<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 1997
REGISTRATION NO. 333-
================================================================================
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)
<TABLE>
<S> <C> <C>
NEW JERSEY 2844 22-1024240
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
PETER S. GALLOWAY, ESQ.
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933
(908) 524-0400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
ROBERT A. KINDLER, ESQ. CHRISTOPHER D. MITCHELL, ESQ.
CRAVATH, SWAINE & MOORE WILSON SONSINI GOODRICH & ROSATI
WORLDWIDE PLAZA 650 PAGE MILL ROAD
825 EIGHTH AVENUE PALO ALTO, CALIFORNIA 94304-1050
NEW YORK, NY 10019 (415) 493-9300
(212) 474-1000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the Merger referred to herein.
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
<TABLE>
<CAPTION>
==========================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED PER UNIT OFFERING PRICE FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per
share.................................. N/A(2) N/A(2) $310,547,457(3) $94,106(4)
==========================================================================================================
</TABLE>
(1) The Registration Statement relates to securities of the Registrant issuable
to holders of common stock of Biopsys Medical, Inc., a Delaware corporation
("Biopsys"), in the proposed merger of a wholly owned subsidiary of the
Registrant with and into Biopsys.
(2) Pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the
"Securities Act"), only the title of the class of securities to be
registered, the proposed maximum aggregate offering price for such class of
securities and the amount of registration fee need appear in the
"Calculation of Registration Fee" Table.
(3) Estimated solely for purposes of calculating the registration fee required
by Section 6(b) of the Securities Act and based upon the product of (a)
11,272,140, the maximum number of shares of Biopsys common stock
exchangeable in the Merger and (b) $27.55, the amount to which the number of
the Registrant's common stock exchanged in the transaction for each share of
Biopsys common stock shall be equal, based upon the average closing price of
the Registrant's common stock during the 20 full trading days preceding the
date of the last full trading day prior to the Special Meeting (as defined
in the Proxy Statement/Prospectus included in this Registration Statement).
(4) Pursuant to Rule 457(b) under the Securities Act, $60,493 of the
registration fee was paid on June 6, 1997 by the Registrant in connection
with the filing of preliminary proxy materials of Biopsys included herein.
------------------------
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
================================================================================
<PAGE> 2
(Biopsys Logo)
June 26, 1997
Dear Stockholder:
At our Special Meeting on July 30, 1997, you will be asked to vote upon the
approval and adoption of the Agreement and Plan of Merger dated as of May 21,
1997 (the "Merger Agreement"), among Johnson & Johnson ("J&J"), Palisades Merger
Corp., a wholly owned subsidiary of J&J ("Merger Sub"), and Biopsys Medical,
Inc. ("Biopsys") providing for the merger of Merger Sub with and into Biopsys
upon the terms and subject to the conditions of the Merger Agreement. The
foregoing proposal is described more fully in the accompanying Proxy
Statement/Prospectus.
After careful consideration, the Biopsys Board of Directors has unanimously
determined that the terms of the Merger Agreement and the transactions
contemplated thereby are fair to, and in the best interests of, Biopsys
stockholders. Accordingly, the Biopsys Board of Directors has unanimously
approved the Merger Agreement and unanimously recommends that the stockholders
of Biopsys vote FOR approval and adoption of the Merger Agreement. The approval
and adoption of the Merger Agreement requires the affirmative vote of holders of
at least a majority of the outstanding shares of common stock of Biopsys.
Pursuant to a stockholder agreement with J&J, certain affiliated stockholders of
Biopsys, holding approximately 33% of the outstanding shares of Biopsys common
stock, have agreed to, among other things, vote (or cause to be voted) their
shares of Biopsys common stock in favor of approval and adoption of the Merger
Agreement.
Stockholders are urged to review carefully the information contained in the
Proxy Statement/Prospectus prior to deciding how to vote their shares at the
Special Meeting.
Whether or not you expect to attend the Special Meeting in person, please
complete, sign and promptly return the enclosed proxy card in the enclosed
postage-prepaid envelope to assure representation of your shares. You may revoke
your proxy at any time before it has been voted, and if you attend the Special
Meeting you may vote in person, even if you previously returned your proxy card.
Your prompt cooperation will be greatly appreciated.
Sincerely,
/s/ STEVEN L. GEX
STEVEN L. GEX
President and Chief Executive Officer
<PAGE> 3
BIOPSYS MEDICAL, INC.
3 MORGAN
IRVINE, CALIFORNIA 92618
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 30, 1997
------------------------
June 26, 1997
TO THE STOCKHOLDERS OF BIOPSYS MEDICAL, INC.
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Special
Meeting") of Biopsys Medical, Inc., a Delaware corporation ("Biopsys"), will be
held on July 30, 1997 at 8:00 a.m., local time, at Biopsys' principal offices at
3 Morgan, Irvine, California 92618.
At the Special Meeting you will be asked to consider and vote upon the
following matters:
(1) approval and adoption of the Agreement and Plan of Merger dated as
of May 21, 1997 (the "Merger Agreement"), among Johnson & Johnson ("J&J"),
Palisades Merger Corp., a wholly owned subsidiary of J&J ("Merger Sub"),
and Biopsys providing for the merger of Merger Sub with and into Biopsys
upon the terms and subject to the conditions of the Merger Agreement (the
"Merger"); and
(2) such other business as may properly come before the Special
Meeting or any adjournment thereof.
Pursuant to the Merger Agreement, each share of common stock, par value
$.001 per share, of Biopsys ("Biopsys Common Stock") issued and outstanding at
the effective time of the Merger, together with the associated right under
Biopsys' stockholder rights plan, will be converted into the right to receive
that number of fully paid and nonassessable shares of J&J common stock, par
value $1.00 per share ("J&J Common Stock"), equal to the number obtained by
dividing $27.55 by the average per share closing price of J&J Common Stock
during the 20 full trading days preceding the date of the last full trading day
prior to the Special Meeting, as such prices are reported on the New York Stock
Exchange, Inc. Composite Transactions Tape.
THE BOARD OF DIRECTORS OF BIOPSYS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
Detailed information concerning the Merger Agreement and the Merger is
contained in the attached Proxy Statement/Prospectus; please read it carefully.
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. A STOCKHOLDER WHO EXECUTES A PROXY MAY REVOKE IT AT ANY
TIME BEFORE IT IS EXERCISED BY GIVING WRITTEN NOTICE OF REVOCATION TO BIOPSYS,
BY SUBSEQUENTLY FILING ANOTHER PROXY OR BY ATTENDING THE SPECIAL MEETING AND
VOTING IN PERSON.
For the Board of Directors,
/s/ DAVID S. CHONETTE
DAVID W. CHONETTE
Chairman of the Board of Directors
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN AND PROMPTLY RETURN YOUR PROXY CARD.
HOLDERS OF BIOPSYS COMMON STOCK SHOULD NOT SEND STOCK
CERTIFICATES WITH THEIR PROXY CARDS.
<PAGE> 4
BIOPSYS MEDICAL, INC.
PROXY STATEMENT
------------------------
JOHNSON & JOHNSON
PROSPECTUS
This Proxy Statement/Prospectus is being furnished to the stockholders of
Biopsys Medical, Inc. ("Biopsys") in connection with the solicitation of proxies
by the Board of Directors of Biopsys (the "Biopsys Board") for use at the
special meeting of stockholders of Biopsys to be held on July 30, 1997 at 8:00
a.m., local time, at Biopsys' principal offices at 3 Morgan, Irvine, California
92618, including any adjournments or postponements thereof (the "Special
Meeting").
At the Special Meeting, the holders of common stock, par value $.001 per
share, of Biopsys ("Biopsys Common Stock") will consider and vote upon the
approval and adoption of the Agreement and Plan of Merger dated as of May 21,
1997 (the "Merger Agreement"), among Johnson & Johnson ("J&J"), Palisades Merger
Corp., a wholly owned subsidiary of J&J ("Merger Sub"), and Biopsys providing
for the merger of Merger Sub with and into Biopsys upon the terms and subject to
the conditions of the Merger Agreement (the "Merger"). Pursuant to the Merger
Agreement, each share of Biopsys Common Stock issued and outstanding at the
effective time of the Merger, together with the associated right under Biopsys'
stockholder rights plan, will be converted into the right to receive that number
of fully paid and nonassessable shares of common stock, par value $1.00 per
share, of J&J ("J&J Common Stock"), equal to the number obtained by dividing
$27.55 by the average per share closing price of J&J Common Stock during the 20
full trading days preceding the date of the last full trading day prior to the
Special Meeting, as such prices are reported on the New York Stock Exchange,
Inc. ("NYSE") Composite Transactions Tape.
The Biopsys Board has unanimously determined that the terms of the Merger
Agreement and the transactions contemplated thereby are fair to, and in the best
interests of, Biopsys stockholders. Accordingly, the Biopsys Board has
unanimously approved the Merger Agreement and unanimously recommends that the
stockholders of Biopsys vote FOR approval and adoption of the Merger Agreement,
pursuant to which Biopsys will become a wholly owned subsidiary of J&J and
stockholders of Biopsys will become stockholders of J&J.
This Proxy Statement/Prospectus also serves as a prospectus of J&J under
the Securities Act of 1933, as amended (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 stockholders of Biopsys on or about June 30, 1997.
------------------------
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 June 26, 1997.
<PAGE> 5
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 BIOPSYS
SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
2
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information................................................................... 4
Incorporation of Certain Documents by Reference......................................... 4
Summary................................................................................. 5
Special Meeting....................................................................... 5
Vote Required......................................................................... 5
The Merger............................................................................ 6
Market Price Data..................................................................... 9
Certain Financial Data................................................................ 9
The Special Meeting..................................................................... 11
Special Meeting....................................................................... 11
Record Date; Shares Entitled to Vote; Vote Required................................... 11
Proxies; Proxy Solicitation........................................................... 12
Johnson & Johnson....................................................................... 12
Biopsys Medical, Inc.................................................................... 13
The Merger.............................................................................. 14
Background of the Merger.............................................................. 14
Recommendation of the Biopsys Board and Reasons for the Merger........................ 15
Opinion of Financial Advisor.......................................................... 16
Effective Time........................................................................ 19
Merger Consideration.................................................................. 19
Exchange Agent; Exchange Procedures; Dividends; No Further Ownership Rights in Biopsys
Common Stock; No Fractional Shares................................................. 19
Stock Exchange Listing................................................................ 21
Expenses.............................................................................. 21
Material Federal Income Tax Consequences.............................................. 21
Anticipated Accounting Treatment...................................................... 22
Interests of Certain Persons in the Merger............................................ 22
Resale of J&J Common Stock............................................................ 24
The Merger Agreement.................................................................... 25
The Merger............................................................................ 25
Representations and Warranties........................................................ 25
Business of Biopsys Pending the Merger................................................ 26
Certain Additional Agreements......................................................... 28
Conditions to the Consummation of the Merger.......................................... 28
No Solicitation....................................................................... 30
Right of the Biopsys Board to Withdraw Recommendation................................. 30
Termination Fee....................................................................... 31
Termination, Amendment and Waiver..................................................... 32
The Stockholder Agreement............................................................. 33
The Stock Option Agreement............................................................ 34
Management and Operations After the Merger.............................................. 35
Comparative Stock Prices and Dividends.................................................. 36
Comparison of Rights of Common Stockholders of J&J and Biopsys.......................... 37
Other Matters........................................................................... 41
Regulatory Approvals Required......................................................... 41
Absence of Appraisal Rights............................................................. 42
Experts................................................................................. 42
Legal Matters........................................................................... 42
Future Stockholder Proposals............................................................ 42
ANNEXES
Annex I Agreement and Plan of Merger
Annex II Stockholder Agreement
Annex III Stock Option Agreement
Annex IV Opinion of Robertson, Stephens & Company LLC
</TABLE>
3
<PAGE> 7
AVAILABLE INFORMATION
J&J and Biopsys 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 Biopsys 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, D.C.
20549, and at the following Regional Offices of the SEC: Chicago Regional Office
(Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661) and New York Regional Office (Seven World Trade Center, 13th
Floor, New York, New York 10048). The filed material also is available to the
public from commercial document retrieval services and at the web site
maintained by the SEC at "http://www.sec.gov." Copies of such material also can
be obtained by mail from the Public Reference Section of the SEC, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, such
material can be inspected at the offices of 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, D.C. 20006 for Biopsys.
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 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 fiscal year
ended December 29, 1996, (ii) J&J's Quarterly Report on Form 10-Q for the
quarter ended March 30, 1997 and (iii) 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.
The following Biopsys documents are incorporated by reference in this Proxy
Statement/Prospectus: (i) Biopsys' Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, (ii) Biopsys' Quarterly Reports on Form 10-Q for the
quarters ended September 30, 1996, December 31, 1996 and March 31, 1997, (iii)
the description of Biopsys Common Stock set forth in Biopsys' 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 and (iv) the
description of the rights (the "Rights") issued by Biopsys pursuant to the
Rights Agreement dated as of November 8, 1996, between Biopsys and Norwest Bank
Minnesota, N.A. (the "Biopsys Rights Agreement") contained in the Registration
Statement on Form 8-A dated November 8, 1996, whereby Biopsys registered the
Rights pursuant to Section 12 of the Exchange Act.
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 THIS 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 THE OFFICE OF THE CORPORATE
SECRETARY, ONE JOHNSON & JOHNSON PLAZA, NEW BRUNSWICK, NEW JERSEY 08933
(TELEPHONE (908) 524-2455). WITH RESPECT TO BIOPSYS' DOCUMENTS, REQUESTS SHOULD
BE DIRECTED TO STEVEN J. NABER, BIOPSYS MEDICAL, INC., 3 MORGAN, IRVINE,
CALIFORNIA 92618 (TELEPHONE (714) 460-7800). IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS IN ADVANCE OF THE SPECIAL MEETING TO WHICH THIS PROXY
STATEMENT/PROSPECTUS RELATES, ANY SUCH REQUEST SHOULD BE MADE BY JULY 18, 1997.
All reports and definitive proxy or information statements filed by J&J and
Biopsys 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.
All information contained in this Proxy Statement/Prospectus relating to
J&J has been supplied by J&J, and all information relating to Biopsys has been
supplied by Biopsys.
4
<PAGE> 8
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. Stockholders are urged to read carefully this
Proxy Statement/ Prospectus and the attached Annexes in their entirety.
SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to Biopsys stockholders
in connection with the solicitation of proxies by the Biopsys Board for use at
the Special Meeting to be held on July 30, 1997 at 8:00 a.m., local time, at
Biopsys' principal offices at 3 Morgan, Irvine, California 92618. Only holders
of record of Biopsys Common Stock at the close of business on June 20, 1997 (the
"Record Date"), will be entitled to notice of, and to vote at, the Special
Meeting. At the Special Meeting, holders of Biopsys Common Stock will be asked
to consider and vote upon the approval and adoption of the Merger Agreement, a
copy of which is attached as Annex I to this Proxy Statement/Prospectus,
pursuant to which Merger Sub will be merged with and into Biopsys. Biopsys will
be the surviving corporation in the Merger (the "Surviving Corporation") and
will become a wholly owned subsidiary of J&J. Holders of Biopsys Common Stock
will also transact such other business as may properly come before the Special
Meeting. See "THE SPECIAL MEETING -- Special Meeting."
VOTE REQUIRED
The close of business on June 20, 1997 has been fixed as the Record Date
for determining the holders of Biopsys Common Stock who are entitled to notice
of and to vote at the Special Meeting. As of the Record Date, there were
9,912,567 shares of Biopsys Common Stock outstanding, of which 3,284,864 shares
(approximately 33% of the outstanding shares) of Biopsys Common Stock were
beneficially owned by directors and executive officers of Biopsys and their
affiliates. All such directors and executive officers of Biopsys and their
affiliates have indicated to Biopsys that they intend to vote all such shares in
favor of the approval and adoption of the Merger Agreement. The holders of
record on the Record Date of shares of Biopsys Common Stock are entitled to one
vote per share of Biopsys Common Stock on each matter submitted to a vote at the
Special Meeting. The presence in person or by proxy of the holders of shares
representing a majority of the voting power of Biopsys Common Stock entitled to
vote is necessary to constitute a quorum for the transaction of business at the
Special Meeting. Under the Delaware General Corporation Law (the "DGCL"), the
affirmative vote of holders of at least a majority of the outstanding shares of
the Biopsys Common Stock is required for approval and adoption of the Merger
Agreement ("Stockholder Approval"). An abstention from voting or a broker
non-vote (as described below under "THE SPECIAL MEETING -- Special Meeting")
will have the practical effect of voting against approval and adoption of the
Merger Agreement since a vote to abstain or a broker non-vote represents one
less vote for such approval and adoption. See "THE SPECIAL MEETING -- Special
Meeting."
Pursuant to the terms of a Stockholder Agreement dated as of May 21, 1997,
among J&J and certain affiliated stockholders of Biopsys (the "Stockholder
Agreement"), such stockholders have agreed, among other things, to vote (or
cause to be voted) their shares of Biopsys Common Stock in favor of approval and
adoption of the Merger Agreement and each of the other transactions contemplated
thereby at the Special Meeting. Together, such stockholders held on the Record
Date 3,278,394 shares (approximately 33% of the outstanding shares) of Biopsys
Common Stock. Consequently, holders of only approximately 25% of Biopsys Common
Stock who are not parties to the Stockholder Agreement need vote in favor of
approval and adoption of the Merger Agreement for Stockholder Approval to be
obtained. The general effect of the Stockholder Agreement is to increase the
likelihood that Stockholder Approval will be obtained. See "THE MERGER --
Interests of Certain Persons in the Merger" and "THE MERGER AGREEMENT -- The
Stockholder Agreement."
No approval by stockholders of J&J is required to effect the Merger.
5
<PAGE> 9
THE MERGER
The Parties. J&J, organized in the State of New Jersey in 1887, employs
approximately 89,300 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. J&J's primary interest, both historically and currently, has been in
products related to health and well-being. J&J's worldwide business is divided
into three segments: consumer, pharmaceutical and professional. The consumer
segment's principal products are personal care and hygienic products, including
oral and baby care products, first aid products, nonprescription drugs, sanitary
protection products and adult skin and hair products; the pharmaceutical
segment's principal worldwide franchises are in the allergy, antibacterial,
antifungal, biotech, central nervous system, contraceptive, dermatology,
gastrointestinal and immunobiology fields; and the professional segment's
products include suture and mechanical wound closure products,
minimally-invasive surgical instruments, diagnostic products, medical equipment
and devices, disposable contact lenses, surgical instruments, joint replacements
and products for wound management and infection prevention.
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 Delaware corporation, is a wholly owned subsidiary of J&J
formed solely for the purposes of the Merger.
Biopsys, a Delaware corporation, designs, develops, manufactures and
markets products for the diagnosis and management of breast cancer. Biopsys'
principal product, the Mammotome Biopsys System, is a minimally-invasive breast
biopsy technology. Biopsys received 510(k) clearance to market the Mammotome
Biopsys System from the United States Food and Drug Administration in April 1995
and commenced commercial sales in August 1995. As of March 31, 1997, the
Mammotome Biopsys System had been installed in approximately 516 sites,
including physicians' offices, hospitals and breast imaging centers, and had
been used in approximately 58,000 Mammotome procedures. Biopsys was incorporated
in California in July 1993 and reincorporated in Delaware in April 1996.
The principal offices of Biopsys are located at 3 Morgan, Irvine,
California 92618. The telephone number is (714) 460-7800.
Merger Consideration. At the effective time of the Merger (the "Effective
Time"), each issued and outstanding share of Biopsys Common Stock (together with
the associated Right), other than shares owned by J&J, Merger Sub or Biopsys,
will be converted into the right to receive that number of fully paid and
nonassessable shares of J&J Common Stock equal to the number obtained by
dividing $27.55 by the average per share closing price of J&J Common Stock
during the 20 full trading days preceding the date of the last full trading day
prior to the Special Meeting, as such prices are reported on the NYSE Composite
Transactions Tape (the "Exchange Ratio"). No fractional shares of J&J Common
Stock will be issued in the Merger and holders of shares of Biopsys Common Stock
will be entitled to a cash payment in lieu of any such fractional shares. See
"THE MERGER -- Merger Consideration" and "-- Exchange Agent; Exchange
Procedures; Dividends; No Further Ownership Rights in Biopsys Common Stock; No
Fractional Shares."
Recommendation of the Biopsys Board and Reasons for the Merger. THE
BIOPSYS BOARD HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST INTERESTS
OF, BIOPSYS STOCKHOLDERS. ACCORDINGLY, THE BIOPSYS BOARD HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
OF BIOPSYS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. In reaching
its decision to approve the Merger Agreement and recommend the Merger, the
Biopsys Board considered a number of factors. See "THE MERGER -- Background of
the Merger" and "-- Recommendation of the Biopsys Board and Reasons for the
Merger."
Opinion of Financial Advisor. Robertson, Stephens & Company LLC
("Robertson Stephens") has delivered its written opinion dated May 21, 1997, to
the Biopsys Board that, as of such date and based on the matters described
therein, the Exchange Ratio was fair to the stockholders of Biopsys from a
financial point of view. The full text of the opinion of Robertson Stephens,
which sets forth the procedures followed, the factors considered, the
assumptions made and scope of the review undertaken by, as well as limitations
on the review undertaken by, Robertson Stephens in rendering its opinion, is
included as Annex IV to this Proxy Statement/
6
<PAGE> 10
Prospectus. Biopsys stockholders are urged to read the 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 Biopsys owned (i) 3,284,864 shares of
Biopsys Common Stock for which they will receive the same consideration as other
Biopsys stockholders and (ii) unexercised options to acquire 805,750 shares of
Biopsys Common Stock (the "Stock Options"), which will be treated as described
below under "THE MERGER -- Interests of Certain Persons in the Merger." J&J also
has agreed to cause the Surviving Corporation to fulfill and honor in all
respects the obligations of Biopsys pursuant to certain indemnification
agreements currently in effect between Biopsys and certain persons and pursuant
to the indemnification provisions contained in Biopsys' Restated Certificate of
Incorporation (the "Biopsys Certificate of Incorporation") and Biopsys' By-laws
(the "Biopsys By-laws"). 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"). J&J and Biopsys have filed notification and report forms under the HSR
Act. Effective June 13, the waiting period under the HSR Act was terminated. See
"OTHER MATTERS -- Regulatory Approvals Required."
Conditions to the Merger. The obligations of J&J and Biopsys to consummate
the Merger are subject to various conditions, including, without limitation,
obtaining Stockholder Approval and regulatory approvals, approval for listing
(subject to official notice of issuance) on the NYSE of the J&J Common Stock to
be issued in connection with the Merger and the absence of any injunction or
other legal restraint preventing the consummation of the Merger. See "THE MERGER
AGREEMENT -- Conditions to the Consummation of the Merger."
No Solicitation. The Merger Agreement provides that Biopsys will not, nor
will it authorize or permit any of its officers, directors or employees or any
investment banker, attorney or other advisor or representative retained by it
to, directly or indirectly, (i) solicit, initiate or encourage the submission of
any Takeover Proposal (as defined in the Merger Agreement and described below
under "THE MERGER AGREEMENT -- No Solicitation") or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal. However, if the Biopsys Board determines in good
faith, after consultation with outside counsel, that failure to do so would
create a substantial risk of liability for breach of its fiduciary duties to the
stockholders of Biopsys under applicable law, Biopsys may, prior to the receipt
of Stockholder Approval, in response to a Takeover Proposal that was unsolicited
and subject to compliance with Biopsys' responsibility to keep J&J informed in
all material respects of the status of, and the identity of the person making,
any Takeover Proposal or certain other inquiries and subject to certain other
conditions, furnish information with respect to Biopsys to any person pursuant
to a customary and reasonable confidentiality agreement and participate in
negotiations regarding a Takeover Proposal. See "THE MERGER AGREEMENT -- No
Solicitation."
Right of the Biopsys Board to Withdraw Recommendation. Under the Merger
Agreement, neither the Biopsys Board nor any committee of Biopsys may (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to J&J
or Merger Sub, the approval or recommendation by such Board or any such
committee of the Merger Agreement or the Merger, (ii) approve or recommend, or
propose to approve or recommend, any Takeover Proposal or (iii) cause Biopsys to
enter into any agreement with respect to any Takeover Proposal. However, the
Biopsys Board, to the extent it determines in good faith, after consultation
with outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Biopsys stockholders under applicable law, may, prior to
receipt of Stockholder Approval, withdraw or modify its approval or
recommendation of the Merger Agreement or the Merger and approve or recommend
any Superior Proposal (as defined in the Merger Agreement and described below
under "THE MERGER AGREEMENT -- Right of the Biopsys Board to Withdraw
Recommendation"), in each case subject to certain notice requirements. In
addition, during the period (the "Applicable Period") commencing after the
earlier of the effectiveness of the Registration Statement and 60 days after the
date of the Merger Agreement
7
<PAGE> 11
and ending on the receipt of Stockholder Approval, the Biopsys Board, to the
extent it determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
the stockholders of Biopsys under applicable law, may cause Biopsys to terminate
the Merger Agreement and subsequently enter into an agreement with respect to a
Superior Proposal, subject to certain waiting periods, notice requirements and
the obligation to pay certain fees. See "THE MERGER AGREEMENT -- Right of the
Biopsys Board to Withdraw Recommendation" and "-- Termination Fee."
Termination Fee. The Merger Agreement requires Biopsys to promptly pay to
J&J $10 million (the "Termination Fee") if the Merger Agreement is terminated
(i) by any party to the Merger Agreement in the event that during the Applicable
Period, the Biopsys Board determines in good faith, after consultation with
outside counsel, that it is necessary to terminate the Merger Agreement in order
to comply with its fiduciary duties to Biopsys stockholders under applicable law
(the Biopsy Board must comply with certain waiting periods and notice
requirements) or (ii) by any party to the Merger Agreement in the event that (x)
a Takeover Proposal shall have been publicly announced and not publicly
withdrawn, (y) prior to the date 12 months following the date of the termination
of the Merger Agreement, Biopsys consummates certain transactions or enters into
certain agreements and (z) either (I) the Merger is not consummated by December
31, 1997 and Biopsys has breached certain obligations to facilitate the
obtaining of Stockholder Approval, (II) Stockholder Approval is not obtained at
the Special Meeting or (III) the Biopsys Board (or any committee thereof)
withdraws or modifies in a manner adverse to J&J its approval or recommendation
of the Merger or Merger Agreement, fails to reconfirm its recommendation within
15 business days after a written request to do so or approves or recommends a
Takeover Proposal or the Biopsys Board resolves to take any of the foregoing
actions. However, the Merger Agreement provides that no Termination Fee will be
payable if, at the time the Merger Agreement is terminated as a result of the
events described in either clause (I) or (II) of the preceding sentence, there
has occurred an uncured material adverse change with respect to J&J on or after
the date of the Merger Agreement. See "THE MERGER AGREEMENT -- Termination Fee."
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 receipt of Stockholder Approval, (i) by mutual written
consent of J&J, Merger Sub and Biopsys; (ii) by either J&J or Biopsys, if
Stockholder Approval is not obtained at the Special Meeting, the Merger is not
consummated by December 31, 1997 (subject to certain exceptions), if certain
legal restraints or prohibitions are in effect which have any Limiting Effects
(as defined under "THE MERGER AGREEMENT -- Conditions to the Consummation of the
Merger") or the Biopsys Board makes certain good faith determinations regarding
its fiduciary duties to Biopsys stockholders; (iii) by J&J if the Biopsys Board
withdraws or modifies or, upon request, fails to reconfirm its approval or
recommendation of the Merger or the Merger Agreement, subject to certain
conditions; and (iv) by either J&J or Biopsys if there are certain breaches of,
or inaccuracies contained in, the other party's representations, warranties,
covenants or agreements and such breaches or inaccuracies are not cured within
45 days, subject to certain conditions and limitations. See "THE MERGER
AGREEMENT -- Termination, Amendment and Waiver."
Absence of Appraisal Rights. In accordance with Section 262 of the DGCL,
holders of Biopsys Common Stock are not entitled to appraisal rights in
connection with the Merger. See "ABSENCE OF APPRAISAL RIGHTS."
Certain Federal Income Tax Consequences. It is a condition to the
obligation of Biopsys to consummate the Merger that it receive the opinion of
Wilson Sonsini Goodrich & Rosati to the effect that (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"), and J&J, Merger Sub and Biopsys
will each be a party to the reorganization, within the meaning of Section 368(b)
of the Code, (ii) no gain or loss will be recognized by J&J, Merger Sub or
Biopsys as a result of the Merger and (iii) no gain or loss will be recognized
by the stockholders of Biopsys upon receipt of J&J Common Stock in exchange for
their Biopsys Common Stock, except that a holder of Biopsys 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 stockholder's fractional share of J&J Common Stock. Such
opinion assumes that the Merger will take place as
8
<PAGE> 12
described in the Merger Agreement and that certain factual matters represented
by J&J, Merger Sub, Biopsys and certain Biopsys stockholders are true and
correct at the Effective Time. See "THE MERGER -- Material 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 Considerations. In considering whether to vote in favor of the
adoption of the Merger Agreement, Biopsys stockholders should consider the
following: (i) the Exchange Ratio will be determined based on the average per
share closing price of J&J Common Stock during the 20 full trading days
preceding the date of the last full trading day prior to the Special Meeting and
(ii) the market price of a share of J&J Common Stock on the closing date of the
Merger (the "Closing Date") can be expected to vary from its price as of the
date of this Proxy Statement/Prospectus and the dates during such 20-day period
due to changes in the business, operations or prospects of J&J, general market
and economic conditions and other factors.
Stock Option Agreement. Biopsys and J&J entered into a stock option
agreement dated as of May 21, 1997 (the "Stock Option Agreement"), immediately
following the execution and delivery of the Merger Agreement, pursuant to which
Biopsys granted J&J the right to purchase 19.9% of the then outstanding shares
of Biopsys Common Stock at a price per share of $27.55. See "THE MERGER
AGREEMENT -- The Stock Option Agreement."
MARKET PRICE DATA
J&J Common Stock (symbol: JNJ) is listed for trading on the NYSE and
Biopsys Common Stock (symbol: BIOP) is quoted on the Nasdaq National Market.
The following table sets forth the last reported sales prices per share of
J&J Common Stock on the NYSE Composite Transactions Tape and of Biopsys Common
Stock on the Nasdaq National Market on May 21, 1997, the last trading day before
announcement of the Merger Agreement, and on June 25, 1997, the last trading day
prior to the date of this Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
J&J BIOPSYS
COMMON COMMON
STOCK STOCK
------ ------
<S> <C> <C>
May 21, 1997............................................ $59 3/8 $25 3/4
June 25, 1997........................................... 65 3/16 27
</TABLE>
CERTAIN FINANCIAL DATA
The Merger will not have a material impact, on a pro forma basis, on the
J&J financial data presented below.
The following tables present selected historical financial data for each of
J&J (on a consolidated basis) and Biopsys. The selected historical financial
data are derived from the historical financial statements of J&J (on a
consolidated basis) and Biopsys that are incorporated by reference in this Proxy
Statement/Prospectus. 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 have been audited by Coopers
& Lybrand L.L.P., independent certified public accountants, for each of the five
fiscal years in the period ended December 29, 1996. The historical financial
statements of Biopsys have been audited by Deloitte & Touche LLP, independent
certified public accountants, for each of the three fiscal years in the period
ended June 30, 1996. The historical consolidated financial statements as of and
for the three months ended March 30, 1997 and March 31, 1996, for J&J, and the
historical financial statements as of and for the nine months ended March 31,
1997 and 1996, for Biopsys, are unaudited; however, in each of J&J's and
Biopsys' 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 Biopsys' respective financial position and
results of operations for such periods. The results of operations for the
respective three-month period and nine-month period in 1997 may not be
indicative of results of operations to be expected for a full year.
9
<PAGE> 13
JOHNSON & JOHNSON AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE FIGURES)
EARNINGS DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
------------------------------------------------------------------ ---------------------
JANUARY 3, JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 29, MARCH 31, MARCH 30,
1993 1994 1995 1995 1996 1996 1997
---------- ---------- ---------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales.................... $ 13,753 $ 14,138 $ 15,734 $ 18,842 $ 21,620 $ 5,334 $ 5,715
Costs and expenses....... 11,546 11,806 13,053 15,525 17,587 4,210 4,413
Earnings before taxes.... 2,207 2,332 2,681 3,317 4,033 1,124 1,302
Net earnings............. 1,030(1) 1,787 2,006 2,403 2,887 790 909
Net earnings per share... $ 0.78 $ 1.37 $ 1.56 $ 1.86 $ 2.17 $ 0.59 $ 0.68
Cash dividends per
share.................. $ 0.445 $ 0.505 $ 0.565 $ 0.64 $ 0.735 $ 0.165 $ 0.19
</TABLE>
BALANCE SHEET DATA
<TABLE>
<CAPTION>
JANUARY 3, JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 29, MARCH 30,
1993 1994 1995 1995 1996 1997
---------- ---------- ---------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets................... $ 11,884 $ 12,242 $ 15,668 $ 17,873 $ 20,010 $20,620
Long-term debt........... 1,365 1,493 2,199 2,107 1,410 1,296
Stockholders' equity..... 5,171 5,568 7,122 9,045 10,836 11,174
</TABLE>
- ---------------
(1) After cumulative effect of accounting changes of $595 million (net of tax).
