS OF CORDIS VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT. In
reaching its decision to adopt the Merger Agreement and recommend the Merger,
the Cordis Board considered a number of factors. See "THE MERGER -- Background
of the Merger" and " -- Recommendation of the Cordis Board and Reasons for the
Merger".
Opinion of Financial Advisor. Morgan Stanley & Co. Incorporated ("Morgan
Stanley") has delivered its written opinion to the Cordis Board that,
as of the date of this Proxy Statement/Prospectus, the consideration to be
received by the holders of Cordis Common Stock (other than J&J and its
affiliates) pursuant to the Merger Agreement is fair from a financial point of
view to such holders. The full text of such opinion of Morgan Stanley, which
sets forth the assumptions made, procedures followed, matters considered and
limitations on the review undertaken by Morgan Stanley, is included as Annex 2
to this Proxy Statement/Prospectus. Cordis shareholders are urged to read such
opinion in its entirety. See "THE MERGER -- Opinion of Financial Advisor".
Interests of Certain Persons in the Merger. As of the Record Date,
directors and executive officers of Cordis owned (i) 1,235,608 shares of Cordis
Common Stock (for which they will receive the same consideration as other Cordis
shareholders) and (ii) options to acquire 526,500 shares of Cordis Common Stock,
which will be treated in the Merger as described below under "THE
MERGER -- Effect on Employee Benefit and Stock Plans". In addition, certain
executives and managers of Cordis are expected to be parties to the Employment
Agreements (as defined herein) with Cordis pursuant to which certain payments
and other benefits will be provided to such persons following the Closing Date.
It is currently anticipated that these executives and managers of Cordis will
continue in their current capacities. See "THE MERGER -- Interests of Certain
Persons in the Merger".
Regulatory Approvals Required. The consummation of the Merger is subject
to the expiration or termination of the relevant waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). On December 19, 1995, the relevant waiting period terminated. See "OTHER
MATTERS -- Regulatory Approvals Required".
Conditions to the Merger. The obligations of J&J, Merger Sub and Cordis to
consummate the Merger are subject to the satisfaction or waiver of various
conditions, including, without limitation, obtaining Cordis
4
<PAGE> 14
shareholder approval and approval for listing (subject to official notice of
issuance) on the NYSE of the additional shares of J&J Common Stock to be issued
in connection with the Merger. See "THE MERGER AGREEMENT -- Conditions to the
Consummation of the Merger".
No Solicitation. The Merger Agreement provides that Cordis may not, nor
may it permit any of its subsidiaries to, nor may it authorize or permit any of
its officers, directors or employees or any investment banker, attorney or other
advisor or representative retained by it or any of its subsidiaries to (i)
solicit, initiate or knowingly encourage the submission of any Takeover Proposal
(as defined herein), or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action knowingly to facilitate any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal. However, to the extent required by the fiduciary obligations
of the Cordis Board, determined by a majority of the members thereof, based on
the advice of outside counsel, Cordis may, in response to an unsolicited
Takeover Proposal and subject to compliance with Cordis's responsibility to keep
J&J informed in all material respects of the status and details of any such
Takeover Proposal and certain other conditions, (i) furnish and discuss
non-public information with respect to Cordis to any person pursuant to a
customary confidentiality agreement (as determined by the Company's outside
counsel) with such person and (ii) participate in negotiations and discussions
regarding such Takeover Proposal. See "THE MERGER -- No Solicitation".
Right of the Cordis Board to Withdraw Recommendation. Under the Merger
Agreement, the Cordis Board or any committee thereof may not (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to J&J or Merger
Sub, the Cordis Board's approval or recommendation of the Merger Agreement or
the Merger, (ii) approve or recommend, or propose to approve or recommend, any
Takeover Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal. However, to the extent required by the fiduciary obligations of the
Cordis Board, as determined in good faith by a majority of the members thereof,
based on the advice of outside counsel, the Cordis Board may (i) withdraw or
modify its approval or recommendation of the Merger Agreement or the Merger,
(ii) approve or recommend any Superior Proposal (as defined herein), (iii) enter
into an agreement with respect to such Superior Proposal or (iv) terminate the
Merger Agreement, in each case at any time after a reasonable period of time
following J&J's receipt of written notice advising J&J that the Cordis Board has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the person making such Superior Proposal.
In addition, if Cordis proposes to enter into an agreement with respect to any
Takeover Proposal, the Merger Agreement requires Cordis to, concurrently with
entering into such an agreement, pay to J&J the fees and expenses described
below under " -- Certain Fees and Expenses". See "THE MERGER -- Right of the
Cordis Board to Withdraw Recommendation".
Certain Fees and Expenses. The Merger Agreement requires Cordis to
promptly pay to J&J $40 million, plus all Expenses (as defined herein) not to
exceed $10 million in the aggregate, if (i) the Merger Agreement is terminated
by Cordis, in accordance with the provisions described under "Right of the
Cordis Board to Withdraw Recommendation" above, in connection with entering into
a definitive agreement with respect to any Takeover Proposal or (ii) prior to
any termination of the Merger Agreement (other than a termination occurring
after a Governmental Entity (as defined herein) of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable), a
bona fide Takeover Proposal shall have been made public after November 12, 1995
and prior to the Special Meeting and the requisite approval of Cordis's
shareholders of the Merger is not obtained upon a vote taken at the Special
Meeting and, within 12 months of such termination, a transaction constituting a
Takeover Proposal is consummated or Cordis enters into an agreement with respect
to, approves or recommends such Takeover Proposal. See "THE MERGER -- Certain
Fees and Expenses".
Termination. The Merger Agreement may be terminated, and the Merger
contemplated thereby may be abandoned, at any time prior to the Effective Time,
whether before or after approval by the shareholders of Cordis of matters
presented in connection with the Merger (i) by mutual written consent of J&J,
Merger Sub and Cordis, (ii) by either J&J or Cordis if (a) the required approval
of the shareholders of Cordis is not obtained, (b) the Merger shall not have
been consummated on or before May 15, 1996 (unless the failure to
5
<PAGE> 15
consummate the Merger is the result of a breach of the Merger Agreement by the
party seeking to terminate), or (c) any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and nonappealable, (iii) by J&J or
Merger Sub if (a) prior to the Special Meeting, a Takeover Proposal is
commenced, publicly proposed, publicly disclosed or communicated to Cordis (or
the willingness of any person to make a Takeover Proposal is publicly disclosed
or communicated to Cordis) and the Cordis Board or any committee thereof shall
have withdrawn or modified in a manner adverse to J&J its approval or
recommendation of the Merger or the Merger Agreement, or approved or recommended
any Takeover Proposal, or resolved to take any of the foregoing actions, or (b)
Cordis shall have entered into any agreement with respect to any Superior
Proposal, or (iv) by Cordis in connection with entering into a definitive
agreement with respect to a Superior Proposal, if Cordis makes simultaneous
payment of the fees and expenses described in "Certain Fees and Expenses" above.
See "THE MERGER AGREEMENT -- Termination, Amendment and Waiver".
Absence of Dissenters' Rights. In accordance with Section 607.1302 of the
Florida Business Corporation Act (the "FBCA"), holders of Cordis Common Stock
are not entitled to dissenters' rights in connection with the Merger. See
"ABSENCE OF DISSENTERS' RIGHTS".
Certain Federal Income Tax Consequences. Simpson Thacher & Bartlett,
counsel to Cordis, has delivered to Cordis its opinion that for Federal income
tax purposes (under current law and assuming that the Merger will take place as
described in the Merger Agreement and that certain factual matters with respect
to J&J, Merger Sub and Cordis, respectively, described in certain representation
letters addressed to such counsel, will be true and correct as of the Effective
Time), (i) the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
(ii) J&J, Merger Sub and Cordis will each be a party to the reorganization
within the meaning of Section 368(b) of the Code, (iii) no income, gain or loss
will be recognized by either J&J or Cordis in the Merger and (iv) no income,
gain or loss will be recognized by the shareholders of Cordis upon receipt of
J&J Common Stock in exchange for their Cordis Common Stock, except that a holder
of Cordis Common Stock who receives cash in lieu of a fractional share of J&J
Common Stock will recognize gain or loss equal to the difference between the
amount of such cash and the tax basis allocated to such shareholder's fractional
share of J&J Common Stock. See "THE MERGER -- Certain Federal Income Tax
Consequences".
Anticipated Accounting Treatment. J&J intends to treat the Merger as a
pooling of interests for accounting and financial reporting purposes. See "THE
MERGER -- Anticipated Accounting Treatment".
CERTAIN LITIGATION
Various purported class action complaints have been filed against Cordis
and its current directors and a former director alleging, among other things,
breach of fiduciary duty and violation of Section 14(a) of the Exchange Act. See
"OTHER MATTERS -- Certain Litigation".
MARKET PRICE DATA
J&J Common Stock (symbol: JNJ) is listed for trading on the NYSE and Cordis
Common Stock (symbol: CORD) is quoted on the Nasdaq National Market.
The following table sets forth the high and low sales prices per share of
J&J Common Stock on the NYSE Composite Transactions Tape and of Cordis Common
Stock on the Nasdaq National Market on October 18, 1995, the last trading day
before J&J's announcement of its intention to commence a tender offer
6
<PAGE> 16
for all outstanding shares of Cordis Common Stock, and on July 17, 1995, the
last trading day before several wire stories incorrectly reported that there
were merger discussions between Cordis and J&J:
<TABLE>
<CAPTION>
J&J CORDIS
COMMON STOCK COMMON STOCK
------------- -------------
HIGH LOW HIGH LOW
---- ---- ---- ----
<S> <C> <C> <C> <C>
October 18, 1995............................ $78 7/8 $77 1/8 $86 3/4 $ 85
July 17, 1995............................... $67 3/4 $66 5/8 $ 62 $60 3/4
</TABLE>
See "COMPARATIVE STOCK PRICES AND DIVIDENDS".
RECENT DEVELOPMENTS
On January 23, 1996, Cordis reported that for the three-month period ended
December 31, 1995, it had sales of $132.6 million, up 26% from sales of $105.3
million in the corresponding quarterly period last year (the "Prior Period") and
net income for the quarter of $10.2 million, or $0.59 per share, which included
estimated business combination costs incurred in connection with the Merger of
$7.0 million, or $0.41 per share, as compared to net income of $13.0 million, or
$0.78 per share, for the Prior Period.
CERTAIN SELECTED FINANCIAL DATA
The following tables present selected historical consolidated financial
data for each of J&J and Cordis. The selected historical consolidated financial
data are derived from the historical consolidated financial statements of J&J
and Cordis. The information set forth below should be read in conjunction with
such historical financial statements and the notes thereto. The historical
consolidated financial statements of J&J and Cordis have been audited for each
of the five years in the period ended January 1, 1995 and June 30, 1995,
respectively. The historical consolidated financial statements as of and for the
nine months ended October 1, 1995 and October 2, 1994, for J&J, and for the
three months ended September 30, 1995 and September 30, 1994, for Cordis, are
unaudited; however, in each of J&J's and Cordis's opinion (with respect to its
own statements), such statements reflect all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of J&J's and Cordis's
respective financial position and results of operations for such periods. The
results of operations for J&J and Cordis for the respective nine-month and
three-month periods in fiscal years 1995 and 1996, respectively, may not be
indicative of results of operations to be expected for a full year. The Merger
will not have a material impact, on a pro forma basis, on the J&J financial data
presented below.
7
<PAGE> 17
JOHNSON & JOHNSON AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE FIGURES)
<TABLE>
<CAPTION>
NINE MONTHS ENDING FISCAL YEAR ENDING
------------------------ ------------------------------------------------------------------
OCTOBER 1, OCTOBER 2, JANUARY 1, JANUARY 2, JANUARY 3, DECEMBER 29, DECEMBER 30,
1995 1994 1995 1994 1993 1991 1990
----------- ----------- ------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS DATA
Sales................... $13,996 $11,644 $ 15,734 $ 14,138 $ 13,753 $12,447 $11,232
Costs and expenses...... 11,272 9,433 13,053 11,806 11,546 10,409 9,609
Earnings before taxes... 2,724 2,211 2,681 2,332 2,207 2,038 1,623
Net earnings from
continuing
operations............ 1,938 1,628 2,006 1,787 1,625(1) 1,461 1,143(2)
Net earnings per share
from continuing
operations............ 3.00 2.53 3.12 2.74 2.46(1) 2.19 1.72(2)
Cash dividends per
share................. 0.95 0.84 1.13 1.01 0.89 0.77 0.66
BALANCE SHEET
DATA(3)
Assets.................. $17,689 $ 15,668 $ 12,242 $ 11,884 $10,513 $ 9,506
Long-term debt.......... 2,108 2,199 1,493 1,365 1,301 1,316
Stockholders' equity.... 8,912 7,122 5,568 5,171 5,626 4,900
</TABLE>
- ---------------
(1) Before cumulative effect of accounting changes of $595 million (net of tax).
(2) After charges relating to Latin American operations which reduced net
earnings by $125 million (net of tax).
(3) At period end.
CORDIS CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE FIGURES)
<TABLE>
<CAPTION>
THREE MONTHS ENDING
SEPTEMBER 30, FISCAL YEAR ENDING JUNE 30,
------------------------ ------------------------------------------------------------------
1995 1994 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS DATA(4)
Sales................... $ 123 $ 98 $ 443 $ 337 $ 267 $ 230 $ 203
Costs and expenses...... 98 78 363 279 224 195 176
Earnings before taxes... 25 20 80 58 43 35 27
Net earnings from
continuing
operations............ 15 12 50 37(1) 31 26 20(2)
Net earnings per share
from continuing
operations............ 0.89 0.70 3.00 2.27(1) 1.94 1.65 1.32(2)
BALANCE SHEET
DATA(3)
Assets.................. $ 412 $ 395 $ 286 $ 211 $ 172 $ 144
Long-term liabilities... 18 19 9 8 10 30
Stockholders' equity.... 302 282 203 148 119 81
</TABLE>
- ---------------
(1) Before cumulative effect of accounting changes of $10.1 million (net of
tax).
(2) Before loss from discontinued operations of $9.8 million (net of tax).
(3) At period end.
(4) Cordis has not declared cash dividends in any of the periods presented.
8
<PAGE> 18
THE SPECIAL MEETING
SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to Cordis shareholders
in connection with the solicitation by the Cordis Board of proxies for use at
the Special Meeting to be held on Friday, February 23, 1996, at 9:00 a.m., local
time, at the Miami Airport Hilton Hotel and Towers, 5101 Blue Lagoon Drive,
Miami, Florida 33126, Key Biscayne Meeting Room.
At the Special Meeting, holders of Cordis Common Stock will consider and
vote upon a proposal to approve the Merger Agreement. The Merger Agreement
provides that, upon the terms and subject to the conditions thereof, Merger Sub
will be merged with and into Cordis and Cordis will become a wholly owned
subsidiary of J&J. Each share of Cordis Common Stock issued and outstanding
immediately prior to the Merger (together with the associated Right) will be
converted into the right to receive that number of validly issued, fully paid
and nonassessable shares of J&J Common Stock equal to the Exchange Ratio.
No fractional shares of J&J Common Stock will be issued in the Merger. In
lieu of any such fractional shares, each holder of Cordis Common Stock who
otherwise would be entitled to receive a fractional share of J&J Common Stock
pursuant to the Merger Agreement will be paid an amount in cash, without
interest, equal to such holder's fractional part of a share of J&J Common Stock,
if any, multiplied by the Average J&J Price. J&J will make available to the
Exchange Agent (as defined below) from time to time, as needed, cash sufficient
to pay cash in lieu of fractional shares.
THE CORDIS BOARD HAS ADOPTED THE MERGER AGREEMENT, DETERMINED THAT THE
MERGER IS IN THE BEST INTERESTS OF CORDIS AND ITS SHAREHOLDERS, AND RECOMMENDS
THAT THE SHAREHOLDERS OF CORDIS VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT.
SEE "THE MERGER -- BACKGROUND OF THE MERGER" AND "-- RECOMMENDATION OF THE
CORDIS BOARD AND REASONS FOR THE MERGER".
The J&J Board of Directors has approved the Merger Agreement and the
issuance of J&J Common Stock in the Merger, and the Board of Directors of Merger
Sub, and J&J, as the sole shareholder of Merger Sub, have respectively adopted
and approved the Merger Agreement. Approval of the Merger Agreement and the
Merger by J&J's shareholders is not required to effect the Merger.
RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED
The close of business on January 22, 1996, has been fixed as the record
date for determining the holders of Cordis Common Stock who are entitled to
notice of and to vote at the Special Meeting. As of the Record Date, there were
16,523,988 shares of Cordis Common Stock outstanding and entitled to vote. The
holders of record on the Record Date of Cordis Common Stock are entitled to one
vote per share of Cordis Common Stock on each matter submitted to a vote at the
Special Meeting. The presence in person or by proxy of the holders of a majority
of the Cordis Common Stock entitled to vote is necessary to constitute a quorum
for the transaction of business at the Special Meeting. Under the FBCA, the
affirmative vote of holders of a majority of the outstanding shares of the
Cordis Common Stock is required for approval of the Merger Agreement.
Proxies relating to "street name" shares that are properly executed and
returned by brokers will be counted as shares present for purposes of
determining the presence of a quorum, but will not be treated as shares having
voted at the Special Meeting as to the Merger Agreement if authority to vote has
been withheld by the broker (a "broker non-vote"). Abstentions will be recorded
as such by the inspectors of election for the Special Meeting. In light of the
treatment of broker non-votes and abstentions and the fact that the affirmative
vote required to approve the Merger Agreement is a majority of the total number
of outstanding shares of Cordis Common Stock on the Record Date, broker
non-votes and abstentions will have the same effect as votes against approval of
the Merger Agreement.
PROXIES; PROXY SOLICITATION
Shares of Cordis Common Stock represented by properly executed, unrevoked
proxies received at or prior to the Special Meeting will be voted at the Special
Meeting in accordance with the instructions contained
9
<PAGE> 19
therein. Shares of Cordis Common Stock represented by properly executed,
unrevoked proxies for which no instruction is given will be voted FOR approval
of the Merger Agreement. Cordis shareholders are requested to complete, sign,
date and return promptly the enclosed proxy card in the postage-paid envelope
provided for this purpose to ensure that their shares are voted. A Cordis
shareholder may revoke a proxy by submitting a later dated proxy with respect to
the same shares at any time prior to the vote on the approval of the Merger
Agreement, by delivering written notice of revocation to the Secretary of Cordis
at any time prior to such vote or by attending the Special Meeting and voting in
person. Mere attendance at the Special Meeting will not in and of itself revoke
a proxy.
If the Special Meeting is postponed or adjourned for any reason, when the
Special Meeting is convened or reconvened, all proxies will be voted in the same
manner as such proxies would have been voted at the original convening of the
meeting (except for any proxies which have theretofore effectively been revoked
or withdrawn), notwithstanding that they may have been effectively voted on the
same or any other matter at a previous meeting.
In addition to solicitation by mail, directors, officers and employees of
Cordis may solicit proxies by telephone, telegram or otherwise. Such directors,
officers and employees of Cordis will not be additionally compensated for such
solicitation but may be reimbursed for out-of-pocket expenses incurred in
connection therewith. Brokerage firms, fiduciaries and other custodians who
forward soliciting material to the beneficial owners of shares of Cordis Common
Stock held of record by them will be reimbursed for their reasonable expenses
incurred in forwarding such material. Cordis has retained MacKenzie Partners,
Inc. to aid in soliciting proxies from its shareholders. The fees of such firm
are estimated to be $7,500 plus reimbursement of out-of-pocket expenses.
JOHNSON & JOHNSON
J&J, incorporated in New Jersey since 1887, employs approximately 82,000
people worldwide and is engaged in the manufacture and sale of a broad range of
products in the health care field in many countries of the world. Its principal
business segments are consumer products, consisting of toiletries and hygienic
products including dental and baby care products, first-aid products,
non-prescription drugs, sanitary protection products and adult incontinence
products; pharmaceutical products consisting principally of prescription drugs;
and professional products consisting of sutures, mechanical wound closure
products, less invasive surgical instruments, diagnostic products, medical
equipment and devices, surgical instruments, joint replacements and products for
wound management and infection, which professional products are used principally
in the professional fields by physicians, nurses, therapists, hospitals,
diagnostic laboratories and clinics.
The principal executive offices of J&J are located at One Johnson & Johnson
Plaza, New Brunswick, New Jersey 08933. The telephone number is (908) 524-0400.
CORDIS CORPORATION
Cordis, incorporated in Florida in 1959, is engaged in the design,
manufacture and sale of medical devices, primarily angiographic catheters,
neuroscience devices and other related medical devices.
The principal executive offices of Cordis are located at 5200 Blue Lagoon
Drive, Suite 200, Miami, Florida 33126. The telephone number is (305) 824-2900.
THE MERGER
BACKGROUND OF THE MERGER
For the past several years, subsidiaries of J&J have been parties to
transactions with Cordis and its subsidiaries which have generally involved
purchasing certain of Cordis's balloon catheters for resale in stent delivery
systems or stent kits marketed by subsidiaries of J&J in the U.S. and in Europe.
During several cardiology industry meetings since 1992 executives from
J&J's subsidiary, Johnson & Johnson Interventional Systems Company ("JJIS"), met
with executives from Cordis, including Robert C.
10
<PAGE> 20
Strauss, to discuss the potential for Cordis and JJIS to work together in
various ways, including a joint venture, joint marketing agreement or supply
agreement relating primarily to the use of Cordis's balloon catheters with
JJIS's stents. No agreements (apart from the purchases described above) resulted
from these discussions.
In February-March 1994 the President of JJIS and Mr. Strauss had
conversations, along with others in both organizations, concerning the potential
for the companies' working together in a distribution arrangement. No
distribution arrangement was concluded.
On September 6, 1995, Ralph S. Larsen, Chairman of the Board and Chief
Executive Officer of J&J, contacted Dr. Robert Q. Marston, then Chairman of the
Cordis Board, to advise Dr. Marston of J&J's interest in meeting with
representatives of Cordis to discuss a negotiated transaction. Dr. Marston had
previously served for many years on the Board of Directors of J&J. Dr. Marston
explained to Mr. Larsen that he would be stepping down as Chairman of Cordis in
October 1995 and that Mr. Strauss, the President and Chief Executive Officer,
would be his successor as Chairman. Dr. Marston told Mr. Larsen that he would
get back to him following consultation with Richard W. Foxen, a director of
Cordis. Mr. Foxen telephoned Mr. Larsen later that day and Mr. Larsen advised
him of J&J's desire to meet with representatives of Cordis as soon as possible.
Mr. Larsen described J&J's decentralized operating philosophy and indicated
J&J's intention to leave Cordis as an autonomous operating company within J&J's
family of companies. Mr. Foxen agreed that he and Dr. Marston would meet with
Mr. Larsen on September 12 in New York City.
At a meeting on September 12, 1995, Mr. Larsen and Robert N. Wilson, Vice
Chairman of J&J, met with Dr. Marston and Mr. Foxen to discuss a possible merger
between J&J and Cordis. Messrs. Larsen and Wilson expressed J&J's interest in
moving forward with a transaction to be structured as a stock-for-stock tax-free
merger to be accounted for as a pooling of interests. Mr. Larsen and Mr. Wilson
emphasized J&J's desire to keep Cordis intact and autonomous in its current
location in Florida.
On September 13, 1995, Dr. Marston telephoned Mr. Larsen and informed him
that he had reviewed the prior discussion with Mr. Strauss. Mr. Larsen and Mr.
Strauss then spoke by telephone concerning the meeting with Dr. Marston and
Messrs. Foxen and Wilson. Mr. Larsen outlined the strategic basis for a business
combination and requested to meet as soon as possible. Mr. Strauss tentatively
agreed to a meeting on either September 21 or 22, and Mr. Strauss said he would
call Mr. Larsen on September 15 to confirm the date of the meeting. On September
15, 1995, Mr. Larsen called Mr. Strauss, and they scheduled the meeting for
September 21, 1995.
After being informed of the foregoing contacts between representatives of
J&J and Dr. Marston and Messrs. Strauss and Foxen, at a telephonic meeting held
on September 19, 1995, the Cordis Board decided that it would be premature to
meet with representatives of J&J prior to Cordis's Annual Meeting of
Stockholders, scheduled for October 10, 1995. Mr. Strauss and Mr. Larsen
discussed by telephone the Cordis Board's decision and agreed to postpone
meeting until after Cordis's Annual Meeting. Mr. Larsen telephoned Dr. Marston
who declined to discuss the matter further, other than to confirm that the
foregoing was the Cordis Board's position.
On October 10, 1995, the Cordis Board met and determined that Mr. Strauss
should not meet with J&J at that time. On October 11, 1995, Mr. Strauss
telephoned Mr. Larsen and they discussed such determination. Mr. Larsen asked
Mr. Strauss to reconsider and again expressed a desire for a negotiated
transaction. Mr. Strauss responded that he was not authorized to meet, and would
not meet at that time with Mr. Larsen.
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On October 19, 1995, the following letter was sent to Cordis:
Mr. Robert Strauss
Chairman, President and Chief Executive Officer
Cordis Corporation
14201 N.W. 60th Avenue
Miami Lakes, Florida 33014
Dear Bob:
Well over a month ago we advised you of our interest in Cordis Corporation
and our desire to meet to start a process for a negotiated merger transaction.
We have the highest regard for you and your management team, which has built one
of the industry's leading diagnostic and interventional cardiology businesses.
As you know, we view the combination of Johnson & Johnson Interventional Systems
and Cordis as an important strategic step that will benefit everyone. At your
request, we agreed to postpone our meeting until after Cordis' Annual Meeting on
October 10, 1995. After your Annual Meeting you called to advise me that you
would not meet with us.
Given your unwillingness even to meet, and the compelling strategic
importance of this combination, you left us no alternative but to make an offer
directly to your shareholders. Therefore, we are today announcing a tender offer
for all of Cordis' outstanding shares for a price of $100 per share in cash.
However, we are prepared to terminate the cash tender offer and to pay $105 per
share in a negotiated stock-for-stock, tax-free transaction which would be
accounted for as pooling-of-interests.
Our $105 proposal is a premium of approximately 70% over the market price
of Cordis stock prior to July 18, 1995, the date on which several wire stories
incorrectly reported that there were merger discussions between us. Your stock
traded up more than $10 per share on July 18, 1995 based on those rumors and has
continued to trade based upon takeover speculation. Our $105 proposal also
represents a multiple of 35x Cordis' twelve-month trailing earnings.
We believe that a combination of our two businesses would be beneficial to
our respective shareholders, employees, customers and other constituencies. We
view this combination as an important strategic step for both companies to meet
the challenge of providing for customer needs in the fast-changing healthcare
industry. Cordis and Johnson & Johnson Interventional Systems together will
create one of the leading worldwide vascular disease management companies.
Johnson & Johnson's resources and distribution network will help position the
combined business as a more attractive supplier to hospitals. This will allow us
to provide a comprehensive line of superior products and services to hospitals,
physicians and patients. In light of customer preferences for broadline
suppliers, this combination will protect and enhance both companies' leadership
positions while allowing for more powerful product offerings.
Johnson & Johnson operates on a decentralized basis, giving management of
our various businesses a high degree of operational autonomy. Upon completion of
the transaction, we plan to integrate our existing cardiovascular business into
Cordis under the leadership of Cordis' management team. The combined company
will retain the Cordis name and will continue to be headquartered in Miami,
Florida.
We and our advisors are prepared to meet with you and all other members of
the Cordis Board of Directors, management, and advisors to answer any questions
you or they may have. Our objective is to promptly conclude a transaction that
is supported by you and the Cordis Board of Directors.
Sincerely,
Ralph S. Larsen
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In addition, on October 19, 1995, Mr. Larsen telephoned Mr. Strauss to
inform him of J&J's proposal for a $105 per share negotiated stock-for-stock
tax-free merger to be accounted for as a pooling of interests and J&J's $100 per
share cash tender offer. J&J and its wholly owned subsidiary, JNJ Acquisition
Corp., also commenced litigation against Cordis in the United States District
Court for the Southern District of Florida seeking, among other things, an order
compelling the Cordis Board to redeem the Rights or to make the Rights
inapplicable to the cash tender offer and compelling the Cordis Board to approve
the cash tender offer for purposes of Sections 607.0902 and 607.0901 of the
FBCA, respectively.
On October 20, 1995, J&J filed, and on October 30, 1995, Cordis filed, a
Premerger Notification and Report Form with the Federal Trade Commission ("FTC")
and the Antitrust Division of the Department of Justice. In addition, on October
20, JNJ Acquisition Corp. filed preliminary consent solicitation materials with
the SEC with respect to the solicitation of written consents from the
shareholders of Cordis to remove and replace the Cordis Board, among other
things.
At a meeting on October 31, 1995 (the "October 31 Meeting"), the Cordis
Board, by unanimous vote, rejected as inadequate both J&J's $100 per share cash
tender offer and $105 per share proposed stock-for-stock merger. In rejecting
such offer and proposal, the Cordis Board stated its belief that significant
value would be created for Cordis shareholders through the pursuit of Cordis's
strategic plan and also confirmed its commitment to the maximization of
shareholder value. Accordingly, the Cordis Board authorized management and
Cordis's advisors to explore all strategic alternatives and to report back to
the Cordis Board at an early date.
Also at the October 31 Meeting, the Cordis Board authorized Cordis to enter
into severance compensation arrangements with certain executives and managers
(the "Severance Arrangements") and approved the amendment of the definition of
"change in control" in Cordis's Supplemental Executive Retirement Plan (the
"SERP"), Executive Deferred Compensation Plan, Director Deferred Compensation
Plan and Director Retirement Policy (the "Policy") to conform to the definition
of "Change in Control" provided for in the Severance Arrangements. The Cordis
Board also authorized certain technical corrections to the SERP and the Policy.
On November 3, 1995, as part of the Cordis Board's directive to explore all
strategic alternatives, Mr. Strauss telephoned Mr. Larsen. They agreed to meet
the following day in New York City, and were accompanied in the meeting by Mr.
Wilson, James T. Lenehan, a member of J&J's Executive Committee, and Alfred J.
Novak, Vice President and Chief Financial Officer of Cordis. In anticipation of
the meeting, on the evening of November 3, Cordis and J&J entered into a
confidentiality agreement. Messrs. Larsen, Strauss, Wilson, Lenehan and Novak
met on November 4 and 5 to discuss a possible strategic combination involving
Cordis. On November 5, 1995, they agreed in principle to a $109 per share
stock-for-stock tax-free merger to be accounted for as a pooling of interests.
Later that day, the Cordis Board approved the agreement in principle and the
$109 per share price, subject to the execution of a definitive merger agreement
and to Cordis Board and shareholder approval.
On November 6, 1995, J&J terminated its cash tender offer, and J&J and
Cordis jointly announced the agreement in principle.
