<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
AMENDMENT NO. 1
TO
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
FEMRX, INC.
(NAME OF SUBJECT COMPANY)
------------------------
ET/FM ACQUISITION CORP.
JOHNSON & JOHNSON
(BIDDERS)
------------------------
COMMON STOCK, PAR VALUE $.001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
314463 10 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
PHILIP P. CROWLEY, ESQ.
ET/FM ACQUISITION CORP.
C/O JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933
(732) 524-2451
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
COPIES TO:
ROBERT A. KINDLER, ESQ.
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
(212) 474-1000
------------------------
OCTOBER 3, 1998
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
=====================================================================================
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
- -------------------------------------------------------------------------------------
$24,498,097................................................. $4,899.62
=====================================================================================
</TABLE>
* For purposes of calculating amount of filing fee only. The amount assumes the
purchase of 10,424,722 shares of Common Stock, par value $.001 per share (the
"Shares"), at a price per Share of $2.35 in cash. Such number of shares
represents all the Shares outstanding as of September 30, 1998, plus the
number of Shares issuable upon the exercise of all existing options and
warrants.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
</TABLE>
Page 1 of 8 pages.
Exhibit Index on page 8.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<C> <S>
- --------------------------
CUSIP NO. 314463 10 0
- --------------------------
</TABLE>
14D-1 AND 13D Page 2 of 8 Pages
<TABLE>
<C> <S>
- -------------------------------------------------------------------
Name of Reporting Persons
1 I.R.S. Identification Nos. of Above Persons (entities only)
ET/FM ACQUISITION CORP. (APPLIED FOR)
- -------------------------------------------------------------------
Check the Appropriate Box if a Member of Group
2 (a) [ ]
(b) [ ]
- -------------------------------------------------------------------
SEC Use only
3
- -------------------------------------------------------------------
Sources of Funds
4
AF
- -------------------------------------------------------------------
Check if Disclosure of Legal Proceedings is Required
5 Pursuant to Items 2(d) or 2(e) [ ]
- -------------------------------------------------------------------
Citizen or Place of Organization
6
DELAWARE
- -------------------------------------------------------------------
Aggregate Amount Beneficially Owned by Each Reporting Person
7
5,414,858* (COMMON STOCK)
- -------------------------------------------------------------------
Check if the Aggregate Amount in Row (7) Excludes
8 Certain Shares [ ]
- -------------------------------------------------------------------
Percent of Class Represented by Amount in Row (7)
9
APPROXIMATELY 59.1% OF THE SHARES OUTSTANDING AS OF
SEPTEMBER 30, 1998**
- -------------------------------------------------------------------
Type of Reporting Person
10
CO
- -------------------------------------------------------------------
</TABLE>
* See footnote on following page.
** See footnote on following page.
2
<PAGE> 3
<TABLE>
<S> <C> <C>
- -------------------------
CUSIP NO. 314463 10 0 14D-1 AND 13D Page 3 of 8 Pages
- -------------------------
</TABLE>
<TABLE>
<C> <S>
- -------------------------------------------------------------------
Name of Reporting Persons
1 I.R.S. Identification Nos. of Above Persons (entities only)
JOHNSON & JOHNSON (22-1024240)
- -------------------------------------------------------------------
Check the Appropriate Box if a Member of Group
2 (a) [ ]
(b) [ ]
- -------------------------------------------------------------------
3 SEC Use only
- -------------------------------------------------------------------
4 Sources of Funds
WC
- -------------------------------------------------------------------
Check if Disclosure of Legal Proceedings is
5 Required Pursuant to Item 2(d) or 2(e) [ ]
- -------------------------------------------------------------------
Citizen or Place of Organization
6
NEW JERSEY
- -------------------------------------------------------------------
Aggregate Amount Beneficially Owned by Each Reporting Person
7
5,414,858* (COMMON STOCK)
- -------------------------------------------------------------------
8 Check if the Aggregate Amount in Row (7) Excludes Certain
Shares [ ]
- -------------------------------------------------------------------
Percent of Class Represented by Amount in Row (7)
9
APPROXIMATELY 59.1% OF THE SHARES OUTSTANDING AS OF
SEPTEMBER 30, 1998**
- -------------------------------------------------------------------
Type of Reporting Person
10
CO
- -------------------------------------------------------------------
</TABLE>
* On October 3, 1998, Johnson & Johnson ("Parent") and ET/FM Acquisition Corp.,
a wholly owned subsidiary of Parent (the "Purchaser"), entered into
Stockholder Agreements (the "Stockholder Agreements") with certain
stockholders (the "Stockholders") of FemRx, Inc. (the "Company"), who
beneficially own 5,414,858 Shares in the aggregate, including 235,000 Shares
issuable upon the exercise of options, or approximately 59.1% of the Shares
outstanding as of September 30, 1998. Under the Stockholder Agreements, the
Stockholders have agreed with Parent and the Purchaser to tender to the
Purchaser, pursuant to the Offer (as defined below), or sell to the Purchaser
immediately following the Offer, in each case, at a price of $2.35 per Share,
all the Shares owned by the Stockholders. In addition, any Shares that any
such Stockholder may subsequently acquire (by exercise of stock options or
otherwise) automatically become subject to the provisions of the Stockholder
Agreements. The Purchaser's right to purchase the Shares subject to the
Stockholder Agreements is reflected in Rows 7 and 9 of each of the tables
above. If the Purchaser accepts for payment and pays for any Shares tendered
under the Offer, the Purchaser must purchase the Shares subject to the
Stockholder Agreements immediately following the Offer (unless all the Shares
subject to the Stockholder Agreements have been tendered by the Stockholders
and accepted for payment by the Purchaser under the Offer). Pursuant to the
Stockholder Agreements, each Stockholder has also delivered a proxy to the
Purchaser to vote, or grant a consent or approval in respect of, the Shares
subject to the Stockholder Agreements against any transaction with a third
party other than the transactions contemplated by the Offer and the Merger (as
defined in the Offer to Purchase). The Stockholder Agreements are described
more fully in Section 12 ("Purpose of the Offer; The Merger Agreement and The
Stockholder Agreements") of the Offer to Purchase dated October 9, 1998 (the
"Offer to Purchase"), filed as Exhibit (a)(1) hereto.
** Based on a representation of the Company in the Agreement and Plan of Merger
dated as of October 3, 1998, among Parent, the Purchaser and the Company.
3
<PAGE> 4
This Tender Offer Statement on Schedule 14D-1 also constitutes an Amendment
No. 1 to Schedule 13D filed on October 9, 1998 with respect to the acquisition
by the Purchaser and Parent of beneficial ownership of the Shares subject to the
Stockholder Agreements. The item numbers and responses thereto below are in
accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is FemRx, Inc., a Delaware corporation,
which has its principal executive offices at 1221 Innsbruck Drive, Sunnyvale,
California 94089.
(b) This Schedule 14D-1 relates to the offer by the Purchaser to purchase
all outstanding Shares at a price of $2.35 per Share, net to the seller in cash,
without interest (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively. Information concerning the number of
outstanding Shares is set forth in the "Introduction" of the Offer to Purchase
and is incorporated herein by reference.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales prices of Shares for each quarterly period
during the past two years during which the Shares were publicly traded is set
forth in Section 6 ("Price Range of the Shares; Dividends on the Shares") of the
Offer to Purchase and is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Schedule 14D-1 is being filed by the Purchaser, a
Delaware corporation, and Parent, a New Jersey corporation. The Purchaser is a
wholly owned subsidiary of Parent. Information concerning the principal business
and the address of the principal offices of the Purchaser and Parent is set
forth in Section 9 ("Certain Information Concerning the Purchaser and Parent")
of the Offer to Purchase and is incorporated herein by reference. The names,
business addresses, present principal occupations or employment, material
occupations, positions, offices or employments during the last five years and
citizenship of the directors and executive officers of the Purchaser and Parent
are set forth in Schedule I to the Offer to Purchase and are incorporated herein
by reference.
(e) and (f) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") and Section 15 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 11 ("Contacts with the
Company; Background of the Offer") and Section 12 ("Purpose of the Offer; The
Merger Agreement and The Stockholder Agreements") of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement and The Stockholder Agreements") of the Offer to Purchase is
incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
4
<PAGE> 5
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in "Introduction", Section 9
("Certain Information Concerning the Purchaser and Parent") and Section 12
("Purpose of the Offer; The Merger Agreement and The Stockholder Agreements") of
the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction", Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Contacts with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
The Merger Agreement and The Stockholder Agreements") of the Offer to Purchase
is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement and The Stockholder Agreements") of the Offer to Purchase is
incorporated herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of October 3, 1998, among
the Purchaser, Parent and the Company and the Stockholder Agreements, copies of
which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated October 9, 1998.
(a)(8) Text of Joint Press Release dated October 5, 1998, issued by
the Company and Parent.
(b) None.
(c)(1) Agreement and Plan of Merger dated as of October 3, 1998,
among Parent, the Purchaser and the Company.
(c)(2) Stockholder Agreements dated as of October 3, 1998, among
Parent, the Purchaser and certain stockholders of the
Company.
(c)(3) Letter regarding continued employment dated October 1, 1998,
between Andrew M. Thompson and Ethicon, Inc.
(c)(4) Letter regarding continued employment dated October 1, 1998,
between George M. Savage, M.D., and Ethicon, Inc.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
5
<PAGE> 6
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: October 9, 1998
JOHNSON & JOHNSON
By: /s/ James Lenehan
--------------------------------------
Name: James Lenehan
Title: Member, Executive Committee
ET/FM ACQUISITION CORP.
By: /s/ Philip P. Crowley
--------------------------------------
Name: Philip P. Crowley
Title: Vice President
6
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
- ---------- ------------------------------------------------------------ ------
<S> <C> <C>
(a)(1).... Offer to Purchase.
(a)(2).... Letter of Transmittal.
(a)(3).... Notice of Guaranteed Delivery.
(a)(4).... Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5).... Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6).... Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7).... Form of Summary Advertisement dated October 9, 1998.
(a)(8).... Text of Joint Press Release dated October 5, 1998, issued by
the Company and Parent.
(b)....... None.
(c)(1).... Agreement and Plan of Merger dated as of October 3, 1998,
among Parent, the Purchaser and the Company.
(c)(2).... Stockholder Agreements dated as of October 3, 1998, among
Parent, the Purchaser and certain stockholders of the
Company.
(c)(3).... Letter regarding continued employment dated October 1, 1998,
between Andrew M. Thompson and Ethicon, Inc.
(c)(4).... Letter regarding continued employment dated October 1, 1998,
between George M. Savage, M.D., and Ethicon, Inc.
(d)....... None.
(e)....... Not applicable.
(f)....... None.
</TABLE>
7
<PAGE> 1
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FEMRX, INC.
AT
$2.35 NET PER SHARE
BY
ET/FM ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
JOHNSON & JOHNSON
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 6, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER DATED AS OF
OCTOBER 3, 1998 AMONG JOHNSON & JOHNSON, ET/FM ACQUISITION CORP. (THE
"PURCHASER") AND FEMRX, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE
COMPANY HAS APPROVED AND FOUND ADVISABLE THE MERGER AGREEMENT, THE OFFER AND THE
MERGER REFERRED TO HEREIN, DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR
SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST 90% OF
THE OUTSTANDING SHARES (AFTER GIVING EFFECT TO THE EXERCISE OF ALL OPTIONS WITH
EXERCISE PRICES AT OR BELOW THE OFFER PRICE).
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (i) complete and sign the Letter of
Transmittal or a facsimile copy thereof in accordance with the instructions in
the Letter of Transmittal, have such stockholder's signature thereon guaranteed
if required by Instruction 1 to the Letter of Transmittal, mail or deliver the
Letter of Transmittal or such facsimile, or, in the case of a book-entry
transfer effected pursuant to the procedure set forth in Section 2, an Agent's
Message (as defined herein), and any other required documents, to the Depositary
(as defined herein) and either deliver the certificates for such Shares to the
Depositary along with the Letter of Transmittal or facsimile or deliver such
Shares pursuant to the procedure for book-entry transfer set forth in Section 2
or (ii) request such stockholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such stockholder. A
stockholder having Shares registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact such broker, dealer,
commercial bank, trust company or other nominee if such stockholder desires to
tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply in a
timely manner with the procedure for book-entry transfer, or who cannot deliver
all required documents to the Depositary prior to the expiration of the Offer,
may tender such Shares by following the procedure for guaranteed delivery set
forth in Section 2.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
or any other tender offer materials may be directed to the Information Agent at
its address and telephone numbers set forth on the back cover of this Offer to
Purchase.
October 9, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction................................................ 1
1. Terms of the Offer...................................... 2
2. Procedure for Tendering Shares.......................... 4
3. Withdrawal Rights....................................... 7
4. Acceptance for Payment and Payment...................... 7
5. Certain Federal Income Tax Consequences................. 8
6. Price Range of the Shares; Dividends on the Shares...... 10
7. Effect of the Offer on the Market for the Shares; Stock
Quotation; Exchange Act Registration; Margin
Regulations............................................. 10
8. Certain Information Concerning the Company.............. 11
9. Certain Information Concerning the Purchaser and
Parent............................................... 13
10. Source and Amount of Funds.............................. 14
11. Contacts with the Company; Background of the Offer...... 14
12. Purpose of the Offer; The Merger Agreement and The
Stockholder Agreements............................... 15
13. Dividends and Distributions............................. 23
14. Certain Conditions of the Offer......................... 23
15. Certain Legal Matters................................... 25
16. Fees and Expenses....................................... 26
17. Miscellaneous........................................... 26
Schedule I -- Directors and Executive Officers.............. 28
</TABLE>
<PAGE> 3
To the Holders of Common Stock
of FemRx, Inc.:
INTRODUCTION
ET/FM Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Johnson & Johnson, a New Jersey corporation
("Parent"), hereby offers to purchase all outstanding shares (the "Shares") of
Common Stock, par value $.001 per share, of FemRx, Inc., a Delaware corporation
(the "Company"), at $2.35 per Share (the "Offer Price"), net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer").
Tendering stockholders whose shares are registered in their own name and
who tender directly to the Depositary (as defined below) will not be obligated
to pay brokerage fees or commissions to the Purchaser or the Depositary or,
except as set forth in Instruction 6 of the Letter of Transmittal, U.S. Federal,
state or local transfer taxes on the purchase of Shares pursuant to the Offer.
Stockholders who hold their Shares through a bank or broker should check with
such institution as to whether they charge any service fees. The Purchaser will
pay the fees and expenses of First Chicago Trust Company of New York, which is
acting as the Depositary (the "Depositary"), and Georgeson & Company Inc., which
is acting as Information Agent (the "Information Agent"), incurred in connection
with the Offer. See Section 16.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of October 3, 1998 (the "Merger Agreement") among Parent, the Purchaser and
the Company, pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company, with the Company surviving the merger (as such, the
"Surviving Corporation") as a wholly owned subsidiary of Parent (the "Merger").
On the effective date of the Merger, each outstanding Share not tendered in the
Offer (other than Shares owned by the Company as treasury stock or by Parent,
the Purchaser or any other direct or indirect wholly owned subsidiary of Parent
or by stockholders, if any, who are entitled to and who properly exercise
dissenters' rights under Delaware law or, to the extent applicable, California
law) will be converted into the right to receive the Offer Price in cash,
without interest (the "Merger Consideration"). See Section 12.
The Merger is subject to a number of conditions, including approval by
stockholders of the Company, if such approval is required by applicable law, and
Shares having been purchased pursuant to the Offer. In the event the Purchaser
acquires 90% or more of the outstanding Shares pursuant to the Offer or
otherwise, the Purchaser would be able to effect the Merger pursuant to the
short-form merger provisions of the Delaware General Corporation Law (the
"DGCL"), without prior notice to, or any action by, any other stockholder of the
Company. In such event, the Purchaser could, and intends to, effect the Merger
without prior notice to, or any action by, any other stockholder of the Company.
See Section 12.