BIOPSYS MEDICAL, INC.
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE FIGURES)
OPERATING DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
PERIOD FROM JULY 6, 1993 JUNE 30, MARCH 31,
(INCEPTION) ------------------- --------------------
TO JUNE 30, 1994 1995 1996 1996 1997
------------------------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Net sales........................... $ -- $ 80 $3,475 $1,805 $10,045
Cost of sales....................... -- 34 1,899 1,051 4,236
Gross profit........................ -- 46 1,576 754 5,809
Total operating expenses............ 680 2,487 5,521 3,466 6,634
Interest income (expense), net...... 5 (32) 478 167 1,432
Net income (loss)................... (675) (2,473) (3,467) (2,545) 607
Net income (loss) per share......... $(0.15)(1) $(0.55)(1) $(0.43) $(0.33)(1) $ 0.06
</TABLE>
BALANCE SHEET DATA
<TABLE>
<CAPTION>
JUNE 30,
------------------------------ MARCH 31,
1994 1995 1996 1997
------ ------- ------- ---------
<S> <C> <C> <C> <C>
Total assets................................................. $2,026 $ 416 $40,914 $42,289
Redeemable convertible preferred stock....................... 1,975 1,975 -- --
Stockholders' equity (deficit)............................... (31) (2,413) 39,083 40,256
</TABLE>
- ---------------
(1) Net loss per share for each of these periods is computed on a pro forma
basis assuming conversion of the then outstanding preferred stock.
10
<PAGE> 14
THE SPECIAL MEETING
SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to Biopsys stockholders
in connection with the solicitation of proxies by the Biopsys Board for use at
the Special Meeting to be held on July 30, 1997 at 8:00 a.m., local time, at
Biopsys' principal offices at 3 Morgan, Irvine, California 92618. Only holders
of record of Biopsys Common Stock at the close of business on the Record Date
will be entitled to notice of, and to vote at, the Special Meeting. At the
Special Meeting, holders of Biopsys Common Stock will be asked to consider and
vote upon the approval and adoption of the Merger Agreement, a copy of which is
attached as Annex I to this Proxy Statement/Prospectus, pursuant to which Merger
Sub will be merged with and into Biopsys. Biopsys will be the Surviving
Corporation in the Merger and will become a wholly owned subsidiary of J&J.
Holders of Biopsys Common Stock will also transact such other business as may
properly come before the Special Meeting.
At the Effective Time, each issued and outstanding share of Biopsys Common
Stock (together with the associated Right), other than shares owned by J&J,
Merger Sub or Biopsys, will be converted into the right to receive that number
of 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.
Each holder of shares of Biopsys 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 will receive, in lieu thereof, cash (without interest) in an
amount, less the amount of any withholding taxes which may be required thereon,
equal to such fraction of a share of J&J Common Stock multiplied by the per
share closing price of J&J Common Stock on the date of the Special Meeting, as
such price is reported on the NYSE Composite Transactions Tape. J&J will make
available to the Exchange Agent (as defined in the Merger Agreement and
described below under "THE MERGER -- Exchange Agent; Exchange Procedures;
Dividends; No Further Ownership Rights in Biopsys Common Stock; No Fractional
Shares") from time to time, as needed, funds sufficient to pay cash in lieu of
fractional shares.
THE BIOPSYS BOARD HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST
INTERESTS OF, BIOPSYS STOCKHOLDERS. ACCORDINGLY, THE BIOPSYS BOARD HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF BIOPSYS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
The Finance Committee of the J&J Board of Directors (the "J&J Board"),
acting pursuant to authority delegated to it by the J&J Board, has approved the
Merger and the issuance of J&J Common Stock in the Merger. J&J, as the sole
stockholder of Merger Sub, and the Board of Directors of Merger Sub have each
approved the Merger Agreement. No approval by stockholders of J&J is required to
effect the Merger.
RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED
The close of business on June 20, 1997 has been fixed as the Record Date
for determining the holders of Biopsys Common Stock who are entitled to notice
of and to vote at the Special Meeting. As of the Record Date, there were
9,912,567 shares of Biopsys Common Stock outstanding, of which 3,284,864 shares
(approximately 33% of the outstanding shares) of Biopsys Common Stock were
beneficially owned by directors and executive officers of Biopsys and their
affiliates. All such directors and executive officers of Biopsys and their
affiliates have indicated to Biopsys that they intend to vote all such shares in
favor of the approval and adoption of the Merger Agreement. The holders of
record on the Record Date of shares of Biopsys Common Stock are entitled to one
vote per share of Biopsys Common Stock on each matter submitted to a vote at the
Special Meeting. The presence in person or by proxy of the holders of shares
representing a majority of the voting power of Biopsys Common Stock entitled to
vote is necessary to constitute a quorum for the transaction of business at the
Special Meeting. Under the DGCL, the affirmative vote of holders of at least a
majority of the outstanding shares of the Biopsys Common Stock is required for
Stockholder Approval. An abstention from voting or a broker non-vote will have
the practical effect of voting against approval and adoption of the Merger
Agreement since a vote to abstain or a broker non-vote represents one less vote
for such approval and adoption. A "broker non-vote" occurs when brokers who hold
shares in
11
<PAGE> 15
street name for customers who are the beneficial owners of such shares do not
give a proxy to vote such customers' shares because the customers have failed to
give the broker specific instructions concerning the voting of the customers'
shares.
Pursuant to the terms of the Stockholder Agreement, certain stockholders
have agreed, among other things, to vote (or cause to be voted) their shares of
Biopsys Common Stock in favor of approval and adoption of the Merger Agreement
and each of the other transactions contemplated thereby at the Special Meeting.
Together, such stockholders held on the Record Date 3,278,394 shares
(approximately 33% of the outstanding shares) of Biopsys Common Stock.
Consequently, holders of only approximately 25% of Biopsys Common Stock who are
not parties to the Stockholder Agreement need vote in favor of approval and
adoption of the Merger Agreement for Stockholder Approval to be obtained. The
general effect of the Stockholder Agreement is to increase the likelihood that
Stockholder Approval will be obtained. See "THE MERGER -- Interests of Certain
Persons in the Merger" and "THE MERGER AGREEMENT -- The Stockholder Agreement."
PROXIES; PROXY SOLICITATION
Shares of Biopsys Common Stock represented by properly executed proxies
received at or prior to the Special Meeting that have not been revoked will be
voted at the Special Meeting in accordance with the instructions contained
therein. Shares of Biopsys Common Stock represented by properly executed proxies
for which no instruction is given will be voted FOR approval and adoption of the
Merger Agreement. Biopsys stockholders are requested to complete, sign and
return promptly the enclosed proxy card in the enclosed postage-prepaid envelope
to ensure that their shares are voted at the Special Meeting. A Biopsys
stockholder may revoke a proxy by submitting at any time prior to the vote on
the approval and adoption of the Merger Agreement a later dated proxy with
respect to the same shares, by delivering written notice of revocation to the
Secretary of Biopsys 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 a Biopsys stockholder is not the registered
direct holder of his or her shares, such stockholder must obtain appropriate
documentation from the registered holder in order to be able to vote the shares
in person.
If the Special Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Special Meeting 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 therefore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively voted
on the same or any other manner at a previous meeting.
In addition to solicitation by mail, directors, officers and employees of
J&J and Biopsys may solicit proxies by telephone, telegram or otherwise. Such
directors, officers and employees of J&J and Biopsys 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 Biopsys Common Stock held of record by them will be reimbursed for
their reasonable expenses incurred in forwarding such material. Biopsys may
retain D.F. King & Co., Inc. to aid in soliciting proxies from its stockholders.
The fees of such firm are estimated not to exceed $10,000, plus reimbursement of
out-of-pocket expenses.
JOHNSON & JOHNSON
J&J, organized in the State of New Jersey in 1887, employs approximately
89,300 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. J&J's
primary interest, both historically and currently, has been in products related
to health and well-being. J&J's worldwide business is divided into three
segments: consumer, pharmaceutical and professional. The consumer segment's
principal products are personal care and hygienic products, including oral and
baby care products, first aid products, nonprescription drugs, sanitary
protection products and adult skin and hair products; the pharmaceutical
segment's principal worldwide franchises are in the allergy, antibacterial,
antifungal, biotech, central nervous system, contraceptive, dermatology,
gastrointestinal and immunobiology
12
<PAGE> 16
fields; and the professional segment's products include suture and mechanical
wound closure products, minimally-invasive surgical instruments, diagnostic
products, medical equipment and devices, disposable contact lenses, surgical
instruments, joint replacements and products for wound management and infection
prevention. See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE."
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.
BIOPSYS MEDICAL, INC.
Biopsys, a Delaware corporation, designs, develops, manufactures and
markets products for the diagnosis and management of breast cancer. Biopsys'
principal product, the Mammotome Biopsys System, is a minimally-invasive breast
biopsy technology. Biopsys received 510(k) clearance to market the Mammotome
Biopsys System from the United States Food and Drug Administration in April 1995
and commenced commercial sales in August 1995. As of March 31, 1997, the
Mammotome Biopsys System had been installed in approximately 516 sites,
including physicians' offices, hospitals and breast imaging centers, and had
been used in approximately 58,000 Mammotome procedures. Biopsys was incorporated
in California in July 1993 and reincorporated in Delaware in April 1996. See
"AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
The principal offices of Biopsys are located at 3 Morgan, Irvine,
California 92618. The telephone number is (714) 460-7800.
13
<PAGE> 17
THE MERGER
BACKGROUND OF THE MERGER
As Biopsys began commercial introduction of its Mammotome biopsy system in
late calendar year 1995, the Biopsys Board and senior management began
discussing various alternatives for either raising working capital needed to
support and expand commercial introduction of the Mammotome system or aligning
with major medical device companies for marketing, sales and distribution.
During the period from late 1995 through 1996, representatives of Biopsys held
discussions with representatives of various medical device companies, including
Ethicon Endo-Surgery Inc. ("Ethicon Endo," and, together with J&J, "Johnson &
Johnson"), a subsidiary of J&J. These conversations were conducted primarily at
industry trade shows or investor conferences and were general in nature and did
not lead to any specific proposals for either an acquisition of Biopsys or a
strategic marketing or distribution arrangement.
In July 1996, Biopsys entered into a confidentiality agreement with Ethicon
Endo containing customary terms and conditions. Thereafter during the period
until the spring of 1997, representatives of Biopsys and Johnson & Johnson met
to discuss possible business relationships between Biopsys and Johnson &
Johnson, including the possibility of a merger of Biopsys with Johnson &
Johnson, and to analyze and review the legal, regulatory and financial elements
of the businesses of Biopsys.
On December 9, 1996, management of Biopsys reviewed with the Biopsys Board
the status of the discussions with Johnson & Johnson. The Biopsys Board
determined that management should continue such discussions and should attempt
to reopen discussions with the other companies with which Biopsys had previously
discussed the possibility of a strategic transaction to determine if any of such
companies had any remaining interest in entering into a strategic transaction
with Biopsys. Representatives of Robertson Stephens, at a meeting with one of
such companies, inquired as to whether such company was interested in pursuing a
transaction with Biopsys. This contact did not lead to any proposals for a
strategic transaction with Biopsys. Subsequently, Biopsys did not receive any
other such proposals from any other party.
During the first four months of 1997, the discussions between
representatives of Biopsys and Johnson & Johnson became focused exclusively on a
merger of Biopsys with Johnson & Johnson and continued to explore legal,
regulatory and financial issues relating to the business of Biopsys and the
combination of that business with that of Ethicon Endo. On March 13, 1997, the
Biopsys Board considered at a regularly scheduled meeting the status of the
discussions with Johnson & Johnson and the results of the attempts to initiate
further discussions with the other companies.
During the period from May 5, 1997 through May 19, 1997, representatives of
Biopsys and Johnson & Johnson, their respective legal advisors and Robertson
Stephens held numerous meetings and teleconferences to discuss and review the
terms and conditions of the proposed merger as set forth in the Merger
Agreement, the Stockholder Agreement and the Stock Option Agreement and various
other legal and financial issues, including, among other things, the tax and
accounting treatment of the proposed merger and the amount and nature of the
consideration to be paid to Biopsys stockholders in the proposed merger.
On May 20, 1997, the Biopsys Board met in a specially scheduled Board
meeting to consider the proposed Merger. Biopsys' legal counsel gave a
presentation regarding the fiduciary duties of the Biopsys Board in evaluating
the proposed Merger with Johnson & Johnson. Counsel then reviewed for the
Biopsys Board the provisions of the draft Merger Agreement, Stockholder
Agreement and Stock Option Agreement and the proposed changes that had been
discussed during the preceding days. Counsel then addressed questions from the
Biopsys Board regarding those draft agreements and the proposed changes thereto.
The Representatives of Robertson Stephens then delivered a presentation
regarding the financial terms of the proposed Merger and the other analyses
described below under "-- Opinion of Financial Advisor."
On May 21, 1997, the Biopsys Board met by teleconference with its legal and
financial advisors. Legal counsel reviewed for the Biopsys Board the proposed
definitive Merger Agreement, Stockholder Agreement and Stock Option Agreement,
which now incorporated the changes that had been agreed to in principle during
the preceding days. Legal counsel then described to the Biopsys Board the
resolutions that would be required
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in connection with approval of the agreements, including resolutions approving
the agreements and an amendment of Biopsys' stockholder rights plan to provide
that certain triggering events as set forth in such plan would not occur by
virtue of the execution of the agreements with J&J.
Robertson Stephens then rendered its opinion that, as of May 21, 1997, the
Exchange Ratio was fair to the stockholders of Biopsys from a financial point of
view.
After additional discussion, including consideration of the factors set
forth below, the Biopsys Board unanimously approved the Merger Agreement and the
agreements with J&J and unanimously resolved to recommend that the stockholders
of Biopsys vote to approve and adopt the Merger Agreement.
The Merger Agreement, the Stockholder Agreement and the Stock Option
Agreement were executed by all parties during the evening of May 21, 1997 and a
joint public announcement of the transaction was made by J&J and Biopsys on the
morning of May 22, 1997.
RECOMMENDATION OF THE BIOPSYS BOARD AND REASONS FOR THE MERGER
The Biopsys Board has unanimously determined that the terms of the Merger
Agreement and the transactions contemplated thereby are fair to, and in the best
interests of, Biopsys stockholders. Accordingly, the Biopsys Board has
unanimously approved the Merger Agreement and unanimously recommends that the
stockholders of Biopsys vote FOR approval and adoption of the Merger Agreement.
In reaching its determination, the Biopsys Board consulted with Biopsys'
management, as well as its legal counsel and financial advisor, and gave
significant consideration to a number of factors bearing on its decision. The
Biopsys Board did not consider it practical to, nor did it attempt to, quantify
or otherwise assign relative weight to the factors it considered in reaching its
decision.
The factors considered by the Biopsys Board included:
- Analyses of the financial performance and condition, businesses and
prospects of J&J and Biopsys, including, but not limited to, information
with respect to their respective recent and historic stock prices and
earnings performance. The Biopsys Board also considered the detailed
financial analyses, pro forma and other information with respect to J&J
and Biopsys presented by Robertson Stephens and Biopsys' management, as
well as the Biopsys Board's own knowledge of J&J, Biopsys and their
respective businesses, and the current economic, financial and business
climate.
- The effect on Biopsys stockholders of Biopsys continuing as a stand-alone
entity compared to the effect of combining with J&J, in light of the
factors summarized above with respect to the financial condition and
prospects of the two companies on a stand-alone basis and of the
Surviving Corporation. In particular, the Biopsys Board considered that
Biopsys competes in a single segment of the medical device market
(minimally-invasive breast biopsy devices and related products) and has
experienced significant volatility in the market price of its common
stock.
- The view of Biopsys' management that the medical device industry has
recently experienced increased consolidation as participants have sought
to broaden product lines, gain market share, increase international
market penetration and enable bundling and capitation arrangements with
hospitals and managed care organizations (which are increasingly taking
actions that favor medical device companies offering large and
cost-effective product portfolios).
- The relatively greater financial, manufacturing, personnel, and sales and
distribution resources of J&J and the likelihood that such resources
would enable Biopsys to accelerate its long-term growth strategy, to
facilitate the introduction of new products with a larger sales force,
and to compete more effectively in its targeted markets.
- The written opinion of Robertson Stephens that, as of May 21, 1997, and
based upon and subject to the various qualifications and assumptions
described therein, the Exchange Ratio was fair, from a financial point of
view, to the stockholders of Biopsys. See "-- Opinion of Financial
Advisor."
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- The Exchange Ratio and the other terms of the Merger Agreement. See
"--Background of the Merger" and "-- Merger Consideration."
- The expectation that the Merger will be a tax-free transaction to Biopsys
and its stockholders and will be accounted for as a pooling of interests
transaction. See "-- Material Federal Income Tax Consequences" and
"-- Anticipated Accounting Treatment."
- Such other matters as the Biopsys Board deemed necessary or appropriate
in considering the Merger.
OPINION OF FINANCIAL ADVISOR
At the May 21, 1997 special meeting of the Biopsys Board, Robertson
Stephens delivered its oral opinion (subsequently confirmed in writing) that, as
of such date and based on the matters described therein, the Exchange Ratio was
fair to the stockholders of Biopsys from a financial point of view. Robertson
Stephens did not recommend to Biopsys that any specific price was appropriate
for the Merger. Robertson Stephens' opinion to the Biopsys Board addresses only
the fairness to the stockholders of Biopsys, from a financial point of view, of
the Exchange Ratio, and does not constitute a recommendation to any stockholder
as to how such stockholder should vote at the Special Meeting.
THE COMPLETE TEXT OF THE OPINION DATED MAY 21, 1997 IS ATTACHED HERETO AS
ANNEX IV AND THE SUMMARY OF THE OPINION SET FORTH BELOW IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION. STOCKHOLDERS OF BIOPSYS
ARE URGED TO READ SUCH OPINION CAREFULLY AND IN ITS ENTIRETY FOR A DESCRIPTION
OF THE PROCEDURES FOLLOWED, THE FACTORS CONSIDERED, THE ASSUMPTIONS MADE AND
SCOPE OF THE REVIEW UNDERTAKEN BY, AS WELL AS LIMITATIONS ON THE REVIEW
UNDERTAKEN BY, ROBERTSON STEPHENS IN RENDERING ITS OPINION.
Robertson Stephens expresses no opinion as to the tax consequences of the
Merger, and Robertson Stephens' opinion as to the fairness from a financial
point of view of the Exchange Ratio does not take into account the particular
tax status or position of any holder of Biopsys Common Stock. In rendering its
opinion, Robertson Stephens was not engaged as an agent or fiduciary of Biopsys
stockholders or any other third party, and no limitations were imposed by
Biopsys on the scope of Robertson Stephens' opinion or the procedures to be
followed by Robertson Stephens in rendering its opinion.
In connection with the preparation of its opinion, Robertson Stephens among
other things: (i) reviewed financial information relating to Biopsys furnished
to it by Biopsys, including certain internal financial analyses and forecasts
prepared by the management of Biopsys; (ii) reviewed publicly available
information; (iii) examined the financial condition and future prospects of each
of J&J and Biopsys, on a stand-alone basis and combined; (iv) reviewed the
Merger Agreement, the Stock Option Agreement and the Stockholder Agreement; (v)
reviewed the stock price and trading histories of each of J&J and Biopsys common
stock; (vi) prepared discounted cash flow analyses of Biopsys; (vii) reviewed
the valuations of publicly traded companies that it deemed comparable to
Biopsys; (viii) compared the financial terms of the Merger with other
transactions that it deemed relevant; and (ix) made such other studies and
inquiries, reviewed such other data, as it deemed relevant.
Based on past activities, Robertson Stephens has a substantial degree of
familiarity with Biopsys. Robertson Stephens acted as lead manager on Biopsys'
initial public offering on May 1, 1996 (the "Biopsys IPO"). In addition, in the
course of its engagement, Robertson Stephens completed further investigation of
each of Biopsys and J&J. In arriving at its opinion, however, Robertson Stephens
did not independently verify any of the foregoing information and has relied on
all such information being complete and accurate in all material aspects.
Furthermore, Robertson Stephens did not obtain any independent appraisal of the
properties or assets and liabilities of Biopsys or J&J or of any of J&J's
subsidiaries, nor was it furnished with any such evaluations or appraisals. With
respect to the financial and operating forecasts (and the assumptions and bases
therefor) of Biopsys which Robertson Stephens reviewed, Robertson Stephens
assumed that such forecasts had been reasonably prepared and reflected the best
available estimates and judgments of Biopsys management and that such
projections and forecasts will be realized in the amounts and in the time
periods estimated by the management of Biopsys. Robertson Stephens also assumed
that the Merger will be accounted for as a pooling of interests under generally
accepted accounting principles ("GAAP"). While Robertson Stephens believes that
its review, as described
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within, is an adequate basis for the opinion that Robertson Stephens expressed,
this opinion was necessarily based upon market, economic, and other conditions
that existed and could be evaluated as of the date of the opinion, and on
information available, to Robertson Stephens as of such date.
The following paragraphs summarize the material quantitative and
qualitative analyses performed by Robertson Stephens in arriving at its opinion
and reviewed by the Biopsys Board and does not purport to be a complete
description of the analyses performed by Robertson Stephens. The information
presented below is based on the financial condition of Biopsys and J&J as of a
date or dates shortly before the Merger Agreement was executed on May 21, 1997
and stock price information through the close of trading on May 16, 1997.
Stock Price and Trading History. Robertson Stephens reviewed the trading
activity including price and volume of Biopsys Common Stock for the period since
the Biopsys IPO on May 1, 1996. Robertson Stephens also reviewed the trading
activity including price and volume of J&J Common Stock for the one-year period
since May 16, 1996. With respect to J&J, Robertson Stephens noted that, since
May 16, 1996, the daily closing prices of the J&J Common Stock ranged from a
high of $62.75 on February 18, 1997 to a low of $46.00 on July 15, 1996. With
respect to Biopsys, Robertson Stephens noted that, since May 1, 1996, the daily
closing prices of Biopsys Common Stock ranged from a high of $34.25 on March 10,
1997 to a low of $13.00 on July 30, 1996. In addition, Robertson Stephens
compared the indexed performance of Biopsys Common Stock and J&J Common Stock.
Robertson Stephens also compared the performance of Biopsys Common Stock with
the performance of the common stock of each of Bionx, Inc., CardioThoracic
Systems, Inc., Cytyc Corporation, Mimimed Inc., Perclose, Inc., and Spine-Tech,
Inc. (collectively, the "Comparable Companies"), as well as with an index
comprised of the Comparable Companies, since May 1, 1996. Bionx, Inc. was
excluded from the stock price and trading history analysis due to the recent
date of its initial public offering. Robertson Stephens also compared the
indexed performance of Biopsys Common Stock, the Nasdaq Composite Index and the
Robertson Stephens Medical Products/Supplies Index since May 1, 1996.
Discounted Cash Flow Analysis. Robertson Stephens also performed
discounted cash flow analyses of Biopsys and presented a range of implied equity
values per Biopsys share of $21.47 to $26.83. In performing these analyses,
Robertson Stephens aggregated the present value of cash flows projected by
Biopsys' management to be generated by Biopsys' base business (the "Base
Business") and by more speculative Biopsys research and development efforts for
additional applications (the "R&D Business"), and selected the following
parameters: for the Base Business, terminal valuations ranging from 9.0x to
10.0x of operating income for the fiscal year ending June 2004 and discount
rates ranging from 18% to 20%, and for the R&D Business, terminal valuations
ranging from 9.0x to 10.0x of operating income for the calendar year ending
December 2004 and discount rates ranging from 35% to 40%.
Comparable Company Analysis. Robertson Stephens applied certain projected
Biopsys financial data to multiples of such parameters accorded to the
Comparable Companies. Multiples compared included total capitalization to
revenue and total capitalization to operating income for calendar years 1997,
1998 and 1999, and market capitalization to net income for calendar years 1998
and 1999.
For Biopsys, based on total capitalization to revenues multiples of 4.2x to
20.9x, with an average of 8.8x, for projected calendar year 1997 for the
Comparable Companies, implied equity value per share ranged from $12.73 to
$51.26, with an average of $23.31. Based on total capitalization to revenues
multiples of 2.1x to 4.3x, with an average of 3.2x, for projected calendar year
1998 for the Comparable Companies, implied equity value per share ranged from
$11.08 to $19.68, with an average of $15.47. Based on total capitalization to
revenues multiples of 1.0x to 3.3x, with an average of 2.2x, for projected
calendar year 1999 for the Comparable Companies, implied equity value per share
ranged from $10.62 to $27.42, with an average of $18.95. Based on total
capitalization to operating income multiples of 26.4x to 49.4x, with an average
of 36.5x, for projected calendar year 1997 for the Comparable Companies, implied
equity value per share ranged from $15.15 to $25.61, with an average of $19.76.
Based on total capitalization to operating income multiples of 10.9x to 20.8x,
with an average of 15.9x, for projected calendar year 1998 for the Comparable
Companies, implied equity value per share ranged from $16.41 to $28.45, with an
average of $22.53. Based on total capitalization to operating income multiples
of 5.4x to 11.3x, with an average of 8.2x, for projected calendar year 1999 for
the Comparable Companies, implied equity value per share ranged from $17.02 to
$32.03, with an average of
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$24.11. Based on price per share to earnings per share multiples of 21.3x to
37.4x, with an average of 30.9x for projected calendar year 1998 for the
Comparable Companies, implied equity value per share ranged from $16.92 to
$29.72, with an average of $24.58. Based on price per share to earnings per
share multiples of 12.4x to 21.7x, with an average of 15.8x, for projected
calendar year 1999 for the Comparable Companies, implied equity value per share
ranged from $19.82 to $34.78, with an average of $25.21.
Comparable Transaction Analysis. Robertson Stephens also analyzed publicly
available information for ten selected pending or completed acquisitions and
mergers within the medical device and medical equipment industries. The mergers
listed with target/acquirer (year of announcement) were: Target Therapeutics
Inc./Boston Scientific Corp. (1997); Ventritex Inc./St. Jude Medical Inc.
(1996); Corvita Corp./Pfizer Inc. (1996); InStent Inc./Medtronic Inc. (1996);
Daig Corp./St. Jude Medical Inc. (1996); EP Technologies, Inc./Boston Scientific
Corp. (1995); Meadox Medical Inc./Boston Scientific Corp. (1995); Heart
Technology Inc./Boston Scientific Corp. (1995); Mitek Surgical Products,
Inc./J&J (1995); Cardiovascular Imaging Systems Inc./Boston Scientific Corp.
(1994). In examining these transactions, Robertson Stephens applied the multiple
of aggregate consideration over available research analysts' projected revenues
for the targets' first twelve months ("Forward One Year") and second twelve
months after the announcement date (Forward Two Years), respectively, to
projected Biopsys revenue for such periods. Based on the Forward One Year
multiple range of 2.3x to 10.5x, with an average of 5.9x, Biopsys' implied
equity value per share ranged from $8.82 to $28.60, with an average of $17.47.
Based on the Forward Two Years multiple range of 2.1x to 8.7x, with an average
of 4.9x, Biopsys' implied equity value per share ranged from $12.45 to $42.47,
with an average of $25.12.
No company or transaction used in the analyses described in the preceding
three paragraphs is identical to Biopsys, J&J or the Merger. Accordingly, an
analysis of the results of the foregoing is not entirely mathematical; rather,
it involves complex considerations and judgments concerning the differences in
the financial and operating characteristics of the comparable companies or
transactions and other factors that could affect the acquisition or public
trading values of the comparable companies or transactions.
Exchange Ratio Analysis. Robertson Stephens reviewed the historical
exchange ratio of shares of Biopsys Common Stock per share of J&J Common Stock
implied by the daily closing prices of J&J Common Stock and Biopsys Common Stock
since May 16, 1996. Robertson Stephens noted that the average implied exchange
ratio since May 16, 1996 was 0.405 with a high of 0.591 on March 14, 1997 and a
low of 0.252 on August 7, 1996.
The preparation of fairness opinions involves various determinations as to
the most appropriate and relevant quantitative and qualitative methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such opinions are not readily susceptible to
summary description. Accordingly, Robertson Stephens believes its analyses must
be considered as a whole and that considering any portion of such analyses and
the factors, without considering all such analyses and current factors, could
create a misleading or incomplete view of the process underlying such opinions.
In its analyses, Robertson Stephens made numerous assumptions with respect to
industry performance, general business and other conditions and matters, many of
which are beyond the control of Biopsys and J&J. Any estimates contained in
these analyses are not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or less favorable than
as set forth therein. In addition, analyses relating to the value of a business
do not purport to be appraisals or to reflect the prices at which businesses
actually may be sold.
Biopsys retained Robertson Stephens to act as its exclusive financial
advisor in connection with the Merger. Robertson Stephens was retained based on
Robertson Stephens' experience as financial advisor in connection with mergers
and acquisitions as well as Robertson Stephens' industry knowledge and its
investment banking relationship and familiarity with Biopsys. Robertson Stephens
has provided financial advisory and investment banking services to Biopsys since
1996. Robertson Stephens acted as lead underwriter for the Biopsys IPO in May
1996 and with respect to that transaction, Robertson Stephens has been
compensated for such services in the form of customary underwriting discounts.
Robertson Stephens also makes a market in Biopsys Common Stock. In the course of
its market making and other activities, Robertson Stephens may, from time to
time, have a long or short position in and buy and sell securities of Biopsys.
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Biopsys formally engaged Robertson Stephens on January 21, 1997 by means of
an engagement letter to provide financial advisory services in connection with
potential merger or acquisition transactions. Pursuant to the terms of the
engagement letter, Robertson Stephens is to be paid, contingent upon the closing
of the Merger, a fee of $2.79 million. A payment of $500,000 became due and
payable to Robertson Stephens upon delivery of its fairness opinion. The
remainder of the Robertson Stephens fee is due and payable upon consummation of
the Merger. Biopsys has also agreed to reimburse Robertson Stephens for its
out-of-pocket expenses and to indemnify Robertson Stephens for certain
liabilities relating to or arising out of services provided by Robertson
Stephens as financial advisor to Biopsys.
Robertson Stephens is a nationally recognized investment banking firm. As
part of its investment banking business, Robertson Stephens is frequently
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
securities, private placements and other purposes. In the past, Robertson
Stephens has provided J&J with advisory services in connection with other
transactions pursuant to customary terms.
EFFECTIVE TIME
The Merger shall become effective at such time as a Certificate of Merger
is duly filed with the Secretary of State of the State of Delaware, or at such
later time as is specified in such Certificate of Merger. The Merger Agreement
provides that J&J and Biopsys will cause a Certificate of Merger to be filed as
soon as practicable on or after the Closing Date. See "THE MERGER
AGREEMENT -- Conditions to the Consummation of the Merger."
MERGER CONSIDERATION
At the Effective Time, each issued and outstanding share of Biopsys Common
Stock (together with the associated Right), other than shares owned by J&J,
Merger Sub or Biopsys, will be converted into the right to receive that number
of fully paid and nonassessable shares of J&J Common Stock equal to the Exchange
Ratio. For purposes of illustration only, based on the average per share closing
price of J&J Common Stock during the 20 full trading day period ended June 25,
1997, each share of Biopsys Common Stock would be converted into the right to
receive approximately 0.4378 shares of J&J Common Stock. There can be no
assurance that the Exchange Ratio will be equal to the 0.4378 shares of J&J
Common Stock set forth in the illustration in the preceding sentence since the
market price of J&J Common Stock can be expected to vary due to changes in the
business operations or prospects of J&J, general and economic conditions and
other factors. As of the Effective Time, all shares of Biopsys Common Stock will
no longer be outstanding and will automatically be canceled and retired and will
cease to exist, and each holder of a certificate which immediately prior to the
Effective Time represented any such shares of Biopsys Common Stock will 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,
without interest.