During the week of November 6, representatives of J&J and representatives
of Cordis, along with their legal and financial advisors, met and negotiated the
terms of the Merger Agreement, based on the agreement in principle.
On November 8, 1995, the Cordis Board held a meeting in New York City (the
"November 8 Meeting"), at which Cordis's legal and financial advisors were
present, to review the status of the negotiations on the Merger Agreement and to
review the fairness of the consideration to be paid in the Merger.
Following the November 8 Meeting, discussions and negotiations continued,
and on November 12, 1995, at a telephonic meeting (the "November 12 Meeting"),
the Cordis Board adopted the Merger Agreement. Following the adoption of the
Merger Agreement, the Merger Agreement was executed by all parties.
On November 13, 1995, J&J and Cordis jointly announced the signing of the
Merger Agreement.
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RECOMMENDATION OF THE CORDIS BOARD AND REASONS FOR THE MERGER
At the November 12 Meeting, the Cordis Board determined that the terms of
the Merger are fair to and in the best interests of Cordis and its shareholders,
adopted the Merger Agreement and authorized and directed the appropriate
officers of Cordis to execute the Merger Agreement on behalf of Cordis.
THE CORDIS BOARD HAS ADOPTED THE MERGER AGREEMENT, DETERMINED THAT THE
MERGER IS IN THE BEST INTERESTS OF CORDIS AND ITS SHAREHOLDERS, AND RECOMMENDS
THAT THE SHAREHOLDERS OF CORDIS VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT.
In making its determinations, the Cordis Board considered a number of
factors, including the following: (i) the financial and other terms and
conditions of the Merger Agreement; (ii) the recommendation of management that
the Merger Agreement be adopted, based in part on its favorable view of the
prospects for a strategic combination of Cordis with the interventional
cardiology business of J&J and the recognition that the $109 of J&J Common Stock
to be received by Cordis shareholders for each share of Cordis Common Stock in
the Merger is reflective of Cordis's contribution to the strategic combination
and will provide Cordis shareholders a continuing indirect interest in the
potential benefits of such combination following the Merger; (iii) the Cordis
Board's belief, (a) after consultation with management and Cordis's financial
advisors and (b) based on the fact that since October 19, 1995, the date J&J
first publicly announced the cash tender offer and merger proposal with respect
to Cordis, no other party expressed an interest in engaging in a business
combination or other strategic transaction on terms at least as favorable to the
Cordis shareholders as those contained in the Merger Agreement, that any
potential alternative transactions that might be reasonably available to Cordis
were unlikely to provide values to Cordis shareholders superior to the Merger;
(iv) the fact that the $109 per share price represents a premium of
approximately 26.7% over the closing sales price for the shares of Cordis Common
Stock on the Nasdaq National Market on October 18, 1995, the last trading day
prior to the public announcement by J&J of the cash tender offer and merger
proposal with respect to Cordis, and a premium of approximately 75.8% over the
closing sales price of Cordis Common Stock on July 17, 1995, the last trading
day before several wire stories incorrectly reported that there were then
ongoing merger discussions between Cordis and J&J; (v) presentations of Morgan
Stanley at the November 8 Meeting and the November 12 Meeting and the written
opinion of Morgan Stanley dated November 12, 1995, that, as of such date, the
consideration to be received by Cordis shareholders (other than J&J and its
affiliates) pursuant to the Merger Agreement is fair from a financial point of
view to such holders; (vi) the Cordis Board's commitment to protecting the best
interests of Cordis shareholders and the maximization of shareholder value; and
(vii) the fact that, to the extent required by the fiduciary obligations of the
Cordis Board, as determined in good faith by a majority of the members of the
Cordis Board based on the advice of outside counsel, Cordis may terminate the
Merger Agreement if any person shall have made a bona fide proposal to acquire
Cordis on terms which a majority of the disinterested members of the Cordis
Board determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation) to be more favorable to the Cordis
shareholders than the Merger, upon payment of a $40 million termination fee and
not more than $10 million of J&J's Expenses associated with the Merger.
The Cordis Board did not assign relative weights to the foregoing factors
or determine that any factor was of particular importance. Rather, the Cordis
Board viewed its position and recommendations as being based on the totality of
the information presented to and considered by it. Individual members of the
Cordis Board may have given different weights to different factors.
OPINION OF FINANCIAL ADVISOR
Morgan Stanley has acted as financial advisor to Cordis in connection with
the Merger. Morgan Stanley was selected by the Cordis Board to act as Cordis's
financial advisor based on Morgan Stanley's qualifications, expertise and
reputation. At the November 12 Meeting, Morgan Stanley delivered its written
opinion dated November 12, 1995, to the Cordis Board that, based upon and
subject to the various considerations set forth in such opinion, on the date
thereof, the consideration to be received by the holders of Cordis Common Stock,
other than J&J and its affiliates, pursuant to the Merger Agreement was fair
from a financial point of view to such holders. Morgan Stanley has also
delivered to the Cordis Board a substantially identical opinion, dated
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<PAGE> 24
the date of this Proxy Statement/Prospectus. Such opinions are hereinafter
collectively referred to as the "Morgan Stanley Opinion".
THE FULL TEXT OF THE MORGAN STANLEY OPINION DATED AS OF THE DATE OF THIS
PROXY STATEMENT/PROSPECTUS, WHICH SETS FORTH, AMONG OTHER THINGS, THE
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN BY MORGAN STANLEY, IS ATTACHED AS ANNEX 2 TO THIS PROXY
STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. CORDIS
SHAREHOLDERS ARE URGED TO READ THE OPINION CAREFULLY AND IN ITS ENTIRETY IN
CONJUNCTION WITH THIS PROXY STATEMENT/PROSPECTUS. THE MORGAN STANLEY OPINION
ADDRESSES ONLY THE FAIRNESS OF THE CONSIDERATION TO BE RECEIVED BY THE HOLDERS
OF CORDIS COMMON STOCK, OTHER THAN J&J AND ITS AFFILIATES, PURSUANT TO THE
MERGER AGREEMENT FROM A FINANCIAL POINT OF VIEW AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER OF CORDIS AS TO HOW SUCH SHAREHOLDER SHOULD
VOTE WITH RESPECT TO THE MERGER. THE SUMMARY OF THE MORGAN STANLEY OPINION SET
FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF THE OPINION ATTACHED AS ANNEX 2 TO THIS PROXY
STATEMENT/PROSPECTUS.
In connection with rendering the Morgan Stanley Opinion, Morgan Stanley,
among other things: (i) analyzed certain publicly available financial statements
and other information regarding Cordis and J&J; (ii) analyzed certain internal
financial statements and other financial and operating data concerning Cordis
prepared by the management of Cordis; (iii) analyzed certain financial
projections prepared by the management of Cordis; (iv) discussed the past and
current operations and financial condition and the prospects of Cordis with
senior management of Cordis; (v) discussed the past and current operations and
financial condition and the prospects of J&J with senior management of J&J and
analyzed the impact of the Merger on J&J's earnings per share, consolidated
capitalization and financial ratios; (vi) reviewed the reported prices and
trading activity for Cordis Common Stock and J&J Common Stock; (vii) compared
the financial performance of Cordis and the prices and trading activity of the
Cordis Common Stock and the J&J Common Stock with that of certain other
comparable publicly-traded companies and their securities; (viii) reviewed the
financial terms, to the extent publicly available, of certain comparable
acquisition transactions; (ix) responded to inquiries from certain third parties
concerning a possible transaction involving Cordis; (x) reviewed the Merger
Agreement and certain related documents; and (xi) performed such other analyses
and examinations and considered such other factors as Morgan Stanley deemed
appropriate.
In rendering the Morgan Stanley Opinion, Morgan Stanley assumed and relied
upon, without independent verification, the accuracy and completeness of the
information reviewed by it for purposes of rendering its opinion. With regard to
the financial projections referred to in clause (iii) of the preceding
paragraph, Morgan Stanley assumed that they were reasonably prepared on bases
reflecting the best currently available estimates of the future financial
performance of Cordis. Morgan Stanley did not make any independent valuation or
appraisal of the assets or liabilities of Cordis, nor was it furnished with any
such appraisals. The Morgan Stanley Opinion states that it is necessarily based
on economic, market and other conditions as in effect on, and the information
made available to Morgan Stanley as of, the dates of such opinions. Morgan
Stanley also noted that, while it had responded to inquiries from certain third
parties concerning a possible transaction involving Cordis, it was not
authorized to, and it did not, solicit indications of interest from third
parties with respect to engaging in an acquisition or other possible transaction
involving Cordis.
The following is a brief summary of the analyses performed by Morgan
Stanley and reviewed with the Cordis Board during the November 8 Meeting and the
November 12 Meeting in connection with the rendering by Morgan Stanley of its
opinion dated as of November 12, 1995.
Analysis of Stock Price Performance. As part of its analysis, Morgan
Stanley reviewed the recent stock price performance of Cordis and J&J, and
compared the stock price performance of Cordis with that of a group of certain
peer companies in the medical technology industry (which included Arrow
International, Inc., C.R. Bard, Inc., Biomet, Inc., Datascope Corp., Stryker
Corporation, United States Surgical Corporation, Boston Scientific Corporation,
St. Jude Medical, Inc. and Medtronic, Inc. (the "Medical Technology Index"), in
addition to comparing the stock price performance of J&J with that of a group of
certain publicly-traded peer companies in the pharmaceutical industry (which
included Abbott Laboratories, American Home Products Corporation, Amgen Inc.,
Bristol-Myers Squibb Company, Eli Lilly and Company, Merck & Co., Inc.,
Rhone-Poulenc Rorer Inc., Schering-Plough Corporation, The Upjohn Company,
Warner-Lambert
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Company and Pfizer Inc.) (the "Pharmaceutical Index"). Morgan Stanley observed
that (i) Cordis Common Stock outperformed both the S&P MidCap 400 and the
Medical Technology Index from November 8, 1993 through the October 19, 1995
public announcement by J&J of its tender offer and merger proposal with respect
to Cordis (the "Original Offer"); (ii) Cordis's historical indexed price
performance from November 7, 1994 to November 6, 1995 indicated that Cordis
Common Stock outperformed the S&P MidCap 400 but underperformed the Medical
Technology Index until the October 19, 1995 public announcement by J&J of the
Original Offer, after which it outperformed both; and (iii) Cordis's historical
ratios of market price to next 12 months earnings per share ("EPS") from
November 18, 1992 to November 6, 1995 indicated that Cordis's price/earnings
ratios ("P/E ratio") were below that of the average of the companies comprising
the Medical Technology Index until late 1993, after which period and until
approximately the middle of October (shortly before the announcement by J&J of
the Original Offer), Cordis's P/E ratio approximated and moved closely with the
average of such companies.
In addition, Morgan Stanley observed that (i) J&J Common Stock generally
underperformed or moved closely with the average of the companies comprising
both the Pharmaceutical Index and the S&P MidCap 400 from November 9, 1992 to
approximately the middle of March 1995, and that following such date J&J Common
Stock generally outperformed such companies; and (ii) J&J's historical ratio of
market price to next 12 months EPS indicated that J&J's P/E ratio was higher
than the average of the companies comprising the Pharmaceutical Index from
November 18, 1992 to November 6, 1995.
Historical Exchange Ratio Analysis. Morgan Stanley also reviewed certain
historical ratios of the price of Cordis Common Stock to the price of J&J Common
Stock over various periods ending November 6, 1995. The ratios of closing prices
of Cordis Common Stock to J&J Common Stock for the various periods ending
November 6, 1995, were as follows: 0.957 for the previous three years; 1.085 for
the previous twelve months; 1.042 for the previous six months; 1.096 for the
previous sixty days; 1.314 for November 6, 1995; and with respect to the low and
high ratios for the previous year, 1.085 and 1.314, respectively.
Comparable Company Analysis with respect to Cordis. As part of its
analysis, Morgan Stanley analyzed the performance and market valuation of Cordis
Common Stock by comparing certain market trading statistics of Cordis with
certain publicly-traded peer companies in the medical technology industry (which
included the companies included in the Medical Technology Index as well as
Guidant Corporation and Medisense, Inc.). Historical financial information used
in connection with the ratios provided below with respect to the comparable
company analysis is as of the most recent financial statements publicly
available for each such company as of November 6, 1995, and all market price
information used in calculating the ratios provided below is as of November 6,
1995.
Among the market trading information considered in the Morgan Stanley
analysis was the P/E ratio for the last twelve months and as projected for 1995
and 1996. EPS estimates for calendar 1995 and 1996 were based on estimates
obtained from a report prepared by Institutional Brokers Estimate System (a data
service that monitors and publishes compilations of earnings estimates produced
by selected research analysts regarding companies of interest to institutional
shareholders) dated as of October 19, 1995 ("IBES"). Morgan Stanley also
reviewed certain market trading statistics in terms of the aggregate value of
the company in question as a multiple of revenue and as a multiple of earnings
before interest, taxes, depreciation and amortization ("EBITDA"). Based on an
analysis of that market trading information and based on a Cordis Common Stock
share value equal to the average of the closing market prices for shares of
Cordis Common Stock over the 10 trading days immediately prior to the first
public announcement of the Original Offer (such value, the "Unaffected Cordis
Trading Value"), Morgan Stanley's analysis indicated (i) various P/E ratios for
the latest twelve months, with a mean multiple of 30.0x and a median multiple of
25.9x, as compared to a multiple of 26.0x for Cordis; (ii) various P/E ratios
for 1995, with a mean multiple of 23.9x and a median multiple of 24.4x, as
compared to a multiple of 23.6x for Cordis; (iii) various P/E ratios for 1996,
with a mean multiple of 19.6x and a median multiple of 19.3x, as compared to a
multiple of 19.6x for Cordis; (iv) various multiples of aggregate value to
revenues, with a mean multiple of 3.83x and a median multiple of 3.12x, as
compared to a multiple of 2.73x for Cordis; (v) various multiples of aggregate
value to EBITDA, with a mean multiple of 14.1x and a median multiple of 12.9x,
as compared to a multiple of 12.0x for Cordis; (vi) various projected EPS
five-year, compounded annual growth rates (based on IBES estimates), with a mean
growth
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rate of 17.2% and median growth rate of 18.0%, as compared to a growth rate of
19.0% for Cordis; and (vii) various multiples of 1996 projected P/E ratios to
projected five-year, compounded annual growth rates for EPS (based on IBES
estimates), with a mean multiple of 1.1x and median multiple of 1.2x, as
compared to a multiple of 1.0x for Cordis.
No company utilized in the comparable company analysis as a comparison is
identical to Cordis. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations and judgments concerning differences
in financial and operating characteristics of Cordis and other factors that
could affect the public trading value of the companies to which it is being
compared. Mathematical analysis (such as determining the average or the median)
is not itself a meaningful method of using comparable transaction data.
Discounted Cash Flow Analysis with respect to Cordis. Morgan Stanley
performed a discounted cash flow analysis of Cordis to calculate a present value
of the stand-alone unleveraged free cash flows that Cordis is expected to
generate if Cordis performs in accordance with scenarios based upon certain
financial forecasts prepared by the management of Cordis (the "Management
Case"). Morgan Stanley also analyzed a second set of financial forecasts based
upon IBES earnings estimates and IBES projected earnings growth rates (the
"Market Consensus Case"). In addition, Morgan Stanley analyzed a third set of
financial forecasts based upon certain adjustments to the Management Case (the
"Sensitivity Case"). To arrive at a valuation of Cordis based upon this method
of analysis, Morgan Stanley discounted the unleveraged free cash flows that
resulted from the aforementioned assumptions using a range of discount rates of
13.5% to 14.5%. The terminal value was computed by multiplying the projected
market price to net income in the fiscal year 2005 by a range of terminal
multiples of 14.0x to 18.0x. The discounted cash flow analysis indicated a per
share reference range for Cordis Common Stock of between $97 to $123 for the
Management Case, $76 to $94 for the Market Consensus Case and $69 to $86 for the
Sensitivity Case.
Future Stock Price Analysis. Morgan Stanley computed future trading values
per share of Cordis Common Stock based on a range of estimates of earnings,
sales growth and forward multiples of P/E ratios for the calendar year 2000.
Such future values were then discounted back to the present at an equity
discount rate of 16.0%. Such analysis indicated a present value of the future
price performance of Cordis Common Stock ranging from $91.65 to $117.04 per
share of Cordis Common Stock.
Comparable Transaction Analysis. Morgan Stanley reviewed the financial
terms, to the extent publicly available, of 30 selected pending and completed
merger and acquisition transactions in the medical technology industry announced
since June 18, 1988. Morgan Stanley reviewed the prices paid in such
transactions in terms of fully diluted equity value as a multiple of earnings
and book value, and in terms of the aggregate value (defined as equity value
plus any debt assumed and the stated value of any redeemable preferred stock,
less cash) as a multiple of revenue, as a multiple of EBITDA, as a multiple of
earnings before interest and taxes ("EBIT"), and as premiums to stock price one
month prior to the announcement of the transaction in question and/or premiums
to stock price one day prior to such announcement and compared such values to
the values which would be obtained by the shareholders of Cordis in connection
with the Merger. The transactions included: EP Technologies, Inc. and Boston
Scientific Corporation; Meadox and Boston Scientific Corporation; Heart
Technology, Inc. and Boston Scientific Corporation; Medrad, Inc. and Schering
AG; Bayer's Medical Plastic Business and Pall Corporation; MedChem Products,
Inc. and C.R. Bard, Inc.; Puritan-Bennett Corporation and Nellcor Incorporated;
American Medical Electronics, Inc. and Orthofix International; Cabot Medical
Corporation and Circon Corporation; Fisons Plc Scientific Instruments Division
and Thermo Instrument Systems Inc. (Thermo Electron Corporation); Neuromed Inc.
and Quest Medical, Inc.; Mitek Surgical Products, Inc. and Johnson & Johnson;
SciMed Life Systems, Inc. and Boston Scientific Corporation; NAMIC U.S.A.
Corporation and Pfizer Inc.; Orthomet, Inc. and Wright Medical Technology, Inc.;
Cardiovascular Imaging Systems, Inc. and Boston Scientific Corporation; Kendall
International, Inc. and Tyco International Ltd.; Pacesetter (Siemens AG) and St.
Jude Medical, Inc.; Kirschner Medical Corporation and Biomet, Inc.; Pharmacia AB
(Pharmacia Deltec) and Smith Industries Plc; DLP Inc. and Medtronic, Inc.;
Webster Laboratories and Cordis Corporation; PPG Industries, Inc. Biomedical
Systems Unit and Enhanced Imaging Technologies, Inc.; Electromedics Inc. and
Medtronic, Inc.; Bristol-Myers Squibb Company (Edward Weck, Inc.) and Teleflex
Incorporated; Devilbiss Health Care Inc. and Sunrise
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Medical Inc.; Sofamor SA and Danek Group, Inc.; Sorin Biomedica SPA and Imcera
Group, Inc.; Hemocue Intressenter AB and Imcera Group, Inc.; and Intermedics and
Sulzer Brothers Ltd. Based on an analysis of those transactions, Morgan
Stanley's analysis indicated (i) various multiples of equity value to latest
twelve month net income, with a mean multiple of 31.8x and a median multiple of
30.4x, as compared to a multiple of 33.0x for Cordis, (ii) various multiples of
equity value to book value, with a mean multiple of 4.8x and a median multiple
of 3.9x, as compared to a multiple of 6.2x for Cordis, (iii) various multiples
of aggregate value to last twelve-month revenues with a mean multiple of 3.19x
and a median multiple of 2.61x, as compared to a multiple of 3.83x for Cordis,
(iv) various multiples of aggregate value to last twelve-month EBITDA with a
mean multiple of 14.7x and a median multiple of 13.1x, as compared to a multiple
of 16.8x for Cordis, (v) various multiples of aggregate value to last
twelve-month EBIT with a mean multiple of 20.7x and a median multiple of 19.5x,
as compared to a multiple of 19.8x for Cordis, (vi) various premiums to stock
price one month prior to announcement with a mean premium of 49.8% and a median
premium of 41.2%, as compared to a premium of 28.6% for Cordis and (vii) various
premiums to stock price one day prior to announcement with a mean premium of
33.8% and a median premium of 27.7%, as compared to a premium of 26.7% for
Cordis.
No transaction utilized in the comparable transaction analysis is identical
to the Merger. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations and judgments concerning differences
in financial and operating characteristics of J&J and Cordis and other factors
that could affect the acquisition value of the companies to which they are being
compared. Mathematical analysis (such as determining the average or the median)
is not itself a meaningful method of using comparable transaction data.
Comparable Company Analysis with respect to J&J. As part of its analysis,
Morgan Stanley analyzed the relative performance and value of J&J Common Stock
by comparing certain market trading statistics with those of its peer companies
in the Pharmaceutical Index. Historical financial information used in connection
with the ratios provided below with respect to the comparable company analysis
is as of the most recent financial statements publicly available for each
company as of November 6, 1995, and all market information used in calculating
the ratios provided below is as of November 6, 1995.
Among the market trading information considered in the valuation analysis
were EPS estimates for the last twelve months and for calendar 1995 and calendar
1996. EPS estimates for calendar 1995 and calendar 1996 were based on estimates
provided by IBES. Morgan Stanley also reviewed certain market trading statistics
in terms of the aggregate value of the company in question as a multiple of
revenue and as a multiple of operating income. Based on an analysis of that
market trading information, Morgan Stanley's analysis indicated (i) various P/E
ratios for the latest twelve months, with a mean multiple of 20.3x and a median
multiple of 19.6x, as compared to a multiple of 23.3x for J&J; (ii) various
projected P/E ratios for calendar 1995, with a mean multiple of 19.2x and a
median multiple of 19.5x, as compared to a multiple of 22.0x for J&J; (iii)
various projected P/E ratios for calendar 1996, with a mean multiple of 17.2x
and a median multiple of 17.3x, as compared to a multiple of 19.3x for J&J; (iv)
various multiples of aggregate value to revenues, with a mean multiple of 3.64x
and a median multiple of 3.27x, as compared to a multiple of 3.06x for J&J; (v)
various multiples of aggregate value to operating income, with a mean multiple
of 14.2x and a median multiple of 14.7x, as compared to a multiple of 16.4x for
J&J; (vi) various projected five-year, compounded annual growth rates for EPS
(based on IBES estimates), with a mean growth rate of 10.7% and median growth
rate of 10.0%, as compared to a growth rate of 13.0% for J&J; and (vii) various
multiples of 1996 projected P/E ratios to projected five-year, compounded annual
growth rates for EPS (based on IBES estimates), with a mean multiple of 1.9x and
median multiple of 1.7x, as compared to a multiple of 1.7x for J&J.
No company utilized in the comparable company analysis as a comparison is
identical to J&J. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations and judgments concerning differences
in financial and operating characteristics of J&J and other factors that could
affect the public trading value of the companies to which it is being compared.
Mathematical analysis (such as determining the average or the median) is not
itself a meaningful method of using comparable transaction data.
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In connection with its opinion dated as of the date of this Proxy
Statement/Prospectus, Morgan Stanley confirmed the appropriateness of its
reliance on the analyses used to render its opinion dated as of November 12,
1995, by performing procedures to update certain of such analyses and by
reviewing the assumptions upon which such analyses were based and the factors
considered in connection therewith.
The above summary of the presentations by Morgan Stanley to the Cordis
Board does not purport to be a complete description of such presentations or of
all the advice rendered by Morgan Stanley. The preparation of a fairness opinion
is a complex process and is not necessarily susceptible to a partial analysis or
summary description. Morgan Stanley believes that its analyses and the summary
set forth above must be considered as a whole and that selecting portions of its
analyses, without considering all analyses, or portions of the above summary,
without considering all factors and analyses, could create an incomplete view of
the process underlying the analyses set forth in Morgan Stanley's presentations
to the Cordis Board and the Morgan Stanley Opinion. In addition, Morgan Stanley
may have given various analyses more or less weight than other analyses, and may
have deemed various assumptions more or less probable than other assumptions, so
that the ranges of valuations resulting for any particular analysis described
above should not be taken to be Morgan Stanley's view of the actual value of
Cordis.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Cordis and J&J. The
analyses performed by Morgan Stanley are not necessarily indicative of actual
values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. In addition, analyses relating to the
value of businesses do not purport to be appraisals or to reflect the prices at
which businesses actually may be sold or valued in the marketplace. In addition,
as described above, the Morgan Stanley opinion dated as of November 12, 1995
and the information provided by Morgan Stanley to the Cordis Board were one of
many factors taken into consideration by the Cordis Board in making its
determination to adopt the Merger. Consequently, the Morgan Stanley analyses
described above should not be viewed as determinative of the Cordis Board's or
Cordis management's opinion with respect to the value of Cordis or of whether
the Cordis Board or Cordis management would have been willing to agree to
consideration different from the Consideration.
Pursuant to the terms of the engagement letter dated October 20, 1995,
Cordis has retained Morgan Stanley to render financial advisory services to
Cordis, and in accordance with such engagement, Morgan Stanley has advised
Cordis with respect to the Merger and related matters.
Cordis has agreed to pay Morgan Stanley, upon consummation of the Merger, a
transaction fee of approximately $7.5 million (a portion of which is included in
the estimated business combination costs incurred by Cordis in the three-month
period ended December 31, 1995). In the event that the Merger is not consummated
and there is not, prior to October 19, 1996, either an acquisition of 50% or
more of the voting stock of Cordis by J&J or any other party or in a change in a
majority of the members of the Cordis Board, Morgan Stanley will charge an
Independence Fee. The term "Independence Fee" shall mean a fee which is
calculated based on the percentage of the aggregate transaction value of Cordis
implied by the consideration per share of Cordis Common Stock offered in
connection with J&J's cash tender offer, or the most recent proposed transaction
resulting from such offer (which percentage shall be determined on the same
basis as the transaction fees described above).
Cordis has also agreed to reimburse Morgan Stanley for its reasonable
expenses, including travel costs, document production and other similar expenses
of this type and also including the fees of outside counsel and other
professional advisors should they be engaged with Cordis's consent, and to
indemnify Morgan Stanley and certain related persons against certain
liabilities, including certain liabilities under Federal securities laws.
Cordis retained Morgan Stanley based upon its qualifications, expertise and
reputation. Morgan Stanley is an internationally recognized investment banking
and financial advisory firm. Morgan Stanley, as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. In addition to providing investment banking and financial advisory
services, Morgan Stanley is a full service securities firm engaged in securities
trading and brokerage activities. In the ordinary course of its trading and
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brokerage activities, Morgan Stanley or its affiliates may at any time hold long
or short positions, and may trade or otherwise effect transactions, for its own
account or the accounts of customers, in debt or equity securities of Cordis or
J&J. Morgan Stanley and its affiliates have, in the past, provided certain
financial advisory and financing services to J&J and Cordis (which were
unrelated to the proposed transactions between Cordis and J&J) for which they
have received customary fees for the rendering of such services, and may provide
financial advisory and financing services to the combined entity in the future.
EFFECTIVE TIME
The Merger will become effective at such time as articles of merger are
duly filed with the Florida Department of State, or at such other time as Merger
Sub and Cordis agree should be specified in such articles. The Merger Agreement
provides that Merger Sub and Cordis will deliver such articles or other
appropriate documents as soon as practicable on the Closing Date. See "THE
MERGER AGREEMENT -- Conditions to the Consummation of the Merger".
MERGER CONSIDERATION
At the Effective Time, each share of Cordis Common Stock issued and
outstanding immediately prior to the Effective Time (together with the
associated Right), other than shares of Cordis Common Stock owned by Cordis, J&J
or any subsidiary of J&J, will be converted into the right to receive that
number of validly issued, fully paid and nonassessable shares of J&J Common
Stock equal to the Exchange Ratio. If the Closing Date had been January 23,
1996, then the Average J&J Price would have been $86.3875 and each share of
Cordis Common Stock would have been converted into the right to receive 1.2618
shares of J&J Common Stock. However, the actual Exchange Ratio will depend on
the Average J&J Price at the actual Closing Date and may be greater or less than
the above number. For example, if the Average J&J Price were to be 15% higher
(or $99.3456) or 15% lower (or $73.4294) at the Closing Date than the average
price referred to above, the Exchange Ratio would be 1.0972 or 1.4844,
respectively. If, prior to the Special Meeting, it appears that the actual
Exchange Ratio will differ in a material respect from the range noted above,
Cordis would, if necessary at such time, determine whether to adjourn the
Special Meeting and resolicit proxies from the shareholders of Cordis.
As of the Effective Time, all shares of Cordis Common Stock shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares of
Cordis Common Stock shall cease to have any rights with respect thereto, except
the right to receive shares of J&J Common Stock and any cash in lieu of
fractional shares of J&J Common Stock to be issued or paid in consideration
therefor upon surrender of such certificate, in each case without interest.
Any shares of Cordis Common Stock held by Cordis, J&J or any subsidiary of
J&J will automatically be canceled and retired and will cease to exist as of the
Effective Time.
EXCHANGE AGENT; EXCHANGE PROCEDURES; DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED
SHARES; NO FURTHER OWNERSHIP RIGHTS IN CORDIS COMMON STOCK; NO FRACTIONAL SHARES
Exchange Agent. The Merger Agreement requires J&J to deposit as of the
Effective Time, with First Chicago Trust Company of New York or such other bank
or trust company as may be designated by J&J (and reasonably acceptable to
Cordis) (the "Exchange Agent"), for the benefit of the holders of shares of
Cordis Common Stock, certificates representing the shares of J&J Common Stock
issuable in exchange therefor.
Exchange Procedures. As soon as reasonably practicable after the Effective
Time, J&J shall cause the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Cordis Common Stock (the "Certificates"),
whose shares were converted into the right to receive shares of J&J Common Stock
pursuant to the Merger, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent, and shall be
in such form and have such other provisions as J&J may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of J&J Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
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shall be entitled to receive in exchange therefor a certificate representing
that number of shares of J&J Common Stock (rounded down to the nearest whole
share) which such holder has the right to receive after taking into account all
the shares of Cordis Common Stock then held by such holder under all such
Certificates so surrendered, cash in lieu of fractional shares of J&J Common
Stock and any dividends or other distributions to which such holder is entitled,
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of Cordis Common Stock that is not registered in the
transfer records of Cordis, a certificate representing the proper number of
shares of J&J Common Stock may be issued to a person other than the person in
whose name the Certificate so surrendered is registered, if, upon presentation
to the Exchange Agent, such Certificate shall be properly endorsed or otherwise
be in proper form for transfer and the person requesting such payment shall pay
any transfer or other taxes required by reason of the issuance of shares of J&J
Common Stock to a person other than the registered holder of such Certificate or
establish to the satisfaction of J&J that such tax has been paid or is not
applicable. Until so surrendered, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of J&J Common Stock, cash in lieu
of any fractional shares of J&J Common Stock and any dividends or other
distributions to which such holder is entitled pursuant to the Merger Agreement.