The Purchaser and Parent have entered into Stockholder Agreements dated as
of October 3, 1998 (the "Stockholder Agreements") with certain stockholders of
the Company (the "Stockholders"), who beneficially own 5,414,858 Shares in the
aggregate, including Shares issuable upon the exercise of options. Under the
Stockholder Agreements, the Stockholders have agreed to sell, and the Purchaser
has agreed to purchase, all Shares beneficially owned by them, representing
approximately 59.1% of the outstanding Shares (approximately 51.9% on a fully
diluted basis, assuming the exercise of all options and warrants), as well as
any Shares subsequently acquired by the Stockholders through the exercise of
options or otherwise, at a price per Share equal to the Offer Price. The
obligation of the Stockholders to sell, and the obligation of the Purchaser to
purchase, Shares under the Stockholder Agreements are subject to the Purchaser
having accepted Shares for payment under the Offer in accordance with the Merger
Agreement. The Stockholders may, and the Purchaser may direct the Stockholders
to, tender their Shares into the Offer. Any Shares of the Stockholders not
purchased in the Offer will be purchased by the Purchaser immediately following
the purchase of Shares in the Offer. In addition, the Stockholders have agreed
to vote their Shares 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, and have agreed to vote
against any other acquisition proposal.
1
<PAGE> 4
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE NUMBER OF SHARES
TENDERED AND NOT WITHDRAWN NOT LATER THAN THE DATE OF EXPIRATION OF THE OFFER
EQUALING AT LEAST 90% OF THE OUTSTANDING SHARES (AFTER GIVING EFFECT TO THE
EXERCISE OF ALL OPTIONS WITH EXERCISE PRICES AT OR BELOW THE OFFER PRICE).
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED AND FOUND ADVISABLE THE
MERGER AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER
AND TENDER THEIR SHARES.
Warburg Dillon Read LLC ("WDR") has delivered to the Board of Directors of
the Company its written opinion dated October 2, 1998 that, as of such date and
based upon and subject to the matters set forth therein, the consideration to be
offered by the Purchaser to the stockholders of the Company in the transaction
is fair, from a financial point of view, to such stockholders. Such opinion is
set forth in full as an exhibit to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to
stockholders of the Company concurrently herewith.
The Company has informed the Purchaser that, as of September 30, 1998,
there were 8,933,547 Shares issued and outstanding, 1,441,174 Shares reserved
for issuance upon exercise of outstanding Company Stock Options (as defined in
the Merger Agreement), 50,000 Shares reserved for issuance upon exercise of a
warrant and one Share reserved for issuance pursuant to an employee stock
purchase plan. Based upon the foregoing, the Purchaser believes that
approximately 5,212,362 Shares constitute a majority of the fully diluted
Shares. Because the Shares subject to the Stockholder Agreements represent
approximately 51.9% of the Shares on a fully diluted basis (assuming the
exercise of all options and warrants), if the Purchaser accepts for payment
Shares tendered pursuant to the Offer, and accepts for payment the Shares
subject to the Stockholder Agreements pursuant to the Offer or purchases such
Shares immediately following the Offer, the Purchaser will be able to elect a
majority of the members of the Company's Board of Directors and to effect the
Merger without the affirmative vote of any other stockholder of the Company.
The Merger Agreement and the Stockholder Agreements are more fully
described in Section 12. Certain Federal income tax consequences of the sale of
Shares pursuant to the Offer and the exchange of Shares for the Merger
Consideration pursuant to the Merger are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered, including
Shares issuable upon exercise of Company Stock Options, prior to the Expiration
Date and not theretofore properly withdrawn in accordance with Section 3. The
term "Expiration Date" means 12:00 Midnight, New York City time, on Friday,
November 6, 1998, unless and until the Purchaser, in its sole discretion (but
subject to the terms of the Merger Agreement), shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
The Purchaser expressly reserves the right, in its sole discretion (but
subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission (the "Commission")), at
any time and from time to time, and regardless of whether or not any of the
events set forth in Section 14 hereof shall have occurred, to (i) extend the
period of time during which the Offer is open and thereby delay acceptance for
payment of and the payment for any Shares, by giving oral or written notice of
such extension to the Depositary and (ii) amend the Offer in any other respect
by giving oral or written notice of such amendment to the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID BY THE PURCHASER ON THE PURCHASE PRICE OF
THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
2
<PAGE> 5
If by 12:00 Midnight, New York City time, on Friday, November 6, 1998 (or
any other date or time then set as the Expiration Date), any or all conditions
to the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the terms and conditions contained in
the Merger Agreement and to the applicable rules and regulations of the
Commission, to (i) terminate the Offer and not accept for payment any Shares and
return all tendered Shares to tendering stockholders, (ii) waive all the
unsatisfied conditions and, subject to complying with the terms of the Merger
Agreement and the applicable rules and regulations of the Commission, accept for
payment and pay for all Shares validly tendered prior to the Expiration Date and
not theretofore withdrawn, (iii) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (iv) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer (other than as may be required by the Merger Agreement or by
applicable law). Any extension, waiver, amendment or termination will be
followed as promptly as practicable by public announcement. In the case of an
extension, Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires that the announcement be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a press release to the Dow Jones News Service.
In the Merger Agreement the Purchaser has agreed that it will not, without
the express written consent of the Company, extend the Offer, except that,
without the consent of the Company, the Purchaser may extend the Offer (i) if at
the Expiration Date any of the conditions set forth in Section 14 are not
satisfied or waived, until such time as such conditions are satisfied or waived,
(ii) for any period required by any rule, regulation, interpretation or position
of the Commission or the staff thereof, (iii) for up to ten business days if the
Minimum Tender Condition (as defined in Section 14 hereof) has not been
satisfied as of the Expiration Date and (iv) for any reason for up to two
business days. As used in this Offer to Purchase, "business day" has the meaning
set forth in Rule 14d-1 under the Exchange Act.
If the Minimum Tender Condition has not been satisfied, or any condition
set forth in paragraph (a) of Section 14 is not satisfied, at the Expiration
Date, the Merger Agreement requires the Purchaser to extend the Offer in
increments of five business days until the earliest to occur of (x) the
satisfaction or waiver of the Minimum Tender Condition or such other condition,
or Parent reasonably determines that any Offer Condition is not capable of being
satisfied on or prior to December 29, 1998, (y) the termination of the Merger
Agreement in accordance with its terms or (z) December 29, 1998. The Purchaser
is not required to extend the Offer pursuant to this provision for more than 20
business days beyond the date when a Takeover Proposal (as defined in Section 12
hereof) is publicly announced if at the end of such 20 business day period the
Company has given Parent a Notice of Superior Proposal (as defined in Section 12
hereof) with respect to the Takeover Proposal.
In addition, the Purchaser has agreed in the Merger Agreement that it will
not, without the express written consent of the Company, (i) reduce the number
of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) add to or
modify the conditions set forth in Section 14, (iv) extend the Offer, except as
provided above, (v) change the form of consideration payable in the Offer or
(vi) otherwise amend or alter the Offer in any manner adverse to the Company's
stockholders.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is
3
<PAGE> 6
limited by Rule 14e-1 under the Exchange Act, which requires that a bidder pay
the consideration offered or return the securities deposited by or on behalf of
holders of securities promptly after the termination or withdrawal of such
bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
securities sought or any dealer solicitation fee, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in price or a change in the
percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination to stockholders.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Tender Condition and the other conditions set forth in Section 14. Subject to
the terms and conditions contained in the Merger Agreement, the Purchaser
reserves the right (but shall not be obligated) to waive any or all such
conditions.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of the Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (i) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message (as defined below), and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase and either certificates for tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered pursuant to
the procedure for book-entry transfer set forth below (and a Book-Entry
Confirmation (as defined below) received by the Depositary), in each case prior
to the Expiration Date, or (ii) the tendering stockholder must comply with the
guaranteed delivery procedure set forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message, and any other required documents, must, in any case, be transmitted to,
and received by, the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure described below.
The confirmation of a book-entry transfer of Shares into the Depositary's
account at the Book-Entry Transfer Facility as described above is referred to
herein as a "Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility
4
<PAGE> 7
tendering the Shares that such participant has received and agrees to be bound
by the terms of the Letter of Transmittal and that the Purchaser may enforce
such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (i) the Letter of Transmittal is signed by the registered holder
of Shares (which, for purposes of this Section, includes any participant in the
Book-Entry Transfer Facility's system whose name appears on a security position
listing as the owner of the Shares) tendered therewith and such registered
holder has not completed either the box entitled "Special Delivery Instructions"
or the box entitled "Special Payment Instructions" on the Letter of Transmittal
or (ii) such Shares are tendered for the account of a firm that is a participant
in the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be issued to a person other than
the registered holder of the certificates surrendered, the tendered certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed as aforesaid. See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day", for purposes of the preceding
sentence, is any day on which the New York Stock Exchange, Inc. (the
"NYSE") and banks in New York are open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE
PURCHASER ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
5
<PAGE> 8
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above
(including through delivery of an Agent's Message), the tendering stockholder
will irrevocably appoint designees of the Purchaser as such stockholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by the Purchaser and with respect to any and all other
Shares or other securities or rights issued or issuable in respect of such
Shares on or after October 3, 1998. All such proxies shall be considered coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, the Purchaser accepts for payment Shares
tendered by such stockholder as provided herein. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney and proxies may be given
(and, if given, will not be deemed effective). The designees of the Purchaser
will thereby be empowered to exercise all voting and other rights with respect
to such Shares or other securities or rights in respect of any annual, special
or adjourned meeting of the Company's stockholders, or otherwise, as they in
their sole discretion deem proper. The Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such Shares, the Purchaser must be able to
exercise full voting and other rights with respect to such Shares and other
securities or rights, including voting at any meeting of stockholders then
scheduled.
Tender of Shares from Exercise of Company Stock Options. Holders of
Company Stock Options who wish to tender Shares for which their Company Stock
Options are exercisable may do so either (a) by first exercising their Company
Stock Options and delivering to the Depositary certificates for Shares being so
tendered or (b) by executing a Letter of Transmittal appointing the Depositary
as their agent to exercise if, and only if, the Offer is consummated, their
Company Stock Options for the number of Shares to be tendered indicated in the
Letter of Transmittal. In the case of clause (b), only a number of whole Shares
for which the Company Stock Options are exercisable may be tendered. The
Depositary will, in the event the Offer is consummated, pay the Company for each
Share tendered pursuant to clause (b) an amount equal to the exercise price of
the Company Stock Option exercised, and pay the holder of the Company Stock
Option tendered pursuant to clause (b) for each such Share tendered an amount
equal to the Offer Price minus the exercise price of the exercised Company Stock
Option. The amount paid to employees pursuant to clause (b) shall be reduced by
such amount of wage and employment withholding taxes as may be required to be
deducted and withheld with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended, or under any provision of state,
local or foreign law. In any event, such payments for Shares tendered upon
exercise of such Company Stock Options that are accepted for payment pursuant to
the Offer will only be made after the receipt by the Depositary of such Shares
as described in Section 4. Holders of Company Stock Options who elect to tender
Shares pursuant to clause (b) above by executing a Letter of Transmittal, in
addition to the matters described under "Appointment" above, will irrevocably
appoint the Depositary as such holder's agent and attorney-in-fact in the manner
set forth in the Letter of Transmittal, with full power of substitution, to the
full extent of such holder's rights, to exercise the Company Stock Options for
the Shares being tendered. Such appointment will be effective when, and only to
the extent that, the Purchaser accepts for payment Shares tendered by a holder
of Company Stock Options. In the event Company Stock Options are registered in a
name other than the name of the tendering holder, or to the extent deemed
necessary or appropriate by the Depositary or the Purchaser to exercise such
Company Stock Options, additional documents may be required to transfer record
ownership of the Company Stock Options into the name of the tendering holder or
the name of the Depositary.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in any tender with respect to any particular Shares,
whether or not similar defects or irregularities are waived in the case
6
<PAGE> 9
of other Shares. No tender of Shares will be deemed to have been validly made
until all defects or irregularities relating thereto have been cured or waived.
None of the Purchaser, Parent, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. The Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must provide the Depositary with such stockholder's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalty of perjury that such TIN is correct and that such stockholder is
not subject to backup withholding. Certain stockholders (including, among
others, all corporations and certain foreign individuals and entities) are not
subject to backup withholding. If a stockholder does not provide its correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on such stockholder and payment of cash to
such stockholder pursuant to the Offer may be subject to backup withholding of
31%. All stockholders surrendering Shares pursuant to the Offer should complete
and sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to the Purchaser and the Depositary). Noncorporate
foreign stockholders should complete and sign the main signature form and a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after December 7, 1998.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must specify
the name of the person having tendered the Shares to be withdrawn (or in the
case of holders tendering Shares from the exercise of Company Stock Options, the
name of the registered holder of the Company Stock Options that have been
tendered for the Shares to be withdrawn), the number of Shares to be withdrawn
and the name of the registered holder of the Shares to be withdrawn, if
different from the name of the person who tendered the Shares. If certificates
for Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution, the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry delivery set
forth in Section 2, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn shares and otherwise comply with the Book-Entry Transfer
Facility's procedures. Withdrawals of tenders of Shares may not be rescinded,
and any Shares properly withdrawn will thereafter be deemed not validly tendered
for purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3. Any
7
<PAGE> 10
determination concerning the satisfaction of such terms and conditions will be
within the reasonable discretion of the Purchaser, and such determination will
be final and binding on all tendering stockholders. See Sections 1 and 14. The
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of or payment for Shares in order to comply in whole or
in part with any applicable law. Any such delays will be effected in compliance
with Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after the termination
or withdrawal of the Offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2), (ii) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and (iii) any
other documents required by the Letter of Transmittal. The per Share
consideration paid to any stockholder pursuant to the Offer will be the highest
per Share consideration paid to any other stockholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser and
not properly withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Shares (which will include all Shares received and tendered from the exercise of
Company Stock Options exercised at such time). Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Purchaser and transmitting payment to tendering
stockholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID BY THE PURCHASER ON THE PURCHASE PRICE OF THE SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, the certificates for such Shares will be
returned, and if certificates are submitted for more Shares than are tendered,
new certificates for the Shares not tendered will be sent, in each case without
expense, to the tendering stockholder (or, in the case of Shares delivered by
book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedure set forth in Section 2,
such Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of the
Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer. Any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of cash by
stockholders of the Company pursuant to the Merger) will be taxable transactions
for Federal income tax purposes under the Internal Revenue Code of 1986, as
amended (the "Code"), and may also be taxable transactions under applicable
state, local, foreign and other tax laws. For Federal income tax purposes, a
tendering stockholder will generally recognize gain or loss equal to the
difference between the amount of cash received by the stockholder pursuant to
the Offer (or pursuant to the Merger) and the aggregate tax basis in the Shares
tendered by the stockholder and purchased pursuant to
8
<PAGE> 11
the Offer (or cancelled pursuant to the Merger). Gain or loss will be calculated
separately for each block of Shares tendered and purchased pursuant to the Offer
(or cancelled pursuant to the Merger).
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by the tendering stockholder will be capital gain or
loss, which will be long-term capital gain or loss if the tendering
stockholder's holding period for the Shares exceeds one year. Long-term capital
gains recognized by a tendering individual stockholder will generally be taxed
at a maximum Federal marginal tax rate of 20%, and long-term capital gains
recognized by a tendering corporate stockholder will be taxed at a maximum
Federal marginal tax rate of 35%.
Employees who tender Shares for which their Company Stock Options are
exercisable will be subject to Federal income tax at ordinary rates on the full
amount of the payment such employees receive in exchange therefor. Holders of
Company Stock Options who wish to tender Shares for which their Company Stock
Options are exercisable are urged to consult their own tax advisors as to the
tax consequences to them of the Offer and the Merger.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless the stockholder provides its TIN
and certifies that such number is correct or properly certifies that it is
awaiting a TIN and certifies as to no loss of exemption from backup withholding
and otherwise complies with the applicable requirements of the backup
withholding rules. A stockholder that does not furnish its correct TIN or that
does not otherwise establish a basis for an exemption from backup withholding
may be subject to a penalty imposed by the IRS. Each stockholder should complete
and sign the Substitute Form W-9 included as part of the Letter of Transmittal
so as to provide the information and certification necessary to avoid backup
withholding.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED AS COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO
SPECIAL TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE
COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT
APPLY TO A HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES, SUCH AS
PERSONS WHO HOLD THEIR SHARES AS A HEDGE OR AS PART OF A HEDGING, STRADDLE,
CONVERSION OR OTHER RISK REDUCTION TRANSACTION. STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO
THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
9
<PAGE> 12
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded on the Nasdaq National Market of The Nasdaq Stock
Market ("Nasdaq") and prices reflecting such trading are published by the
National Association of Securities Dealers, Inc. ("NASD") under the symbol
"FMRX". The following table sets forth, for each of the periods indicated, the
high and low sales prices per Share as reported by Tradeline(R) IDD Information
Services.