Any shares of Biopsys Common Stock owned by J&J, Merger Sub or Biopsys will
be canceled and retired and will cease to exist and no consideration will be
delivered in exchange therefor.
EXCHANGE AGENT; EXCHANGE PROCEDURES; DIVIDENDS; NO FURTHER OWNERSHIP RIGHTS IN
BIOPSYS 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 of similar size designated by J&J (the "Exchange Agent"), for
the benefit of the holders of shares of Biopsys 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 but in any event within 10 business days thereafter, J&J will 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 Biopsys Common Stock (the "Certificates"), whose shares
were converted into the right to receive shares of
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J&J Common Stock pursuant to the Merger Agreement, (i) a letter of transmittal
(which shall specify that delivery will be effected, and risk of loss and title
to the Certificates will pass, only upon delivery of the Certificates to the
Exchange Agent and will 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 cancelation 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 will be entitled to receive in exchange therefor a certificate
representing that number of whole shares of J&J Common Stock which such holder
under all such Certificates so surrendered, cash in lieu of fractional shares of
J&J Common Stock to which such holder is entitled and any dividends or other
distributions to which such holder is entitled, and the Certificate so
surrendered will forthwith be canceled. In the event of a transfer of ownership
of Biopsys Common Stock that is not registered in the transfer records of
Biopsys, 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 will be properly endorsed or otherwise be in proper form
for transfer and the person requesting such payment pays 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
reasonable satisfaction of J&J that such taxes have been paid or are
nonapplicable. Until surrendered, each Certificate will 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. No interest will be paid or will
accrue on any cash payable pursuant to the exchange provisions of the Merger
Agreement.
BIOPSYS STOCKHOLDERS SHOULD NOT FORWARD BIOPSYS STOCK CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS. BIOPSYS STOCKHOLDERS
SHOULD NOT RETURN BIOPSYS STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
Dividends. No dividends or other distributions with respect to J&J Common
Stock with a record date after the Effective Time will 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, will be
paid to any such holder until the holder of record of such Certificate
surrenders such Certificate. Following surrender of any such Certificate, there
will 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 to which such holder is entitled 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 Biopsys Common Stock. All shares of J&J
Common Stock issued upon the surrender for exchange of shares of Biopsys Common
Stock in accordance with the terms hereof (including any cash paid) will be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Biopsys 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 Biopsys
on such shares of Biopsys Common Stock in accordance with the terms of, or prior
to the date of, the Merger Agreement and which remain unpaid at the Effective
Time, and there will be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Biopsys 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
described herein.
No Fractional Shares. No certificates or scrip representing fractional
shares of J&J Common Stock will be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle
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the owner thereof to vote or to any rights of a stockholder of J&J. Each holder
of shares of Biopsys 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 will receive, in lieu thereof, cash (without interest) in an amount, less
the amount of any withholding taxes which may be required thereon, equal to such
fraction of a share of J&J Common Stock multiplied by the per share closing
price of J&J Common Stock on the date of the Special Meeting, as such price is
reported on the NYSE Composite Transactions Tape.
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 Biopsys stockholders pursuant to the
Merger Agreement will 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, and as a result of the transactions contemplated by, the Merger
Agreement are treasury shares that have been approved for listing on the NYSE.
EXPENSES
The Merger Agreement provides that (except under the circumstances
described under "THE MERGER AGREEMENT -- Termination Fee") all fees and expenses
incurred in connection with the Merger, the Merger Agreement and the Stock
Option Agreement and the transactions contemplated by the Merger Agreement and
the Stock Option Agreement will be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated, except that expenses
incurred in connection with printing and mailing this Proxy Statement/Prospectus
and the Registration Statement will be shared equally by J&J and Biopsys.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material Federal income tax
considerations relevant to the conversion of shares of Biopsys Common Stock into
J&J Common Stock pursuant to the Merger that are generally applicable to holders
of Biopsys Common Stock. This discussion is based on currently existing
provisions of the Code, existing and proposed Treasury Regulations thereunder
and current administrative rulings and court decisions, all of which are subject
to change. Any such change, which may or may not be retroactive, could affect
the continuing validity of this discussion.
Biopsys stockholders should be aware that this discussion does not deal
with all Federal income tax considerations that may be relevant to particular
Biopsys stockholders in light of their particular circumstances, such as
stockholders who are dealers in securities, who are subject to the alternative
minimum tax provisions of the Code, who are foreign persons, who do not hold
their Biopsys Common Stock as capital assets or who acquired their shares in
connection with stock option or stock purchase plans or in other compensatory
transactions. In addition, the following discussion does not address the tax
consequences of the Merger under foreign, state or local tax laws, the tax
consequences of transactions effectuated prior or subsequent to, or concurrently
with, the Merger (whether or not any such transactions are undertaken in
connection with the Merger), including without limitation any transaction in
which shares of Biopsys Common Stock are acquired or shares of J&J Common Stock
are disposed. ACCORDINGLY, BIOPSYS STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER,
INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.
The Merger is intended to constitute a "reorganization" within the meaning
of Section 368(a) of the Code (a "Reorganization"), in which case, subject to
the limitations and qualifications referred to herein, the Merger will generally
result in the following Federal income tax consequences:
(a) No gain or loss will be recognized by holders of Biopsys Common
Stock solely as a result of the conversion of their shares of Biopsys
Common Stock into shares of J&J Common Stock in the Merger.
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<PAGE> 25
(b) The aggregate tax basis of the J&J Common Stock received by
Biopsys stockholders in the Merger will be the same as the aggregate tax
basis of the Biopsys Common Stock converted pursuant to the Merger (except
for the tax basis attributable to fractional shares).
(c) Cash payments in lieu of fractional shares will be treated as if a
fractional share of J&J Common Stock had been received in the Merger and
then redeemed by J&J. A Biopsys stockholder receiving such cash will
generally recognize gain or loss upon such payment equal to the difference
(if any) between such stockholder's basis in the fractional share and the
amount of cash received.
(d) The holding period of the J&J Common Stock received by each
Biopsys stockholder in the Merger will include the period for which the
Biopsys Common Stock surrendered in exchange therefor was considered to be
held, provided that the Biopsys Common Stock so surrendered is held as a
capital asset at the time of the Merger.
(e) Neither J&J nor Biopsys will recognize any gain solely as a result
of the Merger.
The parties are not requesting a ruling from the Internal Revenue Service
("IRS") in connection with the Merger. Instead, Biopsys has received an opinion
from its tax counsel, Wilson Sonsini Goodrich & Rosati to the effect that, for
Federal income purposes, the Merger will qualify as a Reorganization within the
meaning of Section 368(a) of the Code. This opinion will neither bind the IRS
nor preclude the IRS from adopting a contrary position. In addition, this
opinion is subject to certain assumptions and qualifications and will be based
on the continuing truth and accuracy of certain representations made by J&J,
Merger Sub and Biopsys, including representations made by the respective
managements of J&J, Merger Sub, Biopsys and certain stockholders of Biopsys.
A successful IRS challenge to the Reorganization status of the Merger would
result in Biopsys stockholders recognizing taxable gain or loss with respect to
each share of Biopsys Common Stock surrendered equal to the difference between
such stockholder's basis in such share and the fair market value, as of the
Effective Time, of the J&J Common Stock received in exchange therefor. In such
event, the stockholder's aggregate basis in the J&J Common Stock so received
would equal its fair market value, and the stockholder's holding period for such
stock would begin the day after the Merger.
ANTICIPATED ACCOUNTING TREATMENT
J&J intends to treat the Merger as a pooling of interests for accounting
and financial reporting purposes.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Biopsys Board with respect to the
approval and adoption of the Merger Agreement and the transactions contemplated
thereby, stockholders of Biopsys should be aware that certain members of the
management of Biopsys and the Biopsys Board may have certain interests in the
Merger that are different from, or in addition to, the interests of Biopsys
stockholders generally.
General. Biopsys will be the Surviving Corporation in the Merger and,
following the Merger, will be a wholly owned subsidiary of J&J. The officers of
Biopsys will be the officers of the Surviving Corporation. As of the Record
Date, directors and executive officers of Biopsys owned (i) 3,284,864 shares of
Biopsys Common Stock for which they will receive the same consideration as other
Biopsys stockholders and (ii) 805,750 unexercised Stock Options which will be
treated as described below.
Biopsys Stock Options. The Merger Agreement acknowledges that, by virtue
of the Merger Agreement and the transactions contemplated thereby, terms of
Biopsys' stock option plans (collectively, the "Stock Option Plans") provide for
the acceleration prior to the Effective Time, and the expiration as of the
Effective Time, of each unexercised Stock Option granted thereunder. The J&J
Common Stock to be issued in the Merger in exchange for shares of Biopsys Common
Stock issued upon exercise of the Stock Options is to contain an appropriate
legend to permit the Surviving Corporation to recognize any applicable tax
deductions to which it may be entitled upon the disposition of such shares.
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<PAGE> 26
All Stock Option Plans will terminate as of the Effective Time and the
provisions in any other 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 material plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of Biopsys (collectively, "Benefit Plans") which
provides for the issuance, transfer or grant of any capital stock of Biopsys or
any interest in respect of any capital stock of Biopsys will be deleted as of
the Effective Time, and Biopsys will ensure that following the Effective Time no
holder of a Stock Option or any participant in any Stock Option Plan shall have
any right thereunder to acquire any capital stock of Biopsys, J&J or the
Surviving Corporation. As soon as practicable following the date of the Merger
Agreement but in any event no later than 30 days prior to the Effective Time,
Biopsys will deliver to the holders of Stock Options appropriate notices
describing the transactions contemplated by the Merger Agreement and the effect
consummation of those transactions will have on outstanding Stock Options.
As of the Record Date, Stock Options to purchase 1,744,301 shares of
Biopsys Common Stock were outstanding at exercise prices ranging from $0.080 to
$25.750 per share. The following indicates the value of Stock Options held on
the Record Date by the five highest compensated officers of Biopsys, all
executive officers as a group and all directors as a group (assuming that each
and every Stock Option is exercised), respectively, which Stock Options will
become fully exercisable at the Effective Time:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION STOCK OPTION VALUE
------------------------------------------------------------ ------------------
<S> <C>
Steven L. Gex............................................... $ 3,206,500
President and Chief Executive Officer
Steven J. Naber............................................. $ 2,769,800
Vice President of Finance and Chief Financial Officer
Mark A. Cole, Ph.D.......................................... $ 4,265,835
Vice President of Medical Affairs
Kenneth M. Galt............................................. $ 2,506,500
Vice President of Research and Development
Scott W. Tremberth.......................................... $ 2,496,600
Vice President of Sales
All directors as a group (7 persons)........................ $ 4,922,363
All executive officers as a group (7 persons)............... $ 17,135,485
</TABLE>
Stockholder Agreement. The Stockholder Parties listed in Schedule A of the
Stockholder Agreement, including certain directors (in their capacity as
stockholders), officers (in their capacities as stockholders) and certain
entities with which such directors and officers are associated have entered into
the Stockholder Agreement. The general effect of the Stockholder Agreement is to
increase the likelihood that Stockholder Approval will be obtained. See "THE
MERGER AGREEMENT -- The Stockholder Agreement."
Indemnification Pursuant to the Merger Agreement. J&J has agreed that,
from and after the Effective Time, J&J will cause the Surviving Corporation to
fulfill and honor in all respects the obligations of Biopsys pursuant to (i)
each indemnification agreement currently in effect between Biopsys and each
person who is or was a director or officer of Biopsys at or prior to the
Effective Time and (ii) any indemnification provision under the Biopsys
Certificate of Incorporation or the Biopsys By-laws as each is in effect on the
date hereof (such persons to be indemnified are referred to as, collectively,
the "Indemnified Parties"). The Certificate of Incorporation and By-laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the Biopsys
Certificate of Incorporation and the Biopsys By-laws on the date of the Merger
Agreement, which provisions may 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 any Indemnified Party.
After the Effective Time, J&J also has agreed, to the fullest extent
permitted under applicable law, to indemnify and hold harmless each Indemnified
Party against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
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<PAGE> 27
investigative, to the extent arising out of or pertaining to any action or
omission at or prior to the Effective Time in his or her capacity as a director
or officer of Biopsys arising out of or pertaining to the transactions
contemplated by the Merger Agreement for a period of six years after the
Effective Time.
RESALE OF J&J COMMON STOCK
The J&J Common Stock issued pursuant to the Merger will be transferable
under the Securities Act except for shares issued to any Biopsys stockholder who
may be deemed to be an affiliate of Biopsys (an "Affiliate") for purposes of
Rule 145 under the Securities Act. An Affiliate is defined generally as
including, without limitation, directors, certain executive officers and
beneficial owners of 10% or more of a class or common stock of a company.
Biopsys has agreed to use its reasonable efforts to cause each Affiliate to
deliver to J&J on or prior to the Closing Date, a written agreement (an
"Affiliate Letter") providing, among other things, that such Affiliate will not
transfer any J&J Common Stock received in the Merger, except in compliance with
the Securities Act and the Merger Agreement provides that J&J's obligation to
consummate the Merger is subject to J&J receiving such written agreements from
the Affiliates. This Proxy Statement/ Prospectus does not cover resales of
shares of J&J Common Stock received by any person who may be deemed to be an
Affiliate.
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THE MERGER AGREEMENT
The following is a brief summary of certain provisions of the Merger
Agreement, which is attached as Annex I to this Proxy Statement/Prospectus and
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 and
adoption of the Merger Agreement by the stockholders of Biopsys and the
satisfaction or waiver of the other conditions to the Merger, Merger Sub will be
merged with and into Biopsys (with Biopsys being the Surviving Corporation). The
Effective Time will occur upon the filing with the Secretary of State of the
State of Delaware of a duly executed Certificate of Merger or at such later time
as is specified in such Certificate.
Certificate of Incorporation and By-laws. The Merger Agreement provides
that the Certificate of Incorporation of Merger Sub as in effect immediately
prior to the Effective Time will be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law except that the name of the Surviving Corporation will be
changed to be "Biopsys Medical, Inc." in such Certificate of Incorporation. The
By-laws of Merger Sub as in effect immediately prior to the Effective Time will
be the By-laws of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law. The Merger Agreement provides that J&J
will cause the Surviving Corporation to fulfill and honor and maintain certain
indemnification provisions of the Biopsys Certificate of Incorporation and the
Biopsys By-laws. See "THE MERGER -- Interests of Certain Persons in the Merger."
Conversion of Biopsys Common Stock in the Merger. At the Effective Time,
each issued and outstanding share of Biopsys Common Stock (together with the
associated Right), other than shares of Biopsys Common Stock owned by J&J,
Merger Sub or Biopsys, all of which will be canceled, will be converted into the
right to receive such number of fully paid and nonassessable shares of J&J
Common Stock equal to the Exchange Ratio. Cash will be paid to Biopsys
stockholders in lieu of fractional shares of J&J Common Stock and any dividends
or other distributions to which such holder is entitled. See "THE
MERGER -- Exchange Agent; Exchange Procedures; Dividends; No Further Ownership
Rights in Biopsys 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 Biopsys as to, among other things, (i) the corporate
organization, standing and power of Biopsys; (ii) the absence of subsidiaries of
Biopsys; (iii) Biopsys' capital structure (the "Biopsys Capital Structure
Representations"); (iv) the authorization, execution, delivery, performance and
enforceability of the Merger Agreement and the Stock Option Agreement and
related matters, the Merger Agreement's and the Stock Option 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
or the Stock Option Agreement (except for certain filings specified in the
Merger Agreement) (the "Biopsys Authority Representations"); (v) compliance as
to form of, and the accuracy of information contained in, documents filed with
the SEC; (vi) the accuracy of information supplied by Biopsys 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 and publicly available prior to the date of the
Merger Agreement), including the absence of any material adverse change in
Biopsys, any declaration, setting aside or payment of a dividend or other
distribution (other than Rights issued or to be issued pursuant to the Rights
Agreement), any split, combination or reclassification of capital stock or any
issuance or the authorization of any issuance of any securities in respect of,
in lieu of or in substitution for shares of capital stock, certain increases in
compensation, severance or termination pay, entry into certain employment,
severance or termination agreements, any materially adverse damage, destruction
or loss, any materially adverse change in
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<PAGE> 29
accounting methods, principles or practices and any materially adverse tax
election or settlements or compromises of any material income tax liability;
(viii) absence of material litigation or investigations; (ix) disclosure of
material contracts; (x) compliance with laws applicable to the business of
Biopsys, including environmental laws; (xi) the absence of certain material
changes in the Benefit Plans or labor relations; (xii) the compliance with
applicable laws of the Benefit Plans and certain other matters relating to
ERISA; (xiii) the filing of tax returns and payment of taxes; (xiv) the absence
of "excess parachute payments" under the Code; (xv) good and valid title to, or
valid leasehold interests in (and compliance with the terms of such leaseholds),
all material property and assets necessary to conduct Biopsys' business; (xvi)
ownership of or the right to use, and no infringement of others' rights to, and
lack of licensing of, the intellectual property necessary to conduct Biopsys'
business; (xvii) the voting requirements for the approval of the Merger; (xviii)
compliance with applicable state takeover laws; (xix) amendments to the Rights
Agreement; (xx) certain broker's or advisor's fees; (xxi) the receipt of an
opinion of Robertson Stephens; (xxii) the absence of actions taken or agreed to
be taken which would prevent pooling of interests accounting treatment for the
Merger; and (xxiii) certain matters with respect to contracts or agreements
relating to the third-party distribution, sale, licensing or marketing of
Biopsys' products.
The Merger Agreement also includes representations and warranties by J&J
and Merger Sub as to, among other things, (i) the corporation organization,
standing and power of J&J and Merger Sub; (ii) the authorization, execution,
delivery, performance and enforceability of the Merger Agreement, the Stock
Option Agreement and the Stockholder Agreement and related matters, the Merger
Agreement's, the Stock Option Agreement's and the Stockholder 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,
the Stock Option Agreement or the Stockholder Agreement (except for certain
filings specified in the Merger Agreement) (the "J&J and Merger Sub Authority
Representations"); (iii) compliance as to form of, and the accuracy of
information contained in, documents filed with the SEC; (iv) the accuracy of
information supplied by J&J or Merger Sub in connection with this Proxy
Statement/Prospectus and the Registration Statement; (v) 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 and publicly available prior to the date of the Merger Agreement) including
the absence of any material adverse change in J&J, any declaration, setting
aside or payment of any dividend or other distribution (other than regular
quarterly cash dividends), any split, combination or reclassification of capital
stock or any issuance or the authorization of any issuance of any securities in
respect of, in lieu of or in substitution for shares of capital stock; (vi) the
absence of certain broker's or advisor's fees; (vii) the absence of prior
activities of Merger Sub; and (viii) the absence of actions taken or agreed to
be taken which would prevent pooling of interests accounting treatment for the
Merger.
BUSINESS OF BIOPSYS PENDING THE MERGER
Biopsys has agreed that, prior to the Effective Time, it will carry on its
businesses in the ordinary course consistent with prior conduct and, to the
extent consistent therewith, use commercially reasonable efforts to preserve
intact its current business organization, and preserve its relationship with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with it. Biopsys has also agreed that, prior to the Effective
Time, without J&J's consent, it will not, among other things: (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, (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 (other than the issuance of Biopsys Common Stock
upon the exercise of Stock Options outstanding on the date of, and in accordance
with their terms as of the date of, the Merger Agreement or as contemplated by
the Merger Agreement) or (z) purchase, redeem or otherwise acquire any shares of
capital stock of Biopsys or any other securities thereof or any rights,
warranties or options to acquire any such shares or other securities; (ii)
issue, deliver, sell, grant, 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 (x) the issuance of shares of
Biopsys Common Stock upon the exercise of Stock Options outstanding on the date
of the Merger Agreement and in accordance with their terms as of the date of
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the Merger Agreement or as contemplated by the Merger Agreement or (y) the
issuance of shares of Biopsys Common Stock pursuant to the Stock Option
Agreement); (iii) amend the Biopsys Certificate of Incorporation or the Biopsys
By-laws or other comparable charter or organizational documents; (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 asset or assets which, individually,
is in excess of $50,000 or, in the aggregate, are in excess of $150,000, except
purchases of inventory in the ordinary course of business and except for capital
expenditures (which are described below under subsection (vii)); (v) sell,
lease, license, mortgage or otherwise encumber or otherwise dispose of any of
its properties or assets, except sales of inventory or used equipment in the
ordinary course of business consistent with past practice; (vi)(x) 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 Biopsys, 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 (y)
make any loans, advances or capital contributions to, or investments in, any
other person, other than extensions of credit to customers and advances to
employees, in each case in the ordinary course of business consistent with past
practice; (vii) except for the items set forth in the disclosure schedule to the
Merger Agreement, make or agree to make any new capital expenditure or
expenditures, which, individually, is in excess of $50,000 or, in the aggregate,
are in excess of $150,000 (or $200,000, to the extent that 90 days after the
date of the Merger Agreement have elapsed); (viii) discharge, settle or satisfy
any claims, whether or not pending before a Governmental Entity (as defined in
the Merger Agreement), that individually or in the aggregate have a material
adverse effect on Biopsys, or waive any material benefits of, or agree to modify
in any materially adverse respect any confidentiality, standstill or similar
agreements to which Biopsys is a party; (ix) except in the ordinary course of
business, modify, amend or terminate any material contract or agreement to which
Biopsys is a party or waive, release or assign any material rights or claims
thereunder, in any such case in a manner adverse to Biopsys; (x) enter into any
contracts, agreements, binding arrangements or binding understandings relating
to the distribution, sale, license or marketing by third parties of Biopsys'
products, other than pursuant to any such agreements currently in place in
accordance with their terms as of the date of the Merger Agreement; (xi) except
as required to comply with applicable law, (A) adopt, enter into, terminate or
amend any collective bargaining agreement or Benefit Plan for the benefit or
welfare of any current or former employee, officer or director, (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 of cash compensation
or cash bonuses in the ordinary course of business consistent with past
practice), (C) pay any benefit not provided for under any Benefit Plan or any
other benefit plan or arrangement of Biopsys, (D) increase in any manner the
severance or termination pay of any officer, (E) enter any employment,
consulting, severance, termination or indemnification agreement, arrangement or
understanding with any current or former employee, officer or director, (F)
except as permitted in clause (B) set forth above, 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 agreements or
awards made thereunder) or (G) 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; (xii) form any subsidiary to
Biopsys; (xiii) except as required by GAAP, make any change in accounting
methods, principles or practices; or (xiv) authorize any of, or commit or agree
to take any of, the foregoing actions.
Biopsys also has agreed to (i) file all tax returns and reports
("Post-Signing Returns") required to be filed by it (after taking into account
any extensions); (ii) pay timely all taxes due and payable with respect to such
Post-Signing Returns that are so filed; (iii) accrue a reserve in its books and
records and financial statements in accordance with past practice for all taxes
payable by Biopsys for which no Post-Signing Return is due prior to the
Effective Time; (iv) notify promptly J&J of any action, suit, proceeding, claim
or audit (collectively, "Actions") pending against or with respect to Biopsys in
respect of any tax where there is a
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<PAGE> 31
reasonable possibility of a determination or decision which would have a
material adverse effect on Biopsys' tax liabilities or tax attributes and to not
settle or compromise any such Action without J&J's consent; and (v) not make any
material tax election without J&J's consent.
CERTAIN ADDITIONAL AGREEMENTS
The Merger Agreement contains additional covenants relating to, among other
things, (i) Biopsys promptly establishing a record date and calling a
stockholder meeting; (ii) the use of reasonable efforts to obtain "comfort
letters" from each party's accountants regarding the financial information
contained in this Proxy Statement/Prospectus; (iii) J&J having reasonable access
to Biopsys' properties, books, contracts, commitments, personnel and records;
(iv) consulting with the other party regarding any press release or other public
statement relating to the transactions contemplated by the Merger Agreement and
the Stock Option Agreement; (v) 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 and
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by the Merger
Agreement and the Stock Option Agreement; (vi) Biopsys not amending the Rights
Agreement (other than as contemplated by the Merger Agreement) without J&J's
consent; (vii) Biopsys identifying all persons who are, at the time the Merger
Agreement is submitted for approval to the stockholders of Biopsys, Affiliates
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 and to use
its reasonable efforts to cause each such person to deliver to J&J on or prior
to Closing Date an Affiliate Letter (as described under "THE MERGER -- Resale of
J&J Common Stock"); (viii) each party's use of reasonable efforts to cause the
transactions contemplated by the Merger Agreement, including the Merger, to be
accounted for as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations; and (ix) each party
not taking action or failing to take any action, which action or failure to act
would prevent, or would be reasonably likely to prevent, the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
In addition, J&J has agreed (i) to maintain all rights of indemnification in
favor of the Indemnified Parties as described above under "THE
MERGER -- Interests of Certain Persons in the Merger" and (ii) to use its
reasonable efforts to cause the shares of J&J Common Stock to be issued in the
Merger to be approved for listing on the NYSE.
Under the Merger Agreement, Biopsys has also agreed not to solicit other
Takeover Proposals or to withdraw its recommendation of the Merger except as set
forth under "-- No Solicitation" and "-- Right of the Biopsys Board to Withdraw
Recommendation."
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Conditions to Each Party's Obligations to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver of the following conditions: (i) the Merger Agreement
having received Stockholder Approval; (ii) the shares of J&J Common Stock
issuable to Biopsys stockholders pursuant to the Merger Agreement having been
approved for listing on the NYSE, subject to official notice of issuance; (iii)
the waiting period (and any extensions thereof) under the HSR Act applicable to
the Merger having expired or having been terminated; (iv) there not being in
effect any temporary restraining order, preliminary or permanent injunction or
other order of any court of competent jurisdiction or other legal restraint or
prohibition (collectively, "Restraints") preventing the consummation of the
Merger; and (v) the Registration Statement having become effective under the
Securities Act and not being 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 Biopsys contained in the
Merger Agreement being true and correct (other than the Biopsys Capital
Structure Representations and the Biopsys Authority Representations, which must
be true and correct in all material respects) on and as of the Closing Date
except for changes contemplated by the Merger Agreement and except for those
representations and warranties which address matters only as of a particular
date, which must
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<PAGE> 32
remain true and correct (other than the Biopsys Capital Structure
Representations and the Biopsys Authority Representations, which must remain
true and correct in all material respects) as of such particular date, with the
same force and effect as if made on and as of the Closing Date, except in such
cases (other than the Biopsys Capital Structure Representations and the Biopsys
Authority Representations) where the failure to be so true and correct would not
have a material adverse effect on Biopsys; (ii) Biopsys having performed in all
material respects all obligations required to be performed by it under the
Merger Agreement at or prior to the Closing Date (the conditions described in
subsections (i) and (ii) of this section being referred to as the "J&J
Terminating Conditions"); (iii) J&J having received from each 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 an executed
Affiliate Letter; (iv) there not being pending any suit by, action by or
proceeding by any Governmental Entity, (x) seeking to place limitations on the
ownership of shares of Biopsys Common Stock (or shares of common stock of the
Surviving Corporation) by J&J or Merger Sub or seeking to obtain from Biopsys,
J&J or Merger Sub any damages that are material in relation to Biopsys, (y)
seeking to prohibit or materially limit the ownership or operation by Biopsys,
J&J or any of J&J's subsidiaries of any material portion of any business or of
any assets of Biopsys, J&J or any of J&J's subsidiaries, or to compel Biopsys,
J&J or any of J&J's subsidiaries to dispose of or hold separate any material
portion of any business or of any assets of Biopsys, J&J or any of J&J's
subsidiaries, as a result of the Merger or (z) seeking to prohibit J&J or any of
its subsidiaries from effectively controlling in any material respect the
business or operations of Biopsys (the effects described in clauses (x), (y) and
(z) of this subsection (iv), being collectively referred to as "Limiting
Effects"); (v) at any time on or after the date of the Merger Agreement there
not having occurred any material adverse change in Biopsys (or, if one shall
have occurred, it having been cured); and (vi) J&J and Biopsys having received
letters, respectively, from Coopers & Lybrand L.L.P. and Deloitte & Touche LLP,
dated as of the Closing Date, addressed to J&J and Biopsys, stating in substance
(x) that each of Deloitte & Touche LLP and Coopers & Lybrand L.L.P. concurs with
Biopsys' and J&J's management's conclusion, respectively, that, as of such a
date, no conditions exist which would preclude accounting for the Merger as a
pooling of interests transaction under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations and (y) that the basis for such a
concurrence is Deloitte & Touche LLP's or Coopers & Lybrand L.L.P.'s belief, as
the case may be, that the criteria for such accounting treatment have been met.
Conditions to the Obligations of Biopsys. The obligation of Biopsys to
effect the Merger is further subject to the following conditions: (i) the
representations and warranties of J&J and Merger Sub contained in the Merger
Agreement being true and correct (other than the J&J and Merger Sub Authority
Representations, which must be true and correct in all material respects) on and
as of the Closing Date except for changes contemplated by the Merger Agreement
and except for those representations and warranties which address matters only
as of a particular date, which shall remain true and correct (other than the J&J
and Merger Sub Authority Representations, which must remain true and correct in
all material respects) as of such particular date, with the same force and
effect as if made on and as of the Closing Date, except in such cases (other
than the J&J and Merger Sub Authority Representations) where the failure to be
so true and correct would not have a material adverse effect on J&J; (ii) J&J
and Merger Sub having performed in all material respects all obligations
required to be performed by them under the Merger Agreement at or prior to the
Closing Date (the conditions described in subsections (i) and (ii) of this
section being referred to as the "Biopsys Terminating Conditions"); (iii) the
tax opinions of Wilson Sonsini Goodrich & Rosati, counsel to Biopsys, and
Cravath, Swaine & Moore, counsel to J&J, having been delivered to Biopsys and
J&J, respectively, in form and substance reasonably satisfactory to Biopsys and
J&J; and (iv) at any time on or after the date of the Merger Agreement, there
not having occurred any material adverse change in J&J (or, if one shall have
occurred, it having been cured).
Under the Merger Agreement, none of Biopsys, J&J or Merger Sub may rely on
the failure of any condition to such party's obligation to effect the Merger to
be satisfied if such failure was caused by such party's failure to use
reasonable efforts to consummate the Merger and the other transactions
contemplated by the Merger Agreement.
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NO SOLICITATION
The Merger Agreement provides that Biopsys will not, nor will it authorize
or permit any of its officers, directors or employees or any investment banker,
attorney or other advisor or representative retained by it to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Takeover
Proposal or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
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 if, at any time prior to receipt of Stockholder Approval the Biopsys Board
determines in good faith, after consultation with outside counsel, that failure
to do so would create a substantial risk of liability for breach of its
fiduciary duties to Biopsys stockholders under applicable law, Biopsys may,
prior to receipt of Stockholder Approval, in response to a Takeover Proposal
that was unsolicited or that did not otherwise result from a breach of the terms
described in this paragraph, and subject to compliance with the notice
requirements described in the following paragraph, (x) furnish information with
respect to Biopsys to any person pursuant to a customary and reasonable
confidentiality agreement and (y) participate in negotiations regarding such
Takeover Proposal. Under the Merger Agreement, any violation of the restrictions
set forth in the preceding sentence by any officer, director or employee of
Biopsys or any investment banker, attorney or other advisor or representative of
Biopsys, acting on behalf of Biopsys, will be deemed a breach of the no
solicitation provisions of the Merger Agreement by Biopsys. Under the Merger
Agreement, "Takeover Proposal" means any proposal or offer from any person
relating to any direct or indirect acquisition or purchase of a substantial
amount of assets of Biopsys (other than products of Biopsys) or more than a 20%
interest in the total voting securities of Biopsys 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 Biopsys or any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving
Biopsys, other than the transactions contemplated by the Merger Agreement, the
Stock Option Agreement or the Stockholder Agreement.
Under the Merger Agreement, Biopsys has also agreed to promptly advise J&J
orally and in writing of any request for nonpublic information which Biopsys
reasonably believes could lead to a Takeover Proposal or of any Takeover
Proposal or any inquiry with respect to or which Biopsys reasonably believes
could lead to any Takeover Proposal, the material terms and conditions of such
request, Takeover Proposal or inquiry and the identity of the person making any
such Takeover Proposal or inquiry. Biopsys will keep J&J informed in all
material respects of the status and details (including amendments or proposed
amendments) of any such Takeover Proposal or inquiry.
Nothing contained in the Merger Agreement prohibits Biopsys from (i) taking
and disclosing to its stockholders a position contemplated by Rule 14d-9 and
14e-2(a) promulgated under the Exchange Act or (ii) making any disclosure to
Biopsys stockholders if, in the good faith judgment of the Biopsys Board, after
consultation with independent counsel, failure to so disclose would be
inconsistent with applicable laws; provided that Biopsys shall not, except in
accordance with the provisions of the Merger Agreement described in the next
succeeding paragraph, withdraw or modify, or propose to withdraw or modify, its
recommendation of the Merger or approve or recommend, or propose to approve or
recommend, a Takeover Proposal.