No interest will be paid or will accrue on any cash payable pursuant to the
Merger Agreement.
CORDIS SHAREHOLDERS SHOULD NOT FORWARD CORDIS STOCK CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS. CORDIS SHAREHOLDERS
SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to J&J Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of J&J Common Stock represented thereby and no cash
payment in lieu of fractional shares shall be paid to any such holder until the
holder of record of such Certificate shall surrender such Certificate. Following
surrender of any such Certificate, there shall be paid to the record holder of
the certificate representing whole shares of J&J Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional share of J&J Common Stock and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of J&J Common Stock, and (ii)
at the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time, but prior to such surrender, and a
payment date subsequent to such surrender payable with respect to such whole
shares of J&J Common Stock.
No Further Ownership Rights in Cordis Common Stock. All shares of J&J
Common Stock issued upon the surrender for exchange of shares of Cordis Common
Stock in accordance with the terms of the Merger Agreement (including any cash
paid) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Cordis Common Stock, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Cordis Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in the Merger
Agreement.
No Fractional Shares. No certificates or scrip representing fractional
shares of J&J Common Stock shall be issued upon the surrender for exchange of
Certificates. Each holder of shares of Cordis Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of J&J Common Stock (after taking into account all Certificates delivered
by such holder) will receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of J&J Common Stock multiplied
by the Average J&J Price.
STOCK EXCHANGE LISTING
It is a condition to each party's obligation to effect the Merger that the
shares of J&J Common Stock issuable to Cordis's shareholders pursuant to the
Merger Agreement and under the Cordis Stock Plans (as
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defined under "-- Effect on Employee Benefit and Stock Plans") shall have been
approved for listing on the NYSE, subject to official notice of issuance. The
shares of J&J Common Stock to be issued pursuant to the Merger Agreement and
under the Cordis Stock Plans are treasury shares that have been approved for
listing on the NYSE.
EXPENSES
The Merger Agreement provides that (except under the circumstances
described under "--Certain Fees and Expenses" below) J&J and Cordis each will
pay their own expenses in connection with the Merger, the Merger Agreement and
the transactions contemplated thereby, including the fees and expenses of their
own financial or other consultants, investment bankers, accountants and counsel,
whether or not the Merger is consummated, except that J&J and Cordis will share
equally all expenses incurred in connection with filing, printing and mailing
this Proxy Statement/Prospectus and the Registration Statement.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the principal Federal income tax
consequences of the Merger to holders of Cordis Common Stock (held as capital
assets) and does not purport to be a complete analysis or listing of all
potential tax effects relevant to a decision whether to vote in favor of
approval of the Merger. The discussion does not reflect the individual tax
position of any holder of Cordis Common Stock and does not address the tax
consequences that may be relevant to holders of Cordis Common Stock with special
tax status, including but not limited to financial institutions, dealers in
securities, holders that are not citizens or residents of the United States,
tax-exempt entities and holders that acquired Cordis Common Stock upon the
exercise of employee stock options or otherwise as compensation. Moreover, the
discussion does not address any consequences arising under the laws of any
state, locality or foreign jurisdiction. Finally, the tax consequences to
holders of stock options are not discussed. The discussion is based on the Code,
Treasury Regulations thereunder and administrative rulings and court decisions
as of the date hereof. All of the foregoing are subject to change and any such
change could affect the continuing validity of this discussion. Holders of
Cordis Common Stock are urged to consult with their own tax advisors regarding
the tax consequences of the Merger to them, including the effects of Federal,
state, local, foreign and other tax laws.
Simpson Thacher & Bartlett, counsel to Cordis, has delivered to Cordis its
opinion to the effect that: (i) the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code, (ii) J&J, Merger Sub and
Cordis will each be a party to the reorganization, within the meaning of Section
368(b) of the Code, (iii) no income, gain or loss will be recognized for Federal
income tax purposes by either J&J or Cordis as a result of the Merger, and (iv)
no income, gain or loss will be recognized for Federal income tax purposes by
shareholders of Cordis upon the exchange in the Merger of Cordis Common Stock
solely for J&J Common Stock (except to the extent of any cash received in lieu
of fractional shares). Such opinion assumes that the Merger will take place as
described in the Merger Agreement and that certain factual matters with respect
to J&J, Merger Sub and Cordis, respectively, described in certain representation
letters addressed to such counsel, will be true and correct as of the Effective
Time. Based upon the advice of Simpson Thacher & Bartlett, Cordis expects that
the Merger will qualify as a reorganization. Accordingly, the following will be
the Federal income tax consequences to the Cordis shareholders:
(i) no gain or loss will be recognized by the shareholders of Cordis
upon receipt of J&J Common Stock in exchange for their Cordis Common Stock,
except that a holder of Cordis Common Stock who receives cash in lieu of a
fractional share of J&J Common Stock will recognize gain or loss equal to
the difference between the amount of such cash and the tax basis allocated
to such shareholder's fractional share of J&J Common Stock. Such gain or
loss will constitute long-term capital gain or loss if, at the Effective
Time, such shareholder's Cordis Common Stock is held as a capital asset and
has been held for more than one year;
(ii) the tax basis of J&J Common Stock received by the shareholders of
Cordis will be the same as the tax basis of such shareholders' Cordis
Common Stock exchanged therefor reduced by any amount allocable to a
fractional share interest for which cash is received; and
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(iii) the holding period of J&J Common Stock in the hands of the
Cordis shareholders will include the holding period of such shareholders'
Cordis Common Stock exchanged therefor, provided that such Stock is held as
a capital asset at the Effective Time.
ANTICIPATED ACCOUNTING TREATMENT
J&J intends to treat the Merger as a pooling of interests for accounting
and financial reporting purposes.
EFFECT ON EMPLOYEE BENEFIT AND STOCK PLANS
Employee Benefit Plans. The Merger Agreement provides that for a period of
one year following the Effective Time (the "Initial Period"), J&J and Merger Sub
will maintain for the benefit of employees of Cordis and its subsidiaries who
are employed in the United States ("U.S. Employees") certain of Cordis's
existing benefit plans ("Benefit Plans"), or substitute plans which in the
aggregate provide substantially equivalent benefits, for the employees of Cordis
and its subsidiaries. The Merger Agreement provides that for the one-year period
following the Initial Period, J&J will provide or make available for the benefit
of U.S. Employees who continue in employment during the one-year period
following the Initial Period pension, health and welfare benefits which are
substantially equivalent in the aggregate to such benefits provided or made
available to other similarly situated employees of J&J and Merger Sub. Following
the completion of the Initial Period and the one-year period thereafter, J&J, in
its sole discretion, will determine the benefits to be provided or made
available to U.S. Employees. As of the Effective Time, U.S. Employees (i) will
be eligible for coverage under the terms and conditions of the written severance
policy of J&J to the same extent such individuals would be eligible for coverage
under such severance policy if they were employed by J&J or Merger Sub (other
than those U.S. Employees who are entitled to severance payments under the terms
of the Employment Agreements (as defined below) during the term of such
agreements) and (ii) will be given past service credit with Cordis or its
subsidiaries to the same extent such service was credited under Cordis's written
severance policy as of the Effective Time.
As of the Effective Time, U.S. Employees will be given past service credit
for their service with Cordis or its subsidiaries prior to the Effective Time
(i) for all purposes under the terms and conditions of the Benefit Plans (or any
substitute plans) and the written severance policy of J&J and (ii) for
eligibility and vesting purposes (but not for benefit accrual purposes other
than with respect to Cordis's vacation policy) under any other pension, health
and welfare plan provided by J&J to the employees of Cordis or its subsidiaries
during the Initial Period or the one-year period thereafter to the same extent
such service would be credited under the terms and conditions of such plans as
if such U.S. Employees were employed by J&J prior to the Effective Time;
provided, however, that no such past service credit will be given for any
purpose with respect to J&J's post-retirement medical plan.
In addition, J&J has agreed to (i) continue and maintain certain of
Cordis's existing annual incentive compensation plans in effect through the end
of Cordis's fiscal year ending June 30, 1996, and (ii) equitably adjust, as J&J
deems appropriate in its sole discretion, any performance criteria established
under such incentive plans for the annual award period ending on June 30, 1996,
in order to eliminate any costs or expenses directly arising from the
implementation of the Merger which would adversely impact upon the achievement
of the applicable performance criteria. For the remainder of calendar year 1996,
J&J will make available incentive compensation opportunities on terms and
conditions substantially equivalent to those made available to similarly
situated employees of J&J; it being understood, however, that for any award
period under J&J's incentive plans which (i) is in effect on July 1, 1996 and
(ii) commenced prior to July 1, 1996, the performance criteria and target awards
payable will be equitably adjusted, as J&J deems necessary and appropriate in
its sole discretion, to reflect any shortened performance cycle.
For purposes of determining the benefits due to Cordis employees under
certain specified plans, agreements or arrangements of Cordis, the consummation
of the Merger will constitute a "Change in Control" of Cordis (as that term is
defined in such plans, agreements or arrangements). J&J has agreed (i) to cause
the Surviving Corporation after consummation of the Merger to pay all amounts
provided under such plans, agreements and arrangements as a result of a Change
in Control of Cordis in accordance with their terms as in
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effect on the date of the Merger Agreement and (ii) to honor, and to cause the
Surviving Corporation to honor, all rights and privileges to or with respect to
such plans, agreements and arrangements as in effect on the date of the Merger
Agreement which, by their respective terms, became effective as a result of such
Change in Control. The Merger Agreement does not confer upon any person, other
than J&J, Merger Sub and Cordis, any rights, remedies or benefits with respect
to, among other things, employee benefits.
Stock Option Plans. Certain officers, directors and employees of Cordis
have received options to acquire Cordis Common Stock pursuant to The Cordis
Corporation Non-Qualified Stock Option Plan, The Cordis Corporation Director
Non-Qualified Stock Option Plan and The Webster Laboratories, Inc. 1992 Stock
Plan (the "Cordis Stock Plans"). Pursuant to the Merger Agreement each option
granted under the Cordis Stock Plans which is outstanding immediately prior to
the Effective Time ("Cordis Option") will be deemed to constitute an option to
acquire, on substantially the same terms and conditions as were applicable under
such Cordis Option and the applicable Cordis Stock Plan, the same number of
shares of J&J Common Stock (rounded down to the nearest whole share) as the
holder of such Cordis Option would have been entitled to receive pursuant to the
Merger had such holder exercised such Cordis Option in full immediately prior to
the Effective Time, at a price per share equal to (y) the aggregate exercise
price for the shares of Cordis Common Stock otherwise purchasable pursuant to
such Cordis Option divided by (z) the number of shares of J&J Common Stock
deemed purchasable pursuant to such Cordis Option. Pursuant to the respective
terms of the Cordis Stock Plans, Cordis Options (other than those granted under
The Webster Laboratories, Inc. 1992 Stock Plan) become fully exercisable, to the
extent not then exercisable, upon the Effective Time. As provided in the Merger
Agreement, the provisions in the Cordis Stock Plans and any other Benefit Plan
providing for the issuance, transfer or grant of any capital stock of Cordis or
any interest in respect of any capital stock of Cordis will be deleted as of the
Effective Time, and Cordis is required to use its best efforts to ensure that,
following the Effective Time, no holder of a Cordis Option or any participant in
any Cordis Stock Plan will have any right thereunder to acquire any capital
stock of Cordis, or the Surviving Corporation, except as described above.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Cordis Board with respect to the
Merger Agreement, shareholders should be aware that the members of the Cordis
Board and certain members of management of Cordis at the time of the adoption of
the Merger Agreement had, and currently have, certain interests which may
present them with potential conflicts of interest in connection with their
recommendation of the approval of the Merger Agreement to Cordis's shareholders.
Employment Agreements. Pursuant to the Merger Agreement, Cordis will use
its reasonable efforts to cause 62 executives and managers of Cordis (the
"Executives") to enter into four tiers of employment agreements ("Employment
Agreements"). With respect to the Executives who are officers, there are two
types of Employment Agreements (Tier I and Tier II).
The Tier I and Tier II Employment Agreements provide for employment for a
term of two years at an annual base salary ("Base Salary") for each Executive at
the same rate as that which went into effect for calendar year 1995 ("1995 Base
Salary"), subject to increases in the ordinary course of business. In addition,
the Tier I and Tier II Employment Agreements include a non-competition period of
two years following termination of employment during which time the Executive
may not: (i) solicit customers or employees of Cordis or (ii) compete with
Cordis's line of business or that of the interventional systems division of J&J.
In the event of termination of an Executive's employment prior to the end
of the two-year employment agreement (i) by Cordis other than for "cause" (as
defined) or (ii) by the Executive for "good reason" (as defined), the Executive
will be entitled to a lump sum severance payment which is the multiple of the
Executive's 1995 Base Salary and the highest bonus received by the Executive in
the last three fiscal years. The multiples used to determine the lump sum
payment are 2.99 and 2 for Tier I and Tier II, respectively. Although J&J does
not believe that any excise taxes pursuant to Section 4999 of the Code would be
imposed on amounts payable to Executives under the Employment Agreements or on
other amounts payable by Cordis, the Tier I and Tier II Employment Agreements
include an excise tax gross-up provision to cover such contingency.
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Pursuant to the Merger Agreement, Cordis will enter into one year
employment agreements with Mr. Strauss and Mr. Novak substantially similar to
the Employment Agreements described above, with the following key differences.
At the end of one year, Mr. Strauss and Mr. Novak will receive retention bonuses
in the amount of $1.5 million and $1 million, respectively. In addition, Mr.
Strauss and Mr. Novak will receive $1.7 million and $700,000, respectively, in
respect of a covenant not to compete similar to the one described above. In the
event of termination of employment during the one-year period following the
Effective Time (i) by Cordis other than for "cause" (as defined), (ii) by either
Mr. Strauss or Mr. Novak for "good reason" (as defined) or (iii) on account of
death or "disability" (as defined), the foregoing amounts relating to the
retention bonus and the non-competition payment will be paid at the time of
termination. If Mr. Strauss or Mr. Novak terminate employment for any other
reason during such one-year period, they will forfeit all entitlement to such
retention bonus and payment in respect of the covenant not to compete.
Prior to entering into the Merger Agreement, the Severance Agreements
authorized by the Cordis Board at a meeting on October 31, 1995 were rescinded
or terminated by the mutual agreement of the parties.
Other Plans. Benefits accrued under Cordis's performance unit award plan,
supplemental executive retirement plan, Directors Retirement Policy and deferred
compensation plans for executives and directors will become vested, to the
extent not then vested, and, in general, payment of such accrued benefits will
accelerate, in accordance with the respective terms of such plans and Policy,
upon consummation of the Merger.
Cordis Stock Plans. Cordis Options (other than those options granted under
The Webster Laboratories, Inc. 1992 Stock Plan) will become fully exercisable
upon the Effective Time (whether or not then otherwise exercisable) and will be
deemed to constitute options to acquire J&J Common Stock. See "-- Effect on
Employee Benefit and Stock Plans".
Indemnification of Directors and Officers Pursuant to the Merger
Agreement. Pursuant to the Merger Agreement, for a period of six years after
the Effective Time, the Surviving Corporation will, subject to applicable law,
maintain all rights to indemnification existing on the date of the Merger
Agreement under Cordis's By-laws in favor of the present and former directors,
officers, employees and agents of Cordis. J&J has agreed to maintain for six
years from the Effective Time unless J&J agrees in writing to guarantee the
indemnification obligations set forth in Cordis's By-laws, the current level and
scope of directors' and officers' liability insurance maintained by Cordis
covering those persons who are currently covered by Cordis's directors' and
officers' liability insurance policy, so long as the annual premium therefor
would not be in excess of 200% of the last annual premium paid by Cordis prior
to the date of the Merger Agreement ("Cordis's Current Premium"). If such
premiums for such insurance at any time exceed 200% of Cordis's Current Premium,
then the Surviving Corporation will cause to be maintained policies of insurance
which, in the Surviving Corporation's good faith determination, provide the
maximum coverage available at an annual premium equal to 200% of Cordis's
Current Premium.
RESALE OF J&J COMMON STOCK
The J&J Common Stock to be issued pursuant to the Merger will be freely
transferable under the Securities Act except for shares issued to any Cordis
shareholder who may be deemed to be an affiliate of Cordis (an "Affiliate") for
purposes of Rule 145 under the Securities Act or for purposes of qualifying the
Merger for pooling of interests accounting treatment under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations. Cordis
will use its reasonable efforts to cause each such Affiliate to enter into an
agreement with J&J providing that such Affiliate will not transfer any J&J
Common Stock received in the Merger (i) except in compliance with the Securities
Act and (ii) until after such time as results covering at least 30 days of
combined operations of Cordis and J&J have been published by J&J, and that such
Affiliate will not during the 30 days immediately preceding the Effective Time
transfer any shares of Cordis Common Stock.
NO SOLICITATION
The Merger Agreement provides that Cordis may not, nor may it permit any of
its subsidiaries to, nor may it authorize or permit any of its officers,
directors or employees or any investment banker, attorney or other advisor or
representative retained by it or any of its subsidiaries to, (i) solicit,
initiate or knowingly
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encourage the submission of any Takeover Proposal, or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any non-public
information with respect to, or take any other action knowingly to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal. However, to the extent required
by the fiduciary obligations of the Cordis Board, as determined by a majority of
the members thereof, based on the advice of outside counsel, Cordis may, in
response to an unsolicited Takeover Proposal and subject to compliance with
Cordis's responsibility to keep J&J informed in all material respects of the
status and details of any such Takeover Proposal and certain other conditions,
(i) furnish and discuss non-public information with respect to Cordis to any
person pursuant to a customary confidentiality agreement (as determined by
Cordis's outside counsel) with such person and (ii) participate in negotiations
and discussions regarding such Takeover Proposal. As used herein, a "Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of 15% or more of the consolidated
assets of Cordis and its subsidiaries or 20% or more of any class of equity
securities of Cordis or any of its Significant Subsidiaries (within the meaning
of Rule 1-02 of Regulation S-X of the SEC) or any tender offer or exchange offer
that if consummated would result in any person beneficially owning 20% or more
of any class of equity securities of Cordis or any of its Significant
Subsidiaries, or any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving Cordis or any of its subsidiaries, other than the
transactions contemplated by the Merger Agreement, or any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the Merger or which would reasonably be expected to
dilute materially the benefits to J&J of the transactions contemplated by the
Merger Agreement.
RIGHT OF THE CORDIS BOARD TO WITHDRAW RECOMMENDATION
Under the Merger Agreement, neither the Cordis Board nor any committee
thereof may (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to J&J or Merger Sub, the Cordis Board's approval or
recommendation of the Merger Agreement or the Merger, (ii) approve or recommend,
or propose to approve or recommend, any Takeover Proposal or (iii) enter into
any agreement with respect to any Takeover Proposal. However, to the extent
required by the fiduciary obligations of the Cordis Board, as determined in good
faith by a majority of the members thereof, based on the advice of outside
counsel, the Cordis Board may withdraw or modify its approval or recommendation
of the Merger Agreement or the Merger, approve or recommend any Superior
Proposal, enter into an agreement with respect to such Superior Proposal or
terminate the Merger Agreement, in each case at any time after a reasonable
period of time following J&J's receipt of written notice advising J&J that the
Cordis Board has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. In addition, if Cordis proposes to enter into an agreement
with respect to any Takeover Proposal, it shall concurrently with entering into
such agreement pay, or cause to be paid, to J&J the fees and expenses described
below under "--Certain Fees and Expenses". As used herein, "Superior Proposal"
means a bona fide proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more than
50% of the shares of Cordis Common Stock then outstanding or all or
substantially all the assets of Cordis, and otherwise on terms which a majority
of the disinterested members of the Cordis Board determines in its good faith
judgment (based on the advice of a financial advisor of nationally recognized
reputation) to be more favorable to Cordis's shareholders than the Merger and
for which financing, to the extent required, is then committed or which, in the
good faith judgment of a majority of such disinterested members, is reasonably
capable of being financed by such third party.
CERTAIN FEES AND EXPENSES
The Merger Agreement requires Cordis to promptly pay, or cause to be paid,
to J&J $40 million, plus all Expenses (as defined below) not to exceed $10
million, if (i) the Merger Agreement is terminated by the Cordis Board, in
accordance with the provisions described under "Right of the Cordis Board to
Withdraw Recommendation" above, in connection with entering into a definitive
agreement with respect to any Takeover Proposal or (ii) prior to any termination
of the Merger Agreement (other than a termination occurring after any Federal,
state or local government or any court, tribunal, administrative agency or
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commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity") of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable), a bona fide Takeover Proposal shall
have been made public after November 12, 1995 and prior to the Special Meeting
and the requisite approval of Cordis's shareholders of the Merger is not
obtained upon a vote taken at the Special Meeting and, within 12 months of such
termination, a transaction constituting a Takeover Proposal is consummated or
Cordis enters into an agreement with respect to, approves or recommends such
Takeover Proposal. As used herein, "Expenses" means all documented out-of-pocket
fees and expenses incurred or paid by or on behalf of J&J or any of its
subsidiaries in connection with the Merger or any of the transactions
contemplated by the Merger Agreement, not to exceed $10 million in the
aggregate.
THE MERGER AGREEMENT
The following is a brief summary of certain provisions of the Merger
Agreement, which is attached as Annex 1 to this Proxy Statement/Prospectus and
which is incorporated herein by reference. Such summary is qualified in its
entirety by reference to the Merger Agreement.
THE MERGER
The Merger. The Merger Agreement provides that, following the approval of
the Merger Agreement by the shareholders of Cordis and the satisfaction or
waiver of the other conditions to the Merger, Merger Sub will be merged with and
into Cordis (with Cordis being the Surviving Corporation). The Effective Time
will occur upon the filing with the Florida Department of State of duly executed
articles of merger or at such other time as Merger Sub and Cordis shall agree
should be specified in such articles of merger.
Articles of Incorporation and By-laws. The Merger Agreement provides that
the Restated Articles of Incorporation of Cordis as in effect immediately prior
to the Effective Time will be amended as of the Effective Time so that Article
III thereof reads in its entirety as follows: "The total number of shares of all
classes of stock which the Corporation shall have authority to issue is 100
shares of Common Stock, par value $1.00 per share." As so amended, such Restated
Articles of Incorporation will be the Articles of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law. The By-laws of Cordis as in effect at the Effective Time will
become the By-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
Conversion of Cordis Stock in the Merger. At the Effective Time each share
of Cordis Common Stock (together with the associated Right) issued and
outstanding immediately prior to the Effective Time (other than shares of Cordis
Common Stock that are owned by Cordis, J&J or any subsidiary of J&J, all of
which will be canceled) will be converted into the right to receive that number
of validly issued, fully paid and nonassessable shares of J&J Common Stock equal
to the Exchange Ratio. Cash will be paid to Cordis shareholders in lieu of
fractional shares of J&J Common Stock and for any dividends or other
distributions to which such holder is entitled. See "THE MERGER -- Exchange
Agent; Exchange Procedures; Distributions with Respect to Unexchanged Shares; No
Further Ownership Rights in Cordis Common Stock; No Fractional Shares".
REPRESENTATIONS AND WARRANTIES
The Merger Agreement includes various customary representations and
warranties of the parties thereto. The Merger Agreement includes representations
and warranties by Cordis as to, among other things, (i) organization, standing
and corporate power of Cordis and its Significant Subsidiaries; (ii) ownership
of subsidiaries; (iii) capital structure; (iv) the authorization, execution,
delivery, performance and enforceability of the Merger Agreement and related
matters and the Merger Agreement's noncontravention of any agreement, law, or
charter or by-law provision and the absence of the need for governmental or
third-party filings, consents, approvals or actions with respect to any
transaction contemplated by the Merger Agreement (except for certain filings
specified in the Merger Agreement); (v) compliance as to form and the accuracy
of
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information contained in documents filed by Cordis with the SEC; (vi) the
accuracy of information supplied by Cordis in connection with this Proxy
Statement/Prospectus and the Registration Statement; (vii) the absence of
certain material changes or events since the date of the most recent audited
financial statements filed with the SEC (except as disclosed in documents filed
with the SEC prior to the date of the Merger Agreement and except as expressly
contemplated by the Merger Agreement), including the absence of any declaration
of a dividend or other distribution, any split, combination or reclassification
of capital stock, certain increases in compensation, severance or termination
pay, entry into certain employment, severance or termination agreements and
certain changes in accounting methods, principles or practices; (viii) absence
of material litigation; (ix) compliance with laws applicable to the business of
Cordis; (x) the absence of certain material changes in Cordis's benefit plans;
(xi) the compliance with laws applicable to Cordis's benefit plans; (xii) the
filing of tax returns and payment of taxes; (xiii) the absence of "excess
parachute payments" under the Code; (xiv) the voting requirements for the
approval of the Merger; (xv) the applicability of certain state takeover laws to
the Merger and the Merger Agreement; (xvi) certain broker's and advisor's fees
and expenses; (xvii) the receipt of an opinion of Cordis's financial advisor;
(xviii) the absence of actions that would prevent J&J from accounting for the
Merger as a pooling of interests under Opinion 16 of the Accounting Principles
Board and any applicable SEC rules and regulations; and (xix) the absence of
actions that would prevent the Merger from qualifying as a tax-free
reorganization.
The Merger Agreement also includes representations and warranties by J&J
and Merger Sub as to, among other things, (i) organization, standing and
corporate power of J&J and Merger Sub; (ii) capital structure; (iii) the
authorization, execution, delivery, performance and enforceability of the Merger
Agreement and related matters and the Merger Agreement's noncontravention of any
agreement, law, or charter or by-law provision and the absence of the need for
governmental or third-party filings, consents, approvals or actions with respect
to any transaction contemplated by the Merger Agreement (except for certain
filings specified in the Merger Agreement); (iv) compliance as to form and the
accuracy of information contained in documents filed by J&J with the SEC; (v)
the accuracy of information supplied by J&J in connection with this Proxy
Statement/Prospectus and the Registration Statement; (vi) the absence of actions
that would prevent J&J from accounting for the Merger as a pooling of interests;
(vii) the absence of actions that would prevent the Merger from qualifying as a
tax-free reorganization; (viii) J&J's or its affiliates' or associates'
ownership of Cordis Common Stock; and (ix) the absence of prior activities of
Merger Sub.
BUSINESS OF CORDIS PENDING THE MERGER
Cordis has agreed that, prior to the Effective Time, it will, and it will
cause its subsidiaries to, except as expressly contemplated or permitted by the
Merger Agreement or to the extent J&J otherwise consents in writing, carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as conducted prior to the date of the Merger
Agreement and, to the extent consistent therewith, use reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve the relationships
with customers, suppliers, licensors, licensees, distributors and others having
business dealings with them to the end that their goodwill and ongoing
businesses will not be impaired in any material respect at the Effective Time.
Cordis has also agreed that prior to the Effective Time it will not, and it will
not permit any of its subsidiaries to, among other things, except as expressly
contemplated or permitted by the Merger Agreement or to the extent J&J otherwise
consents in writing: (i) (a) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property) in respect of, any
of Cordis's capital stock, except for dividends by a direct or indirect wholly
owned subsidiary of Cordis to its parent, (b) split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital stock or
(c) purchase, redeem or otherwise acquire any shares of capital stock or any
rights, warrants or options to acquire any such shares or other securities; (ii)
issue, deliver, sell, pledge or otherwise encumber any shares of its capital
stock, any other voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting securities or
convertible securities (other than the issuance of shares of Cordis Common Stock
upon the exercise of Cordis Options outstanding on the date of the Merger
Agreement and in accordance with their present terms); (iii) amend its articles
of incorporation, by-laws or other comparable charter or organizational
documents; (iv) subject to certain exceptions, acquire
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or agree to acquire (a) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, association or other business
organization or division thereof or (b) any assets that are material,
individually or in the aggregate, to Cordis and its subsidiaries taken as a
whole, except purchases of inventory in the ordinary course of business
consistent with past practice; (v) sell, lease, license, mortgage or otherwise
encumber or subject to any lien or otherwise dispose of any of its properties or
assets, except sales of inventory in the ordinary course of business consistent
with past practice; (vi) (a) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of Cordis
or any of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with past practice, or
(b) subject to certain exceptions, make any loans, advances or capital
contributions to, or investments in, any other person, other than (1) to Cordis
or any direct or indirect wholly owned subsidiary of Cordis or (2) advances to
employees in accordance with past practice; (vii) subject to certain exceptions,
make or agree to make any new capital expenditure or expenditures which,
individually, is in excess of $250,000 or, in the aggregate, are in excess of
$5,000,000; (viii) make any material tax election or settle or compromise any
material tax liability; (ix) subject to certain exceptions, pay, discharge,
settle or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge, settlement or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of Cordis included in
the reports, forms and other documents filed by Cordis with the SEC and publicly
available prior to November 12, 1995, or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice, or waive any material benefits of, or agree to modify in any material
respect, any confidentiality, standstill or similar agreements to which Cordis
or any of its subsidiaries is a party; (x) except in the ordinary course of
business, modify, amend or terminate any material contract or agreement to which
Cordis or any subsidiary is a party or waive, release or assign any material
rights or claims; (xi) enter into any contracts, agreements, arrangements or
understandings relating to the distribution, sale or marketing by third parties
of Cordis's or its subsidiaries' products or products licensed by Cordis or its
subsidiaries; (xii) except as required to comply with applicable law, (a) adopt,
enter into, terminate or amend any employee benefit plan or other arrangement
for the benefit or welfare of any director, officer or current or former
employee, (b) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any director, officer or employee (except for normal increases
or bonuses in the ordinary course of business consistent with past practice),
(c) pay any benefit not provided for under any benefit plan, (d) except as
permitted in clause (b), grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or benefit plan (including
the grant of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the removal of
existing restrictions in any benefit plan or agreement or awards made
thereunder) or (e) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement, contract
or arrangement or benefit plan; (xiii) make any change in any method of
accounting or accounting practice or policy other than those required by
generally accepted accounting principles; (xiv) intentionally take any action
that (without regard to any action taken or agreed to be taken by J&J or any of
its affiliates) would prevent J&J from accounting for the Merger as a pooling of
interests; (xv) intentionally take any action that would prevent the Merger from
qualifying as a tax-free reorganization; or (xvi) authorize any of, or commit or
agree to take any of, the foregoing actions.