<TABLE>
<CAPTION>
SALES PRICE
-----------
HIGH LOW
---- ---
<S> <C> <C>
1996
Fourth Quarter............................................ $8 1/2 $4
1997
First Quarter............................................. 4 1/2 2
Second Quarter............................................ 5 1 1/2
Third Quarter............................................. 4 5/16 2 5/8
Fourth Quarter............................................ 3 7/16 2 3/8
1998
First Quarter............................................. 2 7/8 1 1/2
Second Quarter............................................ 2 7/16 1 1/8
Third Quarter............................................. 2 1/2 5/8
Fourth Quarter (through October 8, 1998).................. 2 5/16 1 5/16
</TABLE>
On October 2, 1998, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported closing sale
price of the Shares on the Nasdaq National Market, as reported by Tradeline(R)
IDD Information Services, was $1 13/16 per Share. On October 8, 1998, the last
full day of trading before the commencement of the Offer, the reported last sale
price of the Shares on the Nasdaq National Market, as reported by Dow Jones
Interactive, was $2 7/32 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
Since its inception, the Company has not declared or paid any dividends on
shares of its capital stock.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of Nasdaq for continued designation
for the Nasdaq National Market. To maintain such designation, a security must
substantially meet one of two maintenance standards. The first maintenance
standard requires that (i) there be 750,000 publicly held shares, (ii) the
publicly held shares have a market value of $5 million, (iii) the issuer have
net tangible assets of at least $4 million, (iv) there be 400 shareholders of
round lots, (v) the minimum bid price per share be $1 and (vi) there be at least
two registered and active market makers. The second maintenance standard
requires that (i) the issuer have either (A) a market capitalization of $50
million or (B) total assets and total revenue of $50 million each for the most
recently completed fiscal year or two of the last three most recently completed
fiscal years, (ii) there be 1,100,000 shares publicly held, (iii) the publicly
held shares have a market value of $15 million, (iv) the minimum bid price per
share be $5, (v) there be 400 shareholders of round lots and (vi) there be at
least four registered and active market makers.
If these standards for continued designation for the Nasdaq National Market
are not met, the Shares might nevertheless continue to be included in The Nasdaq
SmallCap Market. Continued inclusion in The Nasdaq SmallCap Market, however,
would require that (i) there be 300 round lot holders, (ii) there be at least
500,000 publicly held shares, (iii) the publicly held shares have a market value
of at least $1 million, (iv) there be two
10
<PAGE> 13
registered and active market makers, of which one may be entering stabilizing
bids and (v) the issuer have either (A) net tangible assets of at least $2
million, (B) market capitalization of at least $35 million or (C) net income of
$500,000 in the most recently completed fiscal year or in two of the last three
most recently completed fiscal years. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of the Shares are not
considered as being publicly held for this purpose. According to the Company, as
of October 7, 1998, there were approximately 100 holders of record of Shares and
as of September 30, 1998 there were 8,933,547 Shares outstanding.
The Company has received notification from Nasdaq indicating that the
Company fails to meet certain requirements for continued listing of its Shares
on the Nasdaq National Market. The Company has appealed Nasdaq's determination,
and its Shares will continue to be listed on the Nasdaq National Market while
the Company's appeal is being heard. The Nasdaq notification states that the
Company's net tangible assets of $3.5 million, as reported in the Company's Form
10-Q for the quarter ended June 30, 1998, fall below the $4 million required by
the listing maintenance standards of the Nasdaq National Market.
If the purchase of Shares pursuant to the Offer causes the Shares to no
longer meet the requirements of Nasdaq for continued inclusion in the Nasdaq
National Market or The Nasdaq SmallCap Market as a result of a reduction in the
number or market value of publicly held Shares or the number of round lot
holders or otherwise, as the case may be, the market for Shares could be
adversely affected. It is possible that the Shares would continue to trade in
the over-the-counter market and that price quotations would be reported by other
sources. The extent of the public market for the Shares and the availability of
such quotations, however, would depend upon the number of holders of Shares
remaining at such time, the interests in maintaining a market in Shares on the
part of securities firms, the possible termination of registration of the Shares
under the Exchange Act, as described below, and other factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 500 or more holders of record. Termination of
registration of the Shares under the Exchange Act would, subject to Section
15(d) of the Exchange Act, substantially reduce the information required to be
furnished by the Company to its stockholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the Company,
such as the shortswing profit recovery provisions of Section 16(b) of the
Exchange Act, the requirement of furnishing a proxy or information statement
pursuant to Section 14(a) or (c) of the Exchange Act in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, as amended, may be impaired or eliminated. The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
trading of the Shares will cease to be reported on Nasdaq and the registration
of the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities" or be eligible for Nasdaq reporting.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
at 1221 Innsbruck Drive, Sunnyvale, California 94089, telephone no. (408)
752-8580. According to the Company's Annual Report on
11
<PAGE> 14
Form 10-K for the fiscal year ended December 31, 1997 (the "Annual Report"), the
Company designs, manufactures and distributes surgical systems for the diagnosis
and treatment of gynecologic disorders.
Set forth below is certain selected consolidated financial information with
respect to the Company excerpted or derived from the information contained in
the Annual Report, as well as the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998, which are incorporated herein by reference.
More comprehensive financial information is included in such reports and other
documents filed by the Company with the Commission, and the following summary is
qualified in its entirety by reference to such reports and such other documents
and all the financial information (including any related notes) contained
therein. Such reports and other documents should be available for inspection and
copies thereof should be obtainable in the manner set forth below under
"Available Information".
FEMRX, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ----------------------------
1998 1997 1997 1996 1995
----------- ------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net sales.................................. $ 1,206 $ 483 $ 1,586 $ 64 $ --
Loss from operations....................... (5,341) (5,827) (12,886) (9,732) (3,345)
Net loss................................... (5,224) (5,379) (12,135) (8,780) (3,174)
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
----------- ------------------
1998 1997 1996
----------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets....................... $ 3,856 $ 9,894 $20,574
Total assets............................... 5,356 11,273 22,040
Total current liabilities.................. 1,783 2,564 1,485
Total stockholders' equity................. 3,503 8,567 20,283
</TABLE>
Available Information. The Company is subject to the reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Certain information as of particular
dates concerning the Company's directors and officers, their remuneration,
Company Stock Options (as defined in the Merger Agreement) granted to them, the
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's stockholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located in the Northwestern Atrium Center, 500 West
Madison Street (Suite 1400), Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies should be obtainable, by
mail, upon payment of the Commission's customary charges, by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission also maintains a World Wide Web site on the internet at
http://www.sec.gov that contains reports and certain other information regarding
registrants that file electronically with the Commission. Such information
should also be on file at The Nasdaq Stock Market, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such
12
<PAGE> 15
information is untrue, neither the Purchaser nor Parent takes any responsibility
for the accuracy or completeness of such information or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation and a wholly owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of the Purchaser are
located at One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933. All
outstanding shares of capital stock of the Purchaser are owned by Parent.
Parent's principal line of business is the manufacture and sale of a broad
range of products in the health care field. Parent is a New Jersey corporation
with its principal office located at One Johnson & Johnson Plaza, New Brunswick,
New Jersey 08933.
Financial information with respect to Parent and its subsidiaries is
included in Parent's Annual Report on Form 10-K for the fiscal year ended
December 28, 1997 and in Parent's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 28, 1998, which are incorporated herein by reference, and
other documents filed by Parent with the Commission. Such reports and other
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information".
Except as described in this Offer to Purchase, neither the Purchaser nor
Parent (together, the "Corporate Entities") or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I or any associate or
majority owned subsidiary of the Corporate Entities or any of the persons so
listed, beneficially owns any equity security of the Company, and none of the
Corporate Entities or, to the best knowledge of the Corporate Entities, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (i) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the
Commission and (ii) none of the Corporate Entities or, to the best knowledge of
the Corporate Entities, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
Except as described in this Offer to Purchase, during the last five years,
none of the Corporate Entities or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I (i) has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, Federal or state securities laws or finding any violation
of such laws. The name, business address, present principal occupation or
employment, five year employment history and citizenship of each of the
directors and executive officers of the Purchaser and Parent are set forth in
Schedule I.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning Parent's directors and officers, their remuneration, options granted
to them, the principal holders of Parent's securities and any material interest
of such persons in transactions with Parent is disclosed in proxy statements
distributed to Parent's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the Commission, and copies thereof should be obtainable from the
Commission, in the same manner as set forth with respect to information
concerning the Company in Section 8. Such material should also be available for
inspection at the library of the NYSE, 20 Broad Street, New York, New York
10005.
13
<PAGE> 16
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer and to pay fees and expenses related to
the Offer and the Merger is estimated to be approximately $23 million. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
a capital contribution which will be made by Parent to the Purchaser. Parent
plans to use funds it has available in its cash accounts for such capital
contribution. The Purchaser therefore has not conditioned the Offer on obtaining
financing.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
On April 20, 1998, Ettore Carino, Director New Business Development of
Ethicon, Inc. ("Ethicon"), a wholly owned subsidiary of Parent, and Susan E.
Morano, Associate Director New Business Development of Ethicon, contacted Andrew
M. Thompson, President and Chief Executive Officer of the Company, to discuss
Ethicon's interest in a potential collaborative relationship with the Company.
On April 30, 1998, Mr. Thompson, George M. Savage, M.D., Senior Vice
President of Research and Development of the Company, met in Somerville, New
Jersey, with Mr. Carino, Ms. Morano, Chao Chen, Director of Product Development
of Ethicon, Henry Esparza, Vice President of Sales and Marketing of Ethicon,
Glenn Foy, Director of Marketing of Ethicon, Ron Galovich, Director of Marketing
of Ethicon and James R. Gray, Associate Director, Corporate Finance, of WDR.
Representatives of the Company presented an overview of the Company, its
products and its development pipeline.
Between May of 1998 and mid-September of 1998, representatives from Ethicon
and the Company continued discussions. During this time Howard I. Zauberman,
Vice President Growth Technologies and New Business Development of Ethicon,
Edward W. Unkart, Vice President, Finance & Administration of the Company and
David Gottlieb, Executive Director of WDR became involved in the discussions.
On September 16, 1998, representatives from Ethicon contacted the Company
to discuss Ethicon's interest in acquiring the Company. Ethicon expressed
serious interest in exploring an acquisition and proposed general parameters
pursuant to which Ethicon would be willing to proceed with such a transaction as
well as the desired timetable, due diligence requirements and other actions
necessary to proceed with such a transaction.
On September 17, 1998, the Company and Ethicon entered into a
Confidentiality Agreement. Representatives from Ethicon presented Ethicon's
proposal for a transaction involving the acquisition of all of the outstanding
Shares, including those held by the Stockholders, for cash. The parties
discussed the general parameters pursuant to which Ethicon and the Stockholders
would be willing to proceed with the transaction, including Ethicon's desire to
obtain the support of the Company's Board of Directors and senior management
and, in particular, Ethicon's requirement that the Stockholders agree to support
the transaction.
Between September 18, 1998, and September 21, 1998, Ethicon forwarded
proposed term sheets to the Company and discussions and negotiations continued.
Between September 23, 1998 and October 3, 1998, Ethicon conducted due diligence,
and Ethicon and Philip P. Crowley, Assistant General Counsel of Parent, and the
Company and its counsel had numerous discussions and continued negotiations with
respect to the purchase price and other material terms of the transaction.
Between September 22, 1998, and October 3, 1998, drafts of definitive
agreements were delivered to representatives of the Stockholders and the
Company. Discussions and negotiations continued and the Parties ultimately
agreed upon a price of $2.35 per Share and other material terms of the proposed
transaction and finalized the definitive agreements. Mr. Zauberman began
discussions with Mr. Thompson and Dr. Savage with respect to their
post-acquisition employment arrangements. On October 1, 1998, Ethicon, Mr.
Thompson and Dr. Savage signed letters regarding the continued employment of Mr.
Thompson and Dr. Savage following the Merger. The terms set forth in these
letters are described in Section 12.
On October 1, 1998 the Finance Committee of the Board of Directors of
Parent approved the transaction, and the Board of Directors of the Purchaser
approved the transaction. On October 2 and 3, 1998, the Board of Directors of
the Company met and approved the transaction.
14
<PAGE> 17
Following these approvals, each of the Merger Agreement and Stockholder
Agreements were executed and delivered and the transaction was publicly
announced before U.S. financial markets opened on October 5, 1998.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENTS
Purpose. The purpose of the Offer is to acquire control of and the entire
equity interest in the Company. Following the Offer, the Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
The Merger Agreement. The Merger Agreement provides that following the
satisfaction or waiver of the conditions described below under "Conditions to
the Merger", the Purchaser will be merged with and into the Company, and each
then outstanding Share (other than Shares owned by the Company as treasury stock
or by Parent, the Purchaser or any other direct or indirect wholly owned
subsidiary of Parent or by stockholders, if any, who are entitled to and who
properly exercise dissenters' rights under Delaware law or, to the extent
applicable, California law), will be converted into the right to receive an
amount in cash equal to the Offer Price.
VOTE REQUIRED TO APPROVE MERGER. The DGCL requires, among other things,
that the adoption of any plan of merger or consolidation of the Company must be
approved and found advisable by the Board of Directors and generally by the
holders of the Company's outstanding voting securities. The Board of Directors
of the Company has approved the Offer and the Merger; consequently, the only
additional action of the Company that may be necessary to effect the Merger is
approval by the Company's stockholders if the "short-form" merger procedure
described below is not available. Under the DGCL, the affirmative vote of
holders of a majority of the outstanding Shares (including any Shares owned by
the Purchaser) is generally required to approve the Merger. If the Purchaser
acquires, through the Offer or otherwise, voting power with respect to at least
a majority of the outstanding Shares (which would be the case if the Purchaser
were to purchase the Shares subject to the Stockholder Agreements), it would
have sufficient voting power to effect the Merger without the vote of any other
stockholder of the Company. However, the DGCL also provides that if a parent
company owns at least 90% of each class of stock of a subsidiary, the parent
company can effect a short-form merger with that subsidiary without the action
of the other stockholders of the subsidiary. Accordingly, if, as a result of the
Offer or otherwise, the Purchaser acquires or controls the voting power of at
least 90% of the outstanding Shares, the Purchaser could, and intends to, effect
the Merger without prior notice to, or any action by, any other stockholder of
the Company. Similar provisions may apply under California law.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the Merger is
subject to the satisfaction or waiver of certain conditions, including the
following: (i) if required by applicable law, the Merger Agreement having been
approved and adopted by the holders of a majority of the Shares; provided that
Parent and the Purchaser shall vote all their Shares in favor of the Merger;
(ii) no statute, rule, decision, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other governmental entity or other legal
restraint or prohibition preventing the consummation of the Merger being in
effect; provided, however, that the party seeking to invoke such condition shall
have performed its obligations regarding reasonable efforts and cooperation
under the Merger Agreement; and (iii) Purchaser having previously accepted for
payment and paid for Shares pursuant to the Offer.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be
terminated at any time prior to the effective time of the Merger (the "Effective
Time"), whether before or after approval by the stockholders of the Company, (i)
by mutual written consent of the Company and Parent, (ii) by either the Company
or Parent if (a) as the result of the failure of any of the conditions set forth
in Section 14, the Purchaser terminates the Offer in accordance with its terms
without having purchased any Shares pursuant to the Offer, unless the failure of
such condition results from the failure by the party seeking to terminate to
fulfill its obligations under the Merger Agreement; or (b) if 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 (a "Governmental Entity"), shall have issued an order, decree or
ruling or taken any action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, Shares pursuant to
the Offer or the Merger and such order, decree or ruling or other action has
become final and nonappealable; provided, however, that the party seeking to
terminate the Merger Agreement pursuant to such provision shall have
15
<PAGE> 18
complied with its obligations regarding reasonable efforts and cooperation under
the Merger Agreement, (iii) by the Company, if (a) the Company has given Parent
a Notice of Superior Proposal with respect to a Takeover Proposal, (b) at least
five business days later the Board of Directors of the Company determines in
good faith (based on the written opinion of WDR or another nationally recognized
financial advisor, which opinion takes into account all the terms and conditions
of the Takeover Proposal, including any break-up fees, expense reimbursement
provisions and conditions to consummation), that the terms of such Takeover
Proposal are not more favorable to the person making such Takeover Proposal and
provide greater present value to all the Company's stockholders than the Merger
Agreement, the Offer and the Merger in light of any improved terms proposed by
Parent or the Purchaser prior to the expiration of such five business day period
and (c) the Company shall have paid to Parent a termination fee of $880,000 (the
"Termination Fee"), (iv) by Parent or the Purchaser prior to the Purchaser's
obligation to accept Shares for payment pursuant to the Offer, in the event of a
breach by the Company of any representation, warranty, covenant or other
agreement contained in the Merger Agreement which (I) would give rise to the
failure of a condition set forth in paragraph (d) or (e) under Section 14 and
(II) cannot be or has not been cured within 20 days after the giving of written
notice to the Company, (v) by the Company if Parent or the Purchaser shall have
(a) failed to commence the Offer within five business days of the public
announcement of the Merger Agreement, (b) failed to pay for Shares pursuant to
the Offer in accordance with the terms of the Merger Agreement or (c) breached
in any material respect any of their respective representations, warranties,
covenants or other agreements contained in the Merger Agreement, which breach in
respect of clause (c) is incapable of being cured or has not been cured within
20 days after the giving of written notice to Parent or the Purchaser, except in
any case under clause (c), such breaches which individually or in the aggregate
are not reasonably likely to affect adversely Parent's or the Purchaser's
ability to complete the Offer or the Merger, (vi) by Parent if (a) Parent shall
not have materially breached the Merger Agreement and (b) the Company's Board of
Directors shall have failed to recommend that the Company's stockholders accept
the Offer or withdraws or amends, in a manner materially adverse to Parent, its
recommendation that the Company's stockholders accept the Offer, or recommends
acceptance of any Superior Proposal or (vii) by the Company if the Offer has not
been consummated by December 30, 1998.