RIGHT OF THE BIOPSYS BOARD TO WITHDRAW RECOMMENDATION
Except as expressly permitted by the terms of the Merger Agreement
described in this paragraph, neither the Biopsys Board nor any committee of
Biopsys may (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to J&J or Merger Sub, the approval or recommendation by such
Board or any such committee of the Merger Agreement or the Merger, (ii) approve
or recommend, or propose to approve or recommend, any Takeover Proposal or (iii)
cause Biopsys to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (an "Acquisition Agreement")
with respect to any Takeover Proposal; provided, however, prior to receipt of
Stockholder Approval, the Biopsys Board, to the extent it determines in good
faith, after consultation with outside counsel, that it is necessary to do so in
order to comply with its fiduciary duties to Biopsys stockholders under
applicable law, may, prior to receipt of Stockholder Approval, withdraw or
modify its approval or recommendation of the Merger Agreement or the
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Merger or approve or recommend any Superior Proposal, in each case at any time
after the third business day following J&J's receipt of written notice (a
"Notice of Superior Proposal") advising J&J that the Biopsys Board has received
a Superior Proposal, specifying the material terms and conditions of the
Superior Proposal and identifying the person making such Superior Proposal (any
amendment to the price or material terms of a Superior Proposal requires an
additional Notice of Superior Proposal and an additional three business day
period thereafter to the extent permitted under applicable law). In addition,
during the Applicable Period, the Biopsys Board, to the extent it determines in
good faith, after consultation with outside counsel, that it is necessary to do
so in order to comply with its fiduciary duties to Biopsys stockholders under
applicable law, may cause Biopsys to terminate the Merger Agreement (and
concurrently with or after such termination, if it so chooses, cause Biopsys to
enter into an Acquisition Agreement with respect to a Superior Proposal);
provided, that Biopsys may not terminate the Merger Agreement pursuant to the
provision of the Merger Agreement described in this sentence unless and until
three business days have elapsed following delivery by the Biopsys Board to J&J
of a Notice of Superior Proposal with respect to a Superior Proposal, and no
later than two days thereafter Biopsys pays to J&J the Termination Fee described
in the next paragraph. Under the Merger Agreement, a "Superior Proposal" means
any 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
voting power of Biopsys Common Stock or all or substantially all the assets of
Biopsys and otherwise on terms which the Biopsys Board determines in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation) to be more favorable to the stockholders of Biopsys than
the Merger and for which financing, to the extent required, is then committed or
which, in the good faith judgment of the Biopsys Board, is capable of being
obtained by such third party.
TERMINATION FEE
The Merger Agreement requires Biopsys to promptly pay to J&J the
Termination Fee of $10 million if the Merger Agreement is terminated (i) by any
party to the Merger Agreement in the event that during the Applicable Period,
the Biopsys Board determines in good faith, after consultation with outside
counsel, that it is necessary to terminate the Merger Agreement in order to
comply with the Biopsys Board's fiduciary duty to Biopsys stockholders under
applicable law (the Biopsys Board must comply with certain notice requirements
before it can terminate the Merger Agreement in the case described in this
subsection (i); see "-- Termination, Amendment and Waiver") or (ii) by any party
to the Merger Agreement who may, under the relevant termination provisions of
the Merger Agreement, so terminate in the event that (x) a Takeover Proposal
shall have been publicly announced and not publicly withdrawn, (y) prior to the
date 12 months following the date of the termination of the Merger Agreement,
Biopsys consummates a Company Acquisition (as defined in the Merger Agreement
and described below) or enters into written Acquisition Agreement providing for
a Company Acquisition and (z) either (I) the Merger is not consummated by
December 31, 1997 and Biopsys has breached its obligations (A) to duly call,
give notice of, convene and hold a meeting of its stockholders for the purpose
of obtaining Stockholder Approval or (B) to recommend to the Biopsys
stockholders approval and adoption of the Merger Agreement (except to the extent
that the Biopsys Board has withdrawn or modified its approval or recommendation
of the Merger Agreement or the Merger as permitted by the provisions of the
Merger Agreement described in the preceding paragraph), (II) Stockholder
Approval is not obtained at the Special Meeting or (III) the Biopsys Board (or
any committee thereof) withdraws or modifies in a manner adverse to J&J its
approval or recommendation of the Merger or the Merger Agreement, fails to
reconfirm its recommendation within 15 business days after a written request to
do so or approves or recommends a Takeover Proposal or the Biopsys Board
resolves to take any of the foregoing actions described under this clause (III).
However, the Merger Agreement provides that no Termination Fee will be payable
if, at the time the Merger Agreement is terminated as a result of the events
described in either clause (I) or (II) of the preceding sentence, there has
occurred an uncured material adverse change with respect to J&J on or after the
date of the Merger Agreement. Under the Merger Agreement, "Company Acquisition"
means any transaction or series of related transactions involving (i) a merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Biopsys pursuant to which the stockholders of
Biopsys immediately preceding such transaction or series of related transactions
hold less than 60% of the equity interests in the surviving or resulting entity
of such transaction or transactions (other than the transactions
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contemplated by the Merger Agreement); (ii) a sale by Biopsys of assets
(excluding inventory and used equipment sold in the ordinary course of business)
representing in excess of 40% of the fair market value of Biopsys' business
immediately prior to such sale; or (iii) the acquisition by any person or group
(including without limitation by way of a tender offer or an exchange offer or
issuance by Biopsys), directly or indirectly, of beneficial ownership or a right
to acquire beneficial ownership of 40% or more of the then outstanding shares of
capital stock of Biopsys.
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 receipt of Stockholder Approval (i) by mutual written consent of J&J,
Merger Sub and Biopsys; (ii) by either J&J or Biopsys if (a) Stockholder
Approval is not obtained at the Special Meeting, (b) if the Merger shall not
have been consummated by December 31, 1997 for any reason; provided, however,
that the right to terminate the Merger Agreement pursuant to the provision of
the Merger Agreement described in this clause (b) will not be available to any
party whose action or failure to act has been a principal cause of or resulted
in the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a wilful and material breach of the Merger Agreement,
(c) if any Restraint, which has any of the Limiting Effects described in
subsection (iv) of the second paragraph under "-- Conditions to Consummation of
the Merger," is in effect and is final and nonappealable, and (d) if, during the
Applicable Period, the Biopsys Board has determined in good faith, after
consultation with outside counsel, that it is necessary to terminate the Merger
Agreement in order to comply with the Biopsys Board's fiduciary duties to
Biopsys stockholders under applicable law; provided, however, that Biopsys may
not terminate the Merger Agreement pursuant to the provision of the Merger
Agreement described in this clause (d) unless and until three business days have
elapsed following delivery by the Biopsys Board to J&J of a Notice of Superior
Proposal with respect to a Superior Proposal, and no later than two days
thereafter Biopsys pays to J&J the Termination Fee; (iii) by J&J if the Biopsys
Board (or any committee thereof) withdraws or modifies in a manner adverse to
J&J its approval or recommendation of the Merger or the Merger Agreement or
failed to reconfirm its recommendation within 15 business days after a written
request to do so, or approved or recommended any Takeover Proposal or the
Biopsys Board resolves to take any of the foregoing actions described under this
subsection (iii); (iv) by Biopsys, upon a breach of any representation,
warranty, covenant or agreement on the part of J&J set forth in the Merger
Agreement, or if any such representation or warranty of J&J shall have become
inaccurate, in either case such that either Biopsys Terminating Condition, as
the case may be, would not be satisfied as of the time of such breach or as of
the time such representation or warranty shall have become inaccurate; provided,
that if such inaccuracy in J&J's representations and warranties or breach by J&J
is curable by J&J through the exercise of its reasonable efforts, then (x)
Biopsys may not terminate the Merger Agreement under the provisions of the
Merger Agreement described in this subsection (iv) with respect to a particular
breach or inaccuracy prior to or during the 45-day period commencing upon
delivery by Biopsys of written notice to J&J describing such breach or
inaccuracy, provided J&J continues to exercise reasonable efforts to cure such
breach or inaccuracy and (y) Biopsys may not, in any event, terminate the Merger
Agreement under the provisions of the Merger Agreement described in this
subsection (iv) if such inaccuracy or breach is cured in all material respects
during such 45-day period; and, provided further, that Biopsys may not terminate
the Merger Agreement pursuant to the provisions of the Merger Agreement
described in this subsection (iv) if it shall have wilfully and materially
breached the Merger Agreement; or (v) by J&J, upon a breach of any
representation, warranty, covenant or agreement on the part of Biopsys set forth
in the Merger Agreement, or if any such representation or warranty of Biopsys
shall have become inaccurate, in either case such that either J&J Terminating
Condition, as the case may be, would not be satisfied as of the time of such
breach or as of the time such representation or warranty shall have become
inaccurate; provided, that if such inaccuracy in the Biopsys' representations
and warranties or breach by Biopsys is curable by Biopsys through the exercise
of its reasonable efforts, then (x) J&J may not terminate the Merger Agreement
under the provisions of the Merger Agreement described in this subsection (v)
with respect to a particular breach or inaccuracy prior to or during the 45-day
period commencing upon delivery by J&J of written notice to Biopsys describing
such breach or inaccuracy, provided Biopsys continues to exercise reasonable
efforts to cure such breach or inaccuracy and (y) J&J may not, in any event,
terminate the Merger
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Agreement under the provisions of the Merger Agreement described in this
subsection (v) if such inaccuracy or breach is cured in all material respects
during such 45-day period; and, provided further, that J&J may not terminate the
Merger Agreement pursuant to the provisions of the Merger Agreement described in
this subsection (v) if it shall have wilfully and materially breached the Merger
Agreement.
Subject to applicable law, (i) the Merger Agreement may be modified or
amended by written agreement executed and delivered by the respective duly
authorized officers of J&J, Merger Sub and Biopsys (except that after
Stockholder Approval has been obtained, no amendment may be made which requires
the approval by such stockholders without the further approval of such
stockholders) and (ii) the parties, by written agreement signed by 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.
THE STOCKHOLDER AGREEMENT
The description of the Stockholder Agreement contained in this Proxy
Statement/Prospectus does not purport to be complete and is qualified in its
entirety by reference to the Stockholder Agreement, a conformed copy of which is
attached hereto as Annex II and incorporated herein by reference.
On May 21, 1997, J&J entered into the Stockholder Agreement with certain
affiliated stockholders of Biopsys (the "Stockholder Parties"). The Stockholder
Parties are listed on Schedule A of the Stockholder Agreement, including certain
directors (in their capacity as stockholders), officers (in their capacity as
stockholders) and certain entities with which such directors and officers are
associated. Together, the Stockholder Parties held (including through trusts for
which any such Stockholder Party may act as trustee) at the Record Date
3,278,394 shares (approximately 33% of the outstanding shares) of Biopsys Common
Stock. Consequently, holders of only approximately 25% of Biopsys Common Stock
who are not parties to the Stockholder Agreement need vote in favor of approval
and adoption of the Merger Agreement for Stockholder Approval to be obtained.
The general effect of the Stockholder Agreement is to increase the likelihood
that Stockholder Approval will be obtained.
Pursuant to the terms of the Stockholder Agreement, each Stockholder Party
has agreed to vote (or cause to be voted), at the Special Meeting or in any
other circumstances upon which a vote, consent or other approval with respect to
the Merger and the Merger Agreement is sought his, her or its shares of Biopsys
Common Stock (together, the "Subject Shares") in favor of approval and adoption
of the Merger Agreement and each of the other transactions contemplated thereby.
Each Stockholder Party also has irrevocably granted to, and appointed, J&J
and two of J&J's officers, in their capacities as officers of J&J, and each of
them individually, such Stockholder Party's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of such
Stockholder Party, to vote such Stockholder Party's Subject Shares, or grant a
consent or approval in respect of such Subject Shares, in favor of approval and
adoption of the Merger Agreement.
Further, each Stockholder Party has agreed: (i) not to, directly or
indirectly, except as contemplated by the Stockholder Agreement, grant any
proxies or powers of attorney with respect to the Subject Shares, deposit the
Subject Shares into a voting trust or enter into a voting agreement with respect
to the Subject Shares; (ii) solely in his or her capacity as a stockholder of
Biopsys, not to, and not to permit any representative of, or advisor to, the
Stockholder Party to, directly or indirectly, (x) solicit, initiate or encourage
the submission of any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantial
assets, reorganization, recapitalization, dissolution, liquidation or winding up
of or by Biopsys or any other Takeover Proposal (as defined in the Merger
Agreement and described above under "-- No Solicitation") (collectively, a
"Competing Proposal") or (y) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing Proposal;
(iii) 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 things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable,
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the Merger and the other transactions contemplated by the Merger Agreement;
provided, however, that subsection (iii) shall not limit or affect any actions
taken by a Stockholder Party in good faith in his or her capacity as an officer
or director of Biopsys; and (iv) that the Stockholder Agreement and the
obligations thereunder will attach to such Stockholder Party's Subject Shares
and will be binding upon any person or entity to which legal or beneficial
ownership of such Subject Shares passes, whether by operation of law or
otherwise, including such Stockholder Party's heirs, guardians, administrators
or successors.
The Stockholder Agreement will terminate on the earlier of the Effective
Time or the date upon which the Merger Agreement is terminated in accordance
with its terms.
THE STOCK OPTION AGREEMENT
The description of the Stock Option Agreement contained in this Proxy
Statement/Prospectus does not purport to be complete and is qualified in its
entirety by reference to the Stock Option Agreement, a conformed copy of which
is attached hereto as Annex III and incorporated herein by reference.
General. Immediately following the execution and delivery of the Merger
Agreement, Biopsys and J&J entered into the Stock Option Agreement pursuant to
which Biopsys granted J&J an option (the "Option") to purchase up to 1,970,511
shares of Biopsys Common Stock (or such number of shares of Biopsys Common Stock
as represents 19.9% of the then-outstanding shares of Biopsys Common Stock) at a
price per share of $27.55.
Exercise of the Options. The Option is exercisable with respect to all
(but not less than all) of the shares subject thereto (the "Option Shares") at
any one time (except as described below), after the occurrence of any event (a
"Purchase Event") entitling J&J to receive the Termination Fee pursuant to the
Merger Agreement. See "-- Termination Fee." The Option will expire upon the
earliest to occur of (i) the Effective Time, (ii) 12 months after the first
occurrence of a Purchase Event and (iii) the termination of the Merger
Agreement, in accordance with its terms, prior to the occurrence of a Purchase
Event (unless J&J has the right to receive the Termination Fee following such
termination of the Merger Agreement upon the occurrence of certain events, in
which case the Option will not terminate until the later of (a) six months
following the time such Termination Fee becomes payable and (b) the expiration
of the period in which J&J has or may have such right to receive a Termination
Fee). Any purchase of shares upon exercise of the Option is subject to
compliance with the HSR Act and the obtaining or making of consents, approvals,
orders, notifications or authorizations, the failure of which to have obtained
or made would have the effect of making the issuance of the Option Shares
illegal. In the event that any such governmental or regulatory approval has not
yet been obtained or made at the time the Option is exercisable, which may
prohibit the exercise of the entire Option, the Option may be exercised for the
maximum number of shares that J&J is then permitted to acquire without such
governmental or regulatory approval. If J&J receives official notice that such
governmental or regulatory approval will not be issued or granted or it is not
granted within six months after a partial exercise in accordance with the
preceding sentence, then J&J may exercise the Cash-Out Right (as defined in the
Stock Option Agreement and described below) for the remaining balance of the
Option Shares. Notwithstanding anything in the Stock Option Agreement to the
contrary, if J&J receives in the aggregate an amount equal to the excess, if
any, of (x) the sum of the proceeds (net of any commissions or similar costs)
received by J&J in connection with any sales or other dispositions of Option
Shares and any dividends received by Grantee on Option Shares over (y) the sum
of (I) the product resulting from multiplying $27.55 by the number of Option
Shares acquired by J&J pursuant to the Option and (II) $9 million, then an
amount equal to such excess must be promptly paid by J&J to Biopsys.
Adjustments to Type and Number of Shares. The type and number of shares or
securities subject to the Option and the purchase price thereof will be adjusted
in the event of any change in Biopsys Common Stock by reason of a stock
dividend, split-up, merger, recapitalization, combination, exchange of shares or
similar transaction, such that J&J will receive (upon exercise of the Option)
the type and number of shares or other securities or property that J&J would
have received if the Option had been exercised immediately prior to such event
(or record date therefor). The number of the Option Shares shall upon timely
issuance be adjusted to equal 19.9% of the then-issued and outstanding shares of
Biopsys Common Stock. In the event Biopsys
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enters into an agreement (i) to consolidate with or merge into any person, other
than J&J or one of its subsidiaries, and Biopsys will not be the surviving
corporation in such consolidation or merger, (ii) to permit any person, other
than J&J or one of its subsidiaries, to merge into Biopsys and Biopsys will be
the surviving corporation of such merger or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person other than J&J or one of
its subsidiaries, then such transaction agreement will provide that the Option
will, upon consummation of such transaction, be converted into or exchanged for
an option to acquire the class and number of shares or other securities or
property that J&J would have received in respect of Biopsys Common Stock if the
Option had been exercised immediately prior to such transaction (or the record
date thereof).
Cash Payment in Respect of the Option. In lieu of purchasing shares of
Biopsys Common Stock pursuant to the Option, J&J may exercise its right (the
"Cash-Out Right") to have Biopsys pay to J&J, an amount in cash equal to the
lesser of (i) $9 million or (ii) the product resulting from multiplying the
number of the Option Shares by the difference between (x) the average closing
price per share, during a designated 20 day period, of Biopsys Common Stock and
(y) $27.55. Notwithstanding anything to the contrary in the Stock Option
Agreement, the sum of (A) the amount equal to the difference of clause (x) and
clause (y)(I) of the second preceding paragraph with respect to any transfer by
J&J of the Option Shares which are not cashed out and (B) the amount received by
J&J pursuant to the Cash-Out Right shall not exceed $9 Million, and J&J must
promptly pay any such excess to Biopsys.
Registration Rights and Listing. J&J has certain rights to require
registration by Biopsys of any shares purchased pursuant to the Option under the
securities laws if necessary for J&J to be able to sell such shares and to
require the listing of such shares on the Nasdaq National Market or other
national securities exchange or national securities quotation system.
Assignability. The Stock Option Agreement may not be assigned or delegated
by J&J or Biopsys thereunder without the prior written consent of the other. The
Option may not be sold, assigned, transferred or otherwise disposed of by J&J,
and any sale, assignment, transfer or disposal shall be null and void. The
Option Shares may not be sold, assigned, transferred or otherwise disposed of
except in an underwritten public offering or to a purchaser or transferee who
would not, immediately following such sale, assignment, transfer or disposal,
beneficially own more than 4.9% of the then-outstanding voting power of Biopsys;
provided, however, that J&J shall be permitted to sell any such shares if the
sale is made pursuant to a tender or exchange offer that has been approved or
recommended by a majority of the members of the Biopsys Board.
Effect of Stock Option Agreement. The Stock Option Agreement is intended
to increase the likelihood that the Merger will be consummated on the terms set
forth in the Merger Agreement. Consequently, certain aspects of the Stock Option
Agreement may have the effect of discouraging persons who might now or prior to
the Effective Time be interested in acquiring all of or a significant interest
in Biopsys from considering or proposing such an acquisition, even if such
persons were prepared to offer higher consideration per share for Biopsys Common
Stock than that implicit in the Exchange Ratio.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Directors and Officers. The directors of Merger Sub immediately prior to
the Effective Time will become the directors of the Surviving Corporation until
their respective successors have been duly elected and qualified or until their
earlier resignation or removal. The officers of Biopsys at the Effective Time
will be the officers of the Surviving Corporation until their respective
successors have been duly appointed and qualified or until their earlier
resignation or removal.
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COMPARATIVE STOCK PRICES AND DIVIDENDS
J&J Common Stock (symbol: JNJ) is listed for trading on the NYSE and
Biopsys Common Stock (symbol: BIOP) is quoted on the Nasdaq National Market. The
following table sets forth, for the periods indicated, the high and low sale
prices per share of J&J Common Stock on the NYSE Composite Transactions Tape and
of Biopsys Common Stock on the Nasdaq National Market and the quarterly cash
dividends per share paid by J&J on shares of J&J Common Stock. Biopsys Common
Stock was not publicly traded prior to the second quarter of 1996, and Biopsys
has never paid cash dividends on shares of Biopsys Common Stock. In addition,
the Merger Agreement restricts Biopsys' ability to pay cash dividends between
the date of the Merger Agreement and the Effective Time.
<TABLE>
<CAPTION>
J&J CASH
COMMON BIOPSYS DIVIDENDS PER
STOCK(1) COMMON STOCK SHARE OF J&J
------------- ------------ COMMON
HIGH LOW HIGH LOW STOCK(1)
---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
1994
First Quarter............................... $22 7/8 $ 18 N/A N/A $ 0.130
Second Quarter.............................. 22 1/2 18 N/A N/A 0.145
Third Quarter............................... 26 1/4 21 1/8 N/A N/A 0.145
Fourth Quarter.............................. 28 1/4 24 3/4 N/A N/A 0.145
1995
First Quarter............................... 31 1/2 26 3/4 N/A N/A 0.145
Second Quarter.............................. 35 5/8 29 1/4 N/A N/A 0.165
Third Quarter............................... 37 1/2 32 1/4 N/A N/A 0.165
Fourth Quarter.............................. 46 1/4 36 5/8 N/A N/A 0.165
1996
First Quarter............................... 50 1/4 41 5/8 N/A N/A 0.165
Second Quarter.............................. 50 3/4 42 7/8 $28 $16 3/4 0.190
Third Quarter............................... 53 3/8 44 1/8 20 12 1/2 0.190
Fourth Quarter.............................. 54 47 1/8 26 14 1/4 0.190
1997
First Quarter............................... 62 3/4 48 5/8 34 3/4 20 0.190
Second Quarter (to June 25, 1997)........... 66 7/8 51 1/8 31 3/4 18 3/4 0.220
</TABLE>
- ---------------
(1) Per share amounts for, and cash dividends paid on, J&J Common Stock have
been restated to retroactively reflect a two-for-one stock split effected in
June 1996.
The following table sets forth the last reported sales prices per share of J&J
Common Stock on the NYSE Composite Transactions Tape and of Biopsys Common Stock
on the Nasdaq National Market on May 21, 1997, the last trading day before
announcement of the Merger Agreement, and on June 25, 1997, the last trading day
prior to the date of this Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
J&J
COMMON BIOPSYS
STOCK COMMON STOCK
----- ------------
<S> <C> <C>
May 21, 1997.................................... $59 3/8 $ 25 3/4
June 25, 1997................................... 65 3/16 27
</TABLE>
BIOPSYS STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR J&J
COMMON STOCK AND BIOPSYS COMMON STOCK IN CONNECTION WITH VOTING THEIR SHARES.
36
<PAGE> 40
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF J&J AND BIOPSYS
The rights of J&J stockholders 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 Biopsys stockholders are governed by the Biopsys Certificate of
Incorporation, the Biopsys By-laws and the DGCL. After the Effective Time, the
rights of Biopsys stockholders who become J&J stockholders 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 stockholders and the rights of Biopsys stockholders. This summary is not
intended to be complete and is qualified in its entirety by reference to
applicable provisions of the NJBCA and the DGCL and to the Certificate of
Incorporation and By-laws of each of J&J and Biopsys.
Size and Classification of the Board of Directors.
J&J. The J&J Certificate of Incorporation and the J&J By-laws provide that
the total number of J&J directors shall be not less than nine nor more than 18
as determined by the J&J Board from time to time. J&J currently has 13
directors. Directors are elected at each annual meeting of stockholders to serve
until the next annual meeting. The J&J Board is not classified.
Biopsys. The Biopsys Certificate of Incorporation provides that the number
of directors which constitutes the whole Biopsys Board shall be designated in
the Biopsys By-laws. The Biopsys By-laws currently provide that the Biopsys
Board shall consist of seven members. The Biopsys Board is divided into three
classes, consisting of two Class II directors whose term is to expire in 1997,
three Class III directors whose term is to expire in 1998 and two Class I
directors whose term is to expire in 1999. The members of a single class are
elected at each annual meeting of stockholders to serve until the expiration of
the term for which elected and until a successor has been elected and qualified.
Removal of Directors.
J&J. The J&J Certificate of Incorporation and the J&J By-laws provide that
directors of J&J may be removed, with cause, by a majority vote of the
stockholders entitled to vote thereon.
Biopsys. The Biopsys By-laws provide that directors of Biopsys may be
removed, with or without cause, by the holders of a majority of the shares of
Biopsys then entitled to vote at an election of directors.
Special Meeting of Stockholders; Action by Written Consent.
J&J. Under the J&J By-laws, a special meeting of the stockholders 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 J&J, by a Vice-Chairman
of the Executive Committee of J&J, by the President or by a majority of the
directors of the J&J Board and may 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.
Pursuant to the NJBCA, any action required or permitted to be taken at a
meeting of the J&J stockholders generally may be taken without a meeting if all
the stockholders entitled to vote thereon consent thereto in writing.
Biopsys. Under the Biopsys By-laws, a special meeting of stockholders may
be called at any time by the Biopsys Board, by the Chairman of the Biopsys
Board, by the President or by one or more stockholders holding shares in the
aggregate entitled to cast not less than ten percent (10%) of the votes at such
meeting.
Pursuant to the Biopsys Certificate of Incorporation, no action shall be
taken by stockholders of Biopsys except at an annual or special meeting of the
stockholders called in accordance with the Biopsys By-laws, and no action shall
be taken by the stockholders by written consent.
37
<PAGE> 41
Stockholder Inspection Rights; Stockholder Lists.
J&J. Pursuant to the NJBCA, a stockholder who has been a stockholder for
at least six months or who holds, or is authorized in writing by holders of, at
least five percent of the outstanding shares of any class or series of stock of
J&J upon at least five days' written demand has the right for any proper purpose
to inspect in person or by agent or attorney the minutes of the proceedings of
J&J's stockholders and J&J's record of stockholders. Irrespective of the period
such stockholder has held his or her stock or the amount of stock such
stockholder holds, a court is empowered, upon proof of proper purpose, to compel
production for examination by the stockholder of the books and records of
account, minutes and record of stockholders of J&J.
Biopsys. Pursuant to the DGCL, any stockholder, in person or by attorney
or other agent, may, upon written demand given under oath and stating the
purpose thereof, inspect for any proper purpose Biopsys' stock ledger, a list of
its stockholders and its other books and records. A proper purpose is a purpose
reasonably related to such person's interest as a stockholder. A list of
stockholders is to be open to the examination of any stockholder, for any
purpose germane to a meeting of stockholders, for a period of at least 10 days
prior to such meeting. The list is also to be produced and kept at the place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Amendment of Governing Documents.
J&J. Under the NJBCA, a proposed amendment to a corporation's certificate
of incorporation requires approval by the board of directors and an affirmative
vote of a majority of the votes cast by the holders of shares entitled to vote
thereof, unless a specific provision of the NJBCA or the certificate of
incorporation provides otherwise. The J&J Certificate of Incorporation provides
that if any class or series of shares is entitled to vote thereon as a class,
the affirmative vote of a majority of the votes cast in each class is required.
The J&J Certificate of Incorporation also provides that the affirmative vote of
the holders of not less than 80% of the votes entitled to be cast by the holders
of all then outstanding shares of voting stock, voting together as a single
class, and the affirmative vote of a majority of the combined votes entitled to
be cast by "disinterested stockholders" voting together as a single class is
required to amend, repeal or adopt provisions inconsistent with Article EIGHTH
of the J&J Certificate of Incorporation (relating to business combinations with
interested parties); however, this 80% vote shall not be required for any such
amendment, repeal or adoption which is unanimously recommended by the J&J Board
if all its directors are independent directors.
Pursuant to 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
stockholders at a regular or special meeting of the stockholders 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 stockholder
action and such stockholder action may preempt any further action by the J&J
Board.
Biopsys. Pursuant to the DGCL, a proposed amendment to a corporation's
certificate of incorporation requires a resolution adopted by the board of
directors and, unless otherwise provided in the certificate of incorporation,
the affirmative vote of the holders of a majority of the outstanding stock
entitled to vote thereon and the affirmative vote of the holders of a majority
of the outstanding stock of each class entitled to vote thereon as a class. If
any such amendment would adversely affect the rights of any holders of shares of
a class or series, the vote of the holders of a majority of all outstanding
shares of such class or series, voting as a class, is also necessary to
authorize such amendment. The Biopsys Certificate of Incorporation provides that
the Amendment of Article IX (relating to cumulative voting), Article X (relating
to the number and election of directors) or Article XII (relating to stockholder
action) of the Biopsys Certificate of Incorporation requires the affirmative
vote of a majority of the then outstanding voting securities of Biopsys, voting
as a single class.
The DGCL provides that a corporation's by-laws may be adopted, amended or
repealed by the stockholders, and if authorized in the corporation's certificate
of incorporation or by-laws, by such corporation's Board of Directors. The
Biopsys Certificate of Incorporation and the Biopsys By-laws provide that the
Biopsys Board may adopt, amend or repeal the Biopsys By-laws, except that the
affirmative vote of a majority of the then outstanding voting securities of
Biopsys, voting as a single class, is required for the amendment,
38
<PAGE> 42
repeal or modification of Sections 2.4 (relating to notice of stockholders'
meetings), 2.5 (relating to advance notice of stockholders nominees and
stockholder business), 2.10 (relating to stockholder action by written consent
without a meeting) or 3.2 (relating to the number of directors) of the Biopsys
By-laws.
Corporation's Best Interest.
J&J. Under the NJBCA, the director of a New Jersey corporation, 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 may
consider any of the following (in addition to the effects of any action on
stockholders): (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 interests of the corporation and its stockholders, 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 obligation
to facilitate, remove any obstacles to, or refrain from impeding such proposal
or offer.
Biopsys. The DGCL does not include a comparable provision.
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 stockholders 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
participation 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 stockholder.
Biopsys. DGCL requires the affirmative vote of a majority of the Board of
Directors of a Delaware corporation and 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 certificate of incorporation is not amended, (iii) each share
of stock of such corporation outstanding immediately prior to the effective date
of the merger is to be an identical outstanding share of such corporation after
the effective date of the merger and (iv) either no shares of common stock of
such corporation and no shares, securities or obligations convertible into such
stock are to be issued or delivered under the plan of merger, or the authorized
unissued shares or the treasury shares of common stock of such corporation to be
issued or delivered under the plan of merger plus those initially issuable upon
conversion of any other shares, securities or obligations to be issued or
delivered under such plan, do not exceed 20% of the shares of common stock of
such corporation outstanding immediately prior to the effective date of the
merger. A sale of all or substantially all of a Delaware corporation's assets or
a voluntary dissolution of a Delaware corporation requires the affirmative vote
of a majority of the Board of Directors and at least a majority of such
corporation outstanding shares entitled to vote thereon.
39
<PAGE> 43
Business Combinations.
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 stockholder
(generally, a 10% or greater stockholder) of such corporation for a period of
five years following such interested stockholder'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 stockholder 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 stockholder at a meeting called
for such purpose or (iii) a business combination in which the interested
stockholder pays a formula price designed to ensure that all other stockholders
receive at least the highest price per share paid by such interested
stockholder. In connection with business combinations with any five percent
stockholder, the J&J Certificate of Incorporation contains provisions requiring
the approval of at least 80% of the holders of the J&J Common Stock entitled to
vote in the election of directors and compliance with certain procedural
requirements.
Biopsys. In general, Section 203 of the DGCL prohibits an interested
stockholder (generally, a 15% or greater stockholder) of a Delaware corporation
from engaging in a "business combination" (as defined in the DGCL) with such
corporation for three years following the date such person became an interested
stockholder.
The provision is not applicable when (i) prior to the date the stockholder
became an interested stockholder, the Board of Directors of the corporation
approved either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of the
transaction that resulted in the stockholder becoming an interested stockholder,
such interested stockholder owned at least 85% of the outstanding voting stock
of the corporation, not including shares owned by directors who are also
officers and by certain employee stock plans or (iii) on or subsequent to the
date that stockholder becomes an interested stockholder, the business
combination is approved by the Board of Directors of the corporation and
authorized at a meeting of stockholders, and not by written consent, by the
affirmative vote of the holders of at least two-thirds of the outstanding voting
stock entitled to vote thereon, excluding shares owned by the interested
stockholder.