CERTAIN ADDITIONAL AGREEMENTS
The Merger Agreement contains additional covenants relating to, among other
things: (i) Cordis, as soon as practicable following the date of the Merger
Agreement, establishing a record date for, duly calling, giving notice of,
convening and holding the Special Meeting for the purpose of approving the
Merger Agreement; (ii) the use of reasonable efforts to obtain certain letters
from each party's accountants regarding the financial information contained in
this Proxy Statement/Prospectus; (iii) the use by each party, respectively, of
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reasonable efforts to cause to be delivered to J&J by each party's respective
accountants of letters to the effect, in the case of the letter delivered by
J&J's accountants, that the Merger qualifies for pooling of interests accounting
treatment, and in the case of the letter delivered by Cordis's accountants, that
Cordis is an entity which would qualify as a party to a pooling of interests
transaction; (iv) J&J not taking any action that would prevent (a) it from
accounting for the Merger as a pooling of interests or (b) the Merger from
qualifying as a tax-free reorganization; (v) the parties' agreement that the
Merger will not be implemented in the Federal Republic of Germany without the
prior notification and/or approval of the German Federal Cartel Office; (vi) J&J
having reasonable access to Cordis's properties, books, contracts, commitments,
personnel and records, and Deloitte & Touche LLP, on behalf of Cordis, having
reasonable access to any J&J information reasonably related to the ability of
J&J to account for the Merger as a pooling of interests; (vii) (a) each party's
agreement to promptly effect all necessary filings under the HSR Act and any
other domestic or foreign antitrust law, rule or regulation, (b) J&J's
agreement, in order to consummate the Merger, to promptly take all steps
necessary to secure government antitrust clearance, including, without
limitation, all steps to make arrangements for or to effect the sale or other
disposition of particular assets or categories of assets of J&J, Merger Sub, any
of their affiliates and/or Cordis or any of its subsidiaries and to hold
separate pending such sale or other disposition of particular assets or
categories of assets, businesses or voting securities of Cordis or the voting
stock of any of its subsidiaries, consistent with J&J's obligations under
applicable law or any agreement to which it is a party and (c) each party's use
of reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement; (viii) Cordis rendering the Rights
Agreement inapplicable to the Merger and the other transactions contemplated by
the Merger Agreement; (ix) consulting with the other party regarding any public
statements relating to the transactions contemplated by the Merger Agreement;
(x) Cordis identifying all persons who are, at the time the Merger is submitted
for approval to the shareholders of Cordis, Affiliates of Cordis, and to use its
reasonable efforts to cause each such person to deliver to J&J on or prior to
Closing Date a written agreement pursuant to which each such Affiliate agrees
not to dispose of shares of J&J Common Stock received by it in connection with
the Merger (a) except in compliance with the Securities Act and (b) until after
such time as results covering at least 30 days of combined operations have been
published, as described under "THE MERGER--Resale of J&J Common Stock"; (xi)
each party's use of reasonable efforts to obtain a dismissal without prejudice
of Johnson & Johnson and JNJ Acquisition Corp. v. Cordis Corporation, and
Cordis's agreement that it will not settle any litigation pending as of November
12, 1995, or commenced after such date, against Cordis or any of its directors,
without the prior written consent of J&J; (xii) the termination by J&J of its
solicitation of shareholder consents and the termination by Cordis of its
solicitation of revocations of consent with respect thereto and (xiii) Cordis's
use of reasonable efforts to cause the Executives to enter into the Employment
Agreements as described under "THE MERGER--Interests of Certain Persons in the
Merger". In addition, J&J has agreed (i) to take the actions with respect to the
Cordis Options and benefit plans described under "THE MERGER--Effect on Employee
Benefit and Stock Plans"; (ii) to maintain all rights of indemnification in
favor of current and former officers, directors, employees and agents of Cordis
and its subsidiaries and to maintain Cordis's directors' and officers' insurance
as described under "THE MERGER--Interests of Certain Persons in the Merger";
(iii) to use its best efforts to cause the shares of J&J Common Stock to be
issued in the Merger to be approved for listing on the NYSE; and (iv) to use its
reasonable efforts to cause all persons who are affiliates of J&J for purposes
of qualifying the Merger for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations to comply with the transfer restrictions relating to pooling of
interests accounting treatment described under "THE MERGER--Resale of J&J Common
Stock".
Under the Merger Agreement, Cordis has also agreed not to solicit other
Takeover Proposals or to withdraw its recommendation of the Merger except as set
forth under "THE MERGER--No Solicitation" and "--Right of Cordis Board to
Withdraw Recommendation".
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CONDITIONS TO THE CONSUMMATION OF THE MERGER
Conditions to Each Party's Obligation to Effect the Merger. The respective
obligation of each party to effect the Merger is subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions: (i) the
Merger Agreement shall have been approved by the affirmative vote of the holders
of a majority of the outstanding shares of Cordis Common Stock; (ii) the shares
of J&J Common Stock issuable to Cordis's shareholders pursuant to the Merger
Agreement shall have been approved for listing on the NYSE, subject to official
notice of issuance; (iii) the waiting period under the HSR Act applicable to the
Merger shall have expired or been terminated; (iv) the parties shall not be
subject to any statute, rule, regulation, decree, ruling, injunction or other
order issued by any Governmental Entity of competent jurisdiction that
prohibits, restrains, enjoins or restricts the consummation of the transactions
contemplated by the Merger Agreement; provided that each of J&J and Merger Sub
shall have used its best efforts to prevent any such injunction or other order,
and to appeal as promptly as practicable any injunction or other order and (v)
the Registration Statement shall have become effective and shall not be the
subject of any stop order suspending the effectiveness thereof or any proceeding
seeking such a stop order.
Conditions to the Obligations of J&J and Merger Sub. The obligations of
J&J and Merger Sub to effect the Merger are further subject to the following
conditions: (i) the representations and warranties of Cordis set forth in the
Merger Agreement that are qualified as to materiality being true and correct,
and the representations and warranties of Cordis that are not so qualified being
true and correct in all material respects, in each case as of the date of the
Merger Agreement and as of the Closing Date as though made on and as of the
Closing Date, except to the extent such representations and warranties speak as
of an earlier date, except as otherwise contemplated by the Merger Agreement,
and J&J shall have received a certificate signed on behalf of Cordis by the
chief executive officer and chief financial officer of Cordis to the foregoing
effect; (ii) Cordis shall have performed in all material respects all
obligations required to be performed by it under the Merger Agreement and J&J
shall have received a certificate signed on behalf of Cordis by the chief
executive officer and chief financial officer of Cordis to the foregoing effect;
(iii) J&J shall have received agreements from each person identified by Cordis
as an Affiliate relating to the resale of J&J Common Stock and the sale of
Cordis Common Stock; (iv) there shall not have occurred any material adverse
change in the business, properties, assets, financial condition or results of
operations of Cordis and its subsidiaries, taken as a whole, since the date of
the Merger Agreement; and (v) J&J shall have received letters from Deloitte &
Touche LLP and Coopers & Lybrand L.L.P., each dated as of the Closing Date,
confirming their respective letters dated the date of this Proxy
Statement/Prospectus with respect to accounting for the Merger as a pooling of
interests under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations.
Conditions to the Obligation of Cordis. The obligation of Cordis to effect
the Merger is further subject to the following conditions: (i) the
representations and warranties of J&J and Merger Sub set forth in the Merger
Agreement that are qualified as to materiality being true and correct, and the
representations and warranties of J&J and Merger Sub that are not so qualified
being true and correct in all material respects, in each case as of the date of
the Merger Agreement and as of the Closing Date as though made on and as of the
Closing Date, except to the extent such representations and warranties speak as
of an earlier date, except as otherwise contemplated by the Merger Agreement,
and Cordis shall have received a certificate signed on behalf of J&J by the
chief executive officer and the chief financial officer of J&J to the foregoing
effect; and (ii) J&J and Merger Sub shall have performed in all material
respects all obligations required to be performed by them under the Merger
Agreement and Cordis shall have received a certificate signed on behalf of J&J
by the chief executive officer and the chief financial officer of J&J to the
foregoing effect.
TERMINATION, AMENDMENT AND WAIVER
The Merger Agreement may be terminated, and the Merger contemplated thereby
may be abandoned, at any time prior to the Effective Time, whether before or
after approval of the matters presented in connection with the Merger by the
shareholders of Cordis: (i) by mutual written consent of J&J, Merger Sub and
Cordis; (ii) by either J&J or Cordis if (a) upon a vote taken at a duly held
Special Meeting, the required approval of the shareholders of Cordis is not
obtained, (b) the Merger shall not have been consummated on or before
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May 15, 1996 (unless the failure to consummate the Merger is the result of a
breach of the Merger Agreement by the party seeking to terminate), or (c) any
Governmental Entity of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable; (iii) by either J&J or Merger Sub if
(a) prior to the Special Meeting, a Takeover Proposal is commenced, publicly
proposed, publicly disclosed or communicated to Cordis (or the willingness of
any person to make a Takeover Proposal is publicly disclosed or communicated to
Cordis) and the Cordis Board or any committee thereof shall have withdrawn or
modified in a manner adverse to J&J its approval or recommendation of the Merger
or the Merger Agreement, or approved or recommended any Takeover Proposal, or
resolved to take any of the foregoing actions, or (b) Cordis shall have entered
into any agreement with respect to any Superior Proposal; or (iv) by Cordis in
connection with it entering into a definitive agreement with respect to any
Superior Proposal, if it makes simultaneous payment of the fees and expenses
described in "THE MERGER--Certain Fees and Expenses".
In the event of termination of the Merger Agreement by either Cordis or
J&J, the Merger Agreement will become void and have no effect, without liability
or obligation on the part of J&J, Merger Sub or Cordis other than under certain
specified provisions of the Merger Agreement related to broker's fees,
confidentiality agreements and the fees and expenses described under "THE
MERGER--Certain Fees and Expenses", except that no party will be relieved of any
liability resulting from any wilful and material breach of the representations,
warranties, covenants or agreements set forth in the Merger Agreement.
The Merger Agreement may be amended by the parties thereto at any time
before or after any required approval of matters presented in connection with
the Merger by the shareholders of Cordis (except that after any such approval,
no amendment may be made that by law requires the approval by such shareholders
without the further approval of such shareholders) by an instrument in writing
signed on behalf of each of the parties thereto and the parties, by written
agreement signed on behalf of each party, may extend the time for performance of
any of the obligations or other acts of the other parties to the Merger
Agreement, waive inaccuracies in representations and warranties or waive
compliance with any of the agreements or conditions of the other parties
contained in the Merger Agreement.
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<PAGE> 42
OFFICERS AND DIRECTORS AFTER THE MERGER
The officers of Cordis at the Effective Time will become the officers of
the Surviving Corporation until their successors have been duly appointed and
qualified or until their earlier resignation or removal. The directors of Merger
Sub at the Effective Time will become the directors of the Surviving Corporation
until their successors have been duly elected and qualified or until their
earlier resignation or removal.
COMPARATIVE STOCK PRICES AND DIVIDENDS
J&J Common Stock (symbol: JNJ) is listed for trading on the NYSE and Cordis
Common Stock (symbol: CORD) is quoted on the Nasdaq National Market. The
following table sets forth, for the periods indicated, the high and low sales
prices per share of J&J Common Stock on the NYSE Composite Transactions Tape and
of Cordis Common Stock on the Nasdaq National Market and the quarterly cash
dividends per share paid by J&J on the J&J Common Stock.
<TABLE>
<CAPTION>
CASH
DIVIDENDS
PER SHARE
OF
J&J CORDIS COMMON
COMMON STOCK COMMON STOCK STOCK
---------------- ----------------- --------
CALENDAR PERIOD HIGH LOW HIGH LOW J&J
------------------------------------ ------ ------ ------- ------ --------
<S> <C> <C> <C> <C> <C>
1994
First Quarter..................... 45 3/4 36 54 1/2 41 1/4 0.26
Second Quarter.................... 44 5/8 36 1/4 54 1/4 38 0.29
Third Quarter..................... 52 3/8 42 1/4 57 1/4 36 0.29
Fourth Quarter.................... 56 1/2 49 1/2 61 3/4 51 1/4 0.29
1995
First Quarter..................... 63 53 5/8 73 3/4 57 1/2 0.29
Second Quarter.................... 71 1/4 58 3/8 80 60 1/2 0.33
Third Quarter..................... 74 7/8 64 3/8 85 1/4 57 5/16 0.33
Fourth Quarter.................... 92 3/8 73 1/8 112 1/4 77 1/4 0.33
1996
First Quarter (through January 22,
1996).......................... 90 1/4 83 1/8 107 3/4 97 1/2 0.33(1)
</TABLE>
--------------------
(1) Declared on January 2, 1996, and payable on March 12, 1996, to
shareholders of record on February 20, 1996.
Cordis has never paid cash dividends on shares of Cordis Common Stock
(other than $.01 per share paid in the second quarter of fiscal year 1996 to
redeem rights issued under Cordis's prior rights plan). In addition, the Merger
Agreement restricts Cordis's ability to pay cash dividends between the date of
the Merger Agreement and the Effective Time.
The following table sets forth the high and low sales prices per share of
J&J Common Stock on the NYSE Composite Transactions Tape and of Cordis Common
Stock on the Nasdaq National Market on October 18, 1995, the last trading day
before J&J's announcement of its intention to commence a tender offer for all
outstanding shares of Cordis Common Stock, and on July 17, 1995, the last
trading day before several wire stories incorrectly reported that there were
merger discussions between Cordis and J&J:
<TABLE>
<CAPTION>
J&J CORDIS
COMMON STOCK COMMON STOCK
------------- -------------
HIGH LOW HIGH LOW
---- ---- ---- ----
<S> <C> <C> <C> <C>
October 18, 1995.......................................... $78 7/8 $77 1/8 $86 3/4 $85
July 17, 1995............................................. 67 3/4 66 5/6 62 60 3/4
</TABLE>
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<PAGE> 43
COMPARISON OF RIGHTS OF COMMON SHAREHOLDERS
OF J&J AND CORDIS
The rights of J&J shareholders are governed by J&J's Restated Certificate
of Incorporation (the "J&J Certificate of Incorporation"), its By-laws (the "J&J
By-laws") and the New Jersey Business Corporation Act (the "NJBCA"). The rights
of Cordis shareholders are governed by its Restated Articles of Incorporation,
as amended (the "Cordis Articles of Incorporation"), its By-laws (the "Cordis
By-laws") and the FBCA. After the Effective Time, the rights of Cordis
shareholders who become J&J shareholders will be governed by the J&J Certificate
of Incorporation, the J&J By-laws and the NJBCA.
The following is a summary of the material differences between the rights
of J&J shareholders and the rights of Cordis shareholders. This summary is
qualified in its entirety by reference to applicable provisions of the NJBCA and
the FBCA and to the J&J Certificate of Incorporation, J&J By-laws, Cordis
Articles of Incorporation and Cordis By-laws.
Board of Directors.
J&J. The J&J Certificate of Incorporation provides that the total number of
J&J directors shall be not less than 9 nor more than 18 as determined by the J&J
Board from time to time. J&J currently has 15 directors. Directors are elected
at each annual meeting of shareholders to serve until the next annual meeting.
Cordis. The Cordis Articles of Incorporation provide that the number of
Cordis directors shall be not less than three and not more than nine. The number
of directors may be increased or decreased at any time by the shareholders.
Cordis currently has nine directors. Directors are elected at each annual
meeting of shareholders to serve until the next annual meeting.
Removal of Directors.
J&J. The J&J Certificate of Incorporation provides that directors of J&J
may be removed only for cause and, in such circumstance, only by a majority of
the votes cast by the shareholders entitled to vote for the election of
directors.
Cordis. Pursuant to the FBCA, the directors of Cordis may be removed, with
or without cause, by the shareholders if the number of votes cast in favor of
removal exceeds the number of votes cast against removal. If a director is to be
removed by the shareholders at a meeting of the shareholders, the notice of the
meeting must state that the purpose, or one of the purposes, of the meeting is
removal of the director.
Liability and Indemnification.
J&J. Under the NJBCA, a corporation may indemnify any director, officer,
employee or agent of the corporation against his or her expenses and liabilities
in connection with any proceeding relating to his or her having been a corporate
agent, other than a proceeding on behalf of the corporation, if such person
acted in good faith and in a manner reasonably expected to be in the best
interests of the corporation, and if the proceeding is a criminal action and
such person did not have reason to believe such action was unlawful.
The J&J By-laws provide that J&J will indemnify any person who was or is
involved in any proceeding to the full extent permitted by the laws of the State
of New Jersey.
Cordis. Under the FBCA, a director is not personally liable for damages
resulting from any statement, vote, decision, or failure to act unless (with
some exceptions) that director breached or failed to perform his or her duties
as a director and such failure constitutes a violation of criminal law, the
derivation of improper personal benefit through any transaction, an unlawful
distribution, conscious disregard for or wilful misconduct with respect to the
corporation or recklessness or an act or omission committed in bad faith,
malicious purpose or wilful disregard of human rights. Further, subject to
certain limitations, the FBCA allows a corporation to indemnify any person who
is or was a director, officer, employee or agent of the corporation against
liability incurred in any proceeding, if such person acted in good faith and
reasonably believed that such actions were
34
<PAGE> 44
in the best interest of the corporation or, with respect to any criminal
proceeding, if such person had no reasonable cause to believe such action was
unlawful.
The Cordis By-laws also provide for full indemnification of any director,
officer, employee or agent of Cordis to the full extent permitted under the
FBCA, and allow Cordis to provide for additional indemnification by way of a new
by-law, vote or agreement.
Special Meeting of Shareholders; Action by Written Consent.
J&J. Under the J&J By-laws, a special meeting of the shareholders may be
called at any time by the Chairman of the J&J Board, by a Vice-Chairman of the
J&J Board, by the Chairman of the Executive Committee of the J&J Board, by a
Vice-Chairman of the Executive Committee of the J&J Board, by the President or
by a majority of the directors on the J&J Board and shall be held on such
business day and at such time and at such place within or without the State of
New Jersey as is stated in the notice of the meeting.
Any action required or permitted to be taken at a meeting of the J&J
shareholders may be taken without a meeting if all the shareholders entitled to
vote thereon consent thereto in writing.
Cordis. Under the Cordis By-laws, a special meeting of shareholders may be
called by the President or the Cordis Board or requested in writing by holders
of a majority of the stock having the right to vote at such meeting.
Under the FBCA, a special meeting of shareholders may be called by either
(i) the board of directors, (ii) the persons authorized to call such meeting by
the articles of incorporation or (iii) by the holders of not less than 10
percent of all of the votes entitled to be cast at such special meeting, or a
greater percentage of such votes not to exceed 50% if so stated in the articles
of incorporation, if such shareholders sign, date and deliver to the corporation
a written demand for such a meeting describing the purposes of the meeting.
Under the FBCA, Cordis shareholders may take any action that otherwise may
be taken at any annual or special meeting by written consent without a meeting.
Written consents must be signed, dated and delivered to the corporation by the
holders of such number of shares sufficient to authorize or take the action in
question. Notice of the taking of such action must be given to those
shareholders who did not consent in writing within 10 days after obtaining
authorization for any action by written consent.
Shareholder Inspection Rights; Shareholder Lists.
J&J. Under the NJBCA, a shareholder who has been a shareholder for at least
six months or who holds at least five percent of the outstanding shares of any
class of stock of J&J has the right for any proper purpose to inspect the
minutes of the proceedings of J&J's shareholders and J&J's record of
shareholders. Irrespective of the period such shareholder has held his or her
stock or the amount of stock such shareholder holds, a court is empowered, upon
proof of proper purpose, to compel production for examination by the shareholder
of the books and records of account, minutes and record of shareholders of J&J.
Cordis. Under the FBCA, a shareholder of a corporation is entitled to
inspect and copy, on five business days' prior written notice, certain corporate
records and documents, including the record of shareholders, if the demand is
made in good faith and for a proper purpose reasonably related to such person's
interest as a shareholder, if the records sought are described with reasonable
particularity and such records are directly connected with the stated purpose.
Dissenters' Rights.
J&J. Under the NJBCA, any shareholder may dissent from (i) a plan of merger
or consolidation to which the corporation is a party and with regard to which
the shareholder may vote, and (ii) a sale, lease or exchange or other
disposition of all or substantially all of the assets of the corporation not in
the usual or regular course of business as conducted by such corporation which
does not provide for distribution of net assets to the shareholders within one
year. In either of the corporate actions described in this paragraph, a
shareholder may not dissent with respect to shares (i) listed on a national
securities exchange or held of record
35
<PAGE> 45
by not less than 1,000 shareholders on the record date fixed to determine the
shareholders entitled to vote on such action, or (ii) for which, pursuant to
such action, the shareholder would receive (x) cash, (y) shares, obligations or
other securities which, upon consummation of the merger or consolidation, will
either be listed on a national securities exchange or held of record by not less
than 1,000 shareholders, or (z) cash and such securities.
Cordis. Under the FBCA, any shareholder entitled to vote thereon may
dissent from and obtain payment for the fair value of his or her shares in the
event of (i) consummation of a plan of merger to which the corporation is a
party, (ii) consummation of a sale or exchange of all, or substantially all, of
the property of the corporation, (iii) approval of a control-share acquisition,
(iv) consummation of a plan of share exchange to which the corporation is a
party as the corporation the shares of which will be acquired, (v) amendment of
the articles of incorporation if such amendment adversely affects the
shareholder by altering or abolishing any preemptive or voting rights with
respect to such shares, and (vi) any corporate action taken, to the extent the
articles of incorporation provide that a voting or nonvoting shareholder is
entitled to dissent and obtain payment for shares.
Unless the articles of incorporation otherwise provide, shareholders do not
have such dissenters' rights, however, with respect to a plan of merger or share
exchange or a proposed sale or exchange of property if, on the record date fixed
to determine the shareholders entitled to vote at the meeting of shareholders at
which such action is to be acted upon or to consent to any such action without a
meeting, the shares were either registered on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc., or held of
record by not fewer than 2,000 shareholders.
Amendment of By-Laws.
J&J. In accordance with the NJBCA, the J&J Certificate of Incorporation and
the J&J By-laws, the provisions of the J&J By-laws generally may be amended,
added to, altered, changed or repealed in whole or in part (i) by the vote of
the shareholders at a regular or special meeting of the shareholders or (ii) by
the J&J Board at a regular or special meeting of the J&J Board, if notice of the
proposed amendment is contained in the notice of such meeting, except that a
By-law adopted or amended by the J&J Board may be superseded by shareholder
action and such shareholder action shall preempt any further action by the J&J
Board.
Cordis. The FBCA provides that a corporation's by-laws may be amended or
repealed by the shareholders, and, unless such power is reserved to the
shareholders exclusively in the corporation's articles of incorporation or the
shareholders have provided expressly that the board of directors may not amend
or repeal the by-laws or a by-law provision, by such corporation's Board of
Directors.
The Cordis By-laws provide that such By-laws may be amended, consistent
with any By-laws adopted by the shareholders, or any part of the By-laws that
has not been adopted by shareholders may be repealed, by a majority of the
directors present at any regular or special meeting of the Cordis Board. The
Cordis By-laws further provide that the Cordis By-laws may be amended or
repealed, wholly or in part, by a majority of the shareholders entitled to vote
thereon present at any shareholders' meeting.
Corporation's Best Interest.
J&J. Under the NJBCA, the director of a New Jersey corporation may
consider, in discharging his or her duties to the corporation and in determining
what he or she reasonably believes to be is the best interest of the corporation
(in addition to the effects of any action on shareholders) (i) the effects of
the action on the corporation's employees, suppliers, creditors and customers,
(ii) the effects of the action on the community in which the corporation
operates and (iii) the long-term as well as the short-term interest of the
corporation and its shareholders, including the possibility that these interests
may best be served by the continued independence of the corporation. If, on the
basis of the foregoing factors, the Board of Directors determines that any
proposal or offer to acquire the corporation is not in the best interest of the
corporation, it may reject such proposal or offer, in which event the Board of
Directors will have no duty to remove any obstacles to, or refrain from
impeding, such proposal or offer.
36
<PAGE> 46
Cordis. The FBCA provides that a director, in discharging his or her duties
to the corporation, may consider such factors as the director deems relevant,
including (i) the long-term prospects and interests of the corporation and its
shareholders, (ii) the social, economic, legal, or other effects of any action
on the employees, suppliers, customers of the corporation or its subsidiaries,
the communities and society in which the corporation or its subsidiaries
operate, and (iii) the economy of the state and the nation.
Required Vote for Authorization of Certain Actions.
J&J. Under the NJBCA, the consummation of a merger or consolidation of a
New Jersey corporation, such as J&J, which was organized prior to January 1,
1969, requires the approval of such corporation's Board of Directors and the
affirmative vote of two-thirds of the votes cast by the holders of shares of the
corporation entitled to vote thereon, unless such corporation is the surviving
corporation and (i) such corporation's certificate of incorporation is not
amended, (ii) the shareholders of the surviving corporation whose shares were
outstanding immediately before the effective date of the merger will hold the
same number of shares, with identical designations, preferences, limitations,
and rights, immediately after, and (iii) the number of voting shares and
participating shares outstanding after the merger will not exceed by 40% the
total number of voting or participating shares of the surviving corporation
before the merger. Similarly, in the case of a corporation organized prior to
1969, such as J&J, a sale of all or substantially all of a New Jersey
corporation's assets other than in the ordinary course of business, or a
voluntary dissolution of a New Jersey corporation, requires the approval of such
corporation's Board of Directors and the affirmative vote of two-thirds of the
votes cast by the holders of shares of the corporation entitled to vote thereon.
Furthermore, the J&J Certificate of Incorporation contains provisions requiring
the approval of at least 80% of the combined voting power of outstanding voting
stock, voting together as a single class, to approve certain business
combinations and transactions involving any five percent shareholder.
Cordis. The FBCA requires the affirmative vote of a majority of the Board
of Directors of a Florida corporation and of the holders of at least a majority
of such corporation's outstanding shares entitled to vote thereon to authorize a
merger or consolidation, unless (i) such corporation is the surviving
corporation, (ii) such corporation's articles of incorporation are not amended
(with certain exceptions listed in Section 607.1002 of the FBCA) and (iii) each
shareholder of the surviving corporation whose shares were outstanding
immediately prior to the effective date of the merger will hold the same number
of shares, with identical designations, preferences, limitations, and relative
rights, immediately after the merger.
The FBCA also provides that a sale, lease, exchange or disposition of all
or substantially all of a Florida corporation's assets or a voluntary
dissolution of a Florida corporation requires a recommendation by the board of
directors as to the proposed transaction or dissolution to the shareholders of
record, unless the board of directors determines that it should make no
recommendation because of a conflict of interest or other special circumstances
and communicates the basis for its determination to the shareholders of record
with the submission of the proposed transaction or dissolution, and approval of
the transaction, unless the corporation's articles of incorporation or the board
of directors requires a greater vote, by a majority of all the votes entitled to
be cast in the transaction.
Control Share Statute.
J&J. The NJBCA does not contain a control share statute.
Cordis. The FBCA provides that, unless a specified exception is met, if a
person acquires certain ranges of voting shares (e.g., one-fifth to one-third,
one-third to a majority, a majority or more) of certain Florida corporations,
the acquired shares have no voting rights with respect to such shares unless the
corporation's shareholders, by a majority of the votes entitled to be cast on
the matter (excluding all votes of the acquiring person's shares), approve a
resolution specifically granting the voting rights to the acquiring person.
Exceptions to this provision include, among others, (i) where the acquisition of
shares has been approved by the board of directors of the corporation, or (ii)
where the acquisition of shares is pursuant to a board and shareholder approved
merger effected in compliance with the FBCA.
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<PAGE> 47
Business Combinations; Affiliated Transactions.
J&J. The NJBCA provides that no corporation organized under the laws of New
Jersey with its principal executive offices or significant operations located in
New Jersey (a "resident domestic corporation") may engage in any "business
combination" (as defined in the NJBCA) with any interested shareholder
(generally, a 10% or greater shareholder) of such corporation for a period of
five years following such interested shareholder's stock acquisition, unless
such business combination is approved by the Board of Directors of such
corporation prior to the stock acquisition. A resident domestic corporation,
such as J&J, cannot opt out of the foregoing provisions of the NJBCA.
In addition, no resident domestic corporation may engage, at any time, in
any business combination with any interested shareholder of such corporation
other than: (i) a business combination approved by the Board of Directors of
such corporation prior to the stock acquisition, (ii) a business combination
approved by the affirmative vote of the holders of two-thirds of the voting
stock not beneficially owned by such interested shareholder at a meeting called
for such purpose or (iii) a business combination in which the interested
shareholder pays a formula price designed to ensure that all other shareholders
receive at least the highest price per share paid by such interested
shareholder. In connection with business combinations with any five percent
shareholder, the J&J Certificate contains provisions requiring the approval of
at least 80% of the holders of J&J Common Stock entitled to vote in the election
of directors and compliance with certain procedural requirements.
Cordis. In general, the FBCA provides that, unless a specified exception is
met, an "interested shareholder" (i.e., a person holding 10% or more of a
corporation's outstanding voting stock) may not engage in an "affiliated
transaction" (including mergers and other significant corporate transactions)
with a Florida corporation unless such transaction is approved by two-thirds of
the voting shares of the corporation excluding the shares beneficially held by
the interested shareholders.
The provision is not applicable when (i) a majority of the disinterested
directors of the corporation approve the transaction, (ii) the corporation has
not had more than 300 shareholders of record at any time during the three years
prior to the date on which the affiliated transaction was announced, (iii) the
interested shareholder has beneficially owned at least 80% of the outstanding
voting shares of the corporation for at least 5 years prior to the date on which
the affiliated transaction was announced, (iv) the interested shareholder is the
beneficial owner of at least 90% of the outstanding voting shares of the
corporation, exclusive of shares acquired directly from the corporation in a
transaction not approved by a majority of the disinterested directors, (v) the
corporation is an investment company registered under the Investment Company Act
of 1940 or (vi) in the affiliated transaction, consideration shall be paid to
the holders of each class or series of voting shares and all of the conditions
of subsection (4)(f) of Section 607.0901 of the FBCA are met.
The FBCA allows corporations under certain circumstances to elect not to be
subject to the affiliated transaction provisions of the FBCA. Cordis has not
made such an election.
Rights Plan.
J&J. J&J has not adopted a rights plan and has not declared a stock
purchase right dividend with respect to J&J Common Stock.
Cordis. On October 12, 1995, the Cordis Board declared a dividend of one
Right for each outstanding share of Cordis Common Stock. The dividend was paid
on October 23, 1995 (the "Rights Plan Record Date"), to the Cordis shareholders
of record at the close of business on that date. The Rights are not applicable
with respect to the Merger. Each Right entitles the registered holder to
purchase one share, subject to certain adjustments, of Cordis Common Stock, par
value $1.00 per share at a price of $375 per share (the "Purchase Price"). This
summary description of the Rights and the Rights Agreement does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated by reference into this Proxy
Statement/Prospectus.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 15% or more of the outstanding
Cordis Common Stock or (ii) 10 business days (or such later date as may be
determined by
38
<PAGE> 48
action of the Cordis Board prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement of a
tender offer, the consummation of which would result in the beneficial ownership
by a person or group of 15% or more of the outstanding Cordis Common Stock (the
earlier of such dates being the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Cordis Common Stock certificates
outstanding as of the Rights Plan Record Date, by such Cordis Common Stock
certificate.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with Cordis Common Stock. Prior to the Distribution Date (or earlier
redemption or expiration of the Rights), new Cordis Common Stock certificates
issued after the Record Date upon transfer or new issuance of Cordis Common
Stock will contain a notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
the surrender for transfer of any certificates for Cordis Common Stock
outstanding as of the Record Date, even without such notation, will also
constitute the transfer of the Rights associated with Cordis Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of Cordis Common Stock as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on October 13, 2005 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by Cordis, in each case, as described below.