TAKEOVER PROPOSALS. The Merger Agreement provides that the Company shall
not, and shall not authorize or permit any of its subsidiaries, or any of its or
their officers, directors or employees to, and shall use its reasonable efforts
to cause any investment banker, financial advisor, attorney, accountant or other
representative of the Company or of any of its subsidiaries not to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
information), 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 (as defined below) or (ii) participate in any
discussions or negotiations regarding any Takeover Proposal. If, however, prior
to acceptance for payment of Shares pursuant to the Offer an unsolicited
Takeover Proposal is made and the Board of Directors of the Company determines
in good faith, after consultation with outside counsel, that failure to do so
would be inconsistent with its fiduciary duties to the Company's stockholders
under applicable law, after written notice to Parent, and subject to its
obligations to keep Parent informed (consistent with the fiduciary obligations
of the Company's Board of Directors), the Company may furnish information with
respect to the Company pursuant to a confidentiality agreement to the person
making such unsolicited Takeover Proposal and participate in discussions or
negotiations regarding such Takeover Proposal. The Merger Agreement defines
"Takeover Proposal" as any proposal or offer from any person relating to any
direct or indirect acquisition or purchase of 50% or more of the assets of the
Company and its subsidiaries, taken as a whole, or 50% or more of any class of
outstanding equity securities of the Company or any of its subsidiaries, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 50% or more of any class of equity securities of the Company
or any of its subsidiaries or any merger, consolidation, business combination,
sale of substantially all the assets, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by the Merger Agreement.
The Merger Agreement provides further that 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, the approval or
recommendation by such Board of Directors or any such committee of the Merger
Agreement, the Offer 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
16
<PAGE> 19
agreement (an "Acquisition Agreement") with respect to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the acceptance for
payment of Shares pursuant to the Offer, the Board of Directors of the Company
determines in good faith, after consultation with outside counsel, that failure
to do so would be inconsistent with its fiduciary duties to the Company's
stockholders under applicable law, the Board of Directors of the Company may
withdraw or modify its adoption, approval or recommendation of the Merger
Agreement, the Offer and the Merger at any time following Parent's receipt of a
Notice of Superior Proposal. A "Notice of Superior Proposal" is a written notice
advising Parent that the Board of Directors of the Company has received a
Superior Proposal. A "Superior Proposal" is a bona fide Takeover Proposal for
all outstanding Shares on terms that the Board of Directors of the Company
determines in its good faith judgment (based on the written opinion of WDR or
another nationally recognized financial advisor, which opinion takes into
account all the terms and conditions of the Takeover Proposal, including any
break-up fees, expense reimbursement provisions and conditions to consummation)
are not more favorable to the person making such Takeover Proposal and provide
greater present value to all the Company's stockholders than the Offer, the
Merger and the Merger Agreement.
In addition to the obligations of the Company set forth in the preceding
paragraphs, the Merger Agreement provides that the Company shall immediately
advise Parent orally and in writing of any Takeover Proposal, any request for
information concerning the Company or its subsidiaries in relation to or any
inquiry regarding the making of a Takeover Proposal and, unless to do so would
be inconsistent with the fiduciary duties of the Board of Directors of the
Company, the material terms and conditions of such Takeover Proposal, request
for information or inquiry and the identity of the person making any such
Takeover Proposal, request for information or inquiry. The Company is further
required under the terms of the Merger Agreement to keep Parent fully informed
of the status and, unless to do so would be inconsistent with the fiduciary
duties of the Board of Directors of the Company, the material terms (including
amendments or proposed amendments) of any such Takeover Proposal, request for
information or inquiry.
The Merger Agreement provides that nothing contained in these provisions
shall prohibit the Company from taking and disclosing to its stockholders a
position contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders if the
Board of Directors of the Company determines in good faith, after consultation
with outside counsel, that failure to so disclose would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law; provided
that, except as provided above, neither the Company nor the Board of Directors
nor any committee thereof shall withdraw or modify, or propose to withdraw or
modify, its position with respect to the Merger Agreement, the Offer or the
Merger or approve or recommend, or propose to approve or recommend, a Takeover
Proposal.
FEES AND EXPENSES; TERMINATION FEE. All fees and expenses incurred in
connection with the Merger Agreement, the Offer and the Merger and the
transactions contemplated by the Merger Agreement will be paid by the party
incurring such fees or expenses, whether or not the Offer or the Merger is
consummated. If, however, Parent or the Purchaser terminates the Merger
Agreement as a result of a breach by the Company of certain provisions relating
to Takeover Proposals, or the Company terminates the Merger Agreement in
accordance with the provisions relating to Takeover Proposals, the Company is
required to pay to Parent a Termination Fee of $880,000 as liquidated damages,
which the parties have agreed is a reasonable estimate of the costs and expenses
that would be incurred by Parent and the Purchaser if the transactions
contemplated by the Merger Agreement were not to go forward as a result of such
breach.
CONDUCT OF BUSINESS BY THE COMPANY. The Merger Agreement provides that
during the term of the Merger Agreement, except as otherwise provided by the
Merger Agreement or to the extent that Parent shall consent in writing, the
Company shall, and shall cause each of its subsidiaries to, carry on its
business in the ordinary course consistent with past practice and use reasonable
efforts to preserve intact its current business organization, keep available the
services of its current officers and employees and preserve its relationships
with customers, suppliers, licensors, licensees, distributors and others having
significant business dealings with it. The Merger Agreement further provides
that the Company shall not, and shall not permit any of its subsidiaries to,
(except as otherwise permitted by the Merger Agreement or to the extent Parent
consents in writing) (i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent (a) declare, set
aside or pay any dividends on, or make any other distributions in respect of,
any of its capital stock, (b) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
17
<PAGE> 20
of, in lieu of or in substitution for shares of its capital stock or (c)
purchase, redeem or otherwise acquire any shares of its capital stock or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities; (ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities (other than the
issuance of shares of Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of the Merger Agreement in accordance with their
present terms); (iii) amend its certificate of incorporation or by-laws; (iv)
acquire or agree to acquire (a) by merging or consolidating with, or by
purchasing a substantial portion of the assets or any stock of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof or (b) any assets that are
material, individually or in the aggregate, to the Company except purchases of
inventory in the ordinary course of business consistent with past practice; (v)
sell, lease, license, mortgage or otherwise encumber or subject to any lien or
otherwise dispose of any of its properties or assets, except sales of inventory
or sales or licenses of immaterial assets, in each case in the ordinary course
of business consistent with past practice; (vi) (a) except for the Credit
Facility defined below in this Section 12 and the lease line of credit referred
to in Section 14(h) below, incur or suffer to exist any indebtedness for
borrowed money or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing or (b) make any
loans, advances or capital contributions to, or investments in, any other
person; (vii) make or agree to make any capital expenditure or expenditures with
respect to property, plant or equipment in excess of $25,000 in the aggregate;
(viii) make any material tax election or settle or compromise any material
income tax liability or make any change in accounting methods, principles or
practices except as required by a change in generally accepted accounting
principles; (ix) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) of the Company included in any report of the Company filed with the
Commission and publicly available prior to the date of the Merger Agreement or
incurred thereafter in the ordinary course of business consistent with past
practice, or waive any material benefits of, or agree to modify in any material
respect, any confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party; (x) except in the ordinary course
of business, modify, amend or terminate any material contract or agreement to
which the Company or any of its subsidiaries is a party or knowingly waive,
release or assign any material rights or claims; (xi) enter into any material
contracts or agreements relating to the distribution, sale or marketing by third
parties of the products of, or products licensed by, the Company or any of its
subsidiaries; (xii) except as required to comply with applicable law or
agreements, plans or arrangements existing on the date of the Merger Agreement,
(a) adopt, enter into, terminate or amend any employment agreement or benefit
plan or other arrangement for the benefit or welfare of any director, officer or
current or former employee, (b) increase in any material manner the compensation
or fringe benefits of, or pay any bonus to, any director, officer or key
employee, (c) pay any material benefit not provided for under any benefit plan,
(d) grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or benefit plan (including the grant of stock
options, stock appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing restrictions
in any benefit plans or agreement or awards made thereunder) or (e) take any
action other than in the ordinary course of business 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; or (xiii) authorize any of,
or commit or agree to take any of, the foregoing actions.
Pursuant to the Merger Agreement, neither the Company nor any of its
subsidiaries, on the one hand, nor Parent or the Purchaser on the other shall
take any action that would reasonably be expected to result in (i) any of the
representations and warranties of the Company, on the one hand, or of Parent or
the Purchaser on the other hand, set forth in the Merger Agreement that are
qualified as to materiality becoming inaccurate, which inaccuracy would have a
Material Adverse Effect on the Company, (ii) any of such representations and
warranties that are not so qualified becoming inaccurate in any material
respect, which inaccuracy would have a Material Adverse Effect
18
<PAGE> 21
on the Company, or (iii) except as otherwise permitted with respect to Takeover
Proposals, any of the conditions to the Offer or to the Merger not being
satisfied. "Material Adverse Effect" means any effect that is materially adverse
to the business, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole, or would prevent or materially delay the
consummation of the Offer or the Merger; provided, however, that in determining
whether there has been a Material Adverse Effect, the following shall be
disregarded: any material adverse effect that results substantially from (i) the
taking of any action required by the Merger Agreement, (ii) the breach by Parent
of the Merger Agreement, (iii) the announcement or pendency of the Offer, the
Merger or any of the transactions contemplated by the Merger Agreement or (iv)
any decline in the Company's stock price (which shall not in itself constitute a
Material Adverse Effect).
BOARD OF DIRECTORS; MANAGEMENT. Promptly upon the acceptance for payment
of, and payment for, any Shares by the Purchaser pursuant to the Offer, the
number of directors on the Board of Directors of the Company will be reduced to
five and the Purchaser will be entitled to designate three of such directors.
Therefore, the Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, will control a majority of such directors. The Merger Agreement
requires the Company and its Board of Directors to take all such action needed
to cause the Purchaser's designees to be appointed to the Company's Board of
Directors. Subject to applicable law, the Company must take all action requested
by Parent necessary to effect any such election, including mailing to its
stockholders the Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Company has agreed to make such mailing with the mailing of the Schedule 14D-9.
The Merger Agreement provides that the directors of the Purchaser immediately
prior to the Merger will 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.
Ethicon, Andrew M. Thompson, President and Chief Executive Officer of the
Company, and George M. Savage, M.D., Senior Vice President of Research and
Development of the Company, have signed letters regarding the continued
employment of Mr. Thompson and Dr. Savage following the Merger. Ethicon, Mr.
Thompson and Dr. Savage are continuing to negotiate more detailed agreements.
Mr. Thompson expressed his commitment to assist, as needed, with the
transition and integration of the Company with Ethicon. While Mr. Thompson's
role in the transition is not fully defined, Ethicon will capitalize upon his
experience as founder and leader of the organization in making the transition
successful. The duration of Mr. Thompson's commitment will be determined as
integration plans are finalized. Ethicon, however, has committed to six months
compensation at Mr. Thompson's current salary.
The duration of Dr. Savage's commitment to continue his service with
Ethicon in his current capacity is undeclared at this point. Ethicon has
requested a commitment at least through June 30, 2000.
Both Mr. Thompson and Dr. Savage have agreed not to take employment with or
actively engage in the development of businesses that directly compete with the
Company while receiving salary or separation benefits from Ethicon, without the
prior written consent of Ethicon.
STOCK OPTIONS. The Merger Agreement provides that, as soon as practicable
after the date of the Merger Agreement, the Board of Directors of the Company
(or, if appropriate, any committee administering the Company stock option plan)
will adopt such resolutions and take such other actions as may be required to
adjust the terms of each outstanding option to purchase Shares listed on a
schedule provided to Parent to provide that (i) five business days prior to the
earliest date on which the Purchaser can purchase any Shares pursuant to the
Offer (and contingent upon such purchase), such option shall vest and become
exercisable in full, (ii) upon consummation of the Offer each outstanding option
to purchase Shares (a "Company Stock Option") granted under any stock option,
stock appreciation right, stock purchase program or arrangement of the Company
(other than the Employee Stock Purchase Plan ("ESPP")) that is outstanding
immediately prior to the consummation of the Offer, whether or not then
exercisable, shall be canceled concurrently with (and contingent upon) the
consummation of the Offer. The Company (or, if appropriate, the Board of
Directors or any committee administering the stock option plans) will take
actions such that immediately prior to the Effective Time the Company Stock
Options set forth in a schedule provided to Parent are canceled as set forth
above. The Merger Agreement provides that the Company shall not make, or agree
to make, any payment of any kind to any holder of a Company Stock Option without
the consent of Parent.
19
<PAGE> 22
As of the date of the consummation of the Offer (and contingent thereon),
the ESPP will terminate. All funds deposited with the Company in connection with
the ESPP will be returned to the respective participant, without interest, as
soon as practicable after the consummation of the Offer. Prior to the
consummation of the Offer, the Company will take all actions (including, if
appropriate, amending the terms of the ESPP) that are necessary to give effect
to the transactions contemplated by this paragraph.
Subject to the second preceding paragraph, all Stock Option Plans will
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 will be
deleted as of the Effective Time. The Company shall ensure that following the
consummation of the Offer no holder of a Company Stock Option or any participant
in any Stock Option Plan will have any right thereunder to acquire any capital
stock of the Company, Parent or the Surviving Corporation, and the Company will
use its reasonable best efforts to ensure that following the Effective Time, no
holder of a Company Stock Option set forth on the schedule provided to Parent or
any participant in any Stock Option Plan will have any right thereunder to
acquire any capital stock of the Company, Parent or the Surviving Corporation.
CREDIT FACILITY. The Merger Agreement provides that the Purchaser will
establish a credit facility (the "Credit Facility") to provide loans to the
Company in an aggregate amount of up to $3.5 million for working capital needs
from the date of the Merger Agreement to the date on which the Stockholder
Agreements terminate pursuant to their terms. The Company may require advances
of up to $250,000 every two weeks commencing on November 2, 1998. The aggregate
principal amount of all such advances will be payable to the Purchaser in cash
on December 31, 1999. Interest will accrue at a rate equal to the prime rate
plus two percent. The advances and accrued interest will be secured by a first
priority security interest in all of the Company's patents.