The restrictions of Section 203 generally do not apply to business
combinations with an interested stockholder that are proposed subsequent to the
public announcement of, and prior to the consummation or abandonment of, certain
mergers, sales of a majority of a corporation's assets or tender offers for 50%
or more of a corporation voting stock.
The DGCL allows corporations to elect not to be subject to the provisions
of the DGCL. Biopsys 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 its common stock.
Biopsys. On November 8, 1996, the Biopsys Board declared a dividend of one
preferred share purchase Right for each outstanding share of Biopsys Common
Stock. Under certain conditions, each Right may be exercised to purchase from
Biopsys one one-thousandth of a share of Biopsys Series A Preferred Stock, par
value $.001 per share (the "Preferred Shares"), at a price of $90 per one
one-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment.
The Rights will be exercisable only following (i) a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired, or obtained a right to acquire, beneficial
40
<PAGE> 44
ownership of 15% or more of the outstanding Biopsys Common Shares or (ii) the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Biopsys Common
Shares. Unless the Rights are earlier redeemed, in the event that an Acquiring
Person becomes the beneficial owner of 15% or more of the Biopsys Common Stock
then outstanding (other than pursuant to a tender offer for all outstanding
shares of Biopsys Common Stock that has been determined by a majority of the
independent directors to be adequate and otherwise in the best interests of
Biopsys and its stockholders), then each holder of a Right (other than Rights
beneficially owned by the Acquiring Person, which will thereafter be void) will
have the right to receive, upon exercise, Biopsys Common Stock (or in certain
circumstances, property or other securities of Biopsys or of the "Principal
Party" entering into a transaction with Biopsys) having a value equal to two
times the Purchase Price.
At any time after the acquisition by an Acquiring Person of 15% or more of
the outstanding shares of Biopsys Common Stock and prior to the acquisition by
such Acquiring Person of 50% or more of the outstanding shares of Biopsys Common
Stock, the Biopsys Board may exchange the Rights (other than Rights owned by the
Acquiring Person), in whole or in part, at an exchange ratio of one share of
Biopsys Common Stock per Right. At any time on or prior to the close of business
on the earlier of the tenth day following the acquisition by an Acquiring Person
of a 15% interest in Biopsys or such later date as may be determined by a
majority of the independent directors and publicly announced by Biopsys or the
Final Expiration Date, Biopsys may redeem the Rights in whole, but not in part,
at a price of $.001 per Right. Until a Right is exercised, the holder thereof,
as such, will have no rights as a stockholder of Biopsys, including, without
limitation, the right to vote or to receive dividends.
Under the Rights Agreement adopted November 8, 1996, the Rights were to
expire on November 8, 2006 (the "Final Expiration Date") unless the Rights were
earlier redeemed or exchanged as described above. However, pursuant to the
Merger Agreement, Biopsys has amended the Rights Agreement so as to provide that
the Final Expiration Date will occur upon the earlier of (i) the Effective Time
or (ii) November 8, 2006. Pursuant to the Merger Agreement, Biopsys also has
amended the Rights Agreement so as to render the Rights Agreement inapplicable
to the Merger and the other transactions contemplated by the Merger Agreement,
the Stock Option Agreement and the Stockholder Agreement.
OTHER MATTERS
REGULATORY APPROVALS REQUIRED
Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (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 and Biopsys each filed with the Antitrust Division and the FTC a
Notification and Report Form with respect to the Merger on June 9, 1997.
Effective June 13, 1997, the waiting period under the HSR Act was terminated. At
any time before or after the Effective Time, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the Merger of
seeking the divestiture of Biopsys by J&J, in whole or in part, or the
divestiture of substantial assets of J&J, Biopsys or their respective
subsidiaries. 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 Biopsys relating to the
businesses in which J&J, Biopsys and their respective subsidiaries are engaged,
J&J and Biopsys believe that the consummation of the Merger will not violate the
antitrust laws.
J&J and Biopsys do not believe that any other material governmental
approvals or actions will be required for consummation of the Merger. See "THE
MERGER AGREEMENT -- Conditions to the Consummation of the Merger."
41
<PAGE> 45
ABSENCE OF APPRAISAL RIGHTS
Holders of Biopsys Common Stock will not be entitled to appraisal rights as
a result of the Merger. Under Delaware law, appraisal rights are unavailable to
holders of Biopsys Common Stock because Biopsys Common Stock was, on the record
date, quoted on the Nasdaq National Market and will be converted into shares of
J&J Common Stock, which at the effective time of the Merger will be listed on
the NYSE.
EXPERTS
The consolidated financial statements and financial statement schedule as
of December 29, 1996 and December 31, 1995 and for each of the three fiscal
years in the period ended December 29, 1996 of J&J and subsidiaries included or
incorporated by reference in J&J's Annual Report on Form 10-K for the fiscal
year ended December 29, 1996 have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as set forth in their reports included or incorporated
by reference therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
The financial statements of Biopsys incorporated in this Proxy
Statement/Prospectus by reference to the Annual Report on Form 10-K for the
fiscal year ended June 30, 1996, have been so incorporated in reliance on the
report of Deloitte & Touche LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the shares of J&J Common Stock offered hereby will be
passed upon for J&J by Roger S. Fine, Vice President, General Counsel of J&J.
Mr. Fine 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.
Cravath, Swaine & Moore, counsel for J&J, and Wilson Sonsini Goodrich &
Rosati, counsel for Biopsys, have delivered opinions concerning certain Federal
income tax consequences of the Merger. See "THE MERGER -- Material Federal
Income Tax Consequences" and "THE MERGER AGREEMENT -- Conditions to the
Consummation of the Merger." As of the date of this Proxy Statement/Prospectus,
certain members of Wilson Sonsini Goodrich & Rosati and investment partnerships
of which such persons are partners beneficially own approximately 9,324 shares
of Biopsys Common Stock. J. Casey McGlynn, Secretary of Biopsys, and Christopher
D. Mitchell, Assistant Secretary of Biopsys, are members of Wilson Sonsini
Goodrich & Rosati.
FUTURE STOCKHOLDER PROPOSALS
If the Merger is not consummated, Biopsys will hold a 1997 Annual Meeting
of Stockholders. If such meeting is held, stockholder proposals intended to be
presented at such meeting must be received by Biopsys a reasonable time before
the solicitation of proxies for such meeting is made for inclusion in Biopsys'
proxy materials for such meeting.
42
<PAGE> 46
ANNEX I
<PAGE> 47
================================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of May 21, 1997
Among
JOHNSON & JOHNSON
PALISADES MERGER CORP.
And
BIOPSYS MEDICAL, INC.
================================================================================
<PAGE> 48
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. Effect of the Merger.................................................. 2
SECTION 1.05. Certificate 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...................... 12
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
Preparation of the Form S-4 and the Proxy Statement; Stockholders
SECTION 5.01. Meeting............................................................... 18
SECTION 5.02. Letters of the Company's Accountants.................................. 18
SECTION 5.03. Letters of Parent's Accountants....................................... 18
SECTION 5.04. Access to Information; Confidentiality................................ 19
SECTION 5.05. Reasonable Efforts; Notification...................................... 19
SECTION 5.06. Stock Options......................................................... 19
SECTION 5.07. Indemnification and Insurance......................................... 20
SECTION 5.08. Fees and Expenses..................................................... 21
SECTION 5.09. Public Announcements.................................................. 22
SECTION 5.10. Affiliates............................................................ 22
SECTION 5.11. Stock Exchange Listing................................................ 22
SECTION 5.12. Pooling of Interests.................................................. 22
SECTION 5.13. Stockholder Agreement Legend.......................................... 22
SECTION 5.14. Tax Treatment......................................................... 23
</TABLE>
i
<PAGE> 49
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the Merger............ 23
SECTION 6.02. Conditions to Obligations of Parent and Sub........................... 23
SECTION 6.03 Conditions to Obligation of the Company............................... 24
SECTION 6.04. Frustration of Closing Conditions..................................... 24
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination........................................................... 24
SECTION 7.02. Effect of Termination................................................. 25
SECTION 7.03. Amendment............................................................. 26
SECTION 7.04. Extension; Waiver..................................................... 26
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties......................... 26
SECTION 8.02. Notices............................................................... 26
SECTION 8.03. Definitions........................................................... 27
SECTION 8.04. Interpretation........................................................ 27
SECTION 8.05. Counterparts.......................................................... 27
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries........................ 27
SECTION 8.07. Governing Law......................................................... 28
SECTION 8.08. Assignment............................................................ 28
SECTION 8.09. Enforcement........................................................... 28
SECTION 8.10. Severability.......................................................... 28
Exhibit A Form of Company Affiliate Letter
</TABLE>
ii
<PAGE> 50
AGREEMENT AND PLAN OF MERGER dated as of May 21, 1997,
among JOHNSON & JOHNSON, a New Jersey corporation ("Parent"),
PALISADES MERGER CORP., a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), and BIOPSYS MEDICAL, INC.,
a Delaware corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the Company,
and Parent, acting as the sole stockholder of Sub, have approved the merger of
Sub with and into the Company (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 $.001 per share, of the Company, together with
the associated right (a "Right") to purchase, pursuant to the Company's November
8, 1996 Preferred Shares Rights Agreement (the "Rights Agreement"), one
one-thousandth of a share of the Company's Series A Participating Preferred
Stock, par value $.001 per share (such common stock, together with the Rights,
"Company Common Stock"), other than Company Common Stock owned by Parent, Sub or
the Company, will be converted into the right to receive common stock, par value
$1.00 per share, of Parent ("Parent Common Stock");
WHEREAS, substantially concurrently herewith and as a condition and
inducement to Parent's willingness to enter into this Agreement, Parent and
certain affiliate stockholders of the Company have entered into a Stockholder
Agreement (the "Stockholder Agreement");
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;
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");
WHEREAS, for financial accounting purposes, it is intended that the Merger
will be accounted for as a pooling of interests transaction; and
WHEREAS, immediately following the execution and delivery of this
Agreement, Parent and the Company will enter into a stock option agreement (the
"Option Agreement") pursuant to which the Company will grant Parent the option
to purchase shares of Company Common Stock, upon the terms and subject to the
conditions set forth therein.
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 Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into the Company at
the Effective Time (as defined in Section 1.03). 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 DGCL. At
the election of Parent, any direct or indirect wholly owned subsidiary (as
defined in Section 8.03) of Parent may be substituted for Sub as a constituent
corporation in the Merger. 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 or place is agreed to in writing by the parties
hereto.
<PAGE> 51
SECTION 1.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such other time as Parent 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 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-Laws. (a) The
Certificate of Incorporation of Sub, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law (subject in all cases to Section 5.07), except that the name of
the Surviving Corporation in such Certificate of Incorporation will be changed
to be "Biopsys Medical, Inc.".
(b) The By-Laws of Sub, as in effect immediately prior to the Effective
Time, shall be the By-Laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law (subject in all cases to
Section 5.07).
SECTION 1.06. Directors. The directors of Sub immediately prior to 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 immediately prior to
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 $.01 per
share, of the Surviving Corporation.
(b) Cancelation 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 that is owned by Parent or Sub shall automatically be
canceled and retired and shall cease to exist, 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)) shall be
converted into the right to receive that number (the "Exchange Ratio") of
fully paid and nonassessable shares of Parent Common Stock equal to the
amount obtained by dividing the Per Share Price (as hereinafter defined) by
the Average Price (as hereinafter defined). The "Per Share Price" shall
mean $27.55. The "Average Price" shall mean the average per share closing
price of Parent Common Stock during the 20 full trading days preceding the
date of the last full trading day prior to the Stockholders Meeting (as
defined in Section 5.01) or any adjournment or postponement at which the
Stockholder Approval (as defined in Section 3.01(q)) is obtained, as such
prices are reported on the New York Stock Exchange ("NYSE") Composite
Transactions Tape (as reported by The Wall Street
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<PAGE> 52
Journal, or, if not reported thereby, any other authoritative source). 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 which immediately
prior to the Effective Time represented 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, without interest. Notwithstanding the foregoing, 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 the occurrence or record date of any stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares or if Parent pays or declares an
extraordinary dividend with a record date prior to the Effective Date, 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 of similar size as may be designated by
Parent (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 with a record date after the Effective Time
and any cash payments in lieu of any fractional shares of Parent Common Stock,
being hereinafter referred to as the "Exchange Fund") issuable pursuant to
Section 2.01 in exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time but in any event within 10 business days thereafter, 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 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 cancelation 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 whole shares of Parent Common Stock 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 issuance 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 Section 2.02(e) and any dividends or other distributions to
which such holder is entitled pursuant to
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<PAGE> 53
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).
(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, less the
amount of any withholding taxes which may be required thereon, equal to such
fractional part of a share of Parent Common Stock multiplied by the per share
closing price of Parent Common Stock on the date of the Stockholders Meeting, as
such price is reported on the NYSE Composite Transactions Tape (as reported by
The Wall Street Journal, or, if not reported thereby, any other authoritative
source).
(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, and Parent shall remain liable 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 from the Exchange
Fund in each case delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
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<PAGE> 54
(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 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. Except as
set forth on the disclosure schedule delivered by the Company to Parent prior to
the execution of this Agreement (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now being conducted. The Company 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, leasing
or operation of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed individually or in the aggregate would not have a
material adverse effect (as defined in Section 8.03) on the Company. The
Company has delivered to Parent complete and correct copies of its Restated
Certificate of Incorporation and By-Laws, in each case as amended to the
date hereof.
(b) Subsidiaries. The Company has no subsidiaries.
(c) Capital Structure. The authorized capital stock of the Company
consists of 50,000,000 shares of Company Common Stock and 5,000,000 shares
of preferred stock, par value $.001 per share ("Preferred Stock"). At the
close of business on May 20, 1997, (i) 9,902,067 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) 2,150,000 shares of Company
Common Stock were reserved for issuance pursuant to outstanding Stock
Option Plans (as defined in Section 5.06(a)), (iv) 150,000 shares of
Company Common Stock were reserved for issuance pursuant to the Company's
1996 Employee Stock Purchase Plan (the "ESPP") and (v) 50,000 shares of the
Company's Series A Participating Preferred Stock were reserved for issuance
in connection with the Rights Agreement. Except as set forth above, at the
close of business on May 20, 1997, 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 Stock Option Plans and
the ESPP 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, 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 stockholders
of the Company may vote. Except as set forth above, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company is a party,
or by which it is bound, obligating the Company 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 obligating the Company
to issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking. There are
not any outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company.
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<PAGE> 55
(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. The Company has all requisite corporate power and
authority to enter into the Option Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of this
Agreement and the Option Agreement by the Company and the consummation by
the Company of the transactions contemplated by this Agreement and the
Option Agreement 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 and the Option
Agreement have been duly executed and delivered by the Company and
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms except as enforceability
may be limited by bankruptcy and other similar laws and general principles
of equity. The execution and delivery of this Agreement and the Option
Agreement do not, and the consummation of the transactions contemplated by
this Agreement and the Option Agreement and compliance with the provisions
of this Agreement and the Option Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancelation
or acceleration of any obligation or to loss of a material benefit under,
or result in the creation of any pledge, claim, lien, charge, encumbrance
or security interest of any kind or nature whatsoever (collectively,
"Liens") in or upon any of the properties or assets of the Company under
any provision of (i) the Restated Certificate of Incorporation or By-Laws
of the Company, (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 its 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
its properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights 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 the Option
Agreement, or (z) prevent or materially delay the consummation of any of
the transactions contemplated by this Agreement or the Option Agreement;
(provided that in the case of clauses (y) and (z) as they relate to clause
(iii)(B), such representation shall be made only as of the date hereof). No
consent, approval, order or authorization of, or registration, declaration
or filing with, any Federal, state or local government or any court,
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 in connection with the execution and delivery
of this Agreement or the Option Agreement by the Company or the
consummation by the Company of the Merger or the transactions contemplated
by the Option Agreement, except for (1) 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"), (2) the
filing with the Securities and Exchange Commission (the "SEC") of a proxy
statement relating to the approval by the Company's stockholders of this
Agreement (as amended or supplemented from time to time, the "Proxy
Statement") and such reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement, the Option Agreement and the transactions contemplated by this
Agreement and the Option Agreement, (3) the filing of the Certificate of
Merger with the Delaware Secretary of State and appropriate documents with
the relevant authorities of other states in which the Company is qualified
to do business, (4) such filings with and approvals of the NASDAQ National
Market System (the "NMS") to permit the shares of Company Common Stock that
are to be issued pursuant to the Option Agreement to be traded on the NMS
and (5) such other 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 or
the Option Agreement.
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<PAGE> 56
(e) SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since April
1, 1996 (the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933 (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
at the time they were filed 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, 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 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 ("GAAP") (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 presented the financial position of the
Company as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and the absence of
footnotes). Except as set forth in the Filed SEC Documents (as defined in
Section 3.01(g)), the Company has no liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required under GAAP to be disclosed on a balance sheet of the Company and
which, individually or in the aggregate, would 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 (except to the extent revised or
superseded by amendments or supplements contemplated hereby), 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 (except to the
extent revised or superseded by amendments or supplements contemplated
hereby), at the date it is first mailed to the Company's stockholders and
at the time of the meeting of the Company's stockholders held to vote on
approval and adoption 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"), since the date of the most recent
audited financial statements included in the Filed SEC Documents and, in
the case of clauses (ii), (iii), (iv), (vi) and (vii) only, until the date
hereof, the Company has conducted its business only in the ordinary course
consistent with past practice, and there has not been (i) any material
adverse change (as defined in Section 8.03) 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 (other than the Rights issued or to be issued pursuant to the
Rights Agreement), (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,
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<PAGE> 57
(iv) (x) any granting by the Company to any officer of the Company 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 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 into any employment, severance or termination agreement with any
officer, (v) any damage, destruction or loss, whether or not covered by
insurance, that individually or in the aggregate would have a material
adverse effect on the Company, (vi) any change in accounting methods,
principles or practices having a material adverse effect on the Company,
except insofar as may have been required by a change in GAAP or (vii) any
tax election that individually or in the aggregate would have a material
adverse effect on the Company or any of its tax attributes or any
settlement or compromise of any material income tax liability.
(h) Litigation. There is no suit, action or proceeding pending or, to
the knowledge of the Company after consultation with the Company's outside
counsel, threatened against or affecting the Company that individually or
in the aggregate would 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, or, to the knowledge
of the Company after consultation with the Company's outside counsel,
investigation by any Governmental Entity involving, the Company that
individually or in the aggregate would have a material adverse effect on
the Company.
(i) Contracts. Except as disclosed in the Filed SEC Documents, as of
the date hereof, there are no contracts or agreements that are of a nature
required to be filed as an exhibit under the Exchange Act and the rules and
regulations promulgated thereunder. The Company is not in violation of nor
in default under (nor does there exist any condition which upon the passage
of time or the giving of notice or both would cause such a violation of or
default under) any lease, permit, concession, franchise, license or any
other contract, agreement, arrangement or understanding to which it is a
party or by which it or any of its properties or assets is bound, except
for violations or defaults that individually or in the aggregate would not
have a material adverse effect on the Company. The Company has not entered
into any contract, agreement, arrangement or understanding with any
affiliate of the Company that is currently in effect other than agreements
that are (i) disclosed in the Filed SEC Documents or (ii) not of a nature
required to be disclosed in the SEC Documents.
(j) Compliance with Laws. (i) The Company is in compliance with all
applicable statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any Governmental Entity (collectively, "Legal
Provisions") 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 or prevent or materially
delay the consummation of the Merger or the transactions contemplated by
the Option Agreement. The Company has in effect all Federal, state, local
and foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights, including all
authorizations under Environmental Laws (as hereinafter defined)
("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, or violation of, any such Permit, except for the
lack of Permits and for defaults under, or violations of, Permits which
lack, default or violation individually or in the aggregate would not have
a material adverse effect on the Company. Except as disclosed in the Filed
SEC Documents, the Company has not received any notice or other
communication from the Food and Drug Administration or any other
Governmental Entity (i) contesting the premarket clearance or approval of,
the uses of or the labeling and promotion of any of the Company's products
or (ii) otherwise alleging any violation of any Legal Provision by the
Company.
(ii) The term "Environmental Laws" means any Federal, state or local
statute, ordinance, rule, regulation, permit, consent, approval, license,
judgment, order, decree or injunction relating to: (A) Releases (as defined
in 42 U.S.C. sec.9601(22)) or threatened Releases of Hazardous Material (as
hereinafter defined) into the environment, (B) the generation, treatment,
storage, disposal, use, handling,
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manufacturing, transportation or shipment of Hazardous Material or (C) the
health or safety of employees in the workplace environment. The term
"Hazardous Material" means (1) hazardous substances (as defined in 42
U.S.C. sec.9601(14)), (2) petroleum, including crude oil and any fractions
thereof, (3) natural gas, synthetic gas and any mixtures thereof, (4)
asbestos and/or asbestos containing material, (5) PCBs or materials
containing PCBs and (6) any material regulated as a medical waste or
infectious waste.
(iii) During the period of ownership or operation by the Company of
any of its current or previously owned or leased properties, there have
been no Releases of Hazardous Material in, on, under or affecting such
properties or any surrounding site, and the Company has not disposed of any
Hazardous Material in a manner that has led, or could reasonably be
anticipated to lead to a Release, except in each case for those which
individually or in the aggregate would not have a material adverse effect
on the Company, and except as disclosed in the Filed SEC Documents. Prior
to the period of ownership or operation by the Company of any of its
current or previously owned or leased properties, to the knowledge of the
Company after consultation with the Company's outside counsel, no Hazardous
Material was generated, treated, stored, disposed of, used, handled or
manufactured at, or transported shipped or disposed of from, such current
or previously owned or leased properties, and there were no Releases of
Hazardous Material in, on, under or affecting any such property or any
surrounding site, except in each case for the generation, treatment,
storage, disposal, use, handling, manufacturing, transportation or shipment
of Hazardous Material and Releases which individually or in the aggregate
would not have a material adverse effect on the Company, and except as
disclosed in the Filed SEC Documents. The Company has not received any
written notice of, or entered into any order, settlement or decree relating
to: (A) any violation of any Environmental Laws or the institution or
pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any alleged
violation of Environmental Laws, (B) the response to or remediation of
Hazardous Material at or arising from any of the Company's properties or
any other properties or (C) payment for, response to or remediation of
Hazardous Material at or arising from any of the Company's properties or
any other properties, except in each case for any such notices, orders,
settlements or decrees which individually or in the aggregate would not
have a material adverse effect on the Company.
(k) 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 and until
the date hereof, there has not been any adoption or amendment in any
material respect by the Company 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 material plan, arrangement or
understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of the Company
(collectively, "Benefit Plans"). Except as disclosed in the Filed SEC
Documents, as of the date hereof, there exist no employment, consulting,
severance, termination or indemnification agreements, arrangements or
understandings between the Company, any current or former employee, officer
or director of the Company. There are no collective bargaining or other
labor union agreements to which the Company is a party or by which it is
bound. Since July 1, 1995, the Company has not encountered any labor union
organizing activity, nor had any actual or threatened employee strikes,
work stoppages, slowdowns or lockouts.
(l) ERISA Compliance. (i) Schedule 3.01(l)(i) to the Company
Disclosure Schedule 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(1) of ERISA) and all other Benefit Plans
maintained, or contributed to, by the Company or any 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. The Company has
made available to Parent true, complete and correct copies of (1) each
Benefit Plan (or, in the case of any
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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. The
Company and all the Benefit Plans are all in compliance in all material
respects with applicable provisions of ERISA and the Code.
(ii) All Pension Plans have been the subject of determination letters
from the Internal Revenue Service to the effect that such Pension Plans are
qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and no such determination letter has
been revoked nor has any event occurred since the date of its most recent
determination letter or application therefor that would adversely affect
its qualification or materially increase its costs.
(iii) Neither the Company nor any Commonly Controlled Entity has
maintained, contributed or been obligated to contribute to any Benefit Plan
that is subject to Title IV of ERISA.
(iv) With respect to any Benefit Plan that is an employee welfare
benefit plan, there are no understandings, agreements or undertakings,
written or oral, that would prevent any such plan (including any such plan
covering retirees or other former employees) from being amended or
terminated without material liability to the Company on or at any time
after the Effective Time.
(v) Schedule 3.01(l)(v) to the Company Disclosure Schedule lists all
outstanding Stock Options (as defined in Section 5.06(a)) as of May 16,
1997, 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.
(vi) Except as expressly provided by this Agreement, no employee of
the Company 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.
(vii) The deduction of any amount payable pursuant to the terms of the
Benefit Plans will not be subject to disallowances under Section 162(m) of
the Code.
(m) Taxes. The Company has filed all tax returns and reports required
to be filed by it and has paid all material taxes required to be paid by
it, and the most recent financial statements contained in the Filed SEC
Documents reflect an adequate reserve for all taxes payable by the Company
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, and no requests for waivers of
the time to assess any such taxes are pending. None of the Federal income
tax returns of the Company have been examined by the United States Internal
Revenue Service for the fiscal years through June 30, 1996. The Company has
not taken any action nor does it have any knowledge (after consultation
with the Company's outside counsel) of any fact or circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code. 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.
(n) No Excess Parachute Payments. 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 who is a "disqualified individual" (as such term
is defined in proposed Treasury Regulation Section 1.28OG-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 28OG(b)(1) of the
Code). No such person is entitled to receive any additional payment from
the Company, the Surviving Corporation or any other person (a "Parachute
Gross-Up Payment") in the event that the excise tax of Section 4999(a) of
the Code is imposed on such person. The Board of Directors of the Company
has not granted to any officer, director or employee of the Company any
right to receive any Parachute Gross-Up Payment.
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(o) Title to Properties. (i) The Company has good and valid title to,
or valid leasehold interests in, all its material properties and assets
except for such as are no longer used in the conduct of its businesses or
as have been disposed of in the ordinary course of business and except for
defects in title, easements, restrictive covenants and similar encumbrances
that individually or in the aggregate would not have a material adverse
effect on the Company. All such material assets and properties, other than
assets and properties in which the Company has a leasehold interest, are
free and clear of all Liens and except for Liens that individually or in
the aggregate would not have a material adverse effect on the Company.
(ii) The Company has complied in all material respects with the terms
of all material leases to which it is a party and under which it is in
occupancy, and all such leases are in full force and effect, except for
such noncompliance or failure to be in full force and effect as would not
individually or in the aggregate have a material adverse effect on the
Company. The Company enjoys peaceful and undisturbed possession under all
such material leases, except for failures to do so that would not
individually or in the aggregate have a material adverse effect on the
Company.
(p) Intellectual Property. The Company owns, or is validly licensed
or otherwise has the right to use, all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service
mark rights, copyrights and other proprietary intellectual property rights
and computer programs (collectively, "Intellectual Property Rights") which
are material to the conduct of the business of the Company taken as a
whole. No claims are pending or, to the knowledge of the Company after
consultation with the Company's outside counsel, threatened that the
Company is infringing or otherwise adversely affecting the rights of any
person with regard to any Intellectual Property Right. To the knowledge of
the Company after consultation with the Company's outside counsel, no
person is infringing the rights of the Company with respect to any
Intellectual Property Right. The Company has not licensed, or otherwise
granted, to any third party, any rights in or to any Intellectual Property
Rights.
(q) Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock at the
Stockholders Meeting or any adjournment or postponement thereof to approve
this Agreement (the "Stockholder Approval") 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 hereby.
(r) State Takeover Statutes. The Board of Directors of the Company
has approved the Merger, this Agreement, the Option Agreement and the
Stockholder Agreement, and such approval is sufficient to render
inapplicable to the Merger, this Agreement, the Option Agreement, the
Stockholder Agreement and the transactions contemplated by this Agreement,
the Option Agreement and the Stockholder Agreement, the provisions of
Section 203 of the DGCL to the extent, if any, such Section is applicable
to the Merger, this Agreement, the Option Agreement, the Stockholder
Agreement and the transactions contemplated by this Agreement, the Option
Agreement and the Stockholder Agreement. To the Company's knowledge after
consultation with the Company's outside counsel, no other state takeover
statute or similar statute or regulation applies to or purports to apply to
the Merger, this Agreement, the Option Agreement, the Stockholder Agreement
or the transactions contemplated by this Agreement, the Option Agreement or
the Stockholder Agreement.
(s) Rights Agreement. The Rights Agreement has been amended to (i)
render the Rights Agreement inapplicable to the Merger and the other
transactions contemplated by this Agreement, the Option Agreement and the
Stockholder Agreement, (ii) ensure that (y) none of Parent, its
subsidiaries or its permitted assignees or transferees under the
Stockholder Agreement is an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement solely by virtue of the
execution of this Agreement, the Option Agreement and the Stockholder
Agreement or the consummation of the Merger or the other transactions
contemplated by the Option Agreement or the Stockholder Agreement and (z) a
Distribution Date, a Triggering Event or a Shares Acquisition Date (as such
terms are defined in the Rights Agreement) does not occur solely by reason
of the execution of this Agreement, the Option Agreement and the
Stockholder Agreement, the consummation of the Merger, or the consummation
of the other transactions, contemplated by the Option Agreement or the
Stockholder Agreement and
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(iii) provide that the Final Expiration Date (as defined in the Rights
Agreement) shall occur immediately prior to the Effective Time, and such
amendment may not be further amended by the Company without the prior
consent of Parent in its sole discretion.
(t) Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than Robertson Stephens &
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 and the Option Agreement based upon
arrangements made by or on behalf of the Company. Such fees or expenses
payable by the Company to Robertson Stephens & Company in connection with
this Agreement and the Option Agreement and the transactions contemplated
by this Agreement and the Option Agreement will not exceed such fees and
expenses set forth in Schedule 3.01(t) to the Company Disclosure Schedule.
(u) Opinion of Financial Advisor. The Company has received the
opinion of Robertson Stephens & Company, dated the date hereof, to the
effect that, as of such date, the consideration to be received in the
Merger by the Company's stockholders is fair to the Company's stockholders
from a financial point of view, a signed copy of which opinion has been
promptly delivered to Parent.
(v) Accounting Matters. The Company has not taken nor agreed to take
any action that, to the Company's knowledge after consultation with the
Company's independent public accountants, would prevent the business
combination to be effected by the Merger to be accounted for as a pooling
of interests.
(w) Distribution Agreements. Schedule 3.01(w) to the Company
Disclosure Schedule is a complete list of all contracts or agreements to
which the Company is a party as of the date hereof relating to the
distribution, sale, license or marketing by third parties of the Company's
products. The Company has made available to Parent and its representatives
true and correct copies of all contracts and agreements to which the
Company is a party as of the date hereof relating to the distribution,
sale, license or marketing by third parties of the Company's products.
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 all
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, leasing or operation of its properties
makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed 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 Certificate of
Incorporation and By-Laws of Sub, in each case as amended to the date
hereof.
(b) Authority; Noncontravention. Parent and Sub have all requisite
corporate power and authority to enter into this Agreement (and, in the
case of Parent, the Option Agreement and the Stockholder Agreement), and to
consummate the transactions contemplated by this Agreement (and, in the
case of Parent, those contemplated by the Option Agreement and the
Stockholder Agreement). The execution and delivery of this Agreement (and,
in the case of Parent, the Option Agreement and the Stockholder Agreement)
and the consummation of the transactions contemplated by this Agreement
(and, in the case of Parent, those contemplated by the Option Agreement and
the Stockholder Agreement) have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement (and, in the
case of Parent, the Option Agreement and the Stockholder 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 except as enforceability may be limited
by bankruptcy and other similar laws and general principles of equity. The
execution and delivery of this
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Agreement, the Option Agreement and the Stockholder Agreement do not, and
the consummation of the transactions contemplated by this Agreement, the
Option Agreement and the Stockholder Agreement and compliance with the
provisions of this Agreement, the Option Agreement and the Stockholder
Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancelation 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)(A), any such conflicts, violations, defaults, rights 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 each of
Parent and Sub to perform its obligations under this Agreement and the
Option Agreement, as the case may be, or (z) prevent or materially delay
the consummation of any of the transactions contemplated by this Agreement
or the Option Agreement. 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
(and, in the case of Parent, the Option Agreement and the Stockholder
Agreement) by Parent and Sub or the consummation by Parent and Sub of the
transactions contemplated by this Agreement (and, in the case of Parent,
those contemplated by the Option Agreement and the Stockholder Agreement),
except for (1) the filing of a premerger notification and report form under
the HSR Act, (2) 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, the Option Agreement or the Stockholder Agreement and the
transactions contemplated by this Agreement, the Option Agreement or the
Stockholder Agreement, (3) the filing of the Certificate of Merger with the
Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do
business and (4) 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 or the Option Agreement.