The Purchase Price payable, and the number of shares of Cordis Common Stock
or other securities or property issuable, upon exercise of the Right are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, Cordis Common
Stock or (ii) upon the grant to holders of Cordis Common Stock of certain rights
or warrants to subscribe for or purchase Cordis Common Stock with a conversion
price less than the then-current market price of Cordis Common Stock.
The number of outstanding Rights and the number of shares of Cordis Common
Stock issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of Cordis Common Stock or a stock dividend on Cordis
Common Stock payable in Cordis Common Stock or subdivisions, consolidations or
combinations of Cordis Common Stock occurring, in any such case, prior to the
Distribution Date.
In the event that Cordis is acquired in a merger or other business
combination transaction in which Cordis is not the surviving corporation or
Cordis is the surviving corporation, but all of its common stock is exchanged
for the securities of another entity, proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon the exercise
thereof at the then-current exercise price of the Right, that number of shares
of common stock of the acquiring company that at the time of such transaction
will have a market value of two times the exercise price of the Right. In the
event that any person or group of affiliated or associated persons becomes an
Acquiring Person, proper provisions shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of Cordis Common Stock having a market value of two times
the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person, the
Cordis Board may exchange the Rights (other than Rights owned by such person or
group that will have become void), in whole or in part, at an exchange ratio of
one share of Cordis Common Stock per Right (subject to adjustment).
At any time prior to the tenth day following the acquisition by a person or
group of affiliated or associated persons of beneficial ownership of 15% or more
of the outstanding Cordis Common Stock, a majority of the Continuing Directors
(as defined in the Rights Plan) of the Cordis Board may redeem the Rights in
whole, but not in part, at a price of $.005 per Right (the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as a majority of the Continuing Directors of the Cordis
Board in its sole discretion may establish. Immediately upon any redemption of
the Rights, the
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<PAGE> 49
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by a majority of the Continuing
Directors of the Cordis Board without the consent of the holders of the Rights,
except that from and after a Distribution Date no such amendment may adversely
affect the interests of the holders of the Rights, other than an Acquiring
Person or an Affiliate or Associate of any such Person.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of Cordis, including, without limitation, the right to
vote or to receive dividends.
OTHER MATTERS
REGULATORY APPROVALS REQUIRED
Under the HSR Act and the regulations promulgated thereunder by the FTC,
certain acquisition transactions may not be consummated unless notice has been
given and certain information has been furnished to the Antitrust Division of
the United States Department of Justice (the "Antitrust Division") and the FTC
and specified waiting period requirements have been satisfied. J&J filed with
the Antitrust Division and the FTC a Notification and Report Form with respect
to the Merger on October 20, 1995. Cordis filed such Notification and Report
Form on October 30, 1995. On November 3, 1995, J&J and Cordis received a request
for additional information from the FTC. On November 10, 1995, J&J complied with
the FTC's request. On November 28, 1995, Cordis complied with the FTC's request.
On December 19, 1995, the FTC voted to accept an Agreement Containing Consent
Order and a Hold Separate Order which provides that J&J will divest Cordis's
neuroscience business within 12 months. Acceptance of the agreement and order by
the FTC terminated all applicable waiting periods, and J&J may consummate the
Merger at any time. The clearance process does not confer antitrust immunity and
therefore it is possible that, at any time before or after the Effective Time,
the FTC or the Antitrust Division could take such additional action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the Merger or seeking the divestiture of Cordis by
J&J, in whole or in part, or the divestiture of substantial assets of J&J,
Cordis or their respective subsidiaries. See "THE MERGER AGREEMENT -- Certain
Additional Agreements". State Attorneys General and private parties may also
bring legal action under Federal or state antitrust laws in certain
circumstances. Based on an examination of information available to J&J and
Cordis relating to the businesses in which J&J, Cordis and their respective
subsidiaries are engaged, J&J and Cordis believe that such further legal actions
are unlikely and that the consummation of the Merger, subject to the agreed
divestiture of Cordis's neuroscience business, will not violate the antitrust
laws. See "THE MERGER AGREEMENT -- Conditions to Consummation of the Merger".
Consummation of the Merger is also subject to notification or approval
requirements of certain foreign governments. J&J and Cordis do not believe that
such requirements will delay consummation of the Merger.
CERTAIN LITIGATION
Four purported class action complaints have been served on Cordis and its
current directors and a former director, three of which were filed in the United
States District Court for the Southern District of Florida (the "Federal
Shareholders Complaints") and one of which was filed in the Circuit Court of the
11th Judicial Circuit in and for Dade County, Florida (the "State Shareholders
Complaint"). The Federal Shareholders Complaints have been consolidated; the
operative complaint (the "Federal Operative Complaint") alleges, among other
things, violation of Section 14(a) of the Exchange Act and Rule 14a-9 thereunder
and breach of fiduciary duty with respect to the adoption of a by-law amendment
and certain provisions of the Company's Rights Agreement. The State Shareholders
Complaint alleges, among other things, breach of fiduciary duty by failing to
adequately consider J&J's cash tender offer and by failing to exercise
independent business judgment in evaluating such offer. The complaints generally
seek, among other things, an order directing Cordis to take appropriate steps to
maximize value for the shareholders as well as damages and costs.
On December 29, 1995, the defendants filed an answer to the Federal
Operative Complaint denying the allegations. On January 8, 1996, the Federal
District Judge issued an order requiring the parties to meet before January 28,
1996, in order to discuss, among other things, procedural matters and requiring
the parties to file a scheduling report by February 10, 1996. Defendants' time
to respond to the State Shareholders Complaint expires on January 31, 1996.
Cordis believes the suits are without merit.
40
<PAGE> 50
ABSENCE OF DISSENTERS' RIGHTS
Holders of Cordis Common Stock will not be entitled to dissenters' rights
as a result of the Merger. Under Florida law, dissenters' rights are unavailable
to holders of Cordis Common Stock because Cordis Common Stock was, on the Record
Date, designated and quoted for trading as a Nasdaq National Market security.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Based on information filed with the SEC prior to January 18, 1996, pursuant
to Sections 13(d) and 13(g) of the Exchange Act and communications by Cordis
with certain former shareholders, as of December 31, 1995, no person (except as
set forth below) owned beneficially more than 5% of the shares of Cordis Common
Stock outstanding at such date.
SECURITY OWNERSHIP OF DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth, as of the Record Date, the number of shares
of Cordis Common Stock beneficially owned by each director and by each of the
executive officers named below.
<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE
NATURE OF OF CLASS
BENEFICIAL (* DESIGNATES LESS
NAME OF BENEFICIAL OWNER(1) OWNERSHIP THAN 1%)
- -------------------------------------------------------------- ---------- -------------------
<S> <C> <C>
Catherine M. Burzik........................................... -- *
David R. Challoner, M.D. ..................................... 11,000 (2) *
Richard W. Foxen.............................................. 11,000 (2) *
Donald F. Malin, Jr. ......................................... 9,500 (2) *
William J. Razzouk............................................ -- *
Jan L. de Ruyter van Steveninck............................... 4,000 (2) *
Wilton W. Webster, Jr. ....................................... 998,141 (3) 6.0%
Patricia K. Woolf, Ph.D. ..................................... 12,350 (2) *
Robert C. Strauss............................................. 155,176 (3) 1.0%
Rudy J. Kranys................................................ 145,068 (3) *
Alfred J. Novak............................................... 81,260 (3) *
Philip J. Monks............................................... 39,600 (3) *
Egbert Ratering............................................... 54,800 (3) *
---------- -----
All directors and executive officers as a group (20 persons)
including the above......................................... 1,762,108 (4) 10.7%
</TABLE>
- ---------------
(1) Beneficial ownership, as listed in the chart, includes shares of Cordis
Common Stock directly owned or held by the persons named and the group
referred to, or by certain members of their families.
(2) Includes shares of Cordis Common Stock which may be acquired, when vested,
by the exercise of options granted under Cordis's Director Non-Qualified
Stock Option Plan as follows: Dr. Challoner -- 10,000; Mr. Foxen -- 10,000;
Mr. Malin -- 8,000; Mr. van Steveninck -- 4,000; Dr. Woolf -- 10,000.
(3) Includes shares of Cordis Common Stock which may be acquired, when vested,
by the exercise of options granted under Cordis's Non-Qualified Stock Option
Plan, as follows: Mr. Webster -- 3,000; Mr. Strauss -- 121,000; Mr.
Kranys -- 60,500; Mr. Novak -- 60,500; Mr. Monks -- 39,600; Mr.
Ratering -- 39,600.
(4) Includes 526,500 shares of Cordis Common Stock which may be acquired, when
vested, by the exercise of options granted under Cordis's Non-Qualified
Stock Option Plan and Director Non-Qualified Stock Option Plan.
EXPERTS
The consolidated balance sheets of J&J and subsidiaries as of January 1,
1995 and January 2, 1994, and the consolidated statement of earnings,
consolidated statement of common stock, retained earnings and treasury stock,
and consolidated statement of cash flows for each of the three years in the
period ended January 1, 1995, incorporated by reference in this Proxy
Statement/Prospectus have been incorporated herein
41
<PAGE> 51
in reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The consolidated financial statements of Cordis and subsidiaries appearing
in Cordis's Annual Report on Form 10-K as of and for the year ended June 30,
1995, have been audited by Deloitte & Touche LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of said firm as
experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of J&J Common Stock offered hereby will be
passed upon for J&J by Joseph S. Orban, Associate General Counsel of J&J. Mr.
Orban is paid a salary by J&J, is a participant in various employee benefit
plans offered to employees of J&J generally and owns and has options to purchase
shares of J&J Common Stock.
Simpson Thacher & Bartlett (a partnership which includes professional
corporations), counsel for Cordis, has delivered an opinion concerning certain
Federal income tax consequences of the Merger. See "THE MERGER -- Material
Federal Income Tax Consequences".
42
<PAGE> 52
ANNEX 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 12, 1995*
AMONG
JOHNSON & JOHNSON
JNJ MERGER CORP.
AND
CORDIS CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
*AS AMENDED BY THE FIRST AMENDMENT THERETO DATED AS OF DECEMBER 27, 1995
<PAGE> 53
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE MERGER
SECTION 1.01. The Merger........................................................... 1
SECTION 1.02. Closing.............................................................. 1
SECTION 1.03. Effective Time....................................................... 2
SECTION 1.04. Effects of the Merger................................................ 2
SECTION 1.05. Articles of Incorporation and By-Laws................................ 2
SECTION 1.06. Directors............................................................ 2
SECTION 1.07. Officers............................................................. 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock.............................................. 2
SECTION 2.02. Exchange of Certificates............................................. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company........................ 5
SECTION 3.02. Representations and Warranties of Parent and Sub..................... 11
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business.................................................. 14
SECTION 4.02. No Solicitation...................................................... 16
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of Form S-4 and the Proxy Statement; Shareholders
Meeting............................................................ 17
SECTION 5.02. Letters of the Company's Accountants................................. 18
SECTION 5.03. Letters of Parent's Accountants...................................... 18
SECTION 5.04. Accounting and Tax Matters........................................... 18
SECTION 5.05. Foreign Approval..................................................... 19
SECTION 5.06. Access to Information................................................ 19
SECTION 5.07. Reasonable Efforts; Notification..................................... 19
</TABLE>
i
<PAGE> 54
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 5.08. Rights Agreement..................................................... 20
SECTION 5.09. Stock Options........................................................ 20
SECTION 5.10. Indemnification and Insurance........................................ 21
SECTION 5.11. Fees and Expenses.................................................... 22
SECTION 5.12. Public Announcements................................................. 22
SECTION 5.13. Affiliates........................................................... 22
SECTION 5.14. Stock Exchange Listing............................................... 22
SECTION 5.15. Certain Litigation................................................... 23
SECTION 5.16. Consent Solicitation................................................. 23
SECTION 5.17. United States Employee Benefits...................................... 23
SECTION 5.18. Employment Agreements................................................ 24
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the Merger........... 24
SECTION 6.02. Conditions to Obligations of Parent and Sub.......................... 25
SECTION 6.03. Conditions to Obligations of the Company............................. 25
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination.......................................................... 26
SECTION 7.02. Effect of Termination................................................ 26
SECTION 7.03. Amendment............................................................ 27
SECTION 7.04. Extension; Waiver.................................................... 27
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties........................ 27
SECTION 8.02. Notices.............................................................. 27
SECTION 8.03. Definitions.......................................................... 28
SECTION 8.04. Interpretation....................................................... 28
SECTION 8.05. Counterparts......................................................... 28
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries....................... 28
SECTION 8.07. Governing Law........................................................ 28
SECTION 8.08. Assignment........................................................... 28
SECTION 8.09. Enforcement.......................................................... 29
EXHIBIT A Form of Company Affiliate Letter
</TABLE>
ii
<PAGE> 55
AGREEMENT AND PLAN OF MERGER dated as of November 12, 1995,
among JOHNSON & JOHNSON, a New Jersey corporation ("Parent"), JNJ
MERGER CORP., a Florida corporation ("Sub"), and a wholly owned
subsidiary of Parent, and CORDIS CORPORATION, a Florida
corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved the merger of Sub into the Company, or the Company into Sub, at
the election of Parent as set forth below (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding share of common stock, par value $1.00 per share, of the Company
("Company Common Stock"), other than shares owned by Parent or the Company or
any subsidiary of Parent, will be converted into the right to receive common
stock, par value $1.00 per share, of Parent ("Parent Common Stock");
WHEREAS Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Florida Business
Corporation Act (the "FBCA"), Sub shall be merged with and into the Company at
the Effective Time (as hereinafter defined). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance with the FBCA.
Notwithstanding the foregoing, Parent may elect at any time prior to the Merger,
instead of merging Sub into the Company as provided above, to merge the Company
with and into Sub; provided, however, that the Company shall not be deemed to
have breached any of its representations, warranties, covenants or agreements
set forth in this Agreement, and none of the conditions set forth in Sections
6.01 and 6.02 to Parent's and Sub's obligations to effect the Merger shall be
deemed not to have been satisfied, to the extent such breach or failure of a
condition results from such election. In such event, the parties hereto agree to
execute an appropriate amendment to this Agreement in order to reflect the
foregoing, and, where appropriate, to provide that Sub shall be the Surviving
Corporation and shall continue under the name "Cordis Corporation". At the
election of Parent, any direct wholly owned corporate subsidiary (as defined in
Section 8.03) of Parent may be substituted for Sub as a constituent corporation
in the Merger; provided, however, that the Company shall not be deemed to have
breached any of its representations, warranties, covenants or agreements set
forth in this Agreement, and none of the conditions set forth in Sections 6.01
and 6.02 to Parent's and Sub's obligations to effect the Merger shall be deemed
not to have been satisfied, to the extent such breach or failure of a condition
results from such election. In such event, the parties hereto agree to execute
an appropriate amendment to this Agreement in order to reflect such
substitution.
SECTION 1.02. Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. on a date to be specified by the parties, which shall
be no later than the second business day after satisfaction or waiver of the
conditions set forth in Article VI (the "Closing Date"), at the offices of
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, N.Y.
10019, unless another date, time or place is agreed to in writing by the parties
hereto.
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<PAGE> 56
SECTION 1.03. Effective Time. As soon as practicable on the Closing Date,
the parties shall deliver articles of merger or other appropriate documents (in
any such case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the FBCA to the Florida Department of State for filing as
required under the FBCA and shall make all other filings or recordings required
under the FBCA. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Florida Department of State, or at
such other time as Sub and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the effects
set forth in Section 607.1106 of the FBCA.
SECTION 1.05. Articles of Incorporation and By-Laws. (a) The Restated
Articles of Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time so that Article III of
such Restated Articles of Incorporation reads in its entirety as follows: "The
total number of shares of all classes of stock which the Corporation shall have
authority to issue is 100 shares of Common Stock, par value $1.00 per share",
and, as so amended, such Restated Articles of Incorporation shall be the
Articles of Incorporation of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
(b) The By-laws of the Company as in effect at the Effective Time shall be
the By-laws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub at the Effective Time shall
be the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company at the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, par value $1.00 per
share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Company Common Stock that is owned by the Company and each share of
Company Common Stock owned by Parent or any subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist (together
with the associated Right (as defined in Section 3.01(c)), and no Parent
Common Stock or other consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Subject to Section 2.02(e),
each issued and outstanding share of Company Common Stock (other than
shares to be canceled in accordance with Section 2.01(b)) together with the
associated Right shall be converted into the right to receive that number
(the "Exchange Ratio") of validly issued, fully paid and nonassessable
shares of Parent Common Stock equal to the amount obtained by dividing $109
by the Average Closing Price (as hereinafter defined) and rounding to the
nearest 1/10,000th of a share. The "Average Closing Price" shall be an
amount equal to the average per share closing price of Parent Common Stock,
as reported on the New York Stock Exchange ("NYSE") Composite Transaction
Tape for the 10 trading days immediately
2
<PAGE> 57
preceding the Closing Date. As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to receive
shares of Parent Common Stock and any cash in lieu of fractional shares of
Parent Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.02, in each case
without interest. The foregoing notwithstanding, if between the date of
this Agreement and the Effective Time the outstanding shares of Parent
Common Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares or if Parent pays an extraordinary dividend, the Exchange Ratio
shall be appropriately adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange or extraordinary dividend.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As of the
Effective Time, Parent shall deposit with First Chicago Trust Company of New
York or such other bank or trust company as may be designated by Parent (and
reasonably acceptable to the Company) (the "Exchange Agent"), for the benefit of
the holders of shares of Company Common Stock, for exchange in accordance with
this Article II, through the Exchange Agent, certificates representing the
shares of Parent Common Stock (such shares of Parent Common Stock, together with
any dividends or distributions with respect thereto, being hereinafter referred
to as the "Exchange Fund") issuable pursuant to Section 2.01 in exchange for
outstanding shares of Company Common Stock. Except as contemplated by Section
2.02(f), the Exchange Fund shall not be used for any other purpose. Parent
agrees to make available to the Exchange Agent from time to time as needed, cash
sufficient to pay cash in lieu of fractional shares.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted into the right to receive shares of Parent Common
Stock pursuant to Section 2.01(c), (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, and which shall be in such form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of shares of Parent Common Stock (rounded down to the
nearest whole share) which such holder has the right to receive pursuant to the
provisions of this Article II after taking into account all the shares of
Company Common Stock then held by such holder under all such Certificates so
surrendered, cash in lieu of fractional shares of Parent Common Stock to which
such holder is entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.02(c), and
the Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a person other than the person in
whose name the Certificate so surrendered is registered, if, upon presentation
to the Exchange Agent, such Certificate shall be properly endorsed or otherwise
be in proper form for transfer and the person requesting such payment shall pay
any transfer or other taxes required by reason of the issuance of shares of
Parent Common Stock to a person other than the registered holder of such
Certificate or establish to the reasonable satisfaction of Parent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 2.02(b), each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
certificate representing shares of Parent Common Stock, cash in lieu of any
fractional shares of Parent Common Stock as contemplated by this Section 2.02
and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.02(c). No interest will be paid or will accrue on any cash
payable pursuant to Sections 2.02(c) or 2.02(e).
3
<PAGE> 58
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.02(e) until the holder of record of such Certificate shall
surrender such Certificate. Following surrender of any such Certificate, there
shall be paid to the record holder of the certificate representing whole shares
of Parent Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu of a fractional
share of Parent Common Stock to which such holder is entitled pursuant to
Section 2.02(e) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole shares
of Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to such surrender and a payment date subsequent to such surrender payable
with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of Company
Common Stock in accordance with the terms hereof (including any cash paid
pursuant to Section 2.02(c) or 2.02(e)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of Company Common
Stock, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by the Company on such
shares of Company Common Stock in accordance with the terms of this Agreement or
prior to the date of this Agreement and which remain unpaid at the Effective
Time, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Exchange Agent for any reason, they shall be canceled and exchanged as
provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent.
(ii) Notwithstanding any other provision of this Agreement, each holder of
shares of Company Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Parent Common Stock multiplied by the Average
Closing Price.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their claim for Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company or the Exchange Agent
shall be liable to any person in respect of any shares of Parent Common Stock
(or dividends or distributions with respect thereto) or cash the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(i) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving
4
<PAGE> 59
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the shares of Parent Common Stock
and any cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Parent Common Stock deliverable in respect thereof,
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company. The Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
and its Significant Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which
it is incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of the Company and its
subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed or to be in good standing (individually or in
the aggregate) would not have a material adverse effect on the Company. The
Company has delivered to Parent complete and correct copies of its Restated
Articles of Incorporation and By-laws and the certificates of incorporation
and by-laws (or similar organizational documents) of its Significant
Subsidiaries, in each case as amended to the date hereof. For purposes of
this Agreement, a "Significant Subsidiary" means any subsidiary of the
Company that constitutes a significant subsidiary within the meaning of
Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the
"SEC").
(b) Subsidiaries. Schedule 3.01(b) lists each subsidiary of the
Company, together with its jurisdiction of incorporation or organization.
All the outstanding shares of capital stock of each such subsidiary have
been validly issued and are fully paid and nonassessable and, except as set
forth on Schedule 3.01(b), owned by the Company, by another subsidiary of
the Company or by the Company and another such subsidiary, free and clear
of all pledges, claims, liens, charges, encumbrances and security interests
of any kind or nature whatsoever (collectively, "Liens"). Except for the
capital stock of its subsidiaries and except for the ownership interests
set forth in Schedule 3.01(b), the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any
corporation, partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of the Company
consists of 50,000,000 shares of Company Common Stock and 2,500,000 shares
of preferred stock, par value $1.00 per share ("Company Preferred Stock").
At the close of business on November 3, 1995, (i) 16,515,892 shares of
Company Common Stock were issued and outstanding, (ii) no shares of Company
Common Stock were held by the Company in its treasury, (iii) 1,478,284
shares of Company Common Stock were reserved for issuance upon the exercise
of outstanding stock options granted pursuant to The Cordis Corporation Non
Qualified Stock Option Plan, The Cordis Corporation Director Non-Qualified
Stock Option Plan and The Webster Laboratories Plan or for issuance
pursuant to the 1991 Performance Unit Award Plan and the Company's 401(k)
Plan (such stock options and plans, collectively, the "Company Stock
Plans"), (iv) 16,515,892 shares of Company Common Stock were reserved for
issuance upon exercise of the rights (the "Rights") distributed to the
holders of Company Common Stock pursuant to the Rights Agreement dated as
of October 13, 1995 (the "Rights Agreement"), between the Company and
Chemical Mellon Shareholder Services L.L.C., as Rights Agent, and (v) no
shares of Company Preferred Stock were issued or outstanding. Except as set
forth above, as of the date of this Agreement, no shares of capital stock
or other voting securities of the Company were issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the
Company are, and all shares which may be issued pursuant to the Company
Stock Plans will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds,
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debentures, notes or other indebtedness of the Company having the right to
vote (or convertible into securities having the right to vote) on any
matters on which shareholders of the Company may vote. Except as set forth
above, as of the date of this Agreement, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its subsidiaries is
a party or by which any of them is bound obligating the Company or any of
its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. As of the date of this Agreement, there are not
any outstanding contractual obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to
approval of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock, to consummate the transactions contemplated
by this Agreement to be consummated by it. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement to be consummated by it have
been duly authorized by all necessary corporate action on the part of the
Company, subject, in the case of this Agreement, to approval of this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. Except as set
forth on Schedule 3.01(d), the execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or constitute a default (with
or without notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of the Company or any of its subsidiaries
under, any provision of (i) the Restated Articles of Incorporation or
By-laws of the Company or any provision of the comparable charter or
organizational documents of any of its subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable
to the Company or any of its subsidiaries or their respective properties or
assets or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any (A) statute, law, ordinance,
rule or regulation or (B) judgment, order or decree applicable to the
Company or any of its subsidiaries or their respective properties or
assets, other than, in the case of clause (ii) and clause (iii), any such
conflicts, violations, defaults, rights, losses or Liens that individually
or in the aggregate would not (x) have a material adverse effect on the
Company, (y) impair in any material respect the ability of the Company to
perform its obligations under this Agreement, or (z) prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement to be consummated by it. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state or local government or any court, tribunal, administrative agency or
commission or other governmental authority or agency, domestic or foreign
(a "Governmental Entity"), is required by or with respect to the Company or
any of its subsidiaries in connection with the execution and delivery of
this Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement to be consummated by it, except
for (i) the filing of a premerger notification and report form by the
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and such foreign antitrust filings as may be
applicable, (ii) the filing with the SEC of (y) a proxy statement relating
to the approval by the Company's shareholders of this Agreement (as amended
or supplemented from time to time, the "Proxy Statement"), and (z) such
reports under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with this Agreement and
the transactions contemplated by this Agreement, (iii) the filing of the
Certificate of Merger with the Florida Department of State and appropriate
documents with the relevant authorities of other states in which the
Company is qualified to do business, (iv) the consents set forth on
Schedule 3.01(d) and (v) such other
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<PAGE> 61
consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a material adverse effect on the
Company or prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement.
(e) SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since June
30, 1995 (the "SEC Documents"). As of their respective dates, the SEC
Documents complied as to form in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to the
extent that information contained in any SEC Document has been revised or
superseded by a later-filed SEC Document, filed and publicly available
prior to the date of this Agreement, as of the date of this Agreement, none
of the SEC Documents contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Documents complied as of their respective dates
of filing with the SEC as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the Filed SEC Documents
(as defined below), and except for liabilities and obligations incurred in
the ordinary course of business consistent with past practice, neither the
Company nor any of its subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be set forth on a consolidated
balance sheet of the Company and its consolidated subsidiaries or in the
notes thereto which, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the Company.
(f) Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with
the SEC by Parent in connection with the issuance of Parent Common Stock in
the Merger (the "Form S-4") will, at the time the Form S-4 is filed with
the SEC, at any time it is amended or supplemented and at the time it
becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's
shareholders and at the time of the meeting of the Company's shareholders
held to vote on approval of this Agreement, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Proxy Statement.
(g) Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed SEC Documents"), and except as expressly contemplated
by this Agreement, since the date of the most recent audited financial
statements included in the Filed SEC Documents, the Company has conducted
its business only in the ordinary
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<PAGE> 62
course, and there has not been (i) any material adverse change in the
Company, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
of the Company's capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, (iv) (x) any
granting by the Company or any of its subsidiaries to any officer of the
Company or any of its subsidiaries of any increase in compensation, except
in the ordinary course of business consistent with prior practice or as was
required under employment agreements in effect as of the date of the most
recent audited financial statements included in the Filed SEC Documents,
(y) any granting by the Company or any of its subsidiaries to any officer
of any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements in effect as of
the date of the most recent audited financial statements included in the
Filed SEC Documents or (z) any entry by the Company or any of its
subsidiaries into any employment, severance or termination agreement with
any officer, (v) any damage, destruction or loss, whether or not covered by
insurance, that has or is likely to have a material adverse effect on the
Company, or (vi) any change in accounting methods, principles or practices
by the Company materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in generally accepted
accounting principles.
(h) Litigation. Except as disclosed in the Filed SEC Documents, there
is no suit, action or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries (other
than any such suit, action or proceeding challenging the acquisition by
Parent or Sub of any shares of Company Common Stock or any provision of
this Agreement or seeking to restrain or prohibit the consummation of the
Merger) that, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the Company, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its subsidiaries
having, or which could reasonably be expected to have, any such effect.
(i) Compliance with Laws. (i) Except as disclosed in the Filed SEC
Documents, the Company and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any Governmental Entity applicable to its business or
operations, except for instances of possible noncompliance that,
individually or in the aggregate, would not have a material adverse effect
on the Company. To the knowledge of the Company, each of the Company and
its subsidiaries has in effect all Federal, state, local and foreign
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights ("Permits"), necessary for it to own,
lease or operate its properties and assets and to carry on its business as
now conducted, and there has occurred no default under any such Permit,
except for the lack of Permits and for defaults under Permits which,
individually or in the aggregate, would not have a material adverse effect
on the Company.
(j) Absence of Changes in Benefit Plans; Labor Relations. Except as
disclosed in the Filed SEC Documents, since the date of the most recent
audited financial statements included in the Filed SEC Documents, there has
not been any adoption or amendment in any material respect by the Company
or any of its subsidiaries of any collective bargaining agreement or any
bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding in
each case maintained or contributed to, or required to be maintained or
contributed to, by the Company or its subsidiaries for the benefit of any
current or former employee, officer or director of the Company or any of
its subsidiaries (each, a "Benefit Plan" and, collectively, "Benefit
Plans"). Except as set forth in Schedule 3.01(j) or as disclosed in the
Filed SEC Documents, there exist no employment, severance, termination or
indemnification agreements, arrangements or understandings between the
Company or any of its subsidiaries and any current or former employee,
officer or director of the Company or any of its subsidiaries or any
consulting agreement with the Company or any of its subsidiaries with
respect to which the aggregate liability thereunder exceeds $100,000 or
which cannot be cancelled by the Company or any such subsidiary without
penalty on 30 days' or less notice. Each of the Tier I, Tier II, Tier III,
and Tier IV Severance Agreements described
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<PAGE> 63
in Item 3 of the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 dated November 1, 1995 have been rescinded or otherwise
terminated.
(k) Benefit Plan Compliance. (i) Schedule 3.01(k)(i) contains a list
and brief description of all "employee pension benefit plans" (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(l) of ERISA) and
all other Benefit Plans maintained, or contributed to, or required to be
contributed to, by the Company or any of its subsidiaries or any other
person or entity that, together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (the Company and
each such other person or entity, a "Commonly Controlled Entity") for the
benefit of any current or former employees, officers or directors of the
Company or any of its subsidiaries. The Company has delivered or made
available to Parent true, complete and correct copies of (1) each Benefit
Plan (or, in the case of any unwritten Benefit Plans, descriptions
thereof), (2) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Benefit Plan (if any such
report was required), (3) the most recent summary plan description for each
Benefit Plan for which such summary plan description is required and (4)
each trust agreement and group annuity contract relating to any Benefit
Plan. Each Benefit Plan has been administered in all material respects in
accordance with its terms and is in compliance with the applicable
provisions of ERISA, the Code, all other applicable laws and all applicable
collective bargaining agreements except where the failure to comply would
not be reasonably expected to result in a material adverse effect on the
Company.