INDEMNIFICATION, EXCULPATION AND INSURANCE. Through the sixth anniversary
of the Effective Time, Parent will maintain in effect for the benefit of current
or former directors and officers of the Company, the current level and scope of
directors' and officers' liability insurance policies. In no event, however,
will Parent be required to expend an aggregate amount in excess of $150,000 for
such insurance. If the aggregate premium payable for such insurance coverage
exceeds this amount, Parent will obtain a policy with the greatest coverage
available for a cost not exceeding such amount.
Parent has agreed in the Merger Agreement that all rights to
indemnification and exculpation (including the advancement of expenses) from
liabilities for acts or omissions occurring at or prior to the time of
consummation of the Offer (including with respect to the transactions
contemplated by the Merger Agreement) existing now or at the time of
consummation of the Offer in favor of the current or former directors or
officers of the Company as provided in its certificate of incorporation, its
by-laws (each as in effect on the date of the Merger Agreement) and
indemnification agreements shall be assumed by the Surviving Corporation in the
Merger, without further action, as of the time of consummation of the Offer and
shall survive the Merger and shall continue in full force and effect without
amendment, modification or repeal in accordance with their terms; provided,
however, that if any claims are asserted or made during the continuance of such
terms, all rights to indemnification (and to advancement of expenses) hereunder
in respect of any such claims shall continue, without diminution, until
disposition of any and all such claims.
The Merger Agreement provides that in the event Parent, the Surviving
Corporation or any of their successors or assigns (i) consolidates with or
merges into any other person and will not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then and in each
such case, proper provisions shall be made so that the successors and assigns of
Parent or the Surviving Corporation, as the case may be, shall expressly assume
the obligations set forth in the preceding paragraphs. The Merger Agreement also
provides that, in the event the Surviving Corporation transfers any material
portion of its assets, in a single transaction or in a series of transactions,
Parent will either guarantee the indemnification obligations set forth in the
second preceding paragraph or take such other action to ensure that the ability
of the Surviving Corporation to satisfy such indemnification obligations will
not be diminished in any material respect.
REASONABLE EFFORTS. The Merger Agreement provides that, on the terms and
subject to the conditions of the Merger Agreement, unless, to the extent
permitted under the Merger Agreement, the Board of Directors of
20
<PAGE> 23
the Company approves or recommends a Superior Proposal, each of the parties will
use its 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 Offer and the Merger
and the other transactions contemplated by the Merger Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties.
PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. The Merger
Agreement provides that in the event the Purchaser's designees are appointed or
elected to the Board of Directors of the Company as described above under "Board
of Directors", after the acceptance for payment of Shares pursuant to the Offer
and prior to the Effective Time of the Merger, the affirmative vote of a
majority of the directors of the Company not designated by Parent or the
Purchaser is required for the Company to amend or terminate the Merger
Agreement, exercise or waive any of its rights or remedies under the Merger
Agreement, extend the time for performance of the Purchaser's and Parent's
respective obligations under the Merger Agreement or take any action to amend or
otherwise modify the Company's certificate of incorporation or by-laws.
Stockholder Agreements. The Stockholder Agreements provide that each
Stockholder will sell, and the Purchaser will purchase, all Shares beneficially
owned by such Stockholder, at a price per Share equal to $2.35. The obligation
of the Stockholders to sell, and the obligation of the Purchaser to purchase,
Shares under the Stockholder Agreements are subject to the Purchaser having
accepted Shares for payment under the Offer in accordance with the Merger
Agreement. The Stockholders may, and the Purchaser may direct the Stockholders
to, tender their Shares into the Offer. Any Shares of the Stockholders not
purchased in the Offer will be purchased by the Purchaser immediately following
the purchase of Shares in the Offer. The Stockholders are not required to tender
their Shares in the event of any amendment to the Merger Agreement that creates
any additional condition to the Offer, reduces the Offer Price or otherwise
adversely affects the Stockholders without the written approval of the
Stockholders.
Each of the Stockholders has agreed, among other things, not to: (i) sell,
transfer, give, pledge, assign or otherwise dispose of (including by gift)
(collectively, "Transfer") or consent to any Transfer of, any or all of such
Shares or any interest therein, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
Transfer of the Shares to any person other than pursuant to the terms of the
Offer or the Merger; (ii) enter into any voting arrangement, whether by proxy,
voting agreement or otherwise, in connection with, directly or indirectly, any
Takeover Proposal; (iii) directly or indirectly solicit, initiate or encourage
(including by way of furnishing information), or take any other action to
facilitate any inquiries or proposals that constitute, or may reasonably be
expected to lead to, any Takeover Proposal; or (iv) directly or indirectly
participate in any discussions or negotiations regarding any Takeover Proposal.
The provisions described in clauses (iii) and (iv) of the previous sentence will
not, however, prohibit an individual Stockholder, or any partner, stockholder,
officer or affiliate of a Stockholder that is a legal entity, who is a director
of the Company from performing his or her legally required fiduciary duties as a
director of the Company as permitted or required under the Merger Agreement.
Each of the Stockholders has also agreed that at any meeting of
stockholders of the Company in which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought, the Stockholders will vote (or cause to be voted) their
Shares in favor of the Merger, the adoption of the Merger Agreement and the
other transactions contemplated thereby. Each Stockholder Agreement includes an
irrevocable proxy provision for the benefit of the Purchaser with respect to the
Shares owned by each Stockholder, to vote such Shares at any meeting of
stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which a stockholders' vote, consent or other approval is
sought, against (x) any Takeover Proposal or (y) any amendment of the Company's
certificate of incorporation or by-laws or other proposal or transaction
involving the Company, which amendment or other proposal or transaction would be
reasonably likely to impede, frustrate, prevent, delay or nullify the Offer, the
Merger, the Merger Agreement or any of the other transactions contemplated by
the Merger Agreement.
21
<PAGE> 24
In the event the Merger Agreement is terminated by the Company pursuant to
the provisions regarding Takeover Proposals or because the Offer has not been
consummated by December 29, 1998, the Stockholder Agreements will terminate 120
days after the termination of the Merger Agreement (unless the Purchaser ceases
to fulfill its obligations regarding the Credit Facility, in which case the
Stockholder Agreements will terminate five days after such cessation). If the
Merger Agreement otherwise terminates, the Stockholder Agreements will terminate
five days after such termination.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares.
In addition, because the Company may be regarded as being subject to
certain provisions of the California General Corporation Law, as amended (the
"CGCL"), if upon consummation of the Offer, Parent and the Purchaser own
five-sixths or less of the outstanding Shares and the Merger is consummated,
holders of the Shares who vote against the Merger may have certain rights
pursuant to the provisions of Chapter 13 (commencing with Section 1300) of the
CGCL to demand that the Company purchase their Shares. If a holder's Shares
constitute "dissenting shares" within the meaning of Section 1300 of the CGCL
and the statutory procedures are complied with, the holder of such Shares will
be entitled to receive payment in cash of the fair value of his or her Shares as
of the day before the first announcement of the terms of the Merger. If the
Company denies that the Shares qualify as dissenting shares, or if the Company
and the holder are unable to agree on the fair value of the Shares, then the
holder may seek a judicial determination of whether the Shares are dissenting
shares or the fair value of the Shares or both.
Any such judicial determination of the fair value of Shares under the DGCL
or the CGCL could be based upon considerations other than or in addition to the
Offer Price or the market value of the Shares, including asset values and the
investment value of the Shares. The value so determined could be more or less
than the Offer Price or the Merger Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
or, if applicable, Chapter 13 of the CGCL fails to perfect, or effectively
withdraws or loses his right to appraisal, as provided in the DGCL or the CGCL,
the Shares of such stockholder will be converted into the Merger Consideration
in accordance with the Merger Agreement. A stockholder may withdraw his demand
for appraisal by delivery to Parent of a written withdrawal of his demand for
appraisal and acceptance of the Merger.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL or the CGCL and is qualified in its entirety by
the full text of Section 262 of the DGCL and Chapter 13 of the CGCL.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL OR, IF
APPLICABLE, CHAPTER 13 OF THE CGCL FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN
THE LOSS OF SUCH RIGHTS.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
stockholders be filed with the Commission and disclosed to minority stockholders
prior to consummation of the Merger.
Other Matters. Except as otherwise described in this Offer to Purchase,
the Purchaser and Parent have no current plans or proposals that would relate
to, or result in, any extraordinary corporate transaction involving the Company,
such as a merger, reorganization or liquidation involving the Company, a sale or
transfer of a material amount of assets of the Company, any change in the
Company's capitalization or dividend policy or any other material change in the
Company's business, corporate structure or personnel.
22
<PAGE> 25
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the succeeding paragraph, and
nothing herein shall constitute a waiver by the Purchaser or Parent of any of
its rights under the Merger Agreement or a limitation of remedies available to
the Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
If, on or after the date of the Merger Agreement, the Company should (a)
split, combine or otherwise change the Shares or its capitalization, (b) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares or (c) issue or sell additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights or options, conditional or otherwise, to acquire, any of the
foregoing, other than Shares issued pursuant to the exercise of outstanding
employee stock options, then, subject to the provisions of Section 14 below, the
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any cash dividend on the Shares or other distribution on the
Shares, or issue with respect to the Shares any additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to stockholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to the Purchaser or its nominee or transferee on the Company's stock
transfer records, then, subject to the provisions of Section 14 below, (a) the
Offer Price may, in the sole discretion of the Purchaser, be reduced by the
amount of any such cash dividend or cash distribution and (b) the whole of any
such noncash dividend, distribution or issuance to be received by the tendering
stockholders will (i) be received and held by the tendering stockholders for the
account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer, or (ii) at
the direction of the Purchaser, be exercised for the benefit of the Purchaser,
in which case the proceeds of such exercise will promptly be remitted to the
Purchaser. Pending such remittance and subject to applicable law, the Purchaser
will be entitled to all rights and privileges as owner of any such noncash
dividend, distribution, issuance or proceeds and may withhold the entire Offer
Price or deduct from the Offer Price the amount or value thereof, as determined
by the Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), to pay for
any Shares tendered pursuant to the Offer unless the number of Shares tendered
and not withdrawn not later than the date of expiration of the Offer, shall
equal at least 90% of the Fully Diluted Shares (defined below) (such number of
Shares, the "Minimum Tender Condition"). For purposes of the Merger Agreement:
(i) "Fully Diluted Shares" shall mean all outstanding securities entitled
generally to vote in the election of directors of the Company after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into such voting securities with exercise or
conversion prices at or below the Offer Price, and (ii) both "Shares tendered"
and "Fully Diluted Shares" shall include those shares that would be received
upon the exercise of stock options contingently tendered to the Offer.
Furthermore, notwithstanding any other term of the Offer, the Purchaser shall
not be required to accept for payment or, subject as aforesaid, to pay for any
Shares not theretofore accepted for payment or paid for, and may terminate the
Offer if, at any time on or after the date of the Merger Agreement and before
the acceptance of such Shares for payment or the payment therefor, any of the
following conditions exist:
(a) there shall be issued by any U.S. Federal or state court of
competent jurisdiction in connection with any legal proceeding, any order
or ruling (that has not been vacated, withdrawn or overturned), (i)
restraining or prohibiting the acquisition by Parent or the Purchaser of
any Shares under the Offer or pursuant to the Stockholder Agreements or the
making or consummation of the Offer or the Merger or the performance of
23
<PAGE> 26
any of the other transactions contemplated by the Merger Agreement or the
Stockholder Agreements, or obtaining from the Company, Parent or the
Purchaser any damages in connection with the aforesaid transactions that
are material in relation to the Company and its subsidiaries taken as a
whole, (ii) prohibiting or materially limiting the ownership or operation
by the Company, Parent or any of their respective subsidiaries of a
material portion of the business or assets of the Company and its
subsidiaries, or Parent and its subsidiaries, in each case taken as a
whole, or compelling the Company or Parent to dispose of or hold separate
any material portion of the business or assets of the Company and its
subsidiaries, or Parent and its subsidiaries, in each case taken as a
whole, as a result of the Offer or any of the other transactions
contemplated by the Merger Agreement or the Stockholder Agreements, (iii)
seeking to impose material limitations on the ability of Parent or the
Purchaser to acquire or hold, or exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Offer including, without
limitation, the right to vote such Shares on all matters properly presented
to the stockholders of the Company, or (iv) prohibiting Parent or any of
its subsidiaries from effectively controlling in any material respect any
significant portion of the business or operations of the Company and its
subsidiaries taken as a whole;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Entity or court that results, directly or indirectly, in any
of the consequences referred to in clauses (i) through (iv) of paragraph
(a) above;
(c) there shall have occurred any Material Adverse Change with respect
to the Company ("Material Adverse Change" means any change that is
reasonably likely to have a Material Adverse Effect);
(d)(i) the Board of Directors of the Company or any committee thereof
shall have (A) withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement or (B) approved or recommended any Takeover Proposal, (ii)
the Company shall have entered into any agreement with respect to any
Takeover Proposal or (iii) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the foregoing;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case at the date of the Merger Agreement and at the scheduled or extended
expiration of the Offer (except to the extent that any such representation
or warranty refers to specifically to another date, in which case such
representation or warranty shall be accurate as of such other date) and,
individually or in the aggregate, such untruth or incorrectness has a
Material Adverse Effect on the Company;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Merger Agreement, which failure to perform or
comply is not substantially cured within 15 days after Parent provide the
Company with notice of such failure;
(g) the Merger Agreement shall have been terminated in accordance with
its terms; or
(h) the Company shall have any debt for borrowed money other than as
permitted under Section 7.13 of the Merger Agreement or under the Company's
lease line of credit in an aggregate amount not exceeding Three Hundred
Thousand Dollars ($300,000.00).
which, in the reasonable judgment of Parent or the Purchaser in any such case
makes it inadvisable to proceed with such acceptance for payment or payments
therefor.
The foregoing conditions in paragraphs (a) through (h) are for the sole
benefit of the Purchaser and Parent and may, subject to the terms of the Merger
Agreement, be waived by the Purchaser and Parent in whole or in part at any time
and from time to time in their sole discretion. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts
24
<PAGE> 27
and circumstances and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS
Based on a review of publicly available filings made by the Company with
the Commission and other publicly available information concerning the Company,
neither the Purchaser nor Parent is aware of any license or regulatory permit
that appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the Purchaser's
acquisition of Shares as contemplated herein or of any approval or other action,
except as otherwise described in this Section 15, by any Governmental Entity
that would be required for the acquisition or ownership of Shares by the
Purchaser as contemplated herein. Should any such approval or other action be
required, the Purchaser and Parent currently contemplate that such approval or
other action will be sought, except as described below under "State Takeover
Laws". While, except as otherwise expressly described in this Section 15, the
Purchaser does not presently intend to delay the acceptance for payment of or
payment for Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could, subject to the
terms and conditions of the Merger Agreement, decline to accept for payment or
pay for any Shares tendered. See Section 14 for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law, and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders; provided that such laws were applicable
only under certain conditions. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting stock
of the corporation) for a period of three years from the time such interested
stockholders became the holders of 15% or more of such Shares unless, among
other things, the corporation's board of directors has given its prior approval
to either the business combination or the transaction which resulted in the
stockholder becoming an "interested stockholder". The Company's Board of
Directors has approved the Merger Agreement, the Stockholder Agreements and the
Purchaser's acquisition of Shares pursuant to the Offer and, therefore, Section
203 of the DGCL is inapplicable to the Merger.
Based on information supplied by the Company and its own review, the
Purchaser does not believe that any other state takeover statutes purport to
apply to the Offer or the Merger. Neither the Purchaser nor Parent has currently
complied with any state takeover statute or regulation. The Purchaser reserves
the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer or the Merger and nothing in this Offer to
Purchase or any action taken in connection with the Offer or the Merger is
intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer or the
Merger, the Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to accept for payment or pay for Shares tendered pursuant to the
Offer, or be delayed
25
<PAGE> 28
in consummating the Offer or the Merger. In such case, the Purchaser may not be
obligated to accept for payment or pay for any Shares tendered pursuant to the
Offer.
Antitrust. The HSR Act imposes a 15-calendar day waiting period for
consummation of a cash tender offer following the filing of a Notification and
Report Form. The HSR Act does not apply, however, to the acquisition of
companies with annual net sales and total assets below certain thresholds.