(c) 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 (except to the extent revised or
superseded by amendments or supplements contemplated hereby), 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 (except to the
extent revised or superseded by amendments or supplements contemplated
hereby), at the date it is first mailed to the Company's stockholders and
at the time of the meeting of the Company's stockholders held to vote on
approval and adoption 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.
(d) Absence of Certain Changes or Events. Except as disclosed in the
Parent SEC Documents (as defined in Section 3.02(h)) filed with the SEC by
Parent and publicly available prior to the date of this
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Agreement ("Filed Parent SEC Documents"), since the date of the most recent
audited financial statements included in the Filed Parent SEC Documents
and, only in the case of clauses (ii) and (iii) below, through the date of
this Agreement, Parent has conducted its business only in the ordinary
course consistent with past practice, and there has not been (i) any
material adverse change in Parent, (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 Parent's capital stock (except for
regular quarterly cash dividends) or (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.
(e) Brokers. No broker, investment banker, financial advisor or other
person 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 Parent or
Sub.
(f) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
(g) Accounting Matters. Parent has not taken nor agreed to take any
action that, to Parent's knowledge after consultation with Parent's
independent public accountants, would prevent the business combination to
be effected by the Merger to be accounted for as a pooling of interests.
(h) Parent SEC Documents. Parent has filed all required reports,
schedules, forms, statements and other documents with the SEC since April
1, 1996 (the "Parent SEC Documents"). As of their respective dates, the
Parent SEC Documents complied 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 at the
time they were filed 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, 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 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 GAAP (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 presented the financial position of Parent as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and the absence of footnotes).
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 carry on its businesses in the ordinary course
consistent with the manner as heretofore conducted and, to the extent consistent
therewith, use commercially reasonable efforts to preserve intact its current
business organization, and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with it.
Without limiting the generality of the foregoing, other than as set forth in
Section 4.01 of the Company Disclosure Schedule or with respect to the amendment
of the Rights Agreement (as described in Sec-
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tion 3.01(s)), during the period from the date of this Agreement to the
Effective Time, the Company shall not without Parent's consent:
(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, (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 (other
than the issuance of shares of Company Common Stock upon the exercise of
Stock Options outstanding on the date of this Agreement and in accordance
with their present terms or as contemplated by Section 5.06) or (z)
purchase, redeem or otherwise acquire any shares of capital stock of the
Company 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 (y) the
issuance of shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date of this Agreement and in accordance with
their present terms or as contemplated by Section 5.06 or (z) the issuance
of shares of Company Common Stock pursuant to the Option Agreement);
(iii) amend its Restated Certificate of Incorporation, By-Laws or
other comparable charter or organizational documents;
(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 which, individually, is in excess of $50,000 or, in the aggregate,
are in excess of $150,000, except purchases of inventory in the ordinary
course of business and except for capital expenditures (which are covered
in clause (vii) below);
(v) sell, lease, license, mortgage or otherwise encumber or otherwise
dispose of any of its properties or assets, except sales of inventory or
used equipment 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,
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) make any loans,
advances or capital contributions to, or investments in, any other person,
other than extensions of credit to customers and advances to employees, in
each case in the ordinary course of business consistent with past practice;
(vii) except for the items listed on Schedule 4.01(a)(vii) to the
Company Disclosure Schedule, make or agree to make any new capital
expenditure or expenditures which, individually, is in excess of $50,000
or, in the aggregate, are in excess of $150,000 (or $200,000, to the extent
that 90 days after the date hereof have elapsed);
(viii) discharge, settle or satisfy any claims, whether or not pending
before a Governmental Entity, that individually or in the aggregate have a
material adverse effect on the Company, or waive any material benefits of,
or agree to modify in any materially adverse respect any confidentiality,
standstill or similar agreements to which the Company is a party;
(ix) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which the Company is a
party or waive, release or assign any material rights or claims thereunder,
in any such case in a manner adverse to the Company;
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(x) enter into any contracts, agreements, binding arrangements or
binding understandings relating to the distribution, sale, license or
marketing by third parties of the Company's products, other than pursuant
to any such agreements currently in place in accordance with their terms as
of the date hereof;
(xi) except as required to comply with applicable law, (A) adopt,
enter into, terminate or amend any collective bargaining agreement or
Benefit Plan for the benefit or welfare of any current or former employee,
officer or director, (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 of cash compensation or cash bonuses in the ordinary
course of business consistent with past practice), (C) pay any benefit not
provided for under any Benefit Plan or any other benefit plan or
arrangement of the Company, (D) increase in any manner the severance or
termination pay of any officer, (E) enter any employment, consulting,
severance, termination or indemnification agreement, arrangement or
understanding with any current or former employee, officer or director, (F)
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 agreements
or awards made thereunder) or (G) 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;
(xii) form any subsidiary to the Company;
(xiii) except as required by GAAP, make any change in accounting
methods, principles or practices;
(xiv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Certain Tax Matters. From the date hereof until the Effective Time,
(i) the Company will file all tax returns and reports ("Post-Signing Returns")
required to be filed by it (after taking into account any extensions); (ii) the
Company will timely pay all taxes due and payable with respect to such
Post-Signing Returns that are so filed; (iii) the Company will accrue a reserve
in its books and records and financial statements in accordance with past
practice for all taxes payable by the Company for which no Post-Signing Return
is due prior to the Effective Time; (iv) the Company will promptly notify Parent
of any action, suit, proceeding, claim or audit (collectively, "Actions")
pending against or with respect to the Company in respect of any tax where there
is a reasonable possibility of a determination or decision which would have a
material adverse effect on the Company's tax liabilities or tax attributes and
will not settle or compromise any such Action without Parent's consent; and (v)
the Company will not make any material tax election without Parent's consent.
SECTION 4.02. No Solicitation. (a) The Company shall not, 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
to, directly or indirectly, (i) solicit, initiate or encourage the submission of
any Takeover Proposal (as hereinafter defined) or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action 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 if, at any time prior to
receipt of the Stockholder Approval the Board of Directors of the Company
determines in good faith, after consultation with outside counsel, that failure
to do so would create a substantial risk of liability for breach of its
fiduciary duties to the Company's stockholders under applicable law, the Company
may, in response to a Takeover Proposal that was unsolicited or that did not
otherwise result from a breach of this Section 4.02(a), and subject to
compliance with Section 4.02(c), (x) furnish information with respect to the
Company to any person pursuant to a customary and reasonable confidentiality
agreement and (y) participate in negotiations regarding such Takeover Proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any officer, director or
employee of the Company or any investment banker, attorney or other advisor or
representative of the Company, acting on behalf of the Company, shall be deemed
to be a breach of this Section 4.02(a) by the Company. For purposes of this
Agreement, "Takeover Proposal" means any proposal
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or offer from any person relating to any direct or indirect acquisition or
purchase of a substantial amount of assets of the Company (other than products
of the Company) or more than a 20% interest in the total voting securities of
the Company 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 merger, consolidation, business combination,
sale of substantially all assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company, other than the transactions
contemplated by this Agreement, the Option Agreement or the Stockholder
Agreement.
(b) Except as expressly permitted by 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) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement (an "Acquisition Agreement") with respect to any
Takeover Proposal. Notwithstanding the foregoing, prior to receipt of the
Stockholder Approval, the Board of Directors of the Company, to the extent it
determines in good faith, after consultation with outside counsel, that it is
necessary to do so in order to comply with its fiduciary duties to the Company's
stockholders under applicable law, may withdraw or modify its approval or
recommendation of this Agreement or the Merger or approve or recommend any
Superior Proposal (as hereinafter defined), in each case at any time after the
third business day 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 the Superior Proposal and identifying the person making such Superior
Proposal (it being understood that any amendment to the price or material terms
of a Superior Proposal shall require an additional Notice of Superior Proposal
and an additional three business day period thereafter to the extent permitted
under applicable law). In addition, during the period (the "Applicable Period")
commencing after the earlier of the effectiveness of the Form S-4 and 60 days
after the date hereof and ending on the receipt of the Stockholder Approval, the
Board of Directors of the Company, to the extent it determines in good faith,
after consultation with outside counsel, that it is necessary to do so in order
to comply with its fiduciary duties to the Company's stockholders under
applicable law, may cause the Company to terminate this Agreement in accordance
with Section 7.01(b)(iv) (and concurrently with or after such termination, if it
so chooses, cause the Company to enter into an Acquisition Agreement with
respect to a Superior Proposal). For purposes of this Agreement, a "Superior
Proposal" means any 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 voting power of the Company Common Stock or all or
substantially all the assets of the Company and otherwise on terms which the
Board of Directors of the Company determines in its good faith judgment (after
consultation with a financial advisor of nationally recognized reputation) to be
more favorable to the Company's stockholders than the Merger and for which
financing, to the extent required, is then committed or which, in the good faith
judgment of the Board of Directors of the Company, is capable of being obtained
by such third party.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 4.02, the Company promptly shall advise Parent
orally and in writing of any request for nonpublic information which the Company
reasonably believes could lead to a Takeover Proposal or of any Takeover
Proposal, or any inquiry with respect to or which the Company reasonably
believes could lead to any Takeover Proposal, the material terms and conditions
of such request, Takeover Proposal or inquiry, and the identity of the person
making any such 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 or elsewhere in this Agreement
shall prohibit the Company from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14d-9 and 14e-2(a) promulgated under the Exchange
Act or (ii) making any disclosure to the Company's stockholders if, in the good
faith judgment of the Board of Directors of the Company, after consultation with
independent counsel, failure to so disclose would be inconsistent with
applicable laws; provided that the Company shall not, except in accordance with
the provisions of Section 4.02(b), withdraw or modify, or propose to withdraw or
modify,
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its recommendation of the Merger or approve or recommend, or propose to approve
or recommend, a Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Form S-4 and the Proxy Statement;
Stockholders Meeting. (a) As soon as practicable following the date of this
Agreement, the Company and Parent shall prepare and the Company shall 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 filing. The Company will use its reasonable efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after the Form S-4 is declared effective under the Securities Act. Parent shall
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. 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 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 stockholders (the "Stockholders Meeting") for the
purpose of obtaining the Stockholder Approval. The Company will, through its
Board of Directors, recommend to its stockholders approval and adoption 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 the commencement,
public proposal, public disclosure or communication to the Company of any
Takeover Proposal.
SECTION 5.02. Letters of the Company's Accountants. (a) The Company shall
use its reasonable efforts to cause to be delivered to Parent two comfort
letters from Deloitte and Touche LLP, the Company's independent public
accountants, one dated a date within two business days before the date on which
the Form S-4 shall become effective and one dated a date within two business
days before the Closing Date, each addressed to Parent, in form and substance
reasonably satisfactory to Parent.
(b) The Company shall use its reasonable efforts to cause to be delivered
to Parent a letter from Deloitte and Touche LLP, addressed to Parent and the
Company, dated as of the Closing Date, stating that (i) Deloitte and Touche LLP
concurs with management's conclusion that, as of such date, no conditions exist
with respect to the Company which would preclude accounting for the Merger as a
pooling of interests transaction under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations and (ii) the basis for such a
concurrence is Deloitte and Touche LLP's belief that the criteria for such
accounting treatment have been met.
SECTION 5.03. Letters of Parent's Accountants. (a) Parent shall use
reasonable efforts to cause to be delivered to the Company two comfort letters
from Coopers & Lybrand L.L.P., Parent's independent public accountants, one
dated a date within two business days before the date on which the Form S-4
shall become effective and one dated a date within two business days before the
Closing Date, each addressed to the Company, in the form customarily given to
underwriters in securities offerings of Parent in the past.
(b) Parent shall use its reasonable efforts to cause to be delivered to the
Company a letter from Coopers & Lybrand L.L.P., addressed to the Company and
Parent, dated as of the Closing Date, stating that (i) Coopers & Lybrand L.L.P.
concurs with management's conclusion that, as of such a date, no conditions
exist which would preclude accounting for the Merger as a pooling of interests
transaction under Opinion 16 of the Accounting Principles Board and applicable
SEC rules and regulations and (ii) the basis for such a
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concurrence is Coopers & Lybrand L.L.P.'s belief that the criteria for such
accounting treatment have been met.
SECTION 5.04. Access to Information; Confidentiality. The Company shall
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 or the termination
of this Agreement to all its properties, books, contracts, commitments,
personnel and records and, during such period, the Company shall make available
to Parent (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except as required by
law, Parent will hold, and will cause its officers, employees, accountants,
counsel, financial advisors and other representatives and affiliates to hold,
any and all information received from the Company, directly or indirectly, in
confidence, in accordance with the Secrecy Agreement dated as of July 15, 1996,
between a subsidiary of Parent and the Company (as it may be amended from time
to time, the "Confidentiality Agreement") and will agree to be bound thereby as
if Parent had been a party thereto.
SECTION 5.05. Reasonable Efforts; Notification. (a) 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 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 and the Option Agreement,
including (i) the obtaining of all 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 reasonable steps as may be necessary to
avoid an action or proceeding by any Governmental Entity, (ii) the 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 Option Agreement or the
consummation of the transactions contemplated hereby or thereby, 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 and the
Option 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, the Option Agreement, the Stockholder Agreement or any other
transactions contemplated by this Agreement, the Option Agreement or the
Stockholder Agreement, use all reasonable efforts to ensure that the Merger and
the other transactions contemplated by this Agreement and the Option Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and the Option Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger, this Agreement, the Option Agreement, the
Stockholder Agreement and the other transactions contemplated by this Agreement,
the Option Agreement or the Stockholder Agreement. Nothing in this Agreement
shall be deemed to require Parent to dispose of any significant asset or
collection of assets.
(b) The Company shall give prompt notice to Parent of (i) any
representation or warranty made by it contained in this Agreement or the Option
Agreement becoming untrue or inaccurate such that the condition set forth in
Section 6.02(a) would not be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement or the Option Agreement.
(c) Parent shall give prompt notice to the Company of (i) any
representation or warranty made by it or Sub contained in this Agreement or the
Option Agreement becoming untrue or inaccurate such that the condition set forth
in Section 6.03(a) would not be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement or the Option Agreement.
SECTION 5.06. Stock Options. (a) It is acknowledged that, by virtue of
this Agreement and the transactions contemplated hereby, terms of the Company's
stock option plans (collectively, the "Stock Option
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Plans") provide for the acceleration prior to the Effective Time, and the
expiration as of the Effective Time, of each unexercised option to purchase
shares of Company Common Stock ("Stock Options") granted thereunder. The Parent
Common Stock to be issued in the Merger in exchange for shares of Company Common
Stock issued upon exercise of the Stock Options shall contain an appropriate
legend to permit the Surviving Corporation to recognize any applicable tax
deductions to which it may be entitled upon the disposition of such shares.
(b) All Stock Option Plans shall terminate as of the Effective Time and the
provisions in 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 ensure that following the Effective Time no holder of a Stock
Option or any participant in any Stock Option Plan shall have any right
thereunder to acquire any capital stock of the Company, Parent or the Surviving
Corporation.
(c) As soon as practicable following the date of this Agreement but in any
event no later than 30 days prior to the Effective Time, the Company shall
deliver to the holders of Stock Options appropriate notices describing the
transactions contemplated by this Agreement and the effect consummation of those
transactions will have on outstanding Stock Options. This notice shall meet the
requirements of the notice contemplated by Section 10(c) of the Company's 1996
Director Option Plan and Section 13(c) of the Company's 1993 Option Plan.
SECTION 5.07. Indemnification and Insurance. (a) From and after the
Effective Time, Parent will cause the Surviving Corporation to fulfill and honor
in all respects the obligations of the Company pursuant to (i) each
indemnification agreement currently in effect between the Company and each
person who is or was a director or officer of the Company at or prior to the
Effective Time and (ii) any indemnification provision under the Company's
Restated Certificate of Incorporation or By-Laws as each is in effect on the
date hereof (the persons to be indemnified pursuant to the agreements or
provisions referred to in clauses (i) and (ii) of this Section 5.07(a) shall be
referred to as, collectively, the "Indemnified Parties"). The Certificate of
Incorporation and By-Laws of the Surviving Corporation shall contain the
provisions with respect to indemnification and exculpation from liability set
forth in the Company's Restated Certificate of Incorporation and 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 any Indemnified
Party.
(b) Without limiting the provisions of Section 5.07(a), after the Effective
Time Parent will, to the fullest extent permitted under applicable law,
indemnify and hold harmless each Indemnified Party against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, to the extent arising out of or pertaining to
any action or omission at or prior to the Effective Time in his or her capacity
as a director or officer of the Company arising out of or pertaining to the
transactions contemplated by this Agreement (collectively, "Losses") for a
period of six years after the Effective Time; provided, however, that if, at any
time prior to the sixth anniversary of the Effective Time, any Indemnified Party
delivers to Parent a written notice asserting a claim for indemnification under
this Section 5.07(b), then the claim asserted in such notice shall survive the
sixth anniversary of the Effective Time until such time as such claim is fully
and finally resolved. Each Indemnified Party shall give Parent prompt written
notice of any such claim, action, suit, proceeding or investigation; provided
that the failure to give such prompt notice shall not relieve Parent from any
liability which it may have under this Section 5.07(b) unless Parent is actually
prejudiced as a result. If any such claim, action, suit, proceeding or
investigation shall have been brought against an Indemnified Party and if Parent
shall have acknowledged in writing to the Indemnified Party that Parent will
indemnify the Indemnified Party pursuant to this Section 5.07(b) for all Losses
arising out of such claim, action, suit, proceeding or investigation, then
Parent shall be entitled to participate therein, and to assume the defense
thereof, and to settle and compromise any such claim, action, suit, proceeding
or investigation (so long as the Indemnified Party is completely released and
has no continuing obligations or prohibitions imposed on him or her). If Parent
does not acknowledge its obligation to indemnify for all such Losses or does not
elect to assume
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the defense, settlement or compromise thereof, in each case pursuant to the
preceding sentence, then Parent shall nevertheless have the right to participate
in the defense of any such claim, action, suit, proceeding or investigation and
to consent in writing (not to be unreasonably withheld or delayed) to any
settlement or compromise thereof, but such defense and any settlement or
compromise thereof shall at all times be under the direction of the Indemnified
Person. In the event of any such claim, action, suit, proceeding or
investigation (i) any counsel retained by the Indemnified Parties must be
reasonably satisfactory to Parent, and (ii) after the Effective Time, Parent
will, subject to the second succeeding proviso, pay the reasonable fees and
expenses of one such counsel for all Indemnified Parties (it being agreed that
more than one such counsel may be retained and, subject to the second succeeding
proviso, paid for by Parent if counsel for one of the Indemnified Parties
reasonably concludes that conflicts of interest may exist), promptly after
statements therefor are received; provided,that in the event that any
Indemnified Party is not entitled to indemnification hereunder, any amounts
advanced on his or her behalf shall be remitted to Parent; provided, however,
that, notwithstanding the foregoing, Parent shall not be required to pay for
separate counsel for the Indemnified Parties if Parent shall have acknowledged
in writing to the Indemnified Party that Parent will indemnify the Indemnified
Party pursuant to this Section 5.07(b) for all Losses arising out of such claim,
action, suit, proceeding or investigation unless an Indemnified Party reasonably
concludes that conflicts of interest with Parent may exist, in which case clause
(ii) shall apply without regard to this proviso.
(c) This Section 5.07 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
SECTION 5.08. Fees and Expenses. (a) All fees and expenses incurred in
connection with the Merger, this Agreement and the Option Agreement and the
transactions contemplated by this Agreement and the Option 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 printing and
mailing the Proxy Statement and the Form S-4 shall be shared equally by Parent
and the Company.
(b) In the event that this Agreement is terminated by any party hereto
pursuant to Section 7.01(b)(iv), the Company shall promptly, but in no event
later than two days after the date of such termination, pay Parent a fee equal
to $10 million in immediately available funds (the "Termination Fee"). If, at
the time of any termination of this Agreement by any party hereto pursuant to
Section 7.01(b)(i) (to the extent the Company has theretofore failed to hold the
Stockholders Meeting in breach of its obligations under Section 5.01(b)),
7.01(b)(iii) or 7.01(c), a Takeover Proposal shall have been publicly announced
and not publicly withdrawn and prior to the date 12 months following the date of
the termination of this Agreement the Company shall either (x) consummate a
Company Acquisition (as hereinafter defined) or (y) enter into a written
Acquisition Agreement providing for a Company Acquisition, then the Company
shall pay the Termination Fee in the case of clause (x) concurrently with the
consummation of such Company Acquisition or in the case of clause (y)
concurrently with the consummation of the transaction subject to such
Acquisition Agreement (whether or not such transaction is consummated prior to
the date 12 months following the date of the termination of this Agreement, but
only in the event that such transaction subject to such Acquisition Agreement is
in fact consummated); provided, however, that no Termination Fee shall be
payable pursuant to this sentence if at the time the Agreement is terminated
pursuant to Section 7.01(b)(i) or 7.01(b)(iii) the condition set forth in
Section 6.03(d) shall not have been satisfied. The Company acknowledges that the
agreements contained in this Section 5.08(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement; accordingly, if the Company fails
promptly to pay the amounts due pursuant to this Section 5.08(b), and, in order
to obtain such payment, Parent commences a suit which results in a judgment
against the Company for the amounts set forth in this Section 5.08(b), the
Company shall pay to Parent its reasonable costs and expenses (including
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 5.08(b) at the prime rate of
Chase Manhattan Bank, N.A. in effect on the date such payment was required to be
made. "Company Acquisition" shall mean any transaction or series of related
transactions involving (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company pursuant to which the stockholders of the Company immediately
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preceding such transaction or series of related transactions hold less than 60%
of the equity interests in the surviving or resulting entity of such transaction
or transactions (other than the transactions contemplated by this Agreement);
(ii) a sale by the Company of assets (excluding inventory and used equipment
sold in the ordinary course of business) representing in excess of 40% of the
fair market value of the Company's business immediately prior to such sale; or
(iii) the acquisition by any person or group (including without limitation by
way of a tender offer or an exchange offer or issuance by the Company), directly
or indirectly, of beneficial ownership or a right to acquire beneficial
ownership of 40% or more of the then outstanding shares of capital stock of the
Company.
SECTION 5.09. Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, will, to the extent reasonably practicable,
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 the Option Agreement, 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 national securities
quotation system. The parties agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement and the Option
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 5.10. Affiliates. (a) Prior to the Closing Date, the Company
shall deliver to Parent a letter identifying all persons who are, in the
Company's reasonable judgment, at the time this Agreement is submitted for
approval to the stockholders 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 reasonable efforts to cause all persons who are, in
Parent's reasonable judgment, "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.
SECTION 5.11. Stock Exchange Listing. To the extent Parent does not issue
treasury shares in the Merger which are already listed, Parent shall use its
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Merger and under the Stock Option Plans to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the Closing Date. The
Company shall use reasonable efforts to cause the shares of Company Common Stock
to be issued pursuant to the Option Agreement to be approved for trading on the
NMS, subject to official notice of issuance, prior to their issuance pursuant to
the Option Agreement.
SECTION 5.12. Pooling of Interests. Each of the Company and Parent will
use reasonable efforts to cause the transactions contemplated by this Agreement,
including the Merger, to be accounted for as a pooling of interests under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations, and such accounting treatment to be accepted by each of the
Company's and Parent's independent public accountants, and by the SEC,
respectively, and each of the Company and Parent agrees that it will voluntarily
take no action that would cause (to its knowledge after consultation with its
independent public accountants) such accounting treatment not to be obtained.
SECTION 5.13. Stockholder Agreement Legend. The Company will inscribe
upon any Certificate representing Subject Shares tendered by a Stockholder (as
defined in the Stockholder Agreement) for such purpose the following legend:
"THE SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE, OF BIOPSYS MEDICAL, INC.
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDER AGREEMENT DATED AS
OF MAY 21, 1997, AND ARE SUBJECT TO THE TERMS THEREOF. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF BIOPSYS MEDICAL, INC.".
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<PAGE> 72
SECTION 5.14. Tax Treatment. Each of Parent and the Company shall not
take any action and shall not fail to take any action which action or failure to
act would prevent, or would be reasonably likely to prevent, the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code,
and each shall use reasonable efforts to obtain the opinions of counsel referred
to in Section 6.03(c).
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) Stockholder Approval. This Agreement shall have been approved and
adopted 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 stockholders pursuant to this Agreement shall have been approved
for listing on the NYSE, subject to official notice of issuance.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition
(collectively, "Restraints") preventing the consummation of the Merger
shall be in effect.
(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 contained in this Agreement shall be true and
correct (other than the representations in Sections 3.01(c) and 3.01(d),
which shall be true and correct in all material respects) on and as of the
Closing Date except for changes contemplated by this Agreement and except
for those representations and warranties which address matters only as of a
particular date, which shall remain true and correct (other than the
representations in Sections 3.01(c) and 3.01(d), which shall be true and
correct in all material respects) as of such particular date, with the same
force and effect as if made on and as of the Closing Date, except in such
cases (other than the representations in Sections 3.01(c) and 3.01(d))
where the failure to be so true and correct would not have a material
adverse effect on the Company.
(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.
(c) Letters from Company Affiliates. Parent shall have received from
each person named in the letter referred to in Section 5.10(a) an executed
copy of an agreement substantially in the form of Exhibit A hereto.
(d) No Governmental Litigation. There shall not be pending any suit
by, action by or proceeding by any Governmental Entity, (i) seeking to
place limitations on the ownership of shares of Company Common Stock (or
shares of common stock of the Surviving Corporation) by Parent or Sub or
seeking to obtain from the Company, Parent or Sub any damages that are
material in relation to the Company, (ii) seeking to prohibit or materially
limit the ownership or operation by the Company, Parent or any of Parent's
subsidiaries of any material portion of any business or of any assets of
the Company, Parent or any of Parent's subsidiaries, or to compel the
Company, Parent or any of Parent's subsidiaries to dispose of or hold
separate any material portion of any business or of any assets of the
Company, Parent or any of
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Parent's subsidiaries, as a result of the Merger or (iii) seeking to
prohibit Parent or any of its subsidiaries from effectively controlling in
any material respect the business or operations of the Company.
(e) 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 Company (or, if one shall have occurred, it shall have been cured).
(f) Pooling Letters. Parent and the Company shall have received
letters, respectively, from Coopers & Lybrand L.L.P. and Deloitte and
Touche LLP, dated as of the Closing Date, addressed to Parent and the
Company, stating in substance the matters to be stated by Coopers & Lybrand
L.L.P. and Deloitte and Touche LLP pursuant to Sections 5.03(b) and
5.02(b), respectively.
SECTION 6.03. Conditions to Obligation 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 contained in this Agreement shall be true and
correct (other than the representations in Section 3.02(b), which shall be
true and correct in all material respects) on and as of the Closing Date
except for changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a
particular date, which shall remain true and correct (other than the
representations in Section 3.02(b), which shall be true and correct in all
material respects) as of such particular date, with the same force and
effect as if made on and as of the Closing Date, except in such cases
(other than the representations in Section 3.02(b)) where the failure to be
so true and correct would not have a material adverse effect on Parent.
(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.
(c) Tax Opinions. The opinions of Wilson Sonsini Goodrich & Rosati,
counsel to the Company, and Cravath, Swaine & Moore, counsel to Parent,
shall be delivered to the Company and Parent, respectively, in form and
substance reasonably satisfactory to the Company and Parent. In rendering
each such opinion, counsel shall be entitled to rely upon (and Parent, Sub
and the Company shall make) customary representations reasonably requested
by counsel. The opinions shall be dated on the date that is two business
days prior to the Proxy Statement is first mailed to stockholders of the
Company and shall not have been withdrawn or modified in any material
respect.
(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 Parent (or, if one shall have occurred, it shall have been cured).
SECTION 6.04. Frustration of Closing Conditions. None of the Company,
Parent or Sub may rely on the failure of any condition set forth in Section
6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure was
caused by such party's failure to use reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement, as required by
and subject to Section 5.05.
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 stockholders of the Company:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by December 31,
1997 for any reason; provided, however, that the right to terminate this
Agreement under this Section 7.01(b)(i) shall not be available to any
party whose action or failure to act has been a principal cause of or
resulted in
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<PAGE> 74
the failure of the Merger to occur on or before such date and such
action or failure to act constitutes a wilful and material breach of
this Agreement;
(ii) if any Restraint having any of the effects set forth in
Section 6.01(d) shall be in effect and shall have become final and
nonappealable;
(iii) if the Stockholder Approval shall not have been obtained at
the Stockholders Meeting duly convened therefor or at any adjournment or
postponement thereof; or
(iv) if, during the Applicable Period, the Board of Directors of
the Company has made the determination referred to in the penultimate
sentence of Section 4.02(b); provided, however, that the Company may not
terminate this Agreement pursuant to this Section 7.01(b)(iv) unless and
until three business days have elapsed following delivery to Parent of a
Notice of Superior Proposal with respect to a Superior Proposal by the
Board of Directors of the Company, and no later than two days thereafter
the Company pays to Parent the amounts specified under Section 5.08(b)
pursuant to the terms of such Section 5.08(b).
(c) by Parent if (i) 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
failed to reconfirm its recommendation within 15 business days after a
written request to do so, or approved or recommended any Takeover Proposal
or (ii) the Board of Directors of the Company shall have resolved to take
any of the foregoing actions;
(d) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or
if any such representation or warranty or Parent shall have become
inaccurate, in either case such that the conditions set forth in Section
6.03(a) or Section 6.03(b), as the case may be, would not be satisfied as
of the time of such breach or as of the time such representation or
warranty shall have become inaccurate; provided, that if such inaccuracy in
Parent's representations and warranties or breach by Parent is curable by
Parent through the exercise of its reasonable efforts, then (i) the Company
may not terminate this Agreement under this Section 7.01(d) with respect to
a particular breach or inaccuracy prior to or during the 45-day period
commencing upon delivery by the Company of written notice to Parent
describing such breach or inaccuracy, provided Parent continues to exercise
reasonable efforts to cure such breach or inaccuracy and (ii) the Company
may not, in any event, terminate this Agreement under this Section 7.01(d)
if such inaccuracy or breach shall have been cured in all material respects
during such 45-day period; and, provided further that the Company may not
terminate this Agreement pursuant to this Section 7.01(d) if it shall have
wilfully and materially breached this Agreement; or
(e) by Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of the Company set forth in this Agreement, or if
any such representation or warranty of the Company shall have become
inaccurate, in either case such that the conditions set forth in Section
6.02(a) or Section 6.02(b), as the case may be, would not be satisfied as
of the time of such breach or as of the time such representation or
warranty shall have become inaccurate; provided, that if such inaccuracy in
the Company's representations and warranties or breach by the Company is
curable by the Company through the exercise of its reasonable efforts, then
(i) Parent may not terminate this Agreement under this Section 7.01(e) with
respect to a particular breach or inaccuracy prior to or during the 45-day
period commencing upon delivery by Parent of written notice to the Company
describing such breach or inaccuracy, provided the Company continues to
exercise reasonable efforts to cure such breach or inaccuracy and (ii)
Parent may not, in any event, terminate this Agreement under this Section
7.01(e) if such inaccuracy or breach shall have been cured in all material
respects during such 45-day period; and, provided further that Parent may
not terminate this Agreement pursuant to this Section 7.01(e) if it shall
have wilfully and materially breached this Agreement.
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
25
<PAGE> 75
of the last sentence of Section 5.04, Section 5.08, 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.
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 stockholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such stockholders without the further approval
of such stockholders. 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. 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):
if to Parent or Sub, to:
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Attention: Michael H. Ullmann
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Robert I. Townsend, III, Esq.
if to the Company, to:
Biopsys Medical, Inc.
3 Morgan
Irvine, CA 92618
Attention: Steven L. Gex
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<PAGE> 76
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Casey McGlynn, Esq.
Christopher D. Mitchell, Esq.
Marty Korman, 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) as it relates to the Company, "knowledge" means, with respect to
any matter in question, that any of the Chief Executive Officer, Chief
Financial Officer or Vice President of Medical Affairs of the Company has
actual knowledge of such matter, and as it relates to Parent, the term
"knowledge" means, with respect to any matter in question, that any of the
Chief Executive Officer, Chief Financial Officer or General Counsel of
Parent has actual knowledge of such matter;
(c) "material adverse change" or "material adverse effect" means, when
used in connection with the Company or Parent, any change or effect that
is, or is almost certainly to be within three months, materially adverse to
the business, properties, assets or financial condition of either the
Company or Parent and its subsidiaries, taken as a whole, as the case may
be; provided, however, that (i) any adverse change or effect that is
proximately caused by conditions affecting the economy or securities
markets generally shall not be taken into account in determining whether
there has been or would be a "material adverse change" or a "material
adverse effect" on or with respect to such entity, (ii) any adverse change
or effect that is proximately caused by conditions affecting any industry
in which the entity competes shall not be taken into account in determining
whether there has been or would be a "material adverse change" or a
"material adverse effect" on or with respect to the entity and (iii) any
adverse change or effect resulting from those items set forth on Schedule
8.03 of the Company Disclosure Schedule shall not be taken into account in
determining whether there has been or would be a "material adverse change"
or a "material adverse effect" on or with respect to the Company;
(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.