(ii) Except as disclosed in Schedule 3.01(k)(ii), all Pension Plans
have been the subject of determination letters from the Internal Revenue
Service, or have filed a timely application therefor, to the effect that
such Pension Plans are qualified and exempt from Federal income taxes under
Section 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor has any such Pension Plan been
amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(iii) No Commonly Controlled Entity has incurred any liability which
has not been fully paid to a Pension Plan under Title IV of ERISA (other
than for contributions not yet due) or to the Pension Benefit Guaranty
Corporation (other than for payment of premiums not yet due) that, when
aggregated with other such liabilities, would result in a material adverse
effect on the Company.
(iv) As of the most recent valuation date for each Pension Plan that
is a "defined benefit pension plan" (as defined in Section 3(35) of ERISA
subject to Title IV of ERISA (other than a multiemployer plan) (hereinafter
a "Defined Benefit Plan")), there was not any material amount of "unfunded
benefit liabilities" (as defined in Section 4001(a)(18) of ERISA) under
such Defined Benefit Plan, and the Company is not aware of any facts or
circumstances that would materially adversely change the funded status of
any such Defined Benefit Plan. The Company has furnished or made available
to Parent the most recent actuarial report or valuation with respect to
each Defined Benefit Plan and has no reason to believe that the conclusions
expressed in those reports or valuations are incorrect.
(v) No Commonly Controlled Entity has been required at any time within
the five calendar years preceding the date hereof or is required currently
to contribute to any "multiemployer plan" (as defined in Section 4001(a)(3)
of ERISA) or has withdrawn from any multiemployer plan where such
withdrawal has resulted or would result in any "withdrawal liability"
(within the meaning of Section 4201 of ERISA) that has not been fully paid.
(vi) With respect to any Benefit Plan that is an employee welfare
benefit plan, except as disclosed in Schedule 3.01(k)(vi), (1) no such
Benefit Plan is funded through a "welfare benefits fund", as such term is
defined in Section 419(e) of the Code, and (2) each such Benefit Plan that
is a "group health plan", as such term is defined in Section 5000(b)(1) of
the Code, complies substantially with the applicable requirements of
Section 4980B(f) of the Code.
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(vii) Schedule 3.01(k)(vii) lists all outstanding Options as of
November 1, 1995, showing for each such Option: (1) the number of shares
issuable, (2) the number of vested shares, (3) the date of expiration and
(4) the exercise price.
(viii) Except as provided in Section 5.09 or as listed on Schedule
3.01(m) and except with respect to the Options listed on Schedule
3.01(k)(vii), no employee of the Company or any of its subsidiaries will be
entitled to any additional compensation or benefits or any acceleration of
the time of payment or vesting of any compensation or benefits under any
Benefit Plan as a result of the transactions contemplated by this
Agreement.
(ix) Except as set forth in Schedule 3.01(k)(ix) or as contemplated
under Section 5.17, neither the Company or any of its subsidiaries nor any
person acting on behalf of the Company or any of its subsidiaries has, in
contemplation of any corporate transaction involving Parent or Sub, issued
any written communication to, or otherwise made or entered into any legally
binding commitment with, any employees of the Company or of any of its
subsidiaries to the effect that, following the date hereof, (i) any
benefits or compensation provided to such employees under existing Benefit
Plans or under any other plan or arrangement will be enhanced, (ii) any new
plans or arrangements providing benefits or compensation will be adopted,
(iii) any Benefit Plans will be continued for any period of time, or (iv)
any plans or arrangements provided by Parent or Sub will be made available
to such employees.
(l) Taxes. Each of the Company and each of its subsidiaries, and each
affiliated, consolidated, combined or unitary group of which the Company or
any of subsidiaries is a member (an "Affiliated Group"), has filed all
material tax returns and reports required to be filed by it and has paid
(or the Company has paid on its behalf) all taxes required to be paid by it
(other than taxes, the failure to pay which would not, individually or in
the aggregate, have a material adverse effect on the Company), and the most
recent financial statements contained in the Filed SEC Documents reflect an
adequate reserve for all material taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof through the date
of such financial statements. No deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any of its
subsidiaries or any Affiliated Group (other than deficiencies, the
liability for which would not, individually or in the aggregate, have a
material adverse effect on the Company), and no requests for waivers of the
time to assess any taxes are pending. The Federal income tax returns of the
Company and each of its subsidiaries consolidated in such returns have been
examined by the United States Internal Revenue Service for all years
through 1992. None of the assets or properties of the Company or any of its
subsidiaries is subject to any material tax lien. As used in this
Agreement, "taxes" shall include all Federal, state, local and foreign
income, property, sales, excise and other taxes, tariffs or governmental
charges of any nature whatsoever, including any interest, penalties or
additions with respect thereto.
(m) No Excess Parachute Payments. Except as described on Schedule
3.01(m), no amount that could be received (whether in cash or property or
the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of the
Company or any of its affiliates who is a "disqualified individual" (as
such term is defined in proposed Treasury Regulation Section 1.280G-1)
under any employment, severance or termination agreement, other
compensation arrangement or Benefit Plan currently in effect would be an
"excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code).
(n) Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock approving this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the
transactions contemplated by this Agreement.
(o) State Takeover Statutes. The Board of Directors of the Company
has approved the Merger and this Agreement, and such approval is sufficient
to render inapplicable to the Merger and this Agreement, and the
transactions contemplated by this Agreement, the provisions of Section
607.0901 and Section 607.0902 of the FBCA to the extent, if any, any such
Section is applicable to the Merger and this Agreement and the transactions
contemplated by this Agreement.
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<PAGE> 65
(p) Brokers. No broker, investment banker, financial advisor or other
person, other than Morgan Stanley & Co. Incorporated ("Morgan Stanley"),
the fees and expenses of which will be paid by the Company, is entitled to
any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has provided Parent with a true and correct copy of the fee letter
between the Company and Morgan Stanley.
(q) Opinion of Financial Advisor. The Company has received the
opinion of Morgan Stanley, dated the date hereof, to the effect that, as of
such date, the consideration to be received in the Merger by the Company's
shareholders (other than Parent and its affiliates) is fair to such
shareholders from a financial point of view, a signed copy of which opinion
has been delivered to Parent.
(r) Accounting Matters. Neither the Company nor, to its knowledge,
any of its affiliates, has taken or agreed to take any action that (without
regard to any action taken or agreed to be taken by Parent or any of its
affiliates) would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling of interests.
(s) Tax Matters. Neither the Company nor, to its knowledge, any of
its affiliates, has taken or agreed to take any action, or knows of any
circumstances, that (without regard to any action taken or agreed to be
taken by Parent or any of its affiliates) would prevent the Merger from
qualifying as a reorganization within the meaning of Sections 368(a)(1)(A)
and 368(a)(2)(E) of the Code or that would result in the conditions set
forth in clauses (iii) and (iv) of Section 6.03(c) not being true.
SECTION 3.02. Representations and Warranties of Parent and Sub. Parent
and Sub represent and warrant to the Company as follows:
(a) Organization Standing and Corporate Power. Each of Parent and Sub
is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated and has the
requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its Properties makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed or to be in good standing
(individually or in the aggregate) would not have a material adverse effect
on Parent. Parent has delivered to the Company complete and correct copies
of its Certificate of Incorporation and By-laws and the Articles of
Incorporation and By-laws of Sub, in each case as amended to the date
hereof.
(b) Capital Structure. The authorized capital stock of Parent
consists of 1,080,000,000 shares of Parent Common Stock and 2,000,000
shares of Preferred Stock without par value. At the close of business on
November 3, 1995, (i) 767,411,606 shares of Parent Common Stock were issued
and outstanding, (ii) 120,017,106 shares of Parent Common Stock were held
by Parent in its treasury, (iii) not more than 38,000,000 shares of Parent
Common Stock were reserved for issuance upon exercise of outstanding
employee and director stock options to purchase shares of Parent Common
Stock and (iv) no shares of Parent Preferred Stock were outstanding. Except
as set forth above and for amounts which in the aggregate are not material,
at the close of business on November 3, 1995, no shares of capital stock or
other voting securities of the Parent were issued, reserved for issuance or
outstanding. Other than the options referred to in clause (iii) above and
as disclosed in Parent SEC Documents (as defined in Section 3.02(d)), as of
the date of this Agreement, there are no material amounts of outstanding
securities convertible into Parent Common Stock. All outstanding shares of
capital stock of the Parent are, and all shares which may be issued
pursuant to this Agreement will be, when issued in accordance with the
terms hereof, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. As of the date of this Agreement, the
authorized capital stock of Sub consists of 100 shares of common stock, par
value $1.00 per share, all of which have been validly issued, are fully
paid and nonassessable and are owned by Parent free and clear of any Liens.
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<PAGE> 66
(c) Authority; Noncontravention. Parent and Sub have all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement to be
consummated by them. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated by this Agreement to be
consummated by them, in each case by Parent and/or Sub, as the case may be,
have been duly authorized by all necessary corporate action on the part of
Parent and Sub. This Agreement has been duly executed and delivered by
Parent and Sub, and constitutes a valid and binding obligation of each such
party, enforceable against each such party in accordance with its terms.
The execution and delivery of this Agreement does not, and the consummation
of the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or constitute a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or to loss of a material benefit under,
or result in the creation of any Lien upon any of the properties or assets
of Parent or any of its subsidiaries under, any provision of (i) the
certificate of incorporation or by-laws of Parent or Sub or any provision
of the comparable charter or organizational documents of any other
subsidiary of Parent, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent, Sub or any other
subsidiary of Parent or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any (A) statute, law, ordinance, rule or regulation or
(B) judgment, order or decree applicable to Parent, Sub or any other
subsidiary of Parent or their respective properties or assets, other than,
in the case of clause (ii) and clause (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not (x) have a material adverse effect on Parent, (y)
impair in any material respect the ability of Parent and Sub to perform
their respective obligations hereunder or (z) prevent or materially delay
the consummation of any of the transactions contemplated by this Agreement
to be consummated by them. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent, Sub or any other subsidiary of
Parent in connection with the execution and delivery of this Agreement by
Parent and Sub or the consummation by Parent and Sub of the transactions
contemplated by this Agreement to be consummated by them, except for (i)
the filing of a premerger notification and report form under the HSR Act
and such foreign antitrust filings as may be applicable, (ii) the filing
with the SEC of the Form S-4 and such reports under the Exchange Act as may
be required in connection with this Agreement and the transactions
contemplated by this Agreement, (iii) the filing of the Certificate of
Merger with the Florida Department of State and appropriate documents with
the relevant authorities of other states in which the Company is qualified
to do business and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under the "blue sky" laws of various states, the failure of which to be
obtained or made would not, individually or in the aggregate, have a
material adverse effect on Parent or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
(d) SEC Documents. Parent has filed all required reports, schedules,
forms, statements and other documents with the SEC since December 31, 1994
(the "Parent SEC Documents"). As of their respective dates, the Parent SEC
Documents complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable
to such Parent SEC Documents, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Except to the extent that information contained in
any Parent SEC Document has been revised or superseded by a later-filed
Parent SEC Document filed and publicly available prior to the date of this
Agreement (the "Filed Parent SEC Documents"), as of the date of this
Agreement, none of the Parent SEC Documents contains any untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of Parent included in the Parent SEC Documents
complied as of their respective dates of filing with the SEC as to form in
all material respects with applicable accounting
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requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed Parent SEC Documents, and
except for liabilities and obligations incurred in the ordinary course of
business consistent with past practice, neither Parent nor any of its
subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by generally accepted
accounting principles to be set forth on a consolidated balance sheet of
Parent and its consolidated subsidiaries or in the notes thereto which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on Parent.
(e) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 is filed with
the SEC, at any time it is amended or supplemented and at the time it
becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's
shareholders and at the time of the meeting of the Company's shareholders
held to vote on approval of this Agreement, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Form S-4
will comply as to form in all material respects with the requirements of
the Securities Act and the rules and regulations thereunder, except that no
representation is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the
Company specifically for inclusion or incorporation by reference in the
Form S-4.
(f) Accounting Matters. Neither Parent nor Sub nor, to Parent's
knowledge, any affiliate of Parent, has taken or agreed to take any action
that (without regard to any action taken or agreed to be taken by the
Company or any of its affiliates) would prevent Parent from accounting for
the business combination to be effected by the Merger as a pooling of
interests.
(g) Tax Matters. Neither Parent nor Sub nor, to Parent's knowledge,
any affiliate of Parent, has taken or agreed to take any action, or knows
of any circumstances, that (without regard to any action taken or agreed to
be taken by the Company or any of its affiliates) would prevent the Merger
from qualifying as a reorganization within the meaning of Sections
368(a)(1)(A) or 368(a)(2)(E) of the Code or that would result in the
conditions set forth in clauses (iii) and (iv) of Section 6.03(c) not being
true.
(h) Ownership of Company Common Stock. As of the date hereof, neither
Parent nor, to its knowledge, any of its affiliates or associates (as such
terms are defined under the Exchange Act), (i) beneficially owns, directly
or indirectly, or (ii) is party to any agreement, arrangement or
understanding providing for the acquisition, holding, voting or disposition
of, in each case, shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for capital stock of the
Company, which in the aggregate represent 10% or more of the outstanding
shares of Company Common Stock after giving effect to the conversion,
exercise or exchange of all such securities beneficially owned by Parent
and its affiliates and associates which are convertible into or exercisable
or exchangeable for capital stock of the Company.
(i) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in a business combination transaction with the Company and has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective
Time, the Company shall, and shall cause its subsidiaries to, except as
expressly contemplated or permitted by this Agreement or to the extent that
Parent shall otherwise consent in writing, carry on their respective businesses
in the usual, regular and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent therewith, use reasonable
efforts to preserve intact their current business organizations, keep available
the services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them to the end that their goodwill and
ongoing businesses shall not be impaired in any material respect (individually,
with respect to any Significant Subsidiary, or in the aggregate, with respect to
the Company and its subsidiaries taken as a whole) at the Effective Time.
Without limiting the generality of the foregoing, during the period from the
date of this Agreement to the Effective Time, the Company shall not, and shall
not permit any of its subsidiaries to, (except as expressly contemplated or
permitted by this Agreement or to the extent that Parent shall otherwise consent
in writing):
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of
its capital stock, except for dividends by a direct or indirect wholly
owned subsidiary of the Company to its parent, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (z) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries or
any other securities thereof or any rights, warrants or options to acquire
any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the
issuance of shares of Company Common Stock upon the exercise of Options
outstanding on the date of this Agreement and in accordance with their
present terms);
(iii) amend its articles of incorporation, by-laws or other comparable
charter or organizational documents;
(iv) except as set forth on Schedule 4.01(a)(iv), acquire or agree to
acquire (x) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, association or other
business organization or division thereof or (y) any assets that are
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets, except
sales of inventory in the ordinary course of business consistent with past
practice;
(vi) (y) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with past
practice, or (z) except as set forth on Schedule 4.01(a)(vi), make any
loans, advances or capital contributions to, or investments in, any other
person, other than (A) to the Company or any direct or indirect wholly
owned subsidiary of the Company or (B) advances to employees in accordance
with past practice;
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(vii) except for the items listed on Schedule 4.01(a)(vii), make or
agree to make any new capital expenditure or expenditures which,
individually, is in excess of $250,000 or, in the aggregate, are in excess
of $5,000,000;
(viii) make any material tax election or settle or compromise any
material tax liability;
(ix) except as set forth on Schedule 4.01(a)(ix), pay, discharge,
settle or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms,
of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the Filed SEC Documents or incurred in the ordinary
course of business consistent with past practice, or waive any material
benefits of, or agree to modify in any material respect, any
confidentiality, standstill or similar agreements to which the Company or
any of its subsidiaries is a party;
(x) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which the Company or any
subsidiary is a party or waive, release or assign any material rights or
claims;
(xi) enter into any contracts, agreements, arrangements or
understandings relating to the distribution, sale or marketing by third
parties of the Company's or its subsidiaries' products or products licensed
by the Company or its subsidiaries;
(xii) except as required to comply with applicable law, (A) adopt,
enter into, terminate or amend any Benefit Plan or other arrangement for
the benefit or welfare of any director, officer or current or former
employee, (B) increase in any manner the compensation or fringe benefits
of, or pay any bonus to, any director, officer or employee (except for
normal increases or bonuses in the ordinary course of business consistent
with past practice), (C) pay any benefit not provided for under any Benefit
Plan, (D) except as permitted in clause (B), grant any awards under any
bonus, incentive, performance or other compensation plan or arrangement or
Benefit Plan (including the grant of stock options, stock appreciation
rights, stock based or stock related awards, performance units or
restricted stock, or the removal of existing restrictions in any Benefit
Plans or agreement or awards made thereunder) or (E) take any action to
fund or in any other way secure the payment of compensation or benefits
under any employee plan, agreement, contract or arrangement or Benefit
Plan;
(xiii) make any change in any method of accounting or accounting
practice or policy other than those required by generally accepted
accounting principles;
(xiv) intentionally take any action that (without regard to any action
taken or agreed to be taken by Parent or any of its affiliates) would
prevent Parent from accounting for the business combination to be effected
by the Merger as a pooling of interests;
(xv) intentionally take any action that (without regard to any action
taken or agreed to be taken by Parent or any of its affiliates) would
prevent the Merger from qualifying as a reorganization within the meaning
of Sections 368(a)(1)(A) or 368(a)(2)(E) of the Code or that would result
in the conditions set forth in clauses (iii) and (iv) of Section 6.03(c)
not being true; or
(xvi) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. The Company and Parent shall not, and shall not permit
any of their respective subsidiaries to, take any action that would, or that
could reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (iii) any
of the conditions to the Merger set forth in Article VI not being satisfied
(subject to the Company's right to take action specifically permitted by Section
4.02).
(c) Certain Tax Matters. From the date hereof until the Effective Time,
(i) the Company and its subsidiaries will accurately prepare and timely file
with the relevant taxing authority all tax returns and reports
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("Post-Signing Returns") required to be filed; (ii) the Company and its
subsidiaries will timely pay all taxes due and payable; (iii) the Company and
its subsidiaries will make adequate provision on their books and records, to the
extent required in accordance with generally accepted accounting principles, for
all taxes due and payable after the Effective Time; and (iv) the Company and its
subsidiaries will promptly notify Parent of any action, suit, proceeding, claim
or audit pending against or with respect to the Company or any of its
subsidiaries in respect of any tax where there is a reasonable possibility of a
determination or decision which would reasonably be expected to have a material
adverse effect on the Company's tax liabilities or tax attributes.
SECTION 4.02. No Solicitation. (a) The Company and its officers,
directors, employees, representatives and agents shall immediately cease any
discussions or negotiations with any parties that may be ongoing with respect to
a takeover proposal. The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its officers, directors
or employees or any investment banker, attorney or other advisor or
representative retained by it or any of its subsidiaries to, (i) solicit,
initiate or knowingly encourage the submission of, any takeover proposal, or
(ii) participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action
knowingly to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any takeover proposal;
provided, however, that to the extent required by the fiduciary obligations of
the Board of Directors of the Company, determined by a majority of the members
thereof based on the advice of outside counsel, the Company may, (A) in response
to an unsolicited takeover proposal and subject to compliance with Section
4.02(c), furnish non-public information with respect to the Company to any
person pursuant to a customary confidentiality agreement (as determined by the
Company's outside counsel) and discuss such information (but not the terms of
any possible takeover proposal) with such person and (B) upon receipt by the
Company of an unsolicited takeover proposal, and subject to compliance with
Section 4.02(c), participate in negotiations and discussions regarding such
takeover proposal. For purposes of this Agreement, "takeover proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 15% or more of the consolidated assets of the Company
and its subsidiaries or 20% or more of any class of equity securities of the
Company or any of its Significant Subsidiaries or any tender offer or exchange
offer that if consummated would result in any person beneficially owning 20% or
more of any class of equity securities of the Company or any of its Significant
Subsidiaries, or any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries, other than the
transactions contemplated by this Agreement, or any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the Merger or which would reasonably be expected to
dilute materially the benefits to Parent of the transactions contemplated
hereby.
(b) Except as set forth in this Section 4.02, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent or Sub, the
approval or recommendation by such Board of Directors or any such committee of
this Agreement or the Merger, (ii) approve or recommend, or propose to approve
or recommend, any takeover proposal or (iii) enter into any agreement with
respect to any takeover proposal. Notwithstanding the foregoing, the Board of
Directors of the Company, to the extent required by the fiduciary obligations
thereof, as determined in good faith by a majority of the members thereof based
on the advice of outside counsel, may (subject to the following sentences),
withdraw or modify its approval or recommendation of this Agreement or the
Merger, approve or recommend any superior proposal (as defined below), enter
into an agreement with respect to such superior proposal or terminate this
Agreement, in each case at any time after a reasonable period of time following
Parent's receipt of written notice (a "Notice of Superior Proposal") advising
Parent that the Board of Directors of the Company has received a superior
proposal, specifying the material terms and conditions of such superior proposal
and identifying the person making such superior proposal (it being understood
that any amendment to a superior proposal shall necessitate an additional
reasonable time period). In addition, if the Company proposes to enter into an
agreement with respect to any takeover proposal, it shall concurrently with
entering into such agreement pay, or cause to be paid, to Parent the Expenses
(as defined in Section 5.11(c)) and the Termination Fee (as defined in Section
5.11(b)). For purposes of this Agreement, "superior proposal" means a bona fide
proposal made by a third party to acquire, directly or indirectly, for
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consideration consisting of cash and/or securities, more than 50% of the shares
of Company Common Stock then outstanding or all or substantially all the assets
of the Company, and otherwise on terms which a majority of the disinterested
members of the Board of Directors of the Company determines in its good faith
judgment (based on the advice of a financial advisor of nationally recognized
reputation) to be more favorable to the Company's shareholders than the Merger
and for which financing, to the extent required, is then committed or which, in
the good faith judgment of a majority of such disinterested members, is
reasonably capable of being financed by such third party.
(c) In addition to the obligations of the Company set forth in paragraph
(b), the Company promptly shall advise Parent in writing of any request for
information or of any takeover proposal, or any inquiry with respect to or which
reasonably could be expected to lead to any takeover proposal, and the material
terms and conditions of such request, takeover proposal or inquiry. The Company
will keep Parent informed in all material respects of the status and details
(including amendments or proposed amendments) of any such takeover proposal or
inquiry.
(d) Nothing contained in this Section 4.02 shall prohibit the Company from
(i) taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or (ii) making any disclosure to the
Company's shareholders if, in the good faith judgment of the majority of the
members of the Board of Directors of the Company, after consultation with
outside counsel, failure to so disclose would be inconsistent with applicable
laws; provided that the Company does not, except in accordance with the
provisions of Section 4.02(b), withdraw or modify, or propose to withdraw or
modify, its position with respect to the Merger or approve or recommend, or
propose to approve or recommend, a takeover proposal.
(e) The provisions of Section 4.02(a), (b) and (c), and Section 5.11(b),
shall be inapplicable during the Termination Period (as defined in Section
7.01(e)); provided, however, that during the Termination Period, the Company
shall not enter into a definitive agreement with respect to any takeover
proposal or terminate this Agreement pursuant to Section 7.01(d) until two
business days following Parent's receipt of written notice specifying the
material terms and conditions of such takeover proposal and identifying the
person making such takeover proposal and stating that the Board of Directors of
the Company intends to approve or recommend such takeover proposal. During such
two business day period, Parent shall be entitled to elect to immediately and
irrevocably terminate the Termination Period and any such irrevocable
termination shall be effective immediately upon delivery of written notice
thereof to the Company in the manner prescribed in Section 4.02(f) and at such
time the provisions of Section 4.02(a), (b) and (c) and Section 5.11(b) shall
become immediately applicable.
(f) In addition to its right under Section 4.02(e), Parent shall be
entitled to elect at any time to immediately and irrevocably terminate the
Termination Period and any such termination shall be effective immediately upon
delivery of written notice thereof to the Company in the manner prescribed in
the next sentence and at such time the provisions of Section 4.02(a), (b) and
(c) and Section 5.11(b) shall become immediately applicable. Any notice by
Parent to the Company of termination of the Termination Period may be given by
facsimile transmission addressed to Ana Maria Gonzalez, Esq. (Telecopy No.:
(305) 824-2747; Confirmation No.: (305) 824-2035) and Charles I. Cogut, Esq.
(Telecopy No.: (212) 455-3418; Confirmation No.: (212) 455-2550) (or such other
telecopy numbers as shall be specified by notice pursuant to Section 8.02) and
such notice shall be deemed delivered upon completion of the transmissions.
Parent shall promptly deliver copies of such facsimiles to the addressees
thereof pursuant to Section 8.02.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of Form S-4 and the Proxy Statement;
Shareholders Meeting. (a) As soon as practicable following the date of this
Agreement, the Company and Parent shall prepare and file with the SEC the Proxy
Statement and Parent shall prepare and file with the SEC the Form S-4, in which
the Proxy Statement will be included as a prospectus. Each of the Company and
Parent shall use all reasonable efforts to have the Form S-4 declared effective
under the Securities Act as promptly as practicable after such
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filing. The Company will use its reasonable efforts to cause the Proxy Statement
to be mailed to the Company's shareholders as promptly as practicable after the
Form S-4 is declared effective under the Securities Act. Parent shall, at its
expense, also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified) required to be taken under any
applicable state securities laws in connection with the issuance of Parent
Common Stock in the Merger and under the Company Stock Plans. Each of Parent and
the Company shall furnish all information concerning itself to the other as may
be reasonably requested in connection with any such action and the preparation,
filing and distribution of the Form S-4 and the preparation, filing and
distribution of the Proxy Statement.
(b) The Company will, as soon as practicable following the date of this
Agreement, establish a record date (which will be as soon as practicable
following the date of this Agreement) for, duly call, give notice of, convene
and hold a meeting of its shareholders (the "Shareholders Meeting") for the
purpose of approving this Agreement; provided, however, that the Company may
postpone or adjourn any Shareholders Meeting to a date no later than May 14,
1996, in order to facilitate the satisfaction of the condition set forth in
Section 6.01(a). The Company will, through its Board of Directors, recommend to
its shareholders approval of this Agreement, except to the extent that the Board
of Directors of the Company shall have withdrawn or modified its approval or
recommendation of this Agreement or the Merger as permitted by Section 4.02(b).
Without limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 5.01(b) shall not be
affected by (i) the commencement, public proposal, public disclosure or
communication to the Company of any takeover proposal or (ii) the withdrawal or
modification by the Board of Directors of the Company of its approval or
recommendation of this Agreement or the Merger.
SECTION 5.02. Letters of the Company's Accountants. (a) The Company shall
use its reasonable efforts to cause to be delivered to Parent a "comfort" letter
of Deloitte & Touche LLP, the Company's independent public accountants, dated a
date within two business days before the date on which the Form S-4 shall become
effective and addressed to Parent, customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
(b) The Company shall use its reasonable efforts to cause to be delivered
to Parent letters from Deloitte & Touche LLP, addressed to Parent and the
Company, one dated the date of the Proxy Statement, stating that after
appropriate review of the Merger Agreement the Company is an entity which would
qualify as a party to a pooling of interests transaction under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations, and one
dated as of the Closing Date, confirming as of the Closing Date the previously
delivered letter referred to above.
SECTION 5.03. Letters of Parent's Accountants. (a) Parent shall use its
reasonable efforts to cause to be delivered to the Company a "comfort" letter of
Coopers & Lybrand L.L.P., Parent's independent public accountants, dated a date
within two business days before the date on which the Form S-4 shall become
effective and addressed to the Company, and in the form customarily given in
securities offerings of Parent registered on Form S-4 in the past.
(b) Parent shall use its reasonable efforts to cause to be received by it
letters from Coopers & Lybrand L.L.P., addressed to Parent, one dated the date
of the Proxy Statement, stating that the Merger will qualify as a pooling of
interests transaction under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations, and one dated as of the Closing Date,
confirming as of the Closing Date the previously delivered letter referred to
above.
SECTION 5.04. Accounting and Tax Matters. (a) Parent shall not, and shall
not permit any of its subsidiaries to, intentionally take any action that
(without regard to any action taken or agreed to be taken by the Company or any
of its affiliates) would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling of interests.
(b) Parent shall not, and shall not permit any of its subsidiaries to,
intentionally take any action that (without regard to any action taken or agreed
to be taken by the Company or any of its affiliates) would prevent the Merger
from qualifying as a reorganization within the meaning of Sections 368(a)(1)(A)
and
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368(a)(2)(E) of the Code or that would result in the conditions set forth in
clauses (iii) and (iv) of Section 6.03(c) not being true.
SECTION 5.05. Foreign Approval. The parties agree that the Merger shall
not be implemented in the Federal Republic of Germany without the prior
notification and/or approval of the German Federal Cartel Office.
SECTION 5.06. Access to Information. (a) The Company shall, and shall
cause each of its subsidiaries to, upon reasonable notice from Parent, afford to
Parent, and to Parent's officers, employees, accountants, counsel, financial
advisors and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time to all their respective
properties, books, contracts, commitments, personnel and records and, during
such period, each of the Company shall, and shall cause each of its subsidiaries
to, furnish promptly to Parent upon request (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of Federal or state securities laws or tax
laws and (ii) all other information concerning its business, properties and
personnel as Parent may reasonably request.
(b) Parent shall, and shall cause each of its subsidiaries to, upon
reasonable notice from the Company, afford to Deloitte & Touche LLP, on behalf
of the Company, reasonable access during normal business hours during the period
prior to the Effective Time to any information reasonably related to the ability
of Parent to account for the business combination to be effected by the Merger
as a pooling of interests.
(c) Each of the Company and Parent may make copies of documents provided to
them pursuant this Section 5.06 at their own expense. The parties shall, and
shall cause their respective officers, employees, accountants, counsel,
financial advisors and other representatives to, hold any such information which
is nonpublic in confidence on the same terms and conditions as set forth in the
letter dated November 3, 1995, as amended from time to time, between the Company
and Parent (the "Confidentiality Agreement").
SECTION 5.07. Reasonable Efforts; Notification. (a) The Company agrees to
promptly effect all necessary filings required to be made by it under the HSR
Act and any other domestic or foreign antitrust law, rule or regulation. Each of
Parent and Sub agrees to (i) continue to process the filing made under the HSR
Act on October 20, 1995, and to promptly effect all necessary filings required
to be made by them under any other domestic or foreign antitrust law, rule or
regulation, and (ii) promptly take, or cause their affiliates to take, if
required by the Federal Trade Commission or its staff, the Assistant Attorney
General in charge of the Antitrust Division or her staff, any state attorney
general or its staff, or any other Governmental Entity, in each case in order to
consummate the Merger, all steps (including executing agreements and submitting
to judicial or administrative orders) to secure government antitrust clearance
(including by avoiding or setting aside any preliminary or permanent injunction
or other order of any Governmental Entity), including, without limitation, all
steps to make arrangements for or to effect the sale or other disposition of
particular assets or categories of assets or businesses of Parent, Sub, any of
their affiliates and/or the Company or any of its subsidiaries and to hold
separate (including, without limitation, pursuant to arrangements which
restrict, limit or prohibit access to the Company or any of its subsidiaries
and/or the voting of shares of capital stock of the Company or the voting stock
of any of its subsidiaries) pending such sale or other disposition of particular
assets or categories of assets, businesses or voting securities of the Company
or the voting stock of any of its subsidiaries. All the actions required to be
taken or to be taken hereunder by Parent, Sub or their affiliates pursuant to
this Section 5.07 will be consistent with their respective obligations under
applicable law or any agreement to which any of such person is a party.