Parent believes that the Offer and the Merger are not subject to the HSR Act
because the Company has annual net sales (as reported in its Annual Report on
Form 10-K for the year ended December 31, 1997) and total assets (as reported in
its Quarterly Report on Form 10-Q for the quarter ended June 30, 1998) of less
than $10 million. Therefore, Parent does not intend to file a Notification and
Report Form with respect to the Offer under the HSR Act.
Filings with, notifications to, and authorizations and approvals of certain
antitrust authorities in jurisdictions other than the United States may be
required. There can be no assurance that any authorizations, approvals or
decisions required by such authorities will be granted or that such authorities
will not challenge the Offer or the Merger. Parent and Company believe, however,
that the failure to obtain such authorizations and approvals would not be
material.
At any time before or after the Purchaser's purchase of Shares pursuant to
the Offer, an antitrust enforcement agency could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by the
Purchaser or the divestiture of substantial assets of Parent or its
subsidiaries, or the Company or its subsidiaries. Private parties may also bring
legal action under the antitrust laws under certain circumstances. There can be
no assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, of the results thereof.
16. FEES AND EXPENSES
The Purchaser has retained Georgeson & Company Inc. to act as the
Information Agent and First Chicago Trust Company of New York to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed by the
Purchaser upon request for customary mailing and handling expenses incurred by
them in forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction where securities or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Purchaser by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
26
<PAGE> 29
The Purchaser or Parent has filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer. In addition, the Company has filed with
the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Sections 8 and 9 (except that they will not be available at the regional offices
of the Commission).
ET/FM ACQUISITION CORP.
October 9, 1998
27
<PAGE> 30
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of Parent are set forth
below. Unless otherwise indicated, the business address of each such director
and each such executive officer is One Johnson & Johnson Plaza, New Brunswick,
New Jersey 08933. Unless otherwise indicated below, each occupation set forth
opposite an individual's name refers to employment with Parent. All directors
and executive officers listed below are citizens of the United States except for
Christian A. Koffmann and Arnold G. Langbo, who are citizens of France and
Canada, respectively.
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
Gerard N. Burrow, M.D. ................... Director of Parent since 1993; Member, Nominating and
Yale University School of Medicine Corporate Governance Committee and Chairman, Science and
333 Cedar Street Technology Advisory Committee. Special Advisor to the
New Haven, CT 06520 President of Yale University for Health Affairs since
1997. Dean of the Yale University School of Medicine
from 1992 to 1997. Member, the Institute of Medicine of
the National Academy of Sciences; Fellow, the American
Association for the Advancement of Science; Director of
Neurex Corporation and the Sea Research Foundation.
Joan Ganz Cooney.......................... Director of Parent since 1978; Member, Compensation
Children's Television Workshop Committee and Chairman, Benefits Committee. Chairman,
One Lincoln Plaza Executive Committee of Children's Television Workshop
New York, NY 10023 since 1990; Chairman-CEO from 1988 to 1990. Director of
Metropolitan Life Insurance Company, the Museum of
Television and Radio and The New York and Presbyterian
Hospitals, Inc.; Trustee, the National Child Labor
Committee.
James G. Cullen........................... Director of Parent since 1995; Member, Compensation
Bell Atlantic Corporation Committee and Audit Committee. President and CEO,
1310 N. Court House Road Telecom Group of Bell Atlantic Corporation since August
Arlington, VA 22201 of 1997; Vice Chairman, Bell Atlantic Corporation since
1995; President from 1993 to 1995; President and CEO of
Bell Atlantic -- New Jersey, Inc. from 1989 to 1993.
Director of Prudential Life Insurance Company.
Robert J. Darretta........................ Member, Executive Committee and Vice President, Finance
since 1997; Treasurer from 1995 to 1997; President,
IOLAB Corporation from 1987 to 1995.
Russell C. Deyo........................... Member, Executive Committee and Vice President,
Administration since 1996; Associate General Counsel
from 1991 to 1996.
Roger S. Fine............................. Member, Executive Committee and Vice President and
General Counsel since 1996; Vice President,
Administration from 1991 to 1996; Associate General
Counsel from 1984 to 1991. Member, Board of Trustees of
the Foundation of the University of Medicine and
Dentistry of New Jersey; Vice President of the National
Ramah Commission.
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
M. Judah Folkman, M.D..................... Director of Parent since February of 1998; Member,
Children's Hospital Science and Technology Advisory Committee. Senior
Hunnewell 103 Associate in Surgery, Children's Hospital since 1981;
300 Longwood Avenue Director, Surgical Research Laboratory, Children's
Boston, MA 02115 Hospital since 1981; Professor, Harvard Medical School,
Department of Surgery since 1968; Member, National
Academy of Sciences and the American Academy of Arts and
Sciences.
Ronald G. Gelbman......................... Member, Executive Committee and Worldwide Chairman,
Health Systems & Diagnostics Group since June of 1998;
Worldwide Chairman, Pharmaceuticals and Diagnostics
Group from 1994 to 1998. Company Group Chairman from
1987 to 1994.
JoAnn H. Heisen........................... Member, Executive Committee and Vice President, Chief
Information Officer since 1997; Controller from 1995 to
1997; Treasurer from 1991 to 1995; Assistant Treasurer,
Investor Relations from 1989 to 1991. Director, The
Vanguard Group, Inc.
Ann Dibble Jordan......................... Director of Parent since 1981; Member, Nominating and
Corporate Governance Committee and Public Policy
Advisory Committee. Consultant and previously Field Work
Assistant Professor, School of Social Service
Administration, University of Chicago from 1970 to 1987.
Director, Automatic Data Processing, Salant Corporation
and Travelers Inc.; Director, The Phillips Collection,
The Child Welfare League and the National Symphony
Orchestra.
Christian A. Koffmann..................... Member, Executive Committee and Worldwide Chairman,
Consumer & Personal Care Group since 1995. Company Group
Chairman from 1989 to 1995.
Arnold G. Langbo.......................... Director of Parent since 1991; Member, Audit Committee
Kellogg Company and Chairman, Compensation Committee. Chairman of the
One Kellogg Square Board and Chief Executive Officer of Kellogg Company
Battle Creek, MI 49016-3599 since 1992; President and Chief Operating Officer of
Kellogg Company from December, 1990 to 1992; President
of Kellogg International from 1986 to 1992; Director of
Kellogg Company and Whirlpool Corporation. Member,
Advisory Board of J.L. Kellogg Graduate School of
Management at Northwestern University. Chairman, Board
of Trustees of Albion College.
Ralph S. Larsen........................... Chairman, Board of Directors and Chief Executive Officer
and Chairman, Executive Committee of Parent since 1989.
Director, Xerox Corporation and AT&T Corp. Member, The
Business Council and the Policy Committee of The
Business Roundtable. Member, Board of United Way of
Tri-State.
James T. Lenehan.......................... Member, Executive Committee and Worldwide Chairman,
Consumer Pharmaceuticals & Professional Group since
1994. Company Group Chairman from 1993 to 1994.
President, McNeil Consumer Products Company from 1990 to
1993.
</TABLE>
29
<PAGE> 32
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
John S. Mayo, Ph.D........................ Director of Parent since 1986; Member, Science and
Lucent Technologies Inc. Technology Advisory Committee; Chairman, Public Policy
600 Mountain Avenue Advisory Committee. President AT&T Bell Laboratories
Murray Hill, NJ 07974 from 1991 to 1995; Executive Vice President of Network
Systems and Network Services from 1989 to 1991;
previously served as Director of the Ocean Systems
Laboratory, Executive Director of the Ocean Systems
Division, Executive Director of the Toll Electronic
Switching Division, Vice President of Electronics
Technology. Member, National Academy of Engineering and
The Swedish Royal Academy of Engineering Services;
Fellow, Institute of Electrical and Electronic
Engineers; Member, Boards of Trustees of Polytechnic
University (Emeritus), the Liberty Science Center
(Chairman), the Kenan Institute for Engineering,
Technology and Science; served on the Board of Overseers
for the New Jersey Institute of Technology and the Board
of Directors of the National Engineering Consortorium,
Inc.
Paul J. Rizzo............................. Director of Parent since 1982; Chairman, Audit
Franklin Street Partners Committee, Member, Nominating and Corporate Governance
6330 Quadrangle Drive, Suite 200 Committee. Vice Chairman of International Business
Chapel Hill, NC 27514 Machines Corporation from 1993 to 1994. Dean of the
Kenan-Flagler Business School at the University of North
Carolina-Chapel Hill from 1987 to 1992. Became a partner
in Franklin Street Partners, a Chapel Hill, North
Carolina investment firm in 1992. Director of
McGraw-Hill Companies, Inc. and Ryder Systems, Inc.
Henry B. Schacht.......................... Director of Parent since 1997; Member, Audit Committee
Lucent Technologies Inc. and Chairman, Nominating and Corporate Governance
32 Old Slip St. Committee. Chairman of the Board, Lucent Technologies
35th Flr. Inc. from 1996 to February of 1998; Chief Executive
New York, NY 10005 Officer from 1996 to 1997; Chairman of Cummins Engine
Company, Inc. from 1977 to 1995; Chief Executive Officer
from 1973 to 1994. Director of Lucent Technologies Inc.,
Aluminum Corporation of America, The Chase Manhattan
Corporation, The Chase Manhattan Bank, N.A. and Cummins
Engine Company, Inc.; Chairman of the Board of Trustees
of The Ford Foundation and Trustee, The Yale Corporation
and the Business Enterprise Trust.
Maxine F. Singer, Ph.D.................... Director of Parent since 1991; Member, Science and
Carnegie Institution of Washington Technology Advisory Committee and Benefits Committee.
1530 P Street, N.W. President, Carnegie Institution of Washington since
Washington, D.C. 20005 1988; Member, National Academy of Sciences, the American
Philosophical Society, the Pontifical Academy of
Sciences, the Governing Board of the Weizmann Institute
of Science.
</TABLE>
30
<PAGE> 33
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
John W. Snow.............................. Director of Parent since April of 1998; Member, Benefits
CSX Corporation Committee and Compensation Committee. Chairman, CSX
One James Center Corporation since 1991; President and Chief Executive
901 East Cary St. Officer of CSX Corporation since 1989. Director of
Richmond, VA 23219 Circuit City Stores, Inc., Textron, Inc. and USX
Corporation. Member, Board of Trustees of Johns Hopkins
University.
William C. Weldon......................... Member, Executive Committee and Worldwide Chairman,
Pharmaceuticals Group since June of 1998. Company Group
Chairman from 1995 to June of 1998. President, Ethicon
Endo-Surgery, Inc. from 1992 to 1995.
Robert N. Wilson.......................... Vice Chairman, Board of Directors since 1989; Vice
Chairman, Executive Committee since 1994; Member,
Executive Committee since 1983. Director, U.S. Trust
Corporation and Amerada Hess Corporation.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of the Purchaser are set
forth below. The business address of each such director and executive officer is
One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933. Unless otherwise
indicated below, each occupation set forth opposite an individual's name refers
to employment with Parent. All such directors and executive officers listed
below are citizens of the United States, except for James J. Bergin, who is a
citizen of Australia.
<TABLE>
<CAPTION>
POSITION WITH THE PURCHASER;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME 5-YEAR EMPLOYMENT HISTORY
---- -----------------------------------
<S> <C>
James J. Bergin........................... Vice President and Assistant Secretary of the Purchaser
since October of 1998. General Attorney since November
of 1997. Associate of Donovan Leisure Newton & Irvine
from August of 1992 until October of 1997.
Philip P. Crowley......................... Director, Vice President and Secretary of the Purchaser
since October of 1998. Assistant General Counsel and
Assistant Secretary since June of 1992.
Clifford E. Holland....................... Director and President of the Purchaser since October of
1998. President of Ethicon since October of 1998. Group
Vice President and General Manager of Ethicon from
November of 1997 until October of 1998. Executive Vice
President of Sales and Marketing of Johnson & Johnson
Health Care Systems Inc. from January of 1995 until
November of 1997. Vice President of Sales and Marketing
of Ethicon from June of 1994 until January of 1995. Vice
President of Sales of Ethicon from February of 1992
until June of 1994.
Howard I. Zauberman....................... Director, Vice President and Treasurer of the Purchaser
since October of 1998. Vice President of Growth
Technologies and New Business Development of Ethicon
since September of 1997. Director of Business
Development of Pfizer, Inc. from October of 1992 until
September of 1997.
</TABLE>
31
<PAGE> 34
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Overnight: By Hand:
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
P.O. Box 2569 14 Wall Street, 8th Floor c/o Securities Transfer &
Suite 4660 Suite 4680 -- FMRX Reporting
Jersey City, NJ 07303-2569 New York, NY 10005 Services Inc.
One Exchange Plaza, 3rd Floor
New York, NY 10006
</TABLE>
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
or any other tender offer materials may be directed to the Information Agent at
the address and telephone numbers listed below. You may also contact your
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY LOGO]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll Free (800) 223-2064
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
FEMRX, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED OCTOBER 9, 1998
BY
ET/FM ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
JOHNSON & JOHNSON
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 6, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Overnight: By Hand:
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
P.O. Box 2569 14 Wall Street, 8th Floor c/o Securities Transfer &
Suite 4660 Suite 4680 -- FMRX Reporting Services Inc.
Jersey City, NJ 07303-2569 New York, NY 10005 One Exchange Plaza, 3rd Floor
New York, NY 10006
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in Section 2 of the
Offer to Purchase (as defined below)) is utilized, if delivery of Shares (as
defined below) is to be made by book-entry transfer to an account maintained by
the Depositary at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 2 of the Offer to
Purchase. Stockholders who deliver Shares by book-entry transfer are referred to
herein as "Book-Entry Stockholders" and other stockholders are referred to
herein as "Certificate Stockholders". Stockholders whose certificates for Shares
are not immediately available or who cannot deliver either the certificates for,
or a Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase)
with respect to, their Shares and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) must tender their Shares in accordance with the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2.
This Letter of Transmittal may also be used to tender Shares issuable upon the
exercise of Company Stock Options (as defined in the Offer to Purchase).
Delivery of documents to the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures does not constitute delivery to the
Depositary.
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
------------------------------------------------------------------------
The Depository Trust Company Account Number
-------------------------------------------------------------------
Transaction Code Number
------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
------------------------------------------------------------------------
Window Ticket Number (if any)
------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
----------------------------------------------------------------
Name of Institution that Guaranteed Delivery
-----------------------------------------------------------------------
If delivered to Book-Entry Transfer Facility check this box: [ ]
The Depository Trust Company Account Number
--------------------------------------------------------------------
Transaction Code Number
------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES TO BE
RECEIVED AND
TOTAL NUMBER TENDERED UPON
OF SHARES EXERCISE OF NUMBER
CERTIFICATE REPRESENTED BY COMPANY STOCK OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) OPTIONS TENDERED(2)
------------------------------------------------------------------
<S> <C> <C> <C> <C>
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
TOTAL SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares evidenced
by each certificate delivered to the Depositary are being tendered. See
Instruction 4.
- --------------------------------------------------------------------------------
IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST OR
DESTROYED, SEE INSTRUCTION 11.
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to ET/FM Acquisition Corp., a Delaware
corporation (the "Purchaser"), and a wholly owned subsidiary of Johnson &
Johnson, a New Jersey corporation ("Parent"), the above-described shares of
common stock, par value $.001 per share (the "Shares"), of FemRx, Inc., a
Delaware corporation (the "Company"), upon Purchaser's offer to purchase all
outstanding Shares at a price of $2.35 per Share, net to the seller in cash,
without interest, in accordance with the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase dated October 9, 1998 (the "Offer to
Purchase"), and this Letter of Transmittal (which, together with any amendments
or supplements thereto or hereto, collectively constitute the "Offer"), receipt
of which is hereby acknowledged. Any Shares issuable upon the exercise of
Company Stock Options tendered hereby as indicated above (the "Option Shares")
will only be received by the Depositary and tendered by it and the Company Stock
Options will only be exercised by it in the event that the Offer is consummated.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with the
terms of the Offer (including, if the Offer is extended or amended, the terms or
conditions of any such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser all right, title
and interest in and to all the Shares that are being tendered hereby (and any
and all other Shares or other securities or rights issued or issuable in respect
thereof on or after October 3, 1998), and irrevocably constitutes and appoints
the Depositary the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares (and any such other Shares or securities or rights),
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Shares (and any such other Shares or securities or rights) or transfer
ownership of such Shares (and any such other Shares or securities or rights) on
the account books maintained by the Book-Entry Transfer Facility together, in
any such case, with all accompanying evidences of transfer and authenticity to,
or upon the order of, the Purchaser, (b) present such Shares (and any such other
Shares or securities or rights) for transfer on the Company's books and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares (and any such other Shares or securities or rights), all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares on or after October 3, 1998) and, when the
same are accepted for payment by the Purchaser, the Purchaser will acquire good
title thereto, free and clear of all liens, restrictions, claims and
encumbrances. The undersigned will, upon request, execute any additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the tendered Shares (and any
and all such other Shares or securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned hereby irrevocably appoints Clifford E. Holland, Howard I.