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, the Option Agreement, the Stockholder 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, the Option Agreement, the
Stockholder Agreement and
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<PAGE> 77
the Confidentiality Agreement and (b) except for the provisions of Article II,
Section 5.06 and Section 5.07, 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 Delaware, 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 or indirect wholly owned 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.
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 Delaware or in any Delaware 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 court of the United States located in the State of
Delaware or of any Delaware 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 court of the United States located in
the State of Delaware or a Delaware state court.
SECTION 8.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
28
<PAGE> 78
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/ WILLIAM C. WELDON
------------------------------------
Name: William C. Weldon
Title: Company Group Chairman
PALISADES MERGER CORP.,
by /s/ MICHAEL ULLMANN
------------------------------------
Name: Michael Ullmann
Title: Vice President
BIOPSYS MEDICAL, INC.,
by /s/ STEVEN L. GEX
------------------------------------
Name: Steven L. Gex
Title: President and CEO
29
<PAGE> 79
EXHIBIT A
TO THE MERGER AGREEMENT
FORM OF AFFILIATE LETTER
Dear Sirs:
The undersigned, a holder of shares of common stock, par value $.001 per
share ("Company Common Stock"), of Biopsys Medical, Inc., a Delaware corporation
(the "Company"), 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, as amended (the "Securities Act"), by the Securities and
Exchange Commission (the "SEC") and may be deemed an "affiliate" of the Company
for purposes of qualifying the Merger (as defined below) 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. Pursuant to the
terms of the Agreement and Plan of Merger dated as of May 21, 1997, among
Johnson & Johnson, a New Jersey corporation ("Parent"), Palisades Merger Corp.,
a Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), and the
Company, Sub will be merged with and into the Company (the "Merger"), and in
connection with the Merger, the undersigned is entitled to receive common stock,
par value $1.00 per share ("Parent Common Stock"), of Parent.
If in fact the undersigned were an affiliate under the Securities Act, the
undersigned's ability to sell, assign or transfer the Parent Common Stock
received by the undersigned in exchange for any shares of Company Common Stock
in connection with the Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration is
available. The undersigned understands that such exemptions are limited and the
undersigned has obtained or will obtain 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 Securities Act. The undersigned understands that Parent will not be
required to maintain the effectiveness of any registration statement under the
Securities Act for the purposes of resale of Parent Common Stock 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 Common Stock
received by the undersigned in exchange for shares of Company Common Stock in
connection with the Merger except (i) pursuant to an effective registration
statement under the Securities 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 (it
being expressly agreed that Wilson Sonsini Goodrich & Rosati shall be considered
reasonably satisfactory for all purposes under this Agreement) or as described
in a "no-action" or interpretive letter from the Staff of the SEC specifically
issued with respect to a transaction to be engaged in by the undersigned, is not
required to be registered under the Securities Act.
The undersigned hereby further represents to and covenants with Parent that
the undersigned has not, within the 30 days prior to the Closing Date, 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 Common Stock received by the undersigned in connection
with the Merger until after such time as results covering at least 30 days of
post-Merger 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, except as would not otherwise reasonably be expected to adversely
affect the qualification of the Merger as a pooling-of-interests.
In the event of a sale or other disposition by the undersigned of Parent
Common Stock 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 reasonably satisfactory documentation evidencing
compliance with Rule 145) and the opinion of counsel or no-action letter
referred to above. The undersigned understands that Parent
<PAGE> 80
may instruct its transfer agent to withhold the transfer of any Parent Common
Stock 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, Parent shall cause the transfer agent to effectuate the
transfer of the Parent Common Stock sold as indicated in such letter.
Parent covenants that it will take all such actions as may be reasonably
available to it to permit the sale or other disposition of Parent Common Stock
by the undersigned under Rule 145 in accordance with the terms thereof.
The undersigned acknowledges and agrees that the legends set forth below
will be placed on certificates representing Parent Common Stock received by the
undersigned in connection with the Merger or held by a transferee thereof, which
legends will be removed by delivery of substitute certificates upon receipt of
an opinion in form and substance reasonably satisfactory to Parent from counsel
reasonably satisfactory to Parent to the effect that such legends are no longer
required for purposes of the Securities Act.
There will be placed on the certificates for Parent Common Stock 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 not been acquired by the
holder 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 (i) until such time as
Johnson & Johnson shall have published financial results covering at least
30 days of combined operations after the Effective Time and (ii) except in
accordance with an exemption from the registration requirements of the
Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of Parent Common
Stock and (ii) the receipt by Parent of this letter is an inducement to Parent's
obligations to consummate the Merger.
Very truly yours,
Dated:
2
<PAGE> 81
ANNEX I
TO EXHIBIT A
[Name] [Date]
On , the undersigned sold the 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 Palisades Merger Corp., a Delaware corporation, with and into
Biopsys Medical, Inc.
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 "Securities Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities 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 THE SECURITIES.]
<PAGE> 82
ANNEX II
<PAGE> 83
STOCKHOLDER AGREEMENT dated as of May 21, 1997, among
JOHNSON & JOHNSON, a New Jersey corporation ("Parent"), and
the individuals and other parties listed on Schedule A
attached hereto (each, a "Stockholder" and, collectively, the
"Stockholders").
WHEREAS Parent, Palisades Merger Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), and Biopsys Medical, Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
Merger dated as of the date hereof (as the same may be amended or supplemented,
the "Merger Agreement"; capitalized terms used but not defined herein shall have
the meanings set forth in the Merger Agreement) providing for the merger of Sub
with and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in the Merger Agreement; and
WHEREAS each Stockholder owns the number of shares of common stock, par
value $.001 per share, of the Company, including the associated rights (the
"Rights") to purchase the Company's Series A Participating Preferred Stock, par
value $.001 per share (such common stock, together with the Rights, the "Common
Stock"), set forth opposite his or its name on Schedule A attached hereto (such
shares of Common Stock, together with any other shares of capital stock of the
Company acquired by such Stockholder after the date hereof and during the term
of this Agreement (including through the exercise of any stock options, warrants
or similar instruments), being collectively referred to herein as the "Subject
Shares"); and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent has requested that each Stockholder enter into this Agreement;
NOW, THEREFORE, to induce Parent to enter into, and in consideration of its
entering into, the Merger Agreement, and in consideration of the promises and
the representations, warranties and agreements contained herein, the parties
agree as follows:
1. Representations and Warranties of each Stockholder. Each Stockholder
hereby, severally and not jointly, represents and warrants to Parent as of the
date hereof in respect of himself or itself as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable against the Stockholder in accordance with
its terms. Except for the expiration or termination of the waiting periods
under the HSR Act and informational filings with the SEC, the execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, (i)
conflict with, or result in any violation of, or default (with or without
notice or lapse of time or both) under any provision of the articles of
incorporation or by-laws (if any) of the Stockholder, any trust agreement,
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license, judgment,
order, notice, decree, statute, law, ordinance, rule or regulation
applicable to the Stockholder or to the Stockholder's property or assets,
(ii) require any filing with, or permit, authorization, consent or approval
of, any Federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency, domestic, foreign or supranational or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable
to the Stockholder or any of the Stockholder's properties or assets,
including the Subject Shares. If the Stockholder is a natural person and is
married, and the Stockholder's Subject Shares constitute community property
or otherwise need spousal or other approval for this Agreement to be legal,
valid and binding, this Agreement has been duly authorized, executed and
delivered by, and constitutes a valid and binding agreement of, the
Stockholder's spouse, enforceable against such spouse in accordance with
its terms. No trust of which such Stockholder is a trustee requires the
consent of any beneficiary to the execution and delivery of this Agreement
or to the consummation of the transactions contemplated hereby.
(b) The Subject Shares. The Stockholder is the record and beneficial
owner of, or is trustee of a trust that is the record holder of, and whose
beneficiaries are the beneficial owners of, or is the beneficial owner of,
and is the owner of a sole proprietorship that is the record holder of, and
has good and valid title
<PAGE> 84
to, the Subject Shares set forth opposite his or its name on Schedule A
attached hereto, free and clear of any Liens whatsoever. The Stockholder
does not own, of record or beneficially, any shares of capital stock of the
Company other than the Subject Shares set forth opposite his or its name on
Schedule A attached hereto. The Stockholder has the sole right to vote such
Subject Shares, and none of such Subject Shares is subject to any voting
trust or other agreement, arrangement or restriction with respect to the
voting of such Subject Shares, except as contemplated by this Agreement.
2. Representations and Warranties of Parent. Parent hereby represents and
warrants to each Stockholder that Parent has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by Parent and constitutes a valid and binding obligation of Parent
enforceable against Parent in accordance with its terms. Except for the
expiration or termination of the waiting periods under the HSR Act and
informational filings with the SEC, the execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby and
compliance with the terms hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time or both) under
any provision of, the articles of incorporation or by-laws of Parent, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise, license, judgment,
order, notice, decree, statute, law, ordinance, rule or regulation applicable to
Parent or to Parent's property or assets.
3. Covenants of each Stockholder. Until the termination of this Agreement
in accordance with Section 8, each Stockholder, severally and not jointly,
agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares (and each class
thereof) in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement.
(b) The Stockholder shall not, except as contemplated by this
Agreement, directly or indirectly, grant any proxies or powers of attorney
with respect to the Subject Shares, deposit the Subject Shares into a
voting trust or enter into a voting agreement with respect to the Subject
Shares.
(c) Subject to the terms of Section 12, during the term of this
Agreement, the Stockholder shall not, nor shall it permit any director,
officer, partner, employee or agent or any investment banker, attorney or
other adviser or representative of the Stockholder to, directly or
indirectly, (i) solicit, initiate or encourage the submission of, any
merger agreement or merger (other than the Merger Agreement and the
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal as such term is defined in
Section 4.02(a) of the Merger Agreement (a "Competing Proposal") or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Competing Proposal. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by an investment banker or
attorney retained by, or other adviser or representative of, such
Stockholder, whether or not such person is purporting to act on behalf of
such Stockholder, shall be deemed to be a violation of this Section 3(c) by
such Stockholder.
(d) Subject to the terms of Section 12, until after the Merger is
consummated or the Merger Agreement is terminated, the Stockholder shall
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 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; provided,
However, that nothing in this paragraph 3(d) shall limit or affect any
actions taken by a Stockholder in good faith in his or her capacity as an
officer or director of the Company.
2
<PAGE> 85
(e) If, at the time the Merger Agreement is submitted for approval to
the stockholders of the Company, a Stockholder is an "affiliate" 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, such Stockholder shall deliver to Parent on or prior
to the Closing Date a written agreement substantially in the form attached
as Exhibit A to the Merger Agreement.
(f) The Stockholder, and any beneficiary of a revocable trust for
which such Stockholder serves as trustee, shall not take any action to
revoke or terminate such trust or take any other action which would
restrict, limit or frustrate in any way the transactions contemplated by
this Agreement. Each such beneficiary hereby acknowledges and agrees to be
bound by the terms of this Agreement applicable to it.
4. Grant of Irrevocable Proxy; Appointment of Proxy. (a) Each Stockholder
hereby irrevocably grants to, and appoints, Parent and Peter S. Galloway and
Michael H. Ullmann, in their respective capacities as officers of Parent, and
any individual who shall hereafter succeed to any such office of Parent, and
each of them individually, such Stockholder's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Subject Shares, or grant a consent or
approval in respect of such Subject Shares, in favor of adoption of the Merger
Agreement.
(b) Such Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Subject Shares are not irrevocable, and that all
such proxies are hereby revoked.
(c) Such Stockholder hereby affirms that the irrevocable proxy set forth in
this Section 4 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Stockholder under this Agreement. Such Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. Such Stockholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 212(e) of the Delaware General
Corporation Law (the "DGCL").
5. Further Assurances. Each Stockholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Parent may reasonably request for
the purpose of effectively carrying out the transactions contemplated by this
Agreement.
6. Certain Events. (a) Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Subject Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Subject Shares shall pass, whether by operation of law or
otherwise, including such Stockholder's heirs, guardians, administrators or
successors. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of the
Company affecting the Common Stock, or the acquisition of additional shares of
Common Stock or other voting securities of the Company by any Stockholder, the
number of Subject Shares listed in Schedule A beside the name of such
Stockholder shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Common Stock or
other voting securities of the Company issued to or acquired by such
Stockholder.
(b) Each Stockholder agrees that such Stockholder will tender to the
Company, within 10 business days after the date hereof (or, in the event Subject
Shares are acquired subsequent to the date hereof within 10 business days after
the date of such acquisition), any and all certificates representing such
Stockholder's Subject Shares in order that the Company may inscribe upon such
certificates the legend in accordance with Section 5.13 of the Merger Agreement.
7. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any Stockholder, on the one hand,
without the prior written consent of Parent nor by Parent, on the other hand,
without the prior written consent of the Stockholders, except that Parent may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to any direct or indirect wholly owned
3
<PAGE> 86
subsidiary of Parent. 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.
8. Termination. This Agreement shall terminate on the earlier of (i) the
Effective Time or (ii) the date upon which the Merger Agreement is terminated in
accordance with its terms.
9. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. All notices 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 Parent in accordance
with Section 8.02 of the Merger Agreement and to the Stockholders at their
respective addresses set forth on Schedule A attached hereto (or at such
other address for a party as shall be specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
(d) 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 of the counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware regardless of the
laws that might otherwise govern under applicable principles of conflicts
of law thereof.
(g) Voidability. If prior to the execution hereof, the Board of
Directors of the Company shall not have duly and validly authorized and
approved by all necessary corporate action, this Agreement, the Merger
Agreement and the transactions contemplated hereby and thereby, so that by
the execution and delivery hereof Parent or Sub would become, or could
reasonably be expected to become an "interested stockholder" with whom the
Company would be prevented for any period pursuant to Section 203 of the
DGCL from engaging in any "business combination" (as such terms are defined
in Section 203 of the DGCL), then this Agreement shall be void and
unenforceable until such time as such authorization and approval shall have
been duly and validly obtained.
10. 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 Delaware or in a Delaware 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 (i) consents to submit such party to the
personal jurisdiction of any court of the United States located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) agrees that such
party will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (iii) agrees that such party
will not
4
<PAGE> 87
bring any action relating to this Agreement or the transactions contemplated
hereby in any court other than a court of the United States located in the State
of Delaware or a Delaware state court.
11. Public Announcements. No Stockholder shall issue any press release or
other public statement with respect to the transactions contemplated by this
Agreement and the Merger Agreement without the prior written consent of Parent.
12. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. Without limiting the generality of the foregoing, each Stockholder
signs solely in his or her capacity as the record holder and beneficial owner
of, or the trustee of a trust whose beneficiaries are the beneficial owners of,
or as the beneficial owner of, and as the owner of a sole proprietorship that is
the record holder of, such Stockholder's Subject Shares and nothing herein shall
limit or affect any actions taken by a Stockholder in his or her capacity as an
officer or director of the Company in exercising its rights under the Merger
Agreement.
13. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, Parent has caused this Agreement to be signed by its
officer thereunto duly authorized and each Stockholder has signed this
Agreement, all as of the date first written above.
JOHNSON & JOHNSON
By:
/s/ WILLIAM C. WELDON
------------------------------------
Name: William C. Weldon
Title: Company Group Chairman
STOCKHOLDERS:
BRENTWOOD ASSOCIATES VI, L.P.
By: /s/ BRENTWOOD VI VENTURES, L.P.
its General Partner
----------------------------------
Name: David W. Chonette
Title: General Partner
/s/ D. W. CHONETTE
- --------------------------------------
David W. Chonette
ST. PAUL FIRE AND MARINE INSURANCE CO.
By: /s/ PATRICK HOPF
----------------------------------
Name: Patrick Hopf
Title: Vice President
5
<PAGE> 88
THREE ARCH PARTNERS, L.P.
By: /s/ THOMAS J. FOGARTY
----------------------------------
Name: Thomas J. Fogarty
Title: General Partner
THREE ARCH ASSOCIATES, L.P.
By: /s/ THOMAS J. FOGARTY
----------------------------------
Name: Thomas J. Fogarty
Title: General Partner
/s/ THOMAS J. FOGARTY
- --------------------------------------
Thomas J. Fogarty, M.D., as Trustee of
the Fogarty Family Revocable Trust
dated 9/14/71, as amended and restated
2/14/91
FOGARTY ENGINEERING
By: /s/ THOMAS J. FOGARTY
----------------------------------
Thomas J. Fogarty
/s/ STEVEN L. GEX
- --------------------------------------
Steven L. Gex, as Trustee of the Gex
Family Trust U/D/T dated June 26, 1992
and as custodian for his minor
children
/s/ STEVE PARKER
- --------------------------------------
Steve Parker, M.D., individually and
as custodian for his minor children
6
<PAGE> 89
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
NAME AND ADDRESS OF STOCKHOLDER OWNED OF RECORD
------------------------------------------------------------- ----------------
<S> <C>
Brentwood Associates VI, L.P. 640,450
David W. Chonette 36,799
c/o Brentwood Associates
1920 Main Street, Suite 820
Irvine, CA 92714
St. Paul Fire and Marine Insurance Company 1,136,136
c/o St. Paul Venture Capital, Inc.
8500 Normandale Lake Blvd., Suite 1940
Bloomington, MN 55437
Three Arch Partners, L.P. 290,943
Three Arch Associates, L.P. 65,453
2800 Sand Hill Road, Suite 270
Menlo Park, CA 94025
Thomas J. Fogarty, M.D., 456,263
as Trustee of the Fogarty
Family Revocable Trust
Fogarty Engineering 228,967
3274 Alpine Road
Portola Valley, CA 94028
Steven L. Gex, 195,166
as Trustee of the Gex Family
Trust U/D/T dated June 26, 1992 and as
custodian for his minor children
c/o Biopsys Medical, Inc.
3 Morgan Irvine, CA 92618
Steve Parker, M.D. 226,973
individually and as custodian -------------
for his minor children
c/o Radiology Imaging Associates, Inc.
8200 E. Belleview Avenue, Suite 102
Englewood, CO 80111
TOTAL 3,277,114
</TABLE>
7
<PAGE> 90
ANNEX III
<PAGE> 91
STOCK OPTION AGREEMENT dated as of May 21, 1997 (the
"Agreement"), by and between BIOPSYS MEDICAL, INC., a Delaware
corporation ("Issuer"), and JOHNSON & JOHNSON, a New Jersey
corporation ("Grantee").
RECITALS
A. Issuer, Grantee and Palisades Merger Corp., a Delaware corporation and a
wholly owned subsidiary of Grantee ("Sub"), have entered into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"; defined
terms used but not defined herein have the meanings set forth in the Merger
Agreement), providing for, among other things, the merger of Sub with and into
Issuer, with Issuer becoming the surviving corporation in the Merger and a
wholly owned subsidiary of Grantee; and
B. As a condition and inducement to Grantee's willingness to enter into the
Merger Agreement, Grantee has requested that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 1,970,511 (as adjusted as set forth herein) shares (the "Option Shares")
(provided that the amount of the Option Shares shall upon timely issuance be
adjusted to equal 19.9% of the then issued and outstanding shares) of Common
Stock, par value $.001 per share ("Issuer Common Stock"), of Issuer at a
purchase price of the Per Share Price (as adjusted as set forth herein) per
Option Share (the "Purchase Price"); provided, however, that, notwithstanding
anything herein to the contrary, if Grantee receives in the aggregate an amount
equal to the excess, if any, of (i) the sum of the proceeds (net of any
commissions or similar costs) received by Grantee in connection with any sales
or other dispositions of Option Shares and any dividends received by Grantee on
Option Shares over (ii) the sum of (x) the product of the Purchase Price times
the number of Option Shares acquired by Grantee pursuant to the Option and (y)
$9 million, then an amount equal to such excess shall be promptly paid by
Grantee to Issuer.
2. Exercise of Option. (a) Grantee may exercise the Option, with respect
to all (but not less than all) of the Option Shares at any one time, subject to
the provisions of Section 2(c), after the occurrence of any event as a result of
which the Grantee is entitled to receive the Termination Fee pursuant to Section
5.08(b) of the Merger Agreement (a "Purchase Event"); provided, however, that
(i) except as provided in the last sentence of this Section 2(a), the Option
will terminate and be of no further force and effect upon the earliest to occur
of (A) the Effective Time, (B) 12 months after the first occurrence of a
Purchase Event and (C) termination of the Merger Agreement in accordance with
its terms prior to the occurrence of a Purchase Event, unless, in the case of
clause (C), Grantee has or may have the right to receive a Termination Fee
following such termination upon the occurrence of certain events, in which case
the Option will not terminate until the later of (x) six months following the
time such Termination Fee becomes payable and (y) the expiration of the period
in which the Grantee has or may have such right to receive a Termination Fee,
and (ii) any purchase of Option Shares upon exercise of the Option will be
subject to compliance with the HSR Act and the obtaining or making of any
consents, approvals, orders, notifications or authorizations, the failure of
which to have obtained or made would have the effect of making the issuance of
Option Shares illegal (the "Regulatory Approvals").
(b) In the event that Grantee wishes to exercise the Option, it will send
to Issuer a written notice (an "Exercise Notice"; the date of which being herein
referred to as the "Notice Date") to that effect which Exercise Notice also
specifies the number of Option Shares, if any, Grantee wishes to purchase
pursuant to this Section 2(b), the number of Option Shares, if any, with respect
to which Grantee wishes to exercise its Cash-Out Right (as defined herein)
pursuant to Section 6(c), the denominations of the certificate or certificates
evidencing the Option Shares which Grantee wishes to purchase pursuant to this
Section 2(b) and a date not earlier than three business days nor later than 20
business days from the Notice Date for the closing of such purchase (an "Option
Closing Date"). Any Option Closing will be at an agreed location and time in
<PAGE> 92
New York, New York on the applicable Option Closing Date or at such later date
as may be necessary so as to comply with clause (ii) of Section 2(a).
(c) Notwithstanding anything to the contrary contained herein, any exercise
of the Option and purchase of Option Shares shall be subject to compliance with
applicable laws and regulations, which may prohibit the purchase of all the
Option Shares specified in the Exercise Notice without first obtaining or making
certain Regulatory Approvals. In such event, if the Option is otherwise
exercisable and Grantee wishes to exercise the Option, the Option may be
exercised in accordance with Section 2(b) and Grantee shall acquire the maximum
number of Option Shares specified in the Exercise Notice that Grantee is then
permitted to acquire under the applicable laws and regulations, and if Grantee
thereafter obtains the Regulatory Approvals to acquire the remaining balance of
the Option Shares specified in the Exercise Notice, then Grantee shall be
entitled to acquire such remaining balance. Issuer agrees to use its reasonable
efforts to assist Grantee in seeking the Regulatory Approvals.
In the event (i) Grantee receives official notice that a Regulatory
Approval required for the purchase of any Option Shares will not be issued or
granted or (ii) such Regulatory Approval has not been issued or granted within
six months of the date of the Exercise Notice, Grantee shall have the right to
exercise its Cash-Out Right pursuant to Section 6(c) with respect to the Option
Shares for which such Regulatory Approval will not be issued or granted or has
not been issued or granted.
3. Payment and Delivery of Certificates. (a) At any Option Closing,
Grantee will pay to Issuer in immediately available funds by wire transfer to a
bank account designated in writing by Issuer an amount equal to the Purchase
Price multiplied by the number of Option Shares to be purchased at such Option
Closing.
(b) At any Option Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer will deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased at
such Option Closing, which Option Shares will be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. If at the time of
issuance of Option Shares pursuant to an exercise of the Option hereunder,
Issuer shall not have redeemed the Rights, or shall have issued any similar
securities, then each Option Share issued pursuant to such exercise will also
represent a corresponding Right or new rights with terms substantially the same
as and at least as favorable to Grantee as are provided under the Rights
Agreement or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at an Option Closing will
have typed or printed thereon a restrictive legend which will read substantially
as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET
FORTH IN THE STOCK OPTION AGREEMENT, DATED AS OF MAY 21, 1997,
A COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF BIOPSYS
MEDICAL, INC. AT ITS PRINCIPAL EXECUTIVE OFFICES."
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of substitute
certificate(s) without such reference if such Option Shares have been registered
pursuant to the Securities Act, such Option Shares have been sold in reliance on
and in accordance with Rule 144 under the Securities Act or Grantee has
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this Agreement
in the above legend will be removed by delivery of substitute certificate(s)
without such reference if the Option Shares evidenced by certificate(s)
containing such
2
<PAGE> 93
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
4. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Authorized Stock. Issuer has taken all necessary corporate and
other action to authorize and reserve and, subject to the expiration or
termination of any required waiting period under the HSR Act, to permit it
to issue, and, at all times from the date hereof until the obligation to
deliver Option Shares upon the exercise of the Option terminates, shall
have reserved for issuance, upon exercise of the Option, shares of Issuer
Common Stock necessary for Grantee to exercise the Option, and Issuer will
take all necessary corporate action to authorize and reserve for issuance
all additional shares of Issuer Common Stock or other securities which may
be issued pursuant to Section 6 upon exercise of the Option. The shares of
Issuer Common Stock to be issued upon due exercise of the Option, including
all additional shares of Issuer Common Stock or other securities which may
be issuable upon exercise of the Option or any other securities which may
be issued pursuant to Section 6, upon issuance pursuant hereto, will be
duly and validly issued, fully paid and nonassessable, and will be
delivered free and clear of all liens, claims, charges and encumbrances of
any kind or nature whatsoever, including without limitation any preemptive
rights of any stockholder of Issuer.
5. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be
transferred or otherwise disposed of except in a transaction registered, or
exempt from registration, under the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc. (a) In the event of any
change in Issuer Common Stock by reason of a stock dividend, split-up, merger,
recapitalization, combination, exchange of shares, or similar transaction, the
type and number of shares or securities subject to the Option, and the Purchase
Price thereof, will be adjusted appropriately, and proper provision will be made
in the agreements governing such transaction, so that Grantee will receive upon
exercise of the Option the number and class of shares or other securities or
property that Grantee would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event or the record date
therefor, as applicable.
(b) Without limiting the parties' relative rights and obligations under the
Merger Agreement, if prior to or concurrently with the termination of the Option
Issuer enters into an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its subsidiaries, and Issuer will not be
the continuing or surviving corporation in such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its subsidiaries, to merge into
Issuer and Issuer will be the continuing or surviving corporation, but in
connection with such merger, the shares of Issuer Common Stock outstanding
immediately prior to the consummation of such merger will be changed into or
exchanged for stock or other securities of Issuer or any other person or cash or
any other property, or the shares of Issuer Common Stock outstanding immediately
prior to the consummation of such merger will, after such merger, represent less
than 50% of the outstanding voting securities of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any person,
other than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction will make proper provision so that the
Option will, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
with identical terms appropriately adjusted to acquire the number and class of
shares or other securities or property that Grantee would have received in
respect of Issuer Common Stock if the Option had been exercised immediately
prior to such consolidation, merger, sale, or transfer, or the record date
therefor, as applicable and make any other necessary adjustments.
(c) If, at any time during the period commencing on a Purchase Event and
ending on the termination of the Option in accordance with Section 2, Grantee
sends to Issuer an Exercise Notice indicating Grantee's election to exercise its
right (the "Cash-Out Right") pursuant to this Section 6(c), then Issuer shall
pay to Grantee, on the Option Closing Date, in exchange for the cancelation of
the Option with respect to such
3
<PAGE> 94
number of Option Shares as Grantee specifies in the Exercise Notice, an amount
in cash equal to the lesser of (1) $9 million and (2) such number of Option
Shares multiplied by the difference between (i) the average closing price per
share during the 20 NMS trading days commencing on the 22nd NMS trading day
immediately preceding the Notice Date, of Issuer Common Stock as quoted on the
NMS (or, if not traded on the NMS, as reported on any other national securities
exchange or national securities quotation system on which the Issuer Common
Stock is listed or quoted, as reported in The Wall Street Journal, or, if not
reported thereby, any other authoritative source) and (ii) the Purchase Price.
Notwithstanding anything to the contrary, the sum of (A) the amount equal to the
difference of clause (i) and clause (ii)(x) of Section 1 with respect to any
transfer by Grantee of the Option Shares which were not cashed out pursuant to
this Section 6(c) and (B) the amount received by Grantee pursuant to the
Cash-Out Right shall not exceed $9 million, and Grantee shall pay promptly any
such excess above $9 million to Issuer.
7. Registration Rights. Issuer will, if requested by Grantee at any time
and from time to time within three years of the exercise of the Option, as
expeditiously as possible prepare and file up to three registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of securities that have been
acquired by or are issuable to Grantee upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by Grantee,
including a "shelf" registration statement under Rule 415 under the Securities
Act or any successor provision, and Issuer will use its reasonable efforts to
qualify such shares or other securities under any applicable state securities
laws. Grantee agrees to use reasonable efforts to cause, and to cause any
underwriters of any sale or other disposition to cause, any sale or other
disposition pursuant to such registration statement or otherwise to be effected
on a widely distributed basis so that upon consummation thereof no purchaser or
transferee will own beneficially more than 4.9% of the then-outstanding voting
power of Issuer. Issuer will use reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or waivers of
other parties which are required therefor, and to keep such registration
statement effective for such period not in excess of 180 calendar days from the
day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. The obligations of Issuer
hereunder to file a registration statement and to maintain its effectiveness may
be suspended for up to 60 calendar days in the aggregate if the Board of
Directors of Issuer shall have determined that the filing of such registration
statement or the maintenance of its effectiveness would require premature
disclosure of material nonpublic information that would materially and adversely
affect Issuer or otherwise interfere with or adversely affect any pending or
proposed offering of securities of Issuer or any other material transaction
involving Issuer. Any registration statement prepared and filed under this
Section 7, and any sale covered thereby, will be at Issuer's expense except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto. Grantee will provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If, during the time periods referred to in the
first sentence of this Section 7, Issuer effects an underwritten registration
under the Securities Act of Issuer Common Stock for its own account or for any
other stockholders of Issuer (other than on Form S-4 or Form S-8, or any
successor form), it will allow Grantee the right to participate in such
registration, and such participation will not affect the obligation of Issuer to
effect demand registration statements for Grantee under this Section 7; provided
that, if the managing underwriters of such offering advise Issuer in writing
that in their opinion the number of shares of Issuer Common Stock requested to
be included in such registration exceeds the number which can be sold in such
offering at a price acceptable to Issuer's Board of Directors, Issuer will first
reduce the shares requested to be included therein by Grantee before reducing
any other shares intended to be included therein. In connection with any
registration pursuant to this Section 7, Issuer and Grantee will provide each
other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification, and contribution in connection with such
registration.
8. Transfers. The Option Shares may not be sold, assigned, transferred, or
otherwise disposed of except (i) in an underwritten public offering as provided
in Section 7 or (ii) to any purchaser or transferee who would not, to the
knowledge of the Grantee after reasonable inquiry, immediately following such
sale, assignment, transfer or disposal beneficially own more than 4.9% of the
then-outstanding voting power of the Issuer; provided, however, that Grantee
shall be permitted to sell any Option Shares if such sale is made pursuant to a
tender or exchange offer that has been approved or recommended by a majority of
the members of the Board
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<PAGE> 95
of Directors of Issuer (which majority shall include a majority of directors who
were directors as of the date hereof). The Option may not be sold, assigned,
transferred or otherwise disposed of by Grantee, and any sale, assignment,
transfer or disposal shall be null and void.
9. Listing. If Issuer Common Stock or any other securities to be acquired
upon exercise of the Option are then traded on the NMS (or any other national
securities exchange or national securities quotation system), Issuer, upon the
request of Grantee, will promptly file an application to have the shares of
Issuer Common Stock or other securities to be acquired upon exercise of the
Option approved for trading on the NMS (and any such other national securities
exchange or national securities quotation system) and will use reasonable
efforts to obtain approval of such application as promptly as practicable.
10. Loss or Mutilation. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancelation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
11. Miscellaneous. (a) Expenses. Except as otherwise provided in the
Merger Agreement, each of the parties hereto will bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants, and counsel.