(b) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all other things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all other reasonable steps as
may be necessary to avoid an action or proceeding by any Governmental Entity,
(ii) the
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obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing, the Company and its Board of Directors shall, if any
state takeover statute or similar statute or regulation is or becomes applicable
to the Merger, this Agreement or the other transactions contemplated by this
Agreement, use all reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement. Nothing herein shall limit or
affect the Company's taking actions specifically permitted by Section 4.02(b).
SECTION 5.08. Rights Agreement. The Company shall take all necessary
action to (i) render the Rights Agreement inapplicable to the Merger and the
other transactions contemplated by this Agreement and (ii) ensure that (y)
neither Parent nor any of its affiliates is an Acquiring Person (as defined in
the Rights Agreement) pursuant to the Rights Agreement and (z) a Stock
Acquisition Date or Distribution Date (in each case as defined in the Rights
Agreement) does not occur by reason of the execution of this Agreement, the
consummation of the Merger, or the consummation of the other transactions
contemplated by this Agreement. The Board of Directors of the Company shall also
take all further action (in addition to that referred to above) requested in
writing by Parent (including redeeming the Rights immediately prior to the
Effective Time or amending the Rights Agreement) in order to render the Rights
inapplicable to the Merger and the other transactions contemplated by this
Agreement. Except as provided above with respect to the Merger and the other
transactions contemplated by this Agreement, or as requested in writing by
Parent, the Board of Directors of the Company shall not (i) amend the Rights
Agreement or (ii) take any action with respect to, or make any determination
under, the Rights Agreement, including a redemption of the Rights or any action
to facilitate a takeover proposal; provided that any such action may be taken
simultaneously with entering into an agreement pursuant to Section 4.02(b).
SECTION 5.09. Stock Options. (a) As soon as practicable following the
date of this Agreement, the Board of Directors of the Company (or, if
appropriate, any committee administering the Company Stock Plans) shall adopt
such resolutions or take such other actions as may be required to effect the
following with respect to all options to purchase shares of Company Common Stock
granted under the Company Stock Plans ("Options") not exercised prior to the
Closing Date:
(i) adjust the terms of all such Options to purchase shares of Company
Common Stock to provide that, at the Effective Time, each Option
outstanding immediately prior to the Effective Time shall be deemed to
constitute an option to acquire, on substantially the same terms and
conditions (including full exercisability at such time as such Option shall
be exercisable by its terms), as were applicable to such Option under the
terms of such Option and the applicable Company Stock Plans, the same
number of shares of Parent Common Stock (rounded down to the nearest whole
share) as the holder of such Option would have been entitled to receive
pursuant to the Merger had such holder exercised such Option in full
immediately prior to the Effective Time, at a price per share equal to (y)
the aggregate exercise price for the shares of Company Common Stock
otherwise purchasable pursuant to such Option divided by (z) the number of
shares of Parent Common Stock deemed purchasable pursuant to such Option;
provided, however, that (i) no certificate or scrip representing fractional
shares of Parent Common Stock shall be issued in respect of any Option as
adjusted pursuant to this Section 5.09 and (ii) any such fractional share
will not entitle the owner thereof to vote or to any rights of a
shareholder of Parent; provided, further, that in the case of any option to
which Section 421 of the Code applies by reason of its qualification under
any of Section 422 of the Code ("qualified stock options"), the option
price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be determined in
order to comply with Section 424(a) of the Code; and
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(ii) make such other changes to the Company Stock Plans as it deems
appropriate to give effect to the Merger (subject to the approval of
Parent, which shall not be unreasonably withheld).
(b) The provisions in the Company Stock Plans and any other Benefit Plan
providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
deleted as of the Effective Time, and the Company shall use its best efforts to
ensure that following the Effective Time no holder of an Option or any
participant in any Company Stock Plan shall have any right thereunder to acquire
any capital stock of the Company, Parent or the Surviving Corporation, except as
provided in Section 5.09(a).
(c) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Options appropriate notices setting forth such holders' rights
pursuant to the respective Company Stock Plans and the agreements evidencing the
grants of such Options shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 5.09 after giving effect to
the Merger). Except as otherwise provided in this Section 5.09, Parent shall
comply with the terms of the Company Stock Plans and ensure, to the extent
required by, and subject to the provisions of such Company Stock Plans, that the
Options which qualified as incentive stock options prior to the Effective Time
continue to qualify as incentive stock options after the Effective Time.
(d) Parent agrees to use reasonable efforts to take such actions as are
necessary for the conversion of the Options in accordance with this Section
5.09, including (i) the reservation, issuance and listing of Parent Common Stock
as is necessary to effectuate the transactions contemplated by Section 5.09(a),
(ii) entering into such agreements as are necessary to assume such Options and
(iii) the filing of a registration statement on Form S-8, if necessary, to
facilitate the public sale of stock issuable upon the exercise of such Options.
(e) A holder of an Option adjusted in accordance with this Section 5.09 may
exercise such adjusted Option in whole or in part in accordance with its terms
by delivering a properly executed notice of exercise to Parent, together with
the consideration therefor and the Federal withholding tax information, if any,
required in accordance with the related Company Stock Plan.
SECTION 5.10. Indemnification and Insurance. (a) The by-laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the Company's
by-laws on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who on or prior to the Effective Time were directors, officers,
employees or agents of the Company.
(b) For six years from the Effective Time, Parent shall, unless Parent
agrees in writing to guarantee the indemnification obligations set forth in
Section 5.10(a), maintain in effect the current level and scope of directors'
and officers' liability insurance covering those persons who are currently
covered by the Company's directors' and officers' liability insurance policy (a
copy of which has been heretofore delivered to Parent), so long as the annual
premium therefor would not be in excess of 200% of the last annual premium paid
prior to the date of this Agreement (the "Company's Current Premium"). If such
premiums for such insurance would at any time exceed 200% of the Company's
Current Premium, then the Surviving Corporation shall cause to be maintained
policies of insurance which, in the Surviving Corporation's good faith
determination, provide the maximum coverage available at an annual premium equal
to 200% of the Company's Current Premium. The Company represents to Parent that
the Company's Current Premium is $561,088.
(c) This Section 5.10 (i) shall survive the consummation of the Merger at
the Effective Time, (ii) is intended to benefit the Company, Parent, the
Surviving Corporation and the Indemnified Parties and their respective heirs,
executors, administrators, representatives and successors, and (iii) is in
addition to, and not in substitution for, any other rights to indemnification or
contribution that any such Indemnified Party may have by contract or otherwise.
In the event that Parent or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its assets to any person, then, and in each such case, proper provision shall be
made so that the
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successors, assigns and transferees of Parent and the Surviving Corporation, as
applicable, assume the respective obligations of Parent and the Surviving
Corporation set forth in this Section 5.10.
SECTION 5.11. Fees and Expenses. (a) Except as provided below, all fees
and expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated, except that
expenses incurred in connection with the filing, printing and mailing of the
Proxy Statement and the Form S-4 shall be shared equally by Parent and the
Company.
(b) The Company shall promptly pay, or cause to be paid, to Parent a fee of
$40,000,000 (the "Termination Fee"), payable in same day funds, plus all
Expenses, if (i) this Agreement is terminated by the Company pursuant to Section
7.01(d) or (ii) prior to any termination of this Agreement (other than a
termination (A) pursuant to Section 7.01(e) or (B) occurring after a
Governmental Entity of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable), a bona fide takeover proposal shall
have been made public after the date hereof and prior to the Shareholders
Meeting and the requisite approval of the Company's shareholders of the Merger
shall not have been obtained upon a vote taken at a duly held Shareholders
Meeting and, within 12 months of such termination, a transaction constituting a
takeover proposal is consummated or the Company enters into an agreement with
respect to, approves or recommends such takeover proposal.
(c) For purposes of this Section 5.11, "Expenses" means all documented
out-of-pocket fees and expenses incurred or paid by or on behalf of Parent or
any of its subsidiaries in connection with the Merger or any of the transactions
contemplated by this Agreement, including all reasonable fees and expenses of
counsel, investment banking firms, accountants, experts and consultants to
Parent or any or its affiliates; provided, however, that the Company shall not
be obligated to make payments of Expenses pursuant to this Section 5.11 in
excess of $10,000,000 in the aggregate.
SECTION 5.12. Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, will consult with each other before issuing, and
give each other the opportunity to review and comment upon, any press release or
other public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or the Nasdaq National
Market. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement shall be in the form
heretofore agreed to by the parties.
SECTION 5.13. Affiliates. (a) Prior to the Closing Date, the Company
shall deliver to Parent a letter identifying all persons who are, at the time
this Agreement is submitted for approval to the shareholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act or
for purposes of qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations. The Company shall use its reasonable efforts to cause
each such person to deliver to Parent on or prior to the Closing Date a written
agreement substantially in the form attached as Exhibit A hereto.
(b) Parent shall use its reasonable efforts to cause all persons who are
"affiliates" of Parent for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations to comply with the fourth
paragraph of Exhibit A hereto.
(c) For so long as resales of shares of Parent Common Stock issued pursuant
to the Merger are subject to the resale restrictions set forth in Rule 145 under
the Securities Act, Parent will use its reasonable efforts to comply with Rule
144(c)(1) under the Securities Act.
SECTION 5.14. Stock Exchange Listing. To the extent Parent does not issue
treasury shares in the Merger or under Company Stock Plans which are already
listed, Parent shall use its reasonable efforts to cause
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the shares of Parent Common Stock to be issued in the Merger and under the
Company Stock Plans to be approved for listing on the NYSE, subject to official
notice of issuance, prior to the Closing Date.
SECTION 5.15. Certain Litigation. (a) Each party agrees to use reasonable
efforts to obtain a dismissal without prejudice of Johnson & Johnson and JNJ
Acquisition Corp. v. Cordis Corporation, with each party bearing its own costs
and attorneys' fees therefor. The Company agrees that it will not settle any
litigation currently pending, or commenced after the date hereof, against the
Company or any of its directors, without the prior written consent of Parent.
(b) The Company will not voluntarily cooperate with any third party which
has sought or may hereafter seek to restrain or prohibit or otherwise oppose the
Merger and will cooperate with Parent and Sub to resist any such effort to
restrain or prohibit or otherwise oppose the Merger, unless the Board of
Directors of the Company determines in good faith, after consultation with
counsel, that failing so to cooperate with such third party or cooperating with
Parent or Sub, as the case may be, would constitute a breach of the Board's
fiduciary duties under applicable law.
SECTION 5.16. Consent Solicitation. Parent and Sub shall immediately
terminate the solicitation of Company shareholder consents, the Company shall
immediately terminate the solicitation of revocations of consent with respect
thereto, and each party shall withdraw the related SEC filings and cease
soliciting written consents or revocations, as applicable, from the shareholders
of the Company.
SECTION 5.17. United States Employee Benefits. (a) For a period of one
year following the Effective Time (the "Initial Period"), Parent and Sub agree
to maintain for the benefit of employees of the Company and its subsidiaries who
are employed in the United States ("U.S. Employees") the Benefit Plans listed on
Schedule 5.17(a) (the "Scheduled Benefit Plans") or substitute plans which in
the aggregate provide substantially equivalent benefits to the Scheduled Benefit
Plans, for the employees of the Company and its subsidiaries. For the one-year
period following the Initial Period, Parent shall provide or make available for
the benefit of U.S. Employees who continue in employment during the one-year
period following the Initial Period pension, health and welfare benefits which
are substantially equivalent in the aggregate to such benefits provided or made
available to other similarly situated employees of Parent and Sub. Following the
completion of the Initial Period and the one-year period thereafter, Parent, in
its sole discretion, shall determine the benefits to be provided or made
available to U.S. Employees.
(b) As of the Effective Time, U.S. Employees (i) shall be eligible for
coverage under the terms and conditions of the written severance policy of
Parent to the same extent such individuals would be eligible for coverage under
such severance policy if they were employed by Parent or Sub and (ii) shall be
given past service credit with the Company or its subsidiaries to the same
extent such service was credited under the Company's written severance policy as
of the Effective Time; provided, however, that each U.S. Employee whose name is
set forth on Schedule 5.18 shall not be eligible for severance benefits under
the written severance policy of Parent, or any other severance policy of Parent,
Sub or the Company or any of its subsidiaries, during the period that such
individual is covered under an employment agreement described in such Schedule.
(c) As of the Effective Time, U.S. Employees shall be given past service
credit for their service with the Company or its subsidiaries prior to the
Effective Time (i) for all purposes under the terms and conditions of the
Scheduled Benefit Plans (or any substitute plans provided pursuant to Section
5.17(a)) and, as provided in accordance with Section 5.17(b), under the terms
and conditions of the written severance policy of Parent, and (ii) for
eligibility and vesting purposes (but not for benefit accrual purposes other
than with respect to the Company's vacation policy) under any other pension,
health and welfare plan provided by Parent to the employees of the Company or
its subsidiaries during the Initial Period or the one-year period thereafter to
the same extent such service would be credited under the terms and conditions of
such plans analogous to the Scheduled Benefit Plans as if such U.S. Employees
were employed by Parent prior to the Effective Time; provided, however, that no
such past service credit will be given for any purpose with respect to Parent's
post-retirement medical plan. Notwithstanding the foregoing, it is understood
between the parties hereto that neither Parent nor Sub shall be required to
provide any benefits from and after the Effective Time except as expressly
provided in this Section 5.17.
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(d) Parent agrees to (i) continue and maintain the Company's existing
annual incentive compensation plans listed on Schedule 3.01(k)(i) in effect
through the end of the Company's fiscal year ending June 30, 1996, and (ii)
equitably adjust, as Parent deems necessary and appropriate in its sole
discretion, any performance criteria established under such incentive plans for
the annual award period ending on June 30, 1996, in order to eliminate any costs
or expenses directly arising from the implementation of the Merger which would
adversely impact upon the achievement of the applicable performance criteria.
For calendar year 1996, Parent shall make available incentive compensation
opportunities on terms and conditions substantially equivalent to those made
available to similarly situated employees of Parent; it being understood,
however, that for any award period under Parent's incentive plans which (i) is
in effect on July 1, 1996 and (ii) commenced prior to July 1, 1996, the
performance criteria and target awards payable shall be equitably adjusted, as
Parent deems necessary and appropriate in its sole discretion, to reflect any
shortened performance cycle.
(e) Parent and Sub acknowledge that, for purposes of those Benefit Plans
listed on Schedule 3.01(m), the consummation of the Merger will constitute a
"Change in Control" of the Company (as that term is defined in such plans,
agreements and arrangements). Parent agrees (i) to cause the Surviving
Corporation after consummation of the Merger to pay all amounts provided under
such plans, agreements and arrangements as a result of a Change in Control of
the Company in accordance with their terms as in effect on the date hereof and
(ii) to honor and to cause the Surviving Corporation to honor, all rights and
privileges to or with respect to any such plans, agreements and arrangements as
in effect on the date hereof which, by their respective terms, became effective
as a result of such Change in Control.
SECTION 5.18. Employment Agreements. The Company shall use its reasonable
efforts to cause each person whose name is set forth on Schedule 5.18 to enter
into an employment agreement on the terms and conditions generally applicable to
the category of employment agreement which will be offered to such person as set
forth on such Schedule.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. This Agreement shall have been approved by
the affirmative vote of the holders of a majority of the outstanding shares
of Company Common Stock.
(b) NYSE Listing. The shares of Parent Company Stock issuable to the
Company's shareholders pursuant to this Agreement and under the Company
Stock Plans shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(c) HSR Act. The waiting period applicable to the Merger under the
HSR Act shall have been terminated or shall have expired.
(d) No Injunctions or Restraints; Illegality. None of the parties
hereto shall be subject to any statute, rule, regulation, decree, ruling,
injunction or other order issued by any Governmental Entity of competent
jurisdiction (an "Injunction") which prohibits, restrains, enjoins or
restricts the consummation of the transactions contemplated by this
Agreement; provided, however, that each of Parent and Sub shall have used
its best efforts, to the extent required pursuant to Section 5.07(a), to
prevent any such injunction or other order, and to appeal as promptly as
practicable any injunction or other order that may have been entered,
including, without limitation, by proffering its willingness to accept an
order embodying any arrangement required to be made by Parent or Sub
pursuant to clause (a)(ii) of Section 5.07 (and notwithstanding anything in
this subsection (d) to the contrary, no terms, conditions or provisions of
an order embodying such an arrangement shall constitute a basis for Parent
or Sub asserting nonfulfillment of the conditions contained in this
subsection (d)).
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(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are qualified as
to materiality shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement, and Parent shall have received a
certificate signed on behalf of the Company by the chief executive officer
and the chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Parent
shall have received a certificate signed on behalf of the Company by the
chief executive officer and the chief financial officer of the Company to
such effect.
(c) Letters from Company Affiliates. Parent shall have received from
each person named in the letter referred to in Section 5.13(a) an executed
copy of an agreement substantially in the form of Exhibit A hereto.
(d) No Material Adverse Change. At any time on or after the date of
this Agreement there shall not have occurred any material adverse change in
the business, properties, assets, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole.
(e) Pooling Letters. Parent shall have received each of the letters
described in Sections 5.02(b) and 5.03(b) from Deloitte & Touche LLP and
Coopers & Lybrand L.L.P., respectively.
SECTION 6.03. Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is further subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement that are qualified
as to materiality shall be true and correct, and the representations and
warranties of Parent and Sub set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement, and the Company shall have
received a certificate signed on behalf of Parent by the chief executive
officer and the chief financial officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing Date,
and the Company shall have received a certificate signed on behalf of
Parent by the chief executive officer and the chief financial officer of
Parent to such effect.
(c) Tax Opinion. On or prior to the date on which the Form S-4
becomes effective, the Company shall have received the opinion of Simpson
Thacher & Bartlett, counsel to the Company, based on certain letters
provided by Parent, Sub and the Company, respectively, in the forms set
forth in Schedules 6.03(c)(I) and (II) to this Agreement, to the effect
that (i) the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii) the
Company, Parent and Sub will each be a party to that reorganization within
the meaning of Section 368(b) of the Code, (iii) no income, gain or loss
will be recognized for Federal income tax purposes by either the Company or
Parent as a result of the consummation of the Merger, and (iv) no income,
gain or loss will be recognized for Federal income tax purposes by
shareholders of the Company upon the
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exchange in the Merger of shares of the Company solely for shares of Parent
(except to the extent of any cash received in lieu of fractional shares).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated, and the
Merger contemplated hereby may be abandoned, at any time prior to the Effective
Time, whether before or after approval of matters presented in connection with
the Merger by the shareholders of the Company:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if, upon a vote taken at a duly held Shareholders Meeting or
any adjournment thereof, any required approval of the shareholders of
the Company shall not have been obtained;
(ii) if the Merger shall not have been consummated on or before May
15, 1996, unless the failure to consummate the Merger is the result of a
breach of this Agreement by the party seeking to terminate this
Agreement; provided, however, that the passage of such period shall be
tolled for any part thereof during which any party shall be subject to a
nonfinal order, decree, ruling or action restraining, enjoining or
otherwise prohibiting the consummation of the Merger or the calling or
holding of the Shareholders Meeting; or
(iii) if any Governmental Entity of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger
and such order, decree, ruling or other action shall have become final
and nonappealable;
(c) by either Parent or Sub:
(i) if, prior to the Shareholders Meeting, a takeover proposal is
commenced, publicly proposed, publicly disclosed or communicated to the
Company (or the willingness of any person to make a takeover proposal is
publicly disclosed or communicated to the Company) and the Board of
Directors of the Company or any committee thereof shall have withdrawn
or modified in a manner adverse to Parent its approval or recommendation
of the Merger or this Agreement, or approved or recommended any takeover
proposal, or resolved to take any of the foregoing actions; or
(ii) if the Company shall have entered into any agreement with
respect to any superior proposal in accordance with Section 4.02(b); or
(d) by the Company in connection with entering into a definitive
agreement in accordance with Section 4.02(b) or Section 4.02(e), as
applicable, provided it has complied with all provisions thereof, including
the notice provisions therein, and that it makes simultaneous payment of
the Expenses and Termination Fee to the extent required hereunder.
(e) by Parent at any time during the period from November 12, 1995
until 6:00 p.m. (New York City time) on January 22, 1996 (or such earlier
date or time elected by Parent pursuant to Section 4.02(e) or Section
4.02(f)) (such period, the "Termination Period"), if Parent in its sole
judgment determines, based on its due diligence review of the Company, that
it is inadvisable to proceed with the Merger.
SECTION 7.02. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of the first sentence of Section 3.01(p), the second sentence of
Section 5.06(c), Section 5.11, this Section 7.02 and Article VIII and except to
the extent that such termination results from the wilful and material breach by
a party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
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SECTION 7.03. Amendment. This Agreement may be amended by the parties
hereto at any time before or after any required approval of matters presented in
connection with the Merger by the shareholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such shareholders without the further approval
of such shareholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) subject to the proviso of Section 7.03, waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 8.02. Notices. Except as otherwise provided in Section 4.02(f),
all notices, requests, claims, demands and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Attention: Joseph S. Orban, Esq.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Robert A. Kindler, Esq.
(b) if to the Company, to
Cordis Corporation
5200 Blue Lagoon Drive, Suite 200
Miami, FL 33126
Attention: Ana Maria Gonzalez, Esq.
27
<PAGE> 82
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Charles I. Cogut, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "knowledge" of any person means actual knowledge of the directors
and executive officers of such person;
(c) "material adverse change" or "material adverse effect" means, when
used in connection with the Company or Parent, any change or effect that is
materially adverse to the business, properties, assets, financial condition
or results of operations of such party and its subsidiaries taken as a
whole;
(d) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(e) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board
of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person;
(f) "superior proposal" has the meaning assigned thereto in Section
4.02; and
(g) "takeover proposal" has the meaning assigned thereto in Section
4.02.
SECTION 8.04. Interpretation. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 8.05. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the Confidentiality Agreement, (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this Agreement
and the Confidentiality Agreement and (b) except for the provisions of Article
II and Section 5.10, are not intended to confer upon any person other than the
parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct wholly owned corporate subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
28
<PAGE> 83
SECTION 8.09. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Florida or the State of New York or in Florida state
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal court located in the State of
Florida or the State of New York or any Florida state court in the event any
dispute arises out of this Agreement or the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this Agreement or the
transactions contemplated by this Agreement in any court other than a Federal
court sitting in the State of Florida or the State of New York or a Florida
state court.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
JOHNSON & JOHNSON
By /s/ ROBERT N. WILSON
-----------------------------
Name: Robert N. Wilson
Title: Vice Chairman
JNJ MERGER CORP.
By /s/ JOSEPH S. ORBAN
-----------------------------
Name: Joseph S. Orban
Title: President
CORDIS CORPORATION
By /s/ ROBERT C. STRAUSS
-----------------------------
Name: Robert C. Strauss
Title: Chairman, President and
Chief Executive Officer
29
<PAGE> 84
EXHIBIT A
FORM OF COMPANY AFFILIATE LETTER
Dear Sirs:
The undersigned, a holder of shares of Common Stock, par value $1.00 per
share ("Company Common Stock"), of CORDIS CORPORATION, a Florida corporation
(the "Company"), is entitled to receive in connection with the merger (the
"Merger") of JNJ Merger Corp. with and into the Company, securities (the "Parent
Securities") of Johnson & Johnson, a New Jersey corporation ("Parent"),
including upon the exercise of employee stock options being assumed by Parent.
The undersigned acknowledges that the undersigned may be deemed an "affiliate"
of the Company within the meaning of Rule 145 ("Rule 145") promulgated under the
Securities Act of 1933 (the "Act") by the Securities and Exchange Commission
(the "SEC"), and may be deemed an "affiliate" of the Company for purposes of
qualifying the Merger for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations, although nothing contained herein should be construed as an
admission of either such fact.
If in fact the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer the Parent Securities received
by the undersigned in connection with the Merger may be restricted unless such
transaction is registered under the Act or an exemption from such registration
is available. The undersigned understands that such exemptions are limited and
the undersigned has obtained advice of counsel as to the nature and conditions
of such exemptions, including information with respect to the applicability to
the sale of such securities of Rules 144 and 145(d) promulgated under the Act.
The undersigned understands that Parent will not be required to maintain the
effectiveness of any registration statement under the Act for the purposes of
resale of Parent Securities by the undersigned.
The undersigned hereby represents to and covenants with Parent that the
undersigned will not sell, assign or transfer any of the Parent Securities
received by the undersigned in connection with the Merger except (i) pursuant to
an effective registration statement under the Act, (ii) in conformity with the
volume and other limitations of Rule 145 or (iii) in a transaction which, in the
opinion of the general counsel of Parent or other counsel reasonably
satisfactory to Parent or as described in a "no-action" or interpretive letter
from the Staff of the SEC, is not required to be registered under the Act;
provided, however, that in any such case, such sale, assignment or transfer
shall only be permitted if, in the opinion of counsel of Parent, such
transaction would not have, directly or indirectly, any adverse consequences for
either Parent or Sub with respect to the treatment of the Merger for tax
purposes.
The undersigned hereby further represents to and covenants with Parent that
the undersigned has not, within the preceding 30 days, sold, transferred or
otherwise disposed of any shares of Company Common Stock held by the undersigned
and that the undersigned will not sell, transfer or otherwise dispose of any
Parent Securities received by the undersigned in the Merger until after such
time as results covering at least 30 days of combined operations of the Company
and Parent have been published by Parent, in the form of a quarterly earnings
report, an effective registration statement filed with the SEC, a report to the
SEC on Form 10-K, 10-Q or 8-K, or any other public filing or announcement which
includes such combined results of operations.
In the event of a sale or other disposition by the undersigned of Parent
Securities pursuant to Rule 145, the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto or other evidence reasonably satisfactory to Parent. The
undersigned understands that Parent may instruct its transfer agent to withhold
the transfer of any Parent Securities disposed of by the undersigned, but that,
provided such transfer is not prohibited by any other provision of this letter
agreement, upon receipt of such evidence of compliance, the transfer agent shall
effectuate the transfer of the Parent Securities sold as indicated in such
evidence.
The undersigned acknowledges and agrees that the legends set forth below
will be placed on certificates representing Parent Securities received by the
undersigned in connection with the Merger or held by a
30
<PAGE> 85
transferee thereof, which legends will be removed by delivery of substitute
certificates upon receipt of a "no-action" letter from the staff of the SEC or
an opinion in form and substance reasonably satisfactory to Parent to the effect
that such legends are no longer required for purposes of the Act, if at such
time such legends are no longer required for purposes of the applicable
provisions of the fourth paragraph of this letter agreement.
There will be placed on the certificates for the Parent Securities issued
to the undersigned, or any substitutions therefor, a legend stating in
substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is being accounted for as a pooling of
interests, in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have been acquired by the holder
not with a view to, or for resale in connection with, any distribution
thereof within the meaning of the Securities Act of 1933. The shares may
not be sold, pledged or otherwise transferred, nor may the owner thereof
reduce the owner's risk relative thereto in any other way, (i) until such
time as Johnson & Johnson shall have published financial results covering
at least 30 days of combined operations after [Closing Date] and (ii)
except in accordance with an exemption from the registration requirement of
the Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirement hereof and the limitations imposed
upon the distribution, sale, transfer of other disposition of Parent Securities
and (ii) the receipt by Parent of this letter is an inducement and a condition
to Parent's obligations to consummate the Merger.
Very truly yours,
[ ]
[ADDRESS]
Dated:
31
<PAGE> 86
ANNEX I
TO EXHIBIT A
[Name] [Date]
On , the undersigned sold the securities ("Securities") of
Johnson & Johnson ("Parent") described below in the space provided for that
purpose (the "Securities"). The Securities were received by the undersigned in
connection with the merger of JNJ Merger Corp. with and into Cordis Corporation.
Based upon the most recent report or statement filed by Parent with the
Securities and Exchange Commission, the Securities sold by the undersigned were
within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Act or in
transactions directly with a "market maker" as that term is defined in Section
3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned
further represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the undersigned has not
made any payment in connection with the offer or sale of the Securities to any
person other than to the broker who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of securities]
32
<PAGE> 87
ANNEX 2
MORGAN STANLEY
MORGAN STANLEY & CO.
INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-1000
January 24, 1996
Board of Directors
Cordis Corporation
5200 Blue Lagoon Drive
Miami, FL 33126
Members of the Board of Directors:
We understand that Cordis Corporation ("Cordis" or the "Company"), Johnson
& Johnson ("J&J") and JNJ Merger Corp., a wholly owned subsidiary of J&J
("Merger Sub") have entered into an Agreement and Plan of Merger, dated as of
November 12, 1995, as amended (the "Merger Agreement"), which provides for,
among other things, the merger of the Merger Sub into the Company, or the
Company into the Merger Sub, at the election of J&J (the "Merger"). Pursuant to
the Merger, the Company will become a wholly-owned subsidiary of J&J and each
issued and outstanding share of common stock, par value $1.00 per share ("Common
Stock") of the Company, other than shares owned by J&J or the Company or any
subsidiary of J&J, will be converted into the right to receive a certain number
of shares of common stock, par value $1.00 per share ("J&J Common Stock") of
J&J, equal to the amount obtained by dividing $109.00 by the average per share
closing price of J&J Common Stock for the 10 trading days immediately preceding
the closing date of the Merger. The terms and conditions of the Merger are more
fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration to be
received by the holders of Common Stock other than J&J and its affiliates
prusuant to the Merger Agreement is fair from a financial point of view to such
holders.
For purposes of the opinion set forth herein, we have:
(i) analyzed certain publicly available financial statements and
other information regarding the Company and J&J, respectively;
(ii) analyzed certain internal financial statements and other
financial and operating data concerning the Company prepared
by the management of the Company;
(iii) analyzed certain financial projections prepared by the
management of the Company;
(iv) discussed the past and current operations and financial
condition and the prospects of the Company with senior
executives of the Company;
(v) discussed the past and current operations and financial
condition and the prospects of J&J with senior management of
J&J and analyzed the impact of the Merger on J&J's earnings
per share, consolidated capitalization and financial ratios;
(vi) reviewed the reported prices and trading activity for the
Common Stock and the J&J Common Stock;
<PAGE> 88
MORGAN STANLEY
(vii) compared the financial performance of the Company and the
prices and trading activity of the Common Stock and the J&J
Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(viii) reviewed the financial terms, to the extent publicly
available, of certain comparable acquisition transactions;
(ix) responded to inquiries from certain third parties concerning
a possible transaction involving the Company;
(x) reviewed the Merger Agreement and certain related documents;
and
(xi) performed such other analyses and examinations and considered
such other factors as we have deemed appropriate.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgements of the Company's management and others as to
the future financial performance of the Company. In addition, we have not made
an independent evaluation or appraisal of the assets of the Company, nor have we
been furnished with any such appraisals. Our opinion is necessarily based on
economic, market and other conditions as in effect on, and the information made
available to us as of, the date hereof.