Zauberman, Philip P. Crowley and James J. Bergin, 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, and any other designees of the
Purchaser, the attorneys-in-fact and proxies of the undersigned, each with full
power of substitution, to vote at any annual, special or adjourned meeting of
the Company's stockholders or otherwise in such manner as each such attorney and
proxy or his substitute shall in his sole discretion deem proper with respect
to, to execute any written consent concerning any matter as each such attorney
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and to otherwise act as each such attorney and proxy or his
substitute shall in his sole discretion deem proper with respect to, all the
Shares tendered hereby that have been accepted for payment by the Purchaser
prior to the time any such action is taken and with respect to which the
undersigned is entitled to vote (and with respect to any and all other Shares or
other securities or rights issued or issuable in respect of such Shares on or
after October 3, 1998). This appointment is effective when, and only to the
extent that, the Purchaser accepts for payment such Shares as provided in the
Offer to Purchase. This power of attorney and proxy are irrevocable and are
granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke all prior powers of attorney and proxies
appointed by the undersigned at any time with respect to such Shares (and any
such other Shares or securities or rights) and no subsequent powers of attorney
or proxies will be appointed by the undersigned, or be effective, with respect
thereto.
If the undersigned is tendering Option Shares to be received from an
exercise by the Depositary of Company Stock Options on behalf of the
undersigned, in addition to the matters described above, the undersigned hereby
irrevocably appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to the full extent of the undersigned's rights with respect to such Company
Stock Options, (a) to exercise Company Stock Options for the Shares to be
tendered, (b) to cause the transfer of record ownership of such Company Stock
Options into the name of the undersigned or the Depositary if deemed by the
Depositary or the Purchaser to be necessary or appropriate to exercise such
Company Stock Options for the Shares being tendered and (c) to receive the
Shares issuable upon exercise of such tendered Company Stock Options. This
appointment will be effective if, when and only to the extent that, the
Purchaser accepts such Shares for payment pursuant to the Offer.
If the undersigned is tendering Option Shares from an exercise of Company
Stock Options, the undersigned, upon request, shall execute and deliver all
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to effectuate the exercise of such Company Stock Options into the
Shares tendered hereby, including, without limitation, such documents as shall
be necessary to effect the transfer of record ownership of such Company Stock
Options into the name of the undersigned or the Depositary.
<PAGE> 4
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered". Similarly, unless
otherwise indicated under "Special Delivery Instructions", please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered". In the event that both Special Delivery Instructions and Special
Payment Instructions are completed, please issue the check for the purchase
price and/or return any certificates for Shares not tendered or accepted for
payment (and any accompanying documents, as appropriate) in the name of, and
deliver such check and/or return such certificates (and any accompanying
documents, as appropriate) to, the person or persons so indicated. Please credit
any Shares tendered herewith by book-entry transfer that are not accepted for
payment by crediting the account at the Book-Entry Transfer Facility. The
undersigned recognizes that the Purchaser has no obligation pursuant to Special
Payment Instructions to transfer any Shares from the name of the registered
holder thereof if the Purchaser does not accept for payment any of the Shares so
tendered. The payment made to the undersigned for each Option Share tendered
will be an amount equal to the Offer Price minus the exercise price of the
exercised Company Stock Option. The amount paid to employees for Option Shares
will be reduced by such amount of wage and employment withholding taxes as may
be required to be deducted and withheld with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended, or under any
provision of state, local, or foreign law. For each Option Share tendered, an
amount equal to the exercise price of the Company Stock Option exercised for
such Option Share shall be paid to the Company.
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned.
Issue check and/or certificate(s) to:
Name
-----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown under
"Description of Shares Tendered".
Mail check and/or certificate(s) to:
Name
-----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
------------------------------------------------------------
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:
------------------ , 1998
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 5.)
Name(s)
---------------------------------------------------------------------
--------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title)
-------------------------------------------------------------
Address
----------------------------------------------------------------------
--------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
------------------------------------------------------
Employer Identification or
Social Security Number
-----------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
IF REQUIRED -- (SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
-------------------------------------------------------------
Name----------------------------------------------------------------------
--------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
------------------------------------------------------------------
Address
----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
------------------------------------------------------
Dated: , 1998
--------------------------------------------------------------------------
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signature. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loans associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (an "Eligible Institution"). No signature guarantee
is required on this Letter of Transmittal (a) if this Letter of Transmittal is
signed by the registered holder(s) (which term, for purposes of this document,
shall include any participant in the Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the reverse hereof, or (b) if such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by stockholders either if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined below) is utilized, if delivery of Shares is to
be made pursuant to the procedures for book-entry transfer set forth in Section
2 of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date and either (i)
certificates for tendered Shares must be received by the Depositary at one of
such addresses prior to the Expiration Date or (ii) Shares must be delivered
pursuant to the procedures for book-entry transfer set forth herein and a
Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date or (b) the tendering stockholder must comply with the guaranteed
delivery procedures set forth below and in Section 2 of the Offer to Purchase.
If certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase.
Pursuant to such procedures, (a) such tender must be made by or through an
Eligible Institution, (b) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Purchaser must be
received by the Depositary prior to the Expiration Date and (c) the certificates
for all physically delivered Shares or a Book-Entry Confirmation with respect to
all tendered Shares, as well as a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees, or,
in the case of a book-entry transfer, an Agent's Message, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three New York Stock Exchange, Inc. trading days after the
date of execution of the Notice of Guaranteed Delivery as provided in Section 2
of the Offer to Purchase.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of this Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER.
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Except as provided herein for tendering Option Shares, no alternative,
conditional or contingent tenders will be accepted and no fractional Shares will
be purchased. All tendering stockholders, by execution of this Letter of
Transmittal (or facsimile thereof), waive any right to receive any notice of the
acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (Applicable to Certificate Stockholders Only). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled "Number
of Shares Tendered". In any such case, new certificate(s) for the remainder of
the Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the acceptance for payment
of, and payment for, the Shares tendered herewith. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
<PAGE> 8
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, and payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
to, such registered holder(s), then no endorsements of certificates or separate
stock powers are required.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be guaranteed
by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Purchaser of such person's authority so to act must be submitted.
6. Stock Transfer Taxes. The Company will pay any U.S. Federal, state or
local stock transfer taxes with respect to the transfer and sale of Shares to
the Purchaser or its order pursuant to the Offer. If, however, payment of the
purchase price is to be made to, or if certificates for Shares not tendered or
accepted for payment are to be registered in the name of, any person(s) other
than the registered owner(s), or if tendered certificates are registered in the
name of any person other than the person(s) signing this Letter of Transmittal,
the amount of any stock transfer taxes (whether imposed on the registered
holder(s) or such person) payable on account of the transfer to such person will
be deducted from the purchase price unless satisfactory evidence of the payment
of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of and/or certificates for Shares not tendered or not accepted for
payment are to be returned to, a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal or to
an address other than that shown above, the appropriate boxes on this Letter of
Transmittal must be completed. Any stockholder(s) delivering Shares by
book-entry transfer may request that Shares not accepted for payment be credited
to such account maintained at the Book-Entry Transfer Facility as such
stockholder(s) may designate.
8. Waiver of Conditions. Subject to the terms of the Offer, the Purchaser
reserves the absolute right in its sole discretion to waive any of the specified
conditions of the Offer, in whole or in part, in the case of any Shares
tendered.
9. 31% Backup Withholding. Under U.S. Federal income tax law, a
stockholder whose tendered Shares are accepted for payment is required to
provide the Depositary with such stockholder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 below. If the Depositary is not provided
with the correct TIN or an adequate basis for exemption, the Internal Revenue
Service may subject the stockholder or other payee to a $50 penalty. In
addition, payments that are made to such stockholder or other payee with respect
to Shares purchased pursuant to the Offer may be subject to a 31% backup
withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup withholding
is not an additional income tax. Rather, the tax liability of persons subject to
backup withholding will be reduced by the amount of tax withheld, provided that
the required information is given to the Internal Revenue Service. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
The stockholder is required to give Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
10. Requests for Assistance or Additional Copies. Requests for additional
copies of the Offer to Purchase, this Letter of Transmittal, the Notice of
Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 and questions or requests for
assistance should be directed to the Information Agent at its address set forth
below.
11. Lost, Destroyed or Stolen Certificates. If any certificate
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly call ChaseMellon Shareholder Services, L.L.C., Customer Service
Department, at 1-800-356-2017. The stockholder will then be instructed as to the
steps that must be taken in order to replace the certificate. This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost or destroyed certificates have been followed.
<PAGE> 9
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF, TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, OR THE NOTICE OF GUARANTEED DELIVERY
MUST BE RECEIVED BY THE DEPOSITARY, IN EACH CASE PRIOR TO THE EXPIRATION DATE.
<PAGE> 10
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- ---------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND -------------------------------
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW Social Security Number(s)
OR
-------------------------------
Employer Identification Number
- ---------------------------------------------------------------------------------------------------------------------------
PART 2--CERTIFICATES--UNDER PENALTIES OF PERJURY, I PART 3--
CERTIFY THAT: Awaiting TIN [ ]
(1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER
IDENTIFICATION NUMBER (OR I AM WAITING FOR A NUMBER TO
BE ISSUED FOR ME), AND
(2) I AM NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE: (A) I
AM EXEMPT FROM BACKUP WITHHOLDING, OR (B) I HAVE NOT BEEN
NOTIFIED BY THE INTERNAL REVENUE SERVICE (THE "IRS")
THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF
A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (C)
THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO
BACKUP WITHHOLDING.
---------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the
INTERNAL REVENUE SERVICE IRS that you are currently subject to backup withholding because of underreporting interest or
PAYOR'S REQUEST FOR dividends on your tax returns. However, if after being notified by the IRS that you are
TAXPAYER subject to backup withholding, you received another notification from the IRS stating that you
IDENTIFICATION NUMBER are no longer subject to backup withholding, do not cross out such item (2).
("TIN") SIGNATURE -------------------------------------------------------------------------------
DATE-------------------------------------, 1998
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has not
been issued to me, and either (1) I have mailed or delivered an application to
receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld, but that such amounts will be
refunded to me if I then provide a Taxpayer Identification Number within sixty
(60) days.
Signature
- --------------------------------------------------------- Date-----------------
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone numbers below. Requests for additional copies
of the Offer to Purchase, the related Letter of Transmittal and all other tender
offer materials may be directed to the Information Agent. Copies will be
furnished promptly at the Purchaser's expense. No fees or commissions will be
paid to any broker or dealer or any other person (other than the Information
Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY LOGO]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll Free (800) 223-2064
<PAGE> 1
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
FEMRX, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 6, 1998, UNLESS THE OFFER IS EXTENDED.
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates representing shares of common stock, par value
$.001 per share (the "Shares"), of FemRx, Inc., a Delaware corporation (the
"Company"), are not immediately available or if the procedures for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase). This form may be delivered by
hand or transmitted by facsimile transmission or mailed to the Depositary and
must include a guarantee by an Eligible Institution (as defined in Section 2 of
the Offer to Purchase). See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Overnight: By Hand:
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
P.O. Box 2569 14 Wall Street, 8th Floor c/o Securities Transfer &
Suite 4660 Suite 4680 -- FMRX Reporting
Jersey City, NJ 07303-2569 New York, NY 10005 Services Inc.
One Exchange Plaza, 3rd Floor
New York, NY 10006
Facsimile Transmission
(for Eligible Institutions only):
(201) 222-4720 or
(201) 222-4721
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to ET/FM Acquisition Corp., a Delaware
corporation (the "Purchaser"), and a wholly owned subsidiary of Johnson &
Johnson, a New Jersey corporation, upon the terms and subject to the conditions
set forth in the Purchaser's Offer to Purchase, dated October 9, 1998 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, Shares pursuant to the
guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase.
Number of Shares
- --------------------------------------------------------------------------------
Name(s) of Record Holder(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Certificate Nos. (if available):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Zip Code
Area Code and Tel. No.:
- --------------------------------------------------------------------------------
Check box if Shares will be tendered by book-entry transfer: [ ]
The Depository Trust Company Account Number:
- --------------------------------------------------------------
Signature(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in Section 2
of the Offer to Purchase) of a transfer of such Shares, in any such case
together with a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile thereof, with any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase), and any other documents
required by the Letter of Transmittal, within three trading days after the date
hereof. A "trading day", for purposes of the preceding sentence, is any day on
which the New York Stock Exchange, Inc. and banks in New York are open for
business.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
Name of Firm:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Address:
- --------------------------------------------------------------------------------
Zip Code
Title:
- --------------------------------------------------------------------------------
Area Code and
Tel. No.:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FEMRX, INC.
AT
$2.35 NET PER SHARE
BY
ET/FM ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
JOHNSON & JOHNSON
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 6, 1998, UNLESS THE OFFER IS EXTENDED.
October 9, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by ET/FM Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of Johnson & Johnson, a New
Jersey corporation ("Parent"), to act as Information Agent in connection with
the Purchaser's offer to purchase all outstanding shares of common stock, par
value $.001 per share (the "Shares"), of FemRx, Inc., a Delaware corporation
(the "Company"), at $2.35 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated October 9, 1998 (the "Offer to Purchase"),
and the related Letter of Transmittal (which, together with any supplements or
amendments thereto, collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase;
2. Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
3. The letter to stockholders of the Company from the Chairman and
Chief Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such client's instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
FRIDAY, NOVEMBER 6, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of October 3, 1998 (the "Merger Agreement"), among Parent, the Purchaser and
the Company, pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company, with the Company surviving the merger as a wholly owned
subsidiary of Parent (the "Merger"). On the effective date of the Merger, each
outstanding Share (other than Shares owned by the Company as treasury stock or
by Parent, the Purchaser or any other direct or indirect wholly owned
subsidiaries of Parent or by stockholders, if any, who are entitled to and who
properly exercise
<PAGE> 2
dissenters' rights under Delaware law or, to the extent applicable, California
law) will be converted into the right to receive $2.35 per Share, net to the
seller in cash, without interest, as set forth in the Merger Agreement and
described in the Offer to Purchase.
The Purchaser and Parent entered into Stockholder Agreements dated as of
October 3, 1998 (the "Stockholder Agreements") with certain stockholders of the
Company (the "Stockholders"), who beneficially own 5,414,858 Shares in the
aggregate, including Shares issuable upon the exercise of options, or
approximately 51.9% of the Shares on a fully diluted basis. Under the
Stockholder Agreements, the Stockholders have agreed to sell all Shares owned by
the Stockholders to the Purchaser for $2.35 per Share in cash, without interest.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
90% OF THE OUTSTANDING SHARES (AFTER GIVING EFFECT TO THE EXERCISE OF ALL
OPTIONS WITH EXERCISE PRICES AT OR BELOW THE OFFER PRICE).
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED AND FOUND ADVISABLE THE
MERGER AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER
AND TENDER THEIR SHARES.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by First Chicago Trust Company of New
York (the "Depositary") of (a) certificates for (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to) such Shares,
(b) a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer effected pursuant to the procedure set forth in Section 2 of
the Offer to Purchase, an Agent's Message (as defined in the Offer to Purchase),
and (c) any other documents required by the Letter of Transmittal. Accordingly,
tendering stockholders may be paid at different times depending upon when
certificates for Shares or Book-Entry Confirmations with respect to Shares are
actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID BY THE PURCHASER ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent and the
Depositary as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. However, you will be
reimbursed upon request for customary mailing and handling expenses incurred by
you in forwarding the enclosed offering materials to your customers.