(b) Amendment. This Agreement may not be amended, except by an instrument
in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to waive any
provision of this Agreement, or to extend the time for performance, will 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 will not constitute a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement, the
Stockholder Agreement, the Merger Agreement (including the documents and
instruments attached thereto as exhibits or schedules or delivered in connection
therewith) and the Confidentiality Agreement (including the predecessor Secrecy
Agreement dated July 17, 1996 between the Company and a subsidiary of Parent)
(i) 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, the Stockholder Agreement, the Merger
Agreement and the Confidentiality Agreement, and (ii) except as provided in
Section 8.06 of the Merger Agreement, are not intended to confer upon any person
other than the parties any rights or remedies.
(e) Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
(f) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and will be deemed given
if delivered personally, telecopied (which is confirmed), 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):
If to Issuer to:
Biopsys Medical, Inc.
3 Morgan
Irvine, CA 92618
Attention: Steven L. Gex
Fax: (714) 460-7811
5
<PAGE> 96
with copies to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Casey McGlynn, Esq.
Christopher D. Mitchell, Esq.
Marty Korman, Esq.
Fax: (415) 496-6811
If to Grantee to:
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Attention: Michael H. Ullmann
Fax: (908) 524-2788
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Robert I. Townsend, III, Esq.
Fax: (212) 474-3700
(g) Assignment. Neither this Agreement, the Option nor any of the rights,
interests, or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise, by Issuer or Grantee without
the prior written consent of the other. Any assignment or delegation in
violation of the preceding sentence will be void. Subject to the first and
second sentences of this Section 11(g), this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
(h) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other actions that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(i) 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 will 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 Delaware or in a Delaware 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 (i) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or the transactions contemplated by this Agreement, (ii) agrees that
it will not attempt to deny or defeat such personal
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<PAGE> 97
jurisdiction by motion or other request for leave from any such court, and (iii)
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 court of
the United States located in the State of Delaware or a Delaware state court.
(j) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
BIOPSYS MEDICAL, INC.,
by /s/ STEVEN L. GEX
------------------------------------
Name: Steven L. Gex
Title: President and CEO
JOHNSON & JOHNSON,
by /s/ WILLIAM C. WELDON
------------------------------------
Name: William C. Weldon
Title: Company Group Chairman
7
<PAGE> 98
ANNEX IV
<PAGE> 99
[ROBERTSON STEPHENS LOGO]
May 21, 1997
PRIVILEGED AND CONFIDENTIAL
Board of Directors
Biopsys Medical, Inc.
3 Morgan
Irvine, CA 92718
Members of the Board:
You have asked our opinion with respect to the fairness to the stockholders
of Biopsys Medical, Inc. ("Biopsys"), from a financial point of view and as of
the date hereof, of the Purchase Price (as defined below), in the proposed
merger of Palisades Merger Corp. ("Sub"), a subsidiary of Johnson & Johnson
("J&J"), with and into Biopsys, pursuant to the Agreement and Plan of Merger,
dated as of May 21, 1997 (the "Agreement"). Under the terms of the Agreement,
Sub shall be merged with and into Biopsys (the "Merger"). Biopsys shall be the
surviving corporation and the separate existence of Sub shall cease. In the
Merger, each outstanding share of the common stock of Biopsys will be converted
into the right to receive a fraction of a share of Common Stock of J&J
determined by dividing $27.55 by an average trading price of J&J common stock
determined in accordance with the Agreement (the "Purchase Price"). The Purchase
Price is subject to an adjustment period which is set out more fully in the
Agreement. The vesting period of any options to acquire shares of Biopsys shall
be accelerated so that all options are exercisable prior to close. Any
outstanding options to acquire shares of Biopsys common stock will be terminated
at the close of the transaction. The Merger is intended to qualify as a tax-free
reorganization and to be accounted for as a "pooling of interests." The terms
and conditions of the Merger are set out more fully in the Agreement. In
connection with the Agreement, (i) Biopsys and J&J have entered into a stock
option agreement (the "Option Agreement") and (ii) J&J and certain affiliate
stockholders of Biopsys have entered into a stockholder agreement (the
"Stockholder Agreement").
For purposes of this opinion we have (i) reviewed financial information on
Biopsys furnished to us by Biopsys, including certain internal financial
analyses and forecasts prepared by the management of Biopsys; (ii) reviewed
publicly available information; (iii) held discussions with the management of
Biopsys concerning the businesses, past and current business operations,
financial condition and future prospects of both companies, independently and
combined; (iv) reviewed the Agreement, the Option Agreement and the Stockholder
Agreement; (v) reviewed the stock price and trading histories of both companies;
(vi) prepared discounted cash flow analyses of Biopsys; (vii) reviewed the
valuations of publicly traded companies that we deemed comparable to Biopsys;
(viii) compared the financial terms of the Merger with other transactions that
we deemed relevant; and (ix) made such other studies and inquiries, and reviewed
such other data, as we deemed relevant.
In connection with rendering our opinion, however, we have not
independently verified any of the foregoing information and have assumed that
all such information is complete and accurate in all material respects.
Furthermore, we did not obtain any independent appraisal of the properties or
assets and liabilities of Biopsys or of any of its subsidiaries, nor were we
furnished with any such evaluations or appraisals. With
[ROBERTSON STEPHENS LETTERHEAD]
<PAGE> 100
Board of Directors
Biopsys Medical, Inc.
May 21, 1997
Page Two
respect to the financial and operating forecasts (and the assumptions and bases
therefor) of Biopsys that we have reviewed, we have assumed that such forecasts
have been reasonably prepared and reflect the best available estimates and
judgments of Biopsys management and that such projections and forecasts will be
realized in the amounts and in the time periods currently estimated by the
management of Biopsys. In addition, we have relied upon estimates and judgments
of Biopsys management as to the future financial performance of Biopsys. The
forecasts, estimates and judgments of Biopsys on which we relied constitute
forward-looking information, are based on numerous factors and events beyond the
control of the parties, and are inherently subject to significant uncertainty.
Accordingly, actual future results may be materially different from those
projected. We also have assumed, with your consent, that the Merger will be
accounted for as a pooling of interests under generally accepted accounting
principles. While we believe that our review, as described within, is an
adequate basis for the opinion that we express, this opinion is necessarily
based upon market, economic, and other conditions that exist and can be
evaluated as of the date of this letter, and on information available to us as
of the date hereof. Finally, we express no opinion as to the value of any
employee agreements or arrangements entered into in connection with the
Agreement or the Merger.
Robertson, Stephens & Company is familiar with Biopsys, having provided
certain investment banking services to Biopsys from time to time, including
acting as an underwriter for the initial public offering of shares of the common
stock of Biopsys in May 1996 and maintaining a market in shares of the common
stock of Biopsys. Furthermore, Robertson, Stephens & Company has acted as
financial advisor to Biopsys in connection with the Merger for which fees are
due and payable contingent upon the closing of the Merger.
It is understood that this letter is for the information of the Board of
Directors of Biopsys and may not be used for any other purpose without our prior
written consent. Based upon and subject to the foregoing considerations, it is
our opinion, that, as of the date hereof, the Purchase Price is fair to the
stockholders of Biopsys from a financial point of view.
Very truly yours,
ROBERTSON, STEPHENS & COMPANY LLC
By: /s/ Robertson, Stephens & Company
Group, L.L.C.
Authorized Signatory
<PAGE> 101
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The New Jersey Business Corporation Act (the "NJBCA") 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
stockholders for damages for breach of any duty owed to the Registrant or its
stockholders.
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 under such By-laws 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. The indemnification 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
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<PAGE> 102
foregoing, the Registrant agrees to hold harmless and indemnify its directors
and officers to the fullest extent 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>
<C> <S>
2.1 Agreement and Plan of Merger dated as of May 21, 1997, among the Registrant,
Palisades Merger Corp. and Biopsys Medical, Inc. ("Biopsys") (included as Annex I
to the Proxy Statement/Prospectus which is a part of this Registration Statement on
Form S-4).
2.2 Stockholder Agreement dated as of May 21, 1997, among the Registrant and certain
affiliated stockholders of Biopsys (included as Annex II to the Proxy
Statement/Prospectus which is a part of this Registration Statement on Form S-4).
2.3 Stock Option Agreement dated as of May 21, 1997, between Biopsys, as issuer, and
the Registrant, as grantee (included as Annex III to the Proxy Statement/Prospectus
which is a part of this Registration Statement on Form S-4).
3.1* Restated Certificate of Incorporation of the Registrant dated April 26, 1990
(incorporated by reference to Exhibit 3(a) to the Registrant's Form 10-K Annual
Report for the fiscal year ended December 30, 1990).
3.2* Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant dated May 20, 1992 (incorporated by reference to Exhibit 3(a) to the
Registrant's Form 10-K Annual Report for the fiscal year ended January 3, 1993 (the
"1992 Form 10-K")).
3.3* Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant dated May 21, 1996 (incorporated by reference to Exhibit 3(a) to the
Registrant's Form 10-K Annual Report for the fiscal year ended December 29, 1996
(the "1996 Form 10-K")).
3.4* By-Laws of the Registrant, as amended April 26, 1990 (incorporated by reference to
Exhibit 3(b) to the 1992 Form 10-K).
4.1* Upon the request of the Securities and Exchange Commission, the Registrant will
furnish a copy of all instruments defining the rights of holders of long term debt
of the Registrant.
5.1 Opinion of Roger S. Fine, Esq. regarding the legality of the securities being
issued.
8.1 Opinion of Cravath, Swaine & Moore regarding certain tax matters.
8.2 Opinion of Wilson Sonsini Goodrich & Rosati regarding certain tax matters.
10.1* Stock Option Plan for Non-Employee Directors (incorporated by reference to Exhibit
10(a) to the 1996 Form 10-K).
10.2* 1995 Stock Option Plan (as amended) (incorporated by reference to Exhibit 10(a) to
the Registrant's Form 10-K Annual Report for the fiscal year ended December 31,
1995 (the "1995 Form 10-K")).
10.3* 1991 Stock Option Plan (incorporated by reference to Exhibit 4(a) to Registration
Statement No. 33-40294).
10.4* 1986 Stock Option Plan (as amended) (incorporated by reference to Exhibit 10(b) to
the 1992 Form 10-K).
10.5* 1995 Stock Compensation Plan (incorporated by reference to Exhibit 10(e) to the
1995 Form 10-K).
10.6* Executive Incentive Plan (incorporated by reference to Exhibit 10(f) to the 1996
Form 10-K).
10.7* Domestic Deferred Compensation Plan (as amended) (incorporated by reference to
Exhibit 10(g) to the 1996 Form 10-K).
10.8* Deferred Fee Plan for Directors (as amended) (incorporated by reference to Exhibit
10(h) to the 1996 Form 10-K).
10.9* Executive Income Deferral Plan (incorporated by reference to Exhibit 10(i) to the
1996 Form 10-K).
10.10* Excess Savings Plan (incorporated by reference to Exhibit 10(j) to the 1996 Form
10-K).
</TABLE>
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<PAGE> 103
<TABLE>
<C> <S>
10.11* Supplemental Retirement Plan (incorporated by reference to Exhibit 10(h) to the
1992 Form 10-K).
10.12* Executive Life Insurance Plan (incorporated by reference to Exhibit 10(i) to the
1992 Form 10-K).
11.1* Calculation of Earnings Per Share (incorporated by reference to Exhibit 11 to the
1996 Form 10-K and Exhibit 11 to the Registrant's Form 10-Q Quarterly Report for
the quarter ended March 30, 1997).
12.1* Statement of Computation of Ratio of Earnings to Fixed Charges (incorporated by
reference to Exhibit 12 to the 1996 Form 10-K).
13.1* Portions of the Registrant's Annual Report to Shareholders for the fiscal year 1996
(incorporated by reference to Exhibit 13 to the 1996 Form 10-K).
21.1* List of Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 to
the 1996 Form 10-K).
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Roger S. Fine, Esq. (included in Exhibit 5.1).
23.4 Consent of Cravath, Swaine & Moore (included in Exhibit 8.1).
23.5 Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit 8.2).
23.6 Consent of Robertson, Stephens & Company LLC.
24.1 Power of Attorney (included on the signature page of this Registration Statement).
99.1 Form of Proxy for Special Meeting of Stockholders of Biopsys.
</TABLE>
- ---------------
* Incorporated by reference.
(b) Financial Statement Schedules
None
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 end 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 a 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 offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
II-3
<PAGE> 104
(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 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 issuer undertakes that
such reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who may
be deemed underwriters, in addition to the information called for by the
other items of the applicable form;
(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.
II-4
<PAGE> 105
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, New Jersey on the 26th
day of June, 1997.
JOHNSON & JOHNSON,
by /s/ R. S. LARSEN
------------------------------------
Name: R. S. Larsen
Title: Chairman and Chief
Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Peter S. Galloway and Michael H. Ullmann, and each of them, as his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or 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 all documents relating thereto,
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, 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 or 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 substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ----------------------------------- --------------
<C> <S> <C>
/s/ R. S. LARSEN Chairman, Board of Directors and June 26, 1997
- ------------------------------------------ Chief Executive Officer, and
(R. S. Larsen) Director (Principal Executive
Officer)
/s/ R. J. DARRETTA Vice President, Finance (Principal June 26, 1997
- ------------------------------------------ Financial Officer)
(R. J. Darretta)
/s/ C. E. LOCKETT Controller (Principal Accounting June 26, 1997
- ------------------------------------------ Officer)
(C. E. Lockett)
Director
- ------------------------------------------
(G. N. Burrow)
/s/ J. G. COONEY Director June 26, 1997
- ------------------------------------------
(J. G. Cooney)
</TABLE>
II-5
<PAGE> 106
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ----------------------------------- --------------
<C> <S> <C>
/s/ J. G. CULLEN Director June 26, 1997
- ------------------------------------------
(J. G. Cullen)
/s/ P. M. HAWLEY Director June 25, 1997
- ------------------------------------------
(P. M. Hawley)
/s/ A. D. JORDAN Director June 24, 1997
- ------------------------------------------
(A. D. Jordan)
/s/ A. G. LANGBO Director June 26, 1997
- ------------------------------------------
(A. G. Langbo)
/s/ J. S. MAYO Director June 26, 1997
- ------------------------------------------
(J. S. Mayo)
/s/ T. S. MURPHY Director June 26, 1997
- ------------------------------------------
(T. S. Murphy)
Director
- ------------------------------------------
(P. J. Rizzo)
/s/ M. F. SINGER Director June 25, 1997
- ------------------------------------------
(M. F. Singer)
Director
- ------------------------------------------
(R. B. Smith)
Director
- ------------------------------------------
(R. N. Wilson)
</TABLE>
II-6
<PAGE> 107
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- -------
<C> <S>
2.1 Agreement and Plan of Merger dated as of May 21, 1997, among the Registrant,
Palisades Merger Corp. and Biopsys Medical, Inc. ("Biopsys") (included as Annex I
to the Proxy Statement/Prospectus which is a part of this Registration Statement on
Form S-4).
2.2 Stockholder Agreement dated as of May 21, 1997, among the Registrant and certain
affiliated stockholders of Biopsys (included as Annex II to the Proxy
Statement/Prospectus which is a part of this Registration Statement on Form S-4).
2.3 Stock Option Agreement dated as of May 21, 1997, between Biopsys, as issuer, and
the Registrant, as grantee (included as Annex III to the Proxy Statement/Prospectus
which is a part of this Registration Statement on Form S-4).
3.1* Restated Certificate of Incorporation of the Registrant dated April 26, 1990
(incorporated by reference to Exhibit 3(a) to the Registrant's Form 10-K Annual
Report for the fiscal year ended December 30, 1990).
3.2* Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant dated May 20, 1992 (incorporated by reference to Exhibit 3(a) to the
Registrant's Form 10-K Annual Report for the fiscal year ended January 3, 1993 (the
"1992 Form 10-K")).
3.3* Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant dated May 21, 1996 (incorporated by reference to Exhibit 3(a) to the
Registrant's Form 10-K Annual Report for the fiscal year ended December 29, 1996
(the "1996 Form 10-K")).
3.4* By-Laws of the Registrant, as amended April 26, 1990 (incorporated by reference to
Exhibit 3(b) to the 1992 Form 10-K).
4.1* Upon the request of the Securities and Exchange Commission, the Registrant will
furnish a copy of all instruments defining the rights of holders of long term debt
of the Registrant.
5.1 Opinion of Roger S. Fine, Esq. regarding the legality of the securities being
issued.
8.1 Opinion of Cravath, Swaine & Moore regarding certain tax matters.
8.2 Opinion of Wilson Sonsini Goodrich & Rosati regarding certain tax matters.
10.1* Stock Option Plan for Non-Employee Directors (incorporated by reference to Exhibit
10(a) to the 1996 Form 10-K).
10.2* 1995 Stock Option Plan (as amended) (incorporated by reference to Exhibit 10(a) to
the Registrant's Form 10-K Annual Report for the fiscal year ended December 31,
1995 (the "1995 Form 10-K")).
10.3* 1991 Stock Option Plan (incorporated by reference to Exhibit 4(a) to Registration
Statement No. 33-40294).
10.4* 1986 Stock Option Plan (as amended) (incorporated by reference to Exhibit 10(b) to
the 1992 Form 10-K).
10.5* 1995 Stock Compensation Plan (incorporated by reference to Exhibit 10(e) to the
1995 Form 10-K).
10.6* Executive Incentive Plan (incorporated by reference to Exhibit 10(f) to the 1996
Form 10-K).
10.7* Domestic Deferred Compensation Plan (as amended) (incorporated by reference to
Exhibit 10(g) to the 1996 Form 10-K).
10.8* Deferred Fee Plan for Directors (as amended) (incorporated by reference to Exhibit
10(h) to the 1996 Form 10-K).
10.9* Executive Income Deferral Plan (incorporated by reference to Exhibit 10(i) to the
1996 Form 10-K).
10.10* Excess Savings Plan (incorporated by reference to Exhibit 10(j) to the 1996 Form
10-K).
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- -------
<C> <S>
10.11* Supplemental Retirement Plan (incorporated by reference to Exhibit 10(h) to the
1992 Form 10-K).
10.12* Executive Life Insurance Plan (incorporated by reference to Exhibit 10(i) to the
1992 Form 10-K).
11.1* Calculation of Earnings Per Share (incorporated by reference to Exhibit 11 to the
1996 Form 10-K and Exhibit 11 to the Registrant's Form 10-Q Quarterly Report for
the quarter ended March 30, 1997).
12.1* Statement of Computation of Ratio of Earnings to Fixed Charges (incorporated by
reference to Exhibit 12 to the 1996 Form 10-K).
13.1* Portions of the Registrant's Annual Report to Shareholders for the fiscal year 1996
(incorporated by reference to Exhibit 13 to the 1996 Form 10-K).
21.1* List of Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 to
the 1996 Form 10-K).
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Roger S. Fine, Esq. (included in Exhibit 5.1).
23.4 Consent of Cravath, Swaine & Moore (included in Exhibit 8.1).
23.5 Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit 8.2).
23.6 Consent of Robertson, Stephens & Company LLC.
24.1 Power of Attorney (included on the signature page of this Registration Statement).
99.1 Form of Proxy for Special Meeting of Stockholders of Biopsys.
</TABLE>
- ---------------
* Incorporated by reference.
<PAGE> 1
EXHIBIT 5.1
June 25, 1997
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08903
Ladies and Gentlemen:
I am Vice President, General Counsel of Johnson & Johnson, a New Jersey
corporation (the "Company"), and I am familiar with the Registration Statement
on Form S-4 (the "Registration Statement") being filed by the Company with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
relating to the proposed issuance of shares of the Company's Common Stock, par
value $1.00 per share, in connection with the merger of Palisades Merger Corp.,
a Delaware corporation and a wholly owned subsidiary of the Company ("Merger
Sub"), into Biopsys Medical, Inc., a Delaware corporation ("Biopsys"), pursuant
to the terms of the Agreement and Plan of Merger dated as of May 21, 1997 (the
"Merger Agreement") among the Company, Merger Sub and Biopsys.
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 Biopsys
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/ ROGER S. FINE
--------------------------------------
Name: Roger S. Fine
Title: Vice President, General
Counsel
<PAGE> 1
EXHIBIT 8.1
[Cravath, Swaine & Moore Letterhead]
June 25, 1997
Agreement and Plan of Merger
Dated as of May 21, 1997
Among Johnson & Johnson,
Palisades Merger Corp. and
Biopsys Medical, Inc.
Ladies and Gentlemen:
We have acted as special counsel for Johnson & Johnson, a New Jersey
corporation ("Johnson & Johnson"), in connection with the proposed merger (the
"Merger") of Palisades Merger Corp., a Delaware corporation and a wholly owned
subsidiary of Johnson & Johnson ("Sub"), with and into Biopsys Medical, Inc., a
Delaware corporation (the "Company"), pursuant to an Agreement and Plan of
Merger dated as of May 21, 1997 (the "Merger Agreement"), among Johnson &
Johnson, Sub and the Company under which each issued and outstanding share of
common stock of the Company not owned by the Company, Johnson & Johnson or Sub
will be exchanged for common stock of Johnson & Johnson.
In that connection, you have requested our opinion regarding the
material Federal income tax consequences of the Merger. In providing our
opinion, we have examined the Merger Agreement, the Proxy Statement/Prospectus
of the Company and Johnson & Johnson to be dated as of June 26, 1997 (the "Proxy
Statement-Prospectus"), and such other documents and corporate records as we
have deemed necessary or appropriate for purposes of our opinion. In addition,
we have assumed that (i) the Merger will be consummated in the manner
contemplated by the Proxy Statement-Prospectus and in accordance with the
provisions of the Merger Agreement, (ii) the representations made to us by the
Company and Johnson & Johnson and Sub in their respective letters to us each
dated June 25, 1997 and delivered to us for purposes of this opinion are
accurate and complete and (iii) the representations made to us by Brentwood
Associates VI, L.P., St. Paul Fire and Marine Insurance Company, Three Arch
Partners, L.P., Three Arch Associates, L.P., the Fogarty Family Revocable
Trust and Fogarty Engineering (entities affiliated with Mr. Thomas J. Fogarty)
and Mr. Thomas J. Fogarty, M.D., Mr. David W. Chonette, Ms. Nancy S. Olson,
Mr. Mark A. Cole, Ph.D., Mr. Kenneth M. Galt, Mr. Steve H. Parker, M.D.,
Mr. Steven J. Naber, Mr. Luis J. Berga, Ms. Ellen M. Preston, Mr. Scott W.
Tremberth and the Gex Family Trust (collectively, the "Stockholders") in their
respective letters and delivered to us for purposes of this opinion are accurate
and complete.
Based upon the foregoing, in our opinion, for Federal income tax
purposes, the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and the Company, Johnson & Johnson and Sub will each be a party to such
reorganization within the meaning of Section 368(b) of the Code.
The opinions expressed herein are based upon existing statutory,
regulatory and judicial authority, any of which may be changed at any time with
retroactive effect. In addition, our opinions are based solely on the documents
that we have examined, the additional information that we have obtained, and the
statements contained in the letters from the Company, Johnson & Johnson and Sub,
and the Stockholders referred to above, which we have assumed will be true as of
the effective time of the Merger. Our opinions cannot be relied upon if any of
the facts pertinent to the Federal income tax treatment of the Merger stated in
such documents or in such additional information is, or later becomes,
inaccurate, or if any of the statements contained in the letters from the
Company, Johnson & Johnson and Sub, or the Stockholders referred to above are,
or later become, inaccurate. Finally, our opinions are limited to the tax
matters specifically covered hereby, and we have not been asked to address, nor
have we addressed, any other tax consequences of the Merger or any other
transactions.
This opinion is being provided solely for the benefit of Johnson &
Johnson. No other person or party shall be entitled to rely on this opinion.
Notwithstanding the previous sentence, we hereby consent to the filing of this
opinion as an exhibit to the Registration Statement and further consent to the
use of our name in the Registration Statement in connection with references to
this opinion. In giving this consent, however, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended.
Very truly yours,
/s/ CRAVATH, SWAINE & MOORE
_________________________________
Cravath, Swaine & Moore
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
<PAGE> 1
EXHIBIT 8.2
[Wilson Sonsini Goodrich & Rosati Letterhead]
June 25, 1997
Biopsys Medical, Inc.
3 Morgan
Irvine, California 92618
Ladies and Gentlemen:
We have acted as counsel for Biopsys Medical, Inc., a Delaware
corporation ("Biopsys"), in connection with the preparation and execution of the
Agreement and Plan of Merger (the "Merger Agreement") dated as of May 21, 1997,
among Johnson & Johnson, a New Jersey corporation ("J & J"), Palisades Merger
Corp., a Delaware corporation and wholly-owned subsidiary of J & J ("Newco"),
and Biopsys. This opinion is being delivered to you pursuant to Section
6.03(c) of the Merger Agreement. Pursuant to the Merger Agreement, Newco will
merge with and into Biopsys and Biopsys will survive as a wholly-owned
subsidiary of J & J (the "Merger"). Unless otherwise defined, capitalized
terms referred to herein have the meanings set forth in the Merger Agreement.
All section references, unless otherwise indicated, are to the Internal
Revenue Code of 1986, as amended (the "Code").
You have requested our opinion regarding certain United States federal
income tax consequences of the Merger. In delivering this opinion, we have
reviewed and relied upon the facts, statements, descriptions and
representations set forth in the registration statement on Form S-4 filed with
the Securities and Exchange Commission (the "Registration Statement"), the
Merger Agreement (including Schedules and Exhibits) and such other documents
pertaining to the Merger as we have deemed necessary or appropriate. We have
also reviewed and relied upon representations of officers of Biopsys and J & J,
respectively (the "Officers' Representations").
In connection with rendering this opinion, we have assumed or obtained
representations (without any independent investigation) that:
1. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has been
(or will be by the effective time of the Merger (the "Effective Time")) due
execution and delivery of all documents where due execution and delivery are
prerequisites to effectiveness thereof;
<PAGE> 2
Biopsys Medical, Inc.
June 25, 1997
Page 2
2. Any statement made in any of the documents referred to herein, "to
the best of the knowledge" of any person or party is correct without such
qualification;
3. All statements, descriptions and representations contained in any of
the documents referred to herein or otherwise made to us are true and correct
in all material respects and no actions have been (or will be) taken which are
inconsistent with such representations;
4. The Merger will be reported by Biopsys, and J & J on their respective
federal income tax returns in a manner consistent with the opinion set forth
below; and
5. The stockholders of Biopsys will not, at the Effective Time, have an
existing plan or intent to dispose of an amount of J & J Common Stock to be
received in the Merger (or to dispose of Biopsys Common Stock in anticipation of
the Merger) such that the stockholders of Biopsys will not receive and retain a
meaningful continuing equity ownership in J & J that is sufficient to satisfy
the continuity of interest requirement as specified in Treasury Regulations
Section 1.368-1(b) and as interpreted in certain Internal Revenue Service
rulings and judicial decisions. For this purpose, an existing plan or intent to
dispose of no more than 50% of J & J Common Stock will not be treated as failing
to satisfy the continuity of interest requirement.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we
are of the opinion that, if the Merger is consummated in accordance with the
Merger Agreement (and without any waiver, breach or amendment of any of the
provisions thereof) and the Officers' Representations are true and correct at
the Effective Time, then for federal income tax purposes the Merger will
qualify as a "reorganization" within the meaning of Section 368(a) of the Code.
This opinion represents and is based upon our best judgment regarding
the application of federal income tax laws arising under the Code, existing
judicial decisions, administrative regulations and published rulings and
procedures. Our opinion is not binding upon the Internal Revenue Service or the
courts, and there is no assurance that the Internal Revenue Service will not
successfully assert a contrary position. Furthermore, no assurance can be
given that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, would not adversely affect the accuracy of
the conclusions stated herein. Nevertheless, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
Federal income tax laws.
This opinion addresses only the classification of the Merger as a
reorganization under Section 368(a) of the Code, and does not address any other
federal, state, local or foreign tax consequences that may result from the
Merger or any other transaction (including any transaction undertaken in
connection with the Merger).
<PAGE> 3
Biopsys Medical, Inc.
June 25, 1997
Page 3
No opinion is expressed as to any transaction other than the Merger as
described in the Merger Agreement or to any transaction whatsoever, including
the Merger, if all the transactions described in the Merger Agreement are not
consummated in accordance with the terms of such Merger Agreement and without
waiver or breach of any material provision thereof or if all of the
representations, warranties, statements and assumptions upon which we relied
are not true and accurate at all relevant times. In the event any one of
the statements, representations, warranties or assumptions upon which we have
relied to issue this opinion is incorrect, our opinion might be adversely
affected and may not be relied upon.
This opinion has been delivered to you only for the purposes stated. It
may not be relied upon for any other purpose or by any other person or entity
and may not be made available to any other person or entity without our prior
written consent. We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and further consent to the use of our name in
the Registration Statement in connection with references to this opinion and
the tax consequences of the Merger. In giving this consent, however, we do not
hereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ WILSON SONSINI GOODRICH & ROSATI
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<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 20, 1997, 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 December 29, 1996. We also consent to the
reference to our firm under the captions "SUMMARY -- Certain Financial Data" and
"EXPERTS".
COOPERS & LYBRAND L.L.P.
New York, New York
June 26, 1997
<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 dated August 1, 1996,
appearing in the Annual Report on Form 10-K of Biopsys Medical, Inc. for the
fiscal year ended June 30, 1996 and to the reference to us under the headings
"SUMMARY -- Certain Financial Data" and "EXPERTS" in the Proxy
Statement/Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Costa Mesa, California
June 25, 1997
<PAGE> 1
EXHIBIT 23.6
CONSENT OF ROBERTSON, STEPHENS & COMPANY LLC
We hereby consent to the use of Annex IV containing our opinion letter
dated May 21, 1997 (the "Opinion") to the board of directors of Biopsys Medical,
Inc. ("Biopsys") in the Proxy Statement/Prospectus constituting a part of the
registration statement on Form S-4 relating to the merger of a wholly owned
subsidiary of Johnson & Johnson with and into Biopsys and to the references to
our firm name in the Proxy Statement/Prospectus in connection with references to
the Opinion. In giving this consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder (collectively, the "Act"), 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 Act.
June 25, 1997
ROBERTSON, STEPHENS & COMPANY LLC
By: /s/ Robertson, Stephens & Company Group, L.L.C.
Authorized Signatory
<PAGE> 1
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF BIOPSYS MEDICAL, INC.
SPECIAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Biopsys Medical, Inc., a Delaware corporation
(the "Company"), hereby acknowledges receipt of the Notice of Special Meeting of
Stockholders and Proxy Statement/Prospectus, each dated June 26, 1997, and
hereby appoints Steven L. Gex and Steven J. Naber, or either of them, proxies
and attorneys-in-fact, with full power to each of substitution, on behalf and in
the name of the undersigned to represent the undersigned at the Special Meeting
of Stockholders of the Company to be held on July 30, 1997, at 8:00 a.m., local
time, at the Company's principal offices located at 3 Morgan, Irvine, California
92618 and at any postponement or adjournment thereof, and to vote all shares of
Company common stock which the undersigned would be entitled to vote if then and
there personally present, on the matter set forth below and, in their
discretion, upon all matters incident to the conduct of the Special Meeting and
all matters presented at the Special Meeting but which were not known to the
Company Board of Directors a reasonable time before the solicitation of this
proxy:
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THE COMPANY BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:
1. Approval and adoption of the Agreement and Plan of Merger dated as of May
21, 1997 pursuant to which the Company will become a wholly owned
subsidiary of Johnson & Johnson.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed and dated on the other side)
(Continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO
CONTRARY DIRECTION IS INDICATED, WILL BE VOTED AS FOLLOWS: FOR APPROVAL AND
ADOPTION OF THE AGREEMENT AND PLAN OF MERGER, AND IN THE DISCRETION OF THE PROXY
HOLDERS ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF THE STOCK IS REGISTERED IN
THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD THEIR TITLES. IF SIGNER IS
A CORPORATION, PLEASE GIVE FULL CORPORATE NAME AND HAVE A DULY AUTHORIZED
OFFICER SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
Dated: , 1997
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Signature
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Signature if held jointly
PLEASE SIGN, DATE AND PROMPTLY
RETURN THIS PROXY IN THE ENCLOSED
RETURN ENVELOPE WHICH IS POSTAGE
PREPAID IF MAILED IN THE UNITED
STATES.
NOTE: (This Proxy should be
marked, signed by the
stockholder(s) exactly as his or
her name appears hereon, and
returned promptly in the enclosed
envelope. Persons signing in a
fiduciary capacity should so
indicate. If shares are held by
joint tenants or as community
property, both should sign.)