We note that, while we have responded to inquiries from certain third
parties concerning a possible transaction involving the Company, we were not
authorized to, and we did not, solicit indications of interest from third
parties other than J&J with respect to engaging in an acquisition or other
possible transaction involving the Company.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent.
We have acted as financial advisor to the Board of Directors of the Company
in connection with this matter and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory services to the Company and J&J and have received fees for
the rendering of these services.
Based on the foregoing, we are of the opinion on the date hereof that the
consideration to be received by the holders of Common Stock other than J&J and
its affiliates pursuant to the Merger Agreement is fair from a financial point
of view to such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ PETER N. CRNKOVICH
------------------------------------------
Peter N. Crnkovich
Managing Director
<PAGE> 89
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The New Jersey Business Corporation Act provides that a New Jersey
corporation has the power to indemnify a director or officer against his or her
expenses and liabilities in connection with any proceeding involving the
director or officer by reason of his or her being or having been such a director
or officer, other than a proceeding by or in the right of the corporation, if
such a director or officer acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation; and with respect to any criminal proceeding, such director or
officer had no reasonable cause to believe his or her conduct was unlawful.
The indemnification and advancement of expenses shall not exclude any other
rights, including the right to be indemnified against liabilities and expenses
incurred in proceedings by or in the right of the corporation, to which a
director or officer may be entitled under a certificate of incorporation,
by-law, agreement, vote of shareholders, or otherwise; provided, that no
indemnification shall be made to or on behalf of a director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that his or her acts or omissions (a) were in breach of his or her
duty of loyalty to the corporation or its shareholders, (b) were not in good
faith or involved a knowing violation of law or (c) resulted in receipt by the
director or officer of an improper personal benefit.
The Registrant's Restated Certificate of Incorporation provides that, to
the full extent that the laws of the State of New Jersey permit the limitation
or elimination of the liability of directors and officers, no director or
officer of the Registrant shall be personally liable to the Registrant or its
shareholders for damages for breach of any duty owed to the Registrant or its
shareholders.
The By-laws of the Registrant provide that to the full extent permitted by
the laws of the State of New Jersey, the Registrant shall indemnify any person
(an "Indemnitee") who was or is involved in any manner (including, without
limitation, as a party or witness) in any threatened, pending or completed
investigation, claim, action, suit or proceeding, whether civil, criminal,
administrative, arbitrative, legislative or investigative (including,without
limitation, any action, suit or proceeding by or in the right of the Registrant
to procure a judgment in its favor) (a "Proceeding"), or who is threatened with
being so involved, by reason of the fact that he or she is or was a director or
officer of the Registrant or, while serving as a director or officer of the
Registrant, is or was at the request of the Registrant also serving as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (including, without limitation, any employee
benefit plan), against all expenses (including attorneys' fees), judgments,
fines, penalties, excise taxes and amounts paid in settlement actually and
reasonably incurred by the Indemnitee in connection with such Proceeding,
provided that, there shall be no indemnification hereunder with respect to any
settlement or other nonadjudicated disposition of any threatened or pending
Proceeding unless the Registrant has given its prior consent to such settlement
or disposition. The right of indemnification created by the By-laws shall be a
contract right enforceable by an Indemnitee against the Registrant, and it shall
not be exclusive of any other rights to which an Indemnitee may otherwise be
entitled. These provisions of the By-laws shall inure to the benefit of the
heirs and legal representatives of an Indemnitee and shall be applicable to
Proceedings commenced or continuing after the adoption of the By-laws, whether
arising from acts or omissions occurring before or after such adoption. No
amendment, alteration, change, addition or repeal of or to the By-laws shall
deprive any Indemnitee of any rights under the By-laws with respect to any act
or omission of such Indemnitee occurring prior to such amendment, alteration,
change, addition or repeal.
The Registrant enters into indemnification agreements with its directors
and officers and enters into insurance agreements on its own behalf. The
indemnification agreements provide that the Registrant agrees to hold harmless
and indemnify its directors and officers to the fullest extent authorized or
permitted by the NJBCA, or any other applicable law, or by any amendment thereof
or other statutory provisions authorizing or permitting such indemnification
that is adopted after the date hereof. Without limiting the generality of the
foregoing, the Registrant agrees to hold harmless and indemnify its directors
and officers to the fullest extent
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<PAGE> 90
permitted by applicable law against any and all expenses, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by its directors and
officers in connection with the defense of any present or future threatened,
pending, or completed claim, action, suit, or proceeding by reason of the fact
that they were, are, shall be, or shall have been a director or officer of the
Registrant, or are or were serving, shall serve, or shall have served, at the
request of the Registrant, as a director or officer of another corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<S> <C> <C>
2 -- Agreement and Plan of Merger (attached as Annex 1 to the Proxy
Statement/Prospectus).
3.1 -- Restated Certificate of Incorporation of the Registrant (incorporated by reference
to Registrant's Form 10-K Annual Report for the year ended January 3, 1993).
3.2 -- By-laws of the Registrant (incorporated by reference to Registrant's Form 10-K
Annual Report for the year ended January 3, 1993).
3.3 -- Certificate of Amendment to the Certificate of Incorporation of the Registrant
dated April 23, 1992, (incorporated by reference to Registrant's Form 10-K Annual
Report for the year ended January 3, 1993).
5 -- Opinion of Joseph S. Orban, Esq. regarding the legality of the J&J Common Stock.
8.1 -- Opinion of Simpson Thacher & Bartlett regarding certain tax matters.
21 -- Subsidiaries of Registrant.
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2 -- Consent of Deloitte & Touche LLP.
23.3 -- Consent of Joseph S. Orban, Esq. (included in Exhibit 5).
23.4 -- Consent of Simpson Thacher & Bartlett (included in Exhibit 8.1).
23.5 -- Consent of Morgan Stanley & Co. Incorporated.
24 -- Power of Attorney (included on page II-4).
99 -- Proxy Card.
</TABLE>
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
(b) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
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<PAGE> 91
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof;
(c) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(d) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof;
(e) that prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this
Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the Registrant undertakes
that such reoffering prospectus will contain the information called for by
Form S-4 with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of Form S-4;
(f) that every prospectus (i) that is filed pursuant to paragraph (e)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the Registration Statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(g) insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue;
(h) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request; and
(i) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
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<PAGE> 92
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN NEW BRUNSWICK, STATE OF NEW JERSEY,
ON THE 23RD OF JANUARY, 1996.
JOHNSON & JOHNSON
By /s/ R.S. Larsen
-------------------------------
Name: R.S. Larsen
Title: Chairman, Board of
Directors and Chief
Executive Officer
POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE APPEARS BELOW CONSTITUTES AND APPOINTS PETER S.
GALLOWAY, JAMES R. HILTON AND JOSEPH S. ORBAN, AND EACH OF THEM ACTING
INDIVIDUALLY, HIS/HER TRUE AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, WITH FULL
POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM/HER AND IN HIS/HER NAME, PLACE
AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS (INCLUDING
POST-EFFECTIVE AMENDMENTS) TO THIS REGISTRATION STATEMENT AND TO FILE THE SAME,
WITH ALL EXHIBITS THERETO, AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS, AND EACH OF THEM ACTING INDIVIDUALLY, FULL POWER AND AUTHORITY TO DO AND
PERFORM EACH AND EVERY ACT AND THING NECESSARY OR ADVISABLE TO BE DONE IN AND
ABOUT THE PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE/SHE MIGHT OR
COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID
ATTORNEYS-IN-FACT AND AGENTS, OR ANY OF THEM, OR THEIR OR HIS/HER SUBSTITUTE OR
SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ R. S. LARSEN Chairman, Board of Directors and January 23, 1996
- -------------------------------------- Chief Executive Officer and
(R. S. LARSEN) Director (Principal Executive
Officer)
/s/ C. H. JOHNSON Vice President, Finance and January 23, 1996
- -------------------------------------- Director (Principal Financial
(C. H. JOHNSON) Officer)
/s/ J. H. HEISEN Controller January 23, 1996
- --------------------------------------
(J.H. HEISEN)
/s/ J. W. BLACK Director January 23, 1996
- --------------------------------------
(J. W. BLACK)
/s/ G. N. BURROW Director January 23, 1996
- --------------------------------------
(G. N. BURROW)
/s/ J. G. COONEY Director January 23, 1996
- --------------------------------------
(J. G. COONEY)
/s/ J. G. CULLEN Director January 23, 1996
- --------------------------------------
(J. G. CULLEN)
/s/ P. M. HAWLEY Director January 23, 1996
- --------------------------------------
(P. M. HAWLEY)
</TABLE>
II-4
<PAGE> 93
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ A. D. JORDAN Director January 23, 1996
------------------------------------
(A. D. JORDAN)
/s/ A. G. LANGBO Director January 23, 1996
------------------------------------
(A. G. LANGBO)
/s/ J. S. MAYO Director January 23, 1996
------------------------------------
(J. S. MAYO)
/s/ T. S. MURPHY Director January 23, 1996
------------------------------------
(T. S. MURPHY)
/s/ P. J. RIZZO Director January 23, 1996
------------------------------------
(P. J. RIZZO)
/s/ M. F. SINGER Director January 23, 1996
------------------------------------
(M. F. SINGER)
/s/ R. B. SMITH Director January 23, 1996
------------------------------------
(R. B. SMITH)
/s/ R. N. WILSON Director January 23, 1996
------------------------------------
(R. N. WILSON)
</TABLE>
II-5
<PAGE> 94
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------ ------------
<S> <C> <C> <C>
2 -- Agreement and Plan of Merger (attached as Annex 1 to the Proxy
Statement/Prospectus)...................................................
3.1 -- Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Registrant's Form 10-K Annual Report for the year ended
January 3, 1993)........................................................
3.2 -- By-laws of the Registrant (incorporated by reference to Registrant's
Form 10-K Annual Report for the year ended January 3, 1993).............
3.3 -- Certificate of Amendment to the Certificate of Incorporation of the
Registrant dated April 23, 1992, (incorporated by reference to
Registrant's Form 10-K Annual Report for the year ended January 3,
1993)...................................................................
5 -- Opinion of Joseph S. Orban, Esq. regarding the legality of the
J&J Common Stock........................................................
8.1 -- Opinion of Simpson Thacher & Bartlett regarding certain tax matters.....
21 -- Subsidiaries of Registrant..............................................
23.1 -- Consent of Coopers & Lybrand L.L.P. ....................................
23.2 -- Consent of Deloitte & Touche LLP........................................
23.3 -- Consent of Joseph S. Orban, Esq. (included in Exhibit 5)................
23.4 -- Consent of Simpson Thacher & Bartlett (included in Exhibit 8.1).........
23.5 -- Consent of Morgan Stanley & Co. Incorporated............................
24 -- Power of Attorney (included on page II-4)...............................
99 -- Proxy Card..............................................................
</TABLE>
<PAGE> 1
EXHIBIT 5
January 23, 1996
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Dear Sirs and Mesdames:
I am familiar with the Form S-4 registration statement being filed by the
company with the Securities and Exchange Commission under the Securities Act of
1933 relating to the proposed issuance of up to 25,492,440 shares of the
company's common stock in connection with the merger of a wholly-owned
subsidiary of the company into Cordis Corporation pursuant to the terms of the
November 12, 1995 merger agreement among the company, its subsidiary and Cordis
Corporation.
I have reviewed the company's restated certificate of incorporation and
by-laws and such other corporate records of the company and documents and
certificates of public officials and others as I have deemed necessary as a
basis for the opinion hereinafter expressed.
Based on the foregoing and having regard for such legal considerations as I
deem relevant, I am of the opinion that the shares of common stock covered by
the registration statement, when delivered in exchange for shares of Cordis
Corporation common stock pursuant to the merger agreement, will be duly
authorized, validly issued, fully paid and nonassessable.
I hereby consent to the use of my name under the caption "Legal Matters" in
the proxy statement-prospectus constituting a part of the registration statement
and to the use of this opinion as an exhibit to the registration statement.
Very truly yours,
/s/ JOSEPH S. ORBAN
--------------------------------------
Joseph S. Orban
Associate General Counsel
<PAGE> 1
EXHIBIT 8.1
[SIMPSON THACHER & BARTLETT LETTERHEAD]
January 23, 1996
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Ladies and Gentlemen:
This opinion is delivered to you in connection with the Registration
Statement on Form S-4 of Johnson & Johnson filed with the Securities and
Exchange Commission on January 23, 1996 (the "Registration Statement"), under
the Securities Act of 1933, as amended.
We have examined the Registration Statement and such other documents as we
have deemed relevant and necessary as a basis for the opinion hereinafter set
forth. In addition, we have made such other and further investigations as we
have deemed relevant and necessary as a basis for the opinions hereinafter set
forth.
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies, and the authenticity of the
originals of such latter documents.
Based on the foregoing, and subject to the qualifications and limitations
stated herein, we hereby advise you that in our opinion the statements made in
the Registration Statement under the caption "Certain United States Federal
Income Tax Consequences", insofar as they purport to constitute summaries of
matters of United States federal tax law and regulations or legal conclusions
with respect thereto, constitute accurate summaries of the matters described
therein in all material respects.
We are members of the Bar of the State of New York, and we do not express
any opinion herein concerning any law other than the law of the State of New
York and the federal law of the United States.
We consent to the filing of this opinion as Exhibit 8.1 to the Registration
Statement and to the use of our name under the caption "Certain Federal Income
Tax Consequences."
Very truly yours,
/s/ SIMPSON THACHER & BARTLETT
--------------------------------------
SIMPSON THACHER & BARTLETT
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
Johnson & Johnson, a New Jersey corporation, has the domestic and
international subsidiaries shown below. Certain domestic subsidiaries and
international subsidiaries are not named because they are not significant in the
aggregate. Johnson & Johnson has no parent.
<TABLE>
<CAPTION>
JURISDICTION OF
NAME OF SUBSIDIARY ORGANIZATION
------------------ ---------------------
<S> <C>
Domestic Subsidiaries:
Ethicon Endo Surgery, Inc. ..................................... Ohio
Ethicon, Inc. .................................................. Ohio
Iolab Corporation............................................... California
Janssen Pharmaceutica Inc. ..................................... New Jersey
Johnson & Johnson Clincal Diagnostics, Inc. .................... New York
Johnson & Johnson Consumer Products, Inc. ...................... New Jersey
Johnson & Johnson Development Corporation....................... New Jersey
Johnson & Johnson Finance Corporation........................... New Jersey
Johnson & Johnson Health Care Systems, Inc. .................... New Jersey
Johnson & Johnson International................................. New Jersey
Johnson & Johnson Japan Inc. ................................... New Jersey
Johnson & Johnson Medical, Inc. ................................ New Jersey
Johnson & Johnson -- Merck Consumer Pharmaceuticals Co. ........ New Jersey
Johnson & Johnson (Middle East) Inc. ........................... New Jersey
Johnson & Johnson Professional, Inc. ........................... New Jersey
Johnson & Johnson (Russia), Inc. ............................... New Jersey
Johnson & Johnson Slovakia, Ltd. ............................... New Jersey
Johnson & Johnson Vision Products, Inc. ........................ Florida
Johnson & Johnson S.E., Inc. ................................... New Jersey
JJHC, Inc. ..................................................... Delaware
LifeScan, Inc. ................................................. California
McNEIL-PPC, Inc. ............................................... New Jersey
McNeilab, Inc. ................................................. Pennsylvania
Mitek Surgical Products, Inc. .................................. Delaware
Neutrogena Corporation.......................................... Delaware
Noramco, Inc. .................................................. Georgia
Ortho Biotech Inc. ............................................. New Jersey
Ortho Diagnostic Systems Inc. .................................. New Jersey
Ortho Pharmaceutical Corporation................................ Delaware
Site Microsurgical Systems, Inc. ............................... Pennsylvania
Therakos, Inc. ................................................. Florida
International Subsidiaries:
Chicopee B.V. .................................................. Netherlands
Cilag AB........................................................ Sweden
Cilag AG........................................................ Switzerland
Cilag AG International.......................................... Switzerland
Cilag AG Pharmaceuticals........................................ Switzerland
Cilag de Mexico, S.A. de C.V. .................................. Mexico
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
JURISDICTION OF
NAME OF SUBSIDIARY ORGANIZATION
------------------ ---------------
<S> <C>
Cilag Farmaceutica Ltda. ....................................... Brazil
Cilag Ges.m.b.H. ............................................... Austria
Cilag G.m.b.H. ................................................. Germany
Cilag Limited................................................... England
Cilag-Medicamenta, Limitada..................................... Portugal
Cilag N.V. ..................................................... Belgium
Cilag Pharmaceutical K.K. ...................................... Japan
Cilag S.A.R.L. ................................................. France
Cilag S.p.A. ................................................... Italy
Dial S.A. ...................................................... France
Dr. Molter G.m.b.H. ............................................ Germany
Ethicon Endo-Surgery (Europe) G.m.b.H. ......................... Germany
Ethicon G.m.b.H. & Co. KG....................................... Germany
Ethicon Ltd. ................................................... Scotland
Ethicon S.p.A. ................................................. Italy
Ethnor Del Istmo S.A. .......................................... Panama
Ethnor Limited.................................................. India
Ethnor (Proprietary) Limited.................................... South Africa
Ethnor S.A. .................................................... France
Greiter AG...................................................... Switzerland
Greiter GmbH.................................................... Austria
Greiter Distribution AG......................................... Switzerland
Greiter (International) AG...................................... Switzerland
Health Care Products S.A. ...................................... Greece
Janssen Biotech N.V. ........................................... Belgium
Janssen-Cilag Pty. Limited...................................... Australia
Janssen Farmaceutica Ltda....................................... Brazil
Janssen Farmaceutica Limitada................................... Chile
Janssen Farmaceutica Portugal, Limitada......................... Portugal
Janssen Farmaceutica C.A. ...................................... Venezuela
Janssen Farmaceutica S.A. ...................................... Argentina
Janssen Farmaceutica S.A. ...................................... Spain
Janssen Farmaceutica S.A. ...................................... Colombia
Janssen Farmaceutica S.A. de C.V. .............................. Mexico
Janssen Farmaceutica S.p.A. .................................... Italy
Janssen G.m.b.H. ............................................... Germany
Janssen International N.V. ..................................... Belgium
Janssen K.K. ................................................... Japan
Janssen Korea, Ltd. ............................................ Korea
Janssen-Kyowa Co., Ltd. ........................................ Japan
Janssen Pharma AB............................................... Sweden
Janssenpharma A/S............................................... Denmark
Janssen Pharmaceutica AG........................................ Switzerland
Janssen Pharmaceutica B.V. ..................................... Netherlands
Janssen Pharmaceutica G.m.b.H................................... Austria
Janssen Pharmaceutica Inc. ..................................... Canada
Janssen Pharmaceutica Limited................................... Thailand
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
JURISDICTION OF
NAME OF SUBSIDIARY ORGANIZATION
-------------------- ---------------
<S> <C>
Janssen Pharmaceutica N.V. ..................................... Belgium
Janssen Pharmaceutica (Proprietary) Limited..................... South Africa
Janssen Pharmaceutica S.A.C.I. ................................. Greece
Janssen Pharmaceutical Limited.................................. England
Janssen Pharmaceutical Limited.................................. Ireland
Janssen Products, Inc. ......................................... Puerto Rico
Johnson & Johnson AB............................................ Sweden
Johnson & Johnson AG............................................ Switzerland
Johnson & Johnson AS............................................ Denmark
Johnson & Johnson S.A. de C.V. ................................. Mexico
Johnson & Johnson (Angola), Limitada............................ Angola
Johnson & Johnson de Argentina, S.A.C.e.I. ..................... Argentina
Johnson & Johnson China, Ltd. .................................. China
Johnson & Johnson Clinical Diagnostics (Europe) SA.............. France
Johnson & Johnson Clinical Diagnostics GmbH..................... Germany
Johnson & Johnson Clinical Diagnostics Ltd. .................... England
Johnson & Johnson Clinical Diagnostics SA....................... France
Johnson & Johnson Clinical Diagnostics SpA...................... Italy
Johnson & Johnson de Chile S.A. ................................ Chile
Johnson & Johnson de Colombia S.A. ............................. Colombia
Johnson & Johnson de Costa Rica S.A. ........................... Costa Rica
Johnson & Johnson del Ecuador S.A. ............................. Ecuador
Johnson & Johnson de Mexico S.A. de C.V. ....................... Mexico
Johnson & Johnson de Uruguay S.A. .............................. Uruguay
Johnson & Johnson de Venezuela, S.A. ........................... Venezuela
Johnson & Johnson (Dominicana), C. por A. ...................... Dominican Republic
Johnson & Johnson (Fiji) Limited................................ Fiji
Johnson & Johnson/Gaba B.V. .................................... Netherlands
Johnson & Johnson G.m.b.H. ..................................... Austria
Johnson & Johnson G.m.b.H. ..................................... Germany
Johnson & Johnson Guatemala, S.A. .............................. Guatemala
Johnson & Johnson Hellas S.A. .................................. Greece
Johnson & Johnson Hemisferica S.A. ............................. Puerto Rico
Johnson & Johnson (Hong Kong) Limited........................... Hong Kong
Johnson & Johnson Inc. ......................................... Canada
Johnson & Johnson Industria e Comercio Ltda..................... Brazil
Johnson & Johnson (Ireland) Limited............................. Ireland
Johnson & Johnson (Jamaica) Limited............................. Jamaica
Johnson & Johnson Japan Diagnostics Ltd. ....................... Japan
Johnson & Johnson (Kenya) Limited............................... Kenya
Johnson & Johnson Korea Ltd. ................................... Korea
Johnson & Johnson Kft. ......................................... Hungary
Johnson & Johnson K.K. ......................................... Japan
Johnson & Johnson Limitada...................................... Portugal
Johnson & Johnson Limited....................................... England
Johnson & Johnson Limited....................................... India
Johnson & Johnson Ltd. ......................................... Russia
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
JURISDICTION OF
NAME OF SUBSIDIARY ORGANIZATION
------------------- ---------------
<S> <C>
Johnson & Johnson Medical B.V. ................................. Netherlands
Johnson & Johnson Medical G.m.b.H. ............................. Germany
Johnson & Johnson Medical K.K. ................................. Japan
Johnson & Johnson Medical Korea Limited......................... Korea
Johnson & Johnson Medial Mexico S.A. de C.V. ................... Mexico
Johnson & Johnson Medical Ltd. ................................. England
Johnson & Johnson Medical Mfg. SDN. BHD......................... Malaysia
Johnson & Johnson Medical Products, Inc. ....................... Canada
Johnson & Johnson Medical Pty. Ltd. ............................ Australia
Johnson & Johnson Medical S.A. ................................. Argentina
Johnson & Johnson Medical S.A.R.L. ............................. France
Johnson & Johnson Morocco S.A. ................................. Morocco
Johnson & Johnson (New Zealand) Limited......................... New Zealand
Johnson & Johnson Pacific Pty. Ltd. ............................ Australia
Johnson & Johnson Pakistan (Private) Limited.................... Pakistan
Johnson & Johnson Panama, S.A. ................................. Panama
Johnson & Johnson (Philippines), Inc. .......................... Philippines
Johnson & Johnson Poland, Inc. Sp. z o.o. ...................... Poland
Johnson & Johnson (Private) Limited............................. Zimbabwe
Johnson & Johnson Produtos Profissionais Ltda. ................. Brazil
Johnson & Johnson Professional Products Ltd. ................... England
Johnson & Johnson Professional Products GmbH.................... Germany
Johnson & Johnson Professional Products (Pty.) Ltd. ............ South Africa
Johnson & Johnson (Proprietary) Limited......................... South Africa
Johnson & Johnson Pte. Ltd. .................................... Singapore
Johnson & Johnson Pty. Limited ................................. Australia
Johnson & Johnson Research Pty. Limited......................... Australia
Johnson & Johnson S.A. ......................................... France
Johnson & Johnson S.A. ......................................... Spain
Johnson & Johnson Sante S.A. ................................... France
Johnson & Johnson SDN. BHD ..................................... Malaysia
Johnson & Johnson S.p.A. ....................................... Italy
Johnson & Johnson Spol.e.r.o. .................................. Czech Republic
Johnson & Johnson Taiwan Ltd. .................................. Taiwan
Johnson & Johnson (Thailand) Limited............................ Thailand
Johnson & Johnson (Trinidad) Limited............................ Trinidad
Johnson & Johnson Vision Products AB............................ Sweden
Johnson & Johnson (Zambia) Limited.............................. Zambia
Laboratories RoC (U.K.) Ltd. ................................... England
Laboratoires Janssen S.A. ...................................... France
Laboratoires Polive S.N.C. ..................................... France
Lifescan Canada Ltd. ........................................... Canada
Medos S.A. ..................................................... Switzerland
Neutrogena Corp. S.A.R.L. ...................................... France
Neutrogena Provence S.A.R.L. ................................... France
Nihon RoC K.K. ................................................. Japan
Ortho Diagnostic Systems G.m.b.H. .............................. Germany
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
JURISDICTION OF
NAME OF SUBSIDIARY ORGANIZATION
------------------ ---------------------
<S> <C>
Ortho Diagnostic Systems K.K. .................................. Japan
Ortho Diagnostic Systems Limited................................ England
Ortho Diagnostic Systems N.V. .................................. Belgium
Ortho Diagnostic Systems S.A. .................................. France
Ortho Diagnostic Systems S.p.A. ................................ Italy
Ortho-McNeil Inc. .............................................. Canada
Penaten G.m.b.H. ............................................... Germany
Penaten Korea Limited........................................... Korea
Penaten Pty. Limited............................................ Australia
Pharma Argentina S.A. .......................................... Argentina
P.T. Johnson & Johnson Indonesia................................ Indonesia
RoC G.m.b.H. ................................................... Germany
RoC S.A. ....................................................... France
RoC S.A./N.V. .................................................. Belgium
RoC S.p.A. ..................................................... Italy
RoC Laboratoires de Dermoestetica S.A. ......................... Spain
R.W. Johnson Pharmaceutical Research Institute.................. Switzerland
Shanghai Johnson & Johnson Ltd.................................. China
Surgikos, S.A. de C.V. ......................................... Mexico
Tasmanian Alkaloids Pty. Ltd. .................................. Australia
Taxandria Pharmaceutica B.V. ................................... Netherlands
Xian-Janssen Pharmaceutical Co. Limited......................... China
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-4 of our reports dated January 23, 1995, on our audits of the
consolidated financial statements and financial statement schedule of Johnson &
Johnson and subsidiaries, which are included or incorporated by reference in the
Annual Report of Johnson & Johnson and subsidiaries on Form 10-K for the fiscal
year ended January 1, 1995. We also consent to the reference to our firm under
the caption "Experts".
COOPERS & LYBRAND L.L.P.
New York, New York
January 23, 1996
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Johnson & Johnson on Form S-4 of our report relating to Cordis Corporation
dated August 11, 1995 (except for note 8, as to which the date is August 24,
1995) appearing in the Cordis Corporation Annual Report on Form 10-K for the
year ended June 30, 1995, and to the reference to us under the heading "Experts"
in this Registration Statement.
Deloitte & Touche LLP
Miami, Florida
January 22, 1996
<PAGE> 1
EXHIBIT 23.5
CONSENT OF MORGAN
STANLEY & CO. INCORPORATED
January 23, 1996
Cordis Corporation
5200 Blue Lagoon Drive
Miami, Florida 33126
Dear Sirs:
We hereby consent to the inclusion in the Registration Statement on Form
S-4 and the related proxy statement with respect to the proposed merger of JNJ
Merger Corp., a wholly owned subsidiary of Johnson & Johnson, with and into
Cordis Corporation, of our opinion letter appearing as Annex 2 to the
Prospectus/Proxy Statement which is a part of such Registration Statement, and
to the references of our firm name under the captions "SUMMARY -- The
Merger -- Opinion of Financial Advisor" and "THE MERGER -- Recommendation of the
Cordis Board and Reasons for the Merger" and "Opinion of Financial Advisor." In
giving such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended (the "Securities Act"), or the rules and regulations adopted by the
Securities and Exchange Commission thereunder (the "Securities Act Rules") nor
do we admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Securities Act
or the Securities Act Rules.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By /s/ PETER N. CRNKOVICH
------------------------------------
Name: Peter N. Crnkovich
Title: Managing Director
<PAGE> 1
EXHIBIT 99
CORDIS CORPORATION
SHAREHOLDER'S PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
CORDIS CORPORATION FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 23, 1996.
TO: CORDIS CORPORATION ("CORDIS")
I appoint Robert C. Strauss and Alfred J. Novak, individually and
together, as my proxies, with power of substitution, to vote all of my
shares of Cordis common stock, par value $1.00 per share, at the Special
Meeting of shareholders of Cordis to be held on Friday, February 23,
1996, at 9:00 a.m., and at any adjournment or postponement of the
meeting.
I HAVE FILLED IN THE APPROPRIATE BOXES ON THE OTHER SIDE OF THIS
CARD, BUT IN THE ABSENCE OF ANY INSTRUCTIONS FROM ME, MY PROXIES WILL
VOTE "FOR" ITEM 1. MY PROXIES MAY VOTE ACCORDING TO THEIR DISCRETION ON
ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE MEETING. I MAY
REVOKE THIS PROXY PRIOR TO ITS EXERCISE.
PLEASE SIGN AND DATE THE OTHER SIDE OF THIS CARD.
(Please fill in the appropriate boxes on the other side)
<PAGE> 2
(Continued from other side)
CORDIS CORPORATION
PLEASE MARK YOUR CHOICES LIKE THIS /X/ IN BLUE OR BLACK INK
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ITEM 1.
- ITEM NO. 1 -- Approval of the Agreement and Plan of Merger dated
as of November 12, 1995, as amended on December 27, 1995, among Johnson
& Johnson, JNJ Merger Corp. and Cordis.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
-----------------------------
Date
X
-----------------------------
Signature
X
-----------------------------
Signature
Please sign exactly as
name(s) appear(s) to the
left. Trustees, executors and
other fiduciaries should
indicate their capacity.
Shares held by corporations,
partnership, associations,
etc., should be signed by an
authorized person, giving
full title or authority. If
shares are held jointly, each
shareholder named should
sign. Date and promptly
return this card in the
envelope provided.