The Company will pay any U.S. Federal, state or local stock transfer taxes
with respect to the transfer and sale of Shares to the Purchaser or its order
pursuant to the Offer, except as otherwise provided in Instruction 6 to the
Letter of Transmittal.
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent at the address and telephone numbers set
forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
GEORGESON & COMPANY INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY AFFILIATE THEREOF OR AUTHORIZE YOU OR ANY OTHER PERSON
TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF
ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
<PAGE> 1
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FEMRX, INC.
AT
$2.35 NET PER SHARE
BY
ET/FM ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
JOHNSON & JOHNSON
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 6, 1998, UNLESS THE OFFER IS EXTENDED.
October 9, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated October 9,
1998 (the "Offer to Purchase"), and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to an offer by ET/FM Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of Johnson & Johnson, a New
Jersey corporation ("Parent"), to purchase shares of Common Stock, par value
$.001 per share (the "Shares"), of FemRx, Inc., a Delaware corporation (the
"Company"), at $2.35 per Share, net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer. Also
enclosed is the Letter to Stockholders of the Company from the Chairman
and Chief Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on
Schedule 14D-9.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is invited to the following:
1. The tender price is $2.35 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of October 3, 1998 (the "Merger Agreement"), among Parent,
the Purchaser and the Company pursuant to which, following the consummation
of the Offer and the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the Company, with the Company
surviving the merger as a wholly owned subsidiary of Parent (the "Merger").
In the Merger, each outstanding Share (other than Shares owned by the
Company as treasury stock or by Parent, the Purchaser or any other direct
or indirect wholly owned subsidiaries of Parent or by stockholders, if any,
who are entitled to and who properly exercise dissenters' rights under
Delaware law or, to the extent applicable, California law) will be
converted into the right to receive $2.35 per Share, net to the seller in
cash, without interest, as set forth in the Merger Agreement and described
in the Offer to Purchase.
4. The Purchaser and Parent have entered into Stockholder Agreements
dated as of October 3, 1998 (the "Stockholder Agreements") with certain
stockholders of the Company (the "Stockholders"), who beneficially own
5,414,858 Shares in the aggregate, including Shares issuable upon the
exercise of options, or approximately 51.9% of the outstanding Shares on a
fully diluted basis. Under the Stockholder Agreements, the Stockholders
have agreed to tender all Shares owned by the Stockholders to the Purchaser
for $2.35 per Share in cash, without interest.
<PAGE> 2
5. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING
BEEN VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE
OFFER AT LEAST 90% OF THE OUTSTANDING SHARES (AFTER GIVING EFFECT TO THE
EXERCISE OF ALL OPTIONS WITH EXERCISE PRICES AT OR BELOW THE OFFER PRICE).
6. THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED AND FOUND
ADVISABLE THE MERGER AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT
THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
7. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, November 6, 1998, unless the Offer is extended
by the Purchaser. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of (a) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (b) a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer effected pursuant to the procedure set forth in Section
2 of the Offer to Purchase, an Agent's Message (as defined in the Offer to
Purchase), and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different
times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the
Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE PURCHASER
ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
8. The Company will pay any U.S. Federal, state or local stock
transfer taxes with respect to the transfer and sale of Shares to the
Purchaser or its order pursuant to the Offer, except as otherwise provided
in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any of or all your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
set forth below. An envelope to return your instructions to us is enclosed. If
you authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified below. Your instructions to us should be forwarded promptly
to permit us to submit a tender on your behalf prior to the expiration of the
Offer.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
Tear Here Tear Here
................................................................................
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK OF FEMRX, INC.
The undersigned acknowledges receipt of your letter enclosing the Offer to
Purchase, dated October 9, 1998, of ET/FM Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Johnson & Johnson, a New Jersey
corporation, and the related Letter of Transmittal, relating to shares of Common
Stock, par value $.001 per share of FemRx, Inc., a Delaware corporation (the
"Shares").
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned on the terms and conditions set forth
in such Offer to Purchase and the related Letter of Transmittal.
Dated:
- ---------------------------------------------------1998
Number of Shares
to be Tendered*
--------------- Shares
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Signature(s)
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Please print name(s)
Address
- -----------------------------------------------------
- ---------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.
- ------------------------------
Taxpayer Identification or Social
Security No.
- -------------------------------------------------
- ---------------
* Unless otherwise indicated, it will be assumed that all your Shares are to be
tendered.
<PAGE> 1
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The
trust account (grantor is also grantor-trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or pension Legal entity (Do
trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan or a custodial account under Section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated October
9, 1998 and the related Letter of Transmittal (and any amendments or supplements
thereto) and the Offer is being made to all holders of Shares. The Offer is not
being made to, nor will tenders be accepted from or on behalf of, holders of
Shares in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where securities or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
FemRx, Inc.
at
$2.35 Net Per Share
by
ET/FM Acquisition Corp.
a wholly owned subsidiary of
Johnson & Johnson
ET/FM Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of Johnson & Johnson, a New Jersey corporation ("Parent"), is
offering to purchase all the outstanding shares of Common Stock, par value $.001
per share (the "Shares"), of FemRx, Inc., a Delaware corporation (the
"Company"), at a price of $2.35 per Share (the "Offer Price"), net to the seller
in cash, without interest, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated October 9, 1998 (the "Offer to Purchase")
and in the related Letter of Transmittal (which, together with any supplements
or amendments thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 6, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger
dated as of October 3, 1998 (the "Merger Agreement") among Parent, the Purchaser
and the Company, pursuant to which, following the consummation of the Offer, the
Purchaser will be merged with and into the Company (the "Merger"). On the
effective date of the Merger, each outstanding Share (other than Shares owned by
the Company as treasury stock or by Parent, the Purchaser or any other
subsidiary of Parent or by stockholders, if any, who are entitled to and who
properly exercise dissenters' rights under Delaware law or, to the extent
applicable, California law) will be converted into the right to receive $2.35 in
cash, without interest. The Merger Agreement is more fully described in the
Offer to Purchase.
The Purchaser and Parent have entered into Stockholder Agreements dated
as of October 3, 1998 (the "Stockholder Agreements") with certain stockholders
of the Company (the "Stockholders"), who beneficially own 5,414,858 Shares in
the aggregate, including Shares issuable upon the exercise of options, or
approximately 51.9% of the Shares on a fully diluted basis. Under the
Stockholder Agreements, the Stockholders have agreed to tender all Shares owned
by the Stockholders to the Purchaser for $2.35 per Share in cash, without
interest.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
90% OF THE OUTSTANDING SHARES (AFTER GIVING EFFECT TO THE EXERCISE OF ALL
OPTIONS WITH EXERCISE PRICES AT OR BELOW THE OFFER PRICE).
<PAGE> 2
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED AND FOUND ADVISABLE
THE MERGER AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER
AND TENDER THEIR SHARES.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment, and thereby purchased, Shares validly tendered to the
Purchaser and not properly withdrawn as, if and when the Purchaser gives oral or
written notice to the Depositary (as defined in the Offer to Purchase) of the
Purchaser's acceptance for payment of such Shares. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Purchaser and transmitting payment to tendering
stockholders whose Shares have been accepted for payment. In all cases, payment
for Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates for such Shares or timely
confirmation of book-entry transfer of such Shares into the Depositary's account
at the Book-Entry Transfer Facility (as defined in the Offer to Purchase)
pursuant to the procedures set forth in Section 2 of the Offer to Purchase, (ii)
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) and (iii) any
other documents required by the Letter of Transmittal. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID BY THE PURCHASER ON THE PURCHASE PRICE OF THE SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, November 6, 1998 unless and until the Purchaser, in its sole discretion
(but subject to the terms of the Merger Agreement), shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date on which the Offer, as so
extended by the Purchaser, shall expire. The Purchaser expressly reserves the
right, in its sole discretion (but subject to the terms of the Merger
Agreement), at any time or from time to time, and regardless of whether or not
any of the events set forth in Section 14 of the Offer to Purchase shall have
occurred, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary and (ii) to
amend the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. There can be no assurance that the Purchaser will
exercise its right to extend the Offer (other than as may be required by
applicable law). Any such extension will be followed by a public announcement
thereof no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
December 7, 1998. For a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution as defined in Section 2 of the Offer to Purchase, the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry transfer as set forth in Section 2 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals
of tenders of Shares may not be rescinded, and any Shares properly withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Purchaser, in its
sole discretion, whose determination will be final and binding.
The Company has provided the Purchaser with the Company's stockholder
lists and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) under
the Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the
Information Agent at the address and telephone number below. Requests for
additional copies of the Offer to Purchase, the related Letter of Transmittal
and all other tender offer materials may be directed to the Information Agent.
Copies will be furnished promptly at the Purchaser's expense. No fees or
commissions will be paid to any broker or dealer or any other person (other than
the Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[GEORGESON LOGO]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect:
(212) 440-9800
All Others Call Toll Free:
(800) 223-2064
October 9, 1998
<PAGE> 1
EXHIBIT (a)(8)
[JOHNSON & JOHNSON LETTERHEAD]
FOR IMMEDIATE RELEASE
JOHNSON & JOHNSON TO ACQUIRE FEMRX, INC.
New Brunswick, NJ (Oct. 5, 1998) -- Johnson & Johnson (NYSE:JNJ), the
health care products manufacturer, and FemRx, Inc. (Nasdaq: FMRX), a leader in
the development of innovative products for gynecological disorders, announced
today that they have entered into a definitive merger agreement through which
Johnson & Johnson, on behalf of its Ethicon, Inc. subsidiary, will purchase all
of the outstanding common shares of FemRx.
Under the agreement, Johnson & Johnson will shortly commence a tender
offer to purchase all of FemRx's approximately 9.4 million shares of common
stock and common stock equivalents for $2.35 per share in cash, or
approximately $22 million. The offer is conditioned on the tender of 90% of the
outstanding shares of common stock and stock equivalents, and certain other
conditions.
FemRx, Inc., headquartered in Sunnyvale, CA, has developed proprietary
surgical systems that enable surgeons to perform less invasive alternatives to
hysterectomy.
Through its Gynecare Division, Ethicon, Inc. offers innovative surgical
solutions for women in the areas of uterine disorders, infertility,
incontinence and adhesion prevention.
Johnson & Johnson is the world's most comprehensive and broadly-based
manufacturer of health care products, as well as a provider of related
services, for the consumer, pharmaceutical and professional markets.
# # #
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
JOHNSON & JOHNSON,
ET/FM ACQUISITION CORP.
AND
FEMRX, INC.
DATED AS OF OCTOBER 3, 1998
<PAGE> 2
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
ARTICLE I
THE OFFER
Page
Section 1.01 The Offer..................................... 3
Section 1.02 Company Actions............................... 5
ARTICLE II
THE MERGER
Section 2.01 The Merger.................................... 7
Section 2.02 Closing....................................... 7
Section 2.03 Effective Time................................ 7
Section 2.04 Effects of the Merger......................... 8
Section 2.05 Certificate of Incorporation and Bylaws....... 8
Section 2.06 Directors..................................... 8
Section 2.07 Officers...................................... 8
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.01 Effect on Capital Stock................. 9
Section 3.02 Exchange of Certificates................ 10
<PAGE> 3
ARTICLE IV
REPRESENTATIONS & WARRANTIES OF THE COMPANY
Section 4.01 Organization................................... 13
Section 4.02 Company Subsidiaries; Equity Interests......... 13
Section 4.03 Capitalization................................. 14
Section 4.04 Authority...................................... 15
Section 4.05 Consents and Approvals; No Violations.......... 15
Section 4.06 SEC Documents; Financial Statements............ 16
Section 4.07 Information Supplied........................... 17
Section 4.08 Absence of Certain Changes or Events........... 17
Section 4.09 Litigation..................................... 18
Section 4.10 Contracts...................................... 19
Section 4.11 Compliance with Laws........................... 19
Section 4.12 Environmental Matters.......................... 20
Section 4.13 Absence of Changes in Benefit Plans; Labor
Relations...................................... 21
Section 4.14 ERISA Compliance............................... 21
Section 4.15 Taxes.......................................... 24
Section 4.16 No Excess Parachute Payments................... 25
Section 4.17 Title to Properties............................ 25
Section 4.18 Intellectual Property.......................... 26
Section 4.19 Material Agreements............................ 26
Section 4.20 Voting Requirements............................ 26
Section 4.21 State Takeover Statutes........................ 27
Section 4.22 Brokers; Schedule of Fees and Expenses......... 27
Section 4.23 Opinion of Financial Advisor................... 27
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Section 5.01 Organization................................... 28
Section 5.02 Authority...................................... 28
Section 5.03 Consents and Approvals; No Violations.......... 28
<PAGE> 4
Section 5.04 Information Supplied........................... 29
Section 5.05 Interim Operations of Sub...................... 30
Section 5.06 Brokers........................................ 30
Section 5.07 Financing...................................... 30
Section 5.08 Section 203.................................... 30
ARTICLE VI
COVENANTS
Section 6.01 Conduct of Business............................ 31
Section 6.02 No Solicitation................................ 34
Section 6.03 Certain Tax Matters............................ 36
Section 6.04 Other Actions.................................. 36
Section 6.05 Advice of Changes; Filings..................... 37
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 Company Stockholder Approval; Preparation
of Proxy Statement............................. 37
Section 7.02 Access to Information; Confidentiality......... 39
Section 7.03 Reasonable Efforts; Notification............... 40
Section 7.04 Cooperation.................................... 41
Section 7.05 Stock Option Plans............................. 42
Section 7.06 Indemnification, Exculpation and Insurance..... 43
Section 7.07 Directors...................................... 44
Section 7.08 Fees and Expenses.............................. 44
Section 7.09 FIRPTA Certificate............................. 45
Section 7.10 Public Announcements........................... 45
Section 7.11 Arrangements for Key Employees................. 45
Section 7.12 Stop Transfer.................................. 45
Section 7.13 Credit Facility................................ 46
Section 7.14 Information Agent.............................. 46
<PAGE> 5
ARTICLE VIII
CONDITIONS
Section 8.01 Conditions to Each Party's Obligation to
Effect the Merger........................... 47
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.01 Termination................................. 47
Section 9.02 Effect of Termination....................... 49
Section 9.03 Amendment................................... 50
Section 9.04 Extension; Waiver........................... 50
Section 9.05 Procedure for Termination, Amendment,
Extension or Waiver......................... 50
ARTICLE X
MISCELLANEOUS
Section 10.01 Nonsurvival of Representations, Warranties
and Agreements.............................. 51
Section 10.02 Notices..................................... 51
Section 10.03 Interpretation.............................. 52
Section 10.04 Counterparts................................ 53
Section 10.05 Entire Agreement; Third Party Beneficiaries. 53
Section 10.06 Governing Law............................... 54
Section 10.07 Assignment.................................. 54
Section 10.08 Enforcement................................. 54
Section 10.09 Severability................................ 54
Section 10.10 Compliance with Law......................... 55
Section 10.11 Dispute Resolution.......................... 55
Section 10.12 Mediation................................... 57
Section 10.13 Obligation of Parent........................ 58
<PAGE> 6
EXHIBIT A Conditions of the Offer A-1
<PAGE> 7
AGREEMENT AND PLAN OF MERGER (the Agreement) dated as
of October 3, 1998, among JOHNSON & JOHNSON, a New Jersey
corporation ("Parent"), ET/FM ACQUISITION CORP., a Delaware
corporation ("Sub") and a wholly-owned subsidiary of Parent,
and FEMRX, INC., a Delaware corporation (the "Company").
Preliminary Statement
The respective Boards of Directors of Parent, Sub and the
Company have approved and found advisable this Agreement and the acquisition of
the Company by Parent on the terms and subject to the conditions set forth in
this Agreement. In furtherance of such acquisition, Parent proposes to cause Sub
to make a tender offer to purchase all the outstanding shares of common stock,
par value $0.001 per share, of the Company (the "Company Common Stock"; all the
outstanding shares of Company Common Stock being hereinafter collectively
referred to as the "Shares") at a purchase price of $2.35 per Share (the "Offer
Price"), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in this Agreement (as it may be amended from
time to time as permitted under this Agreement, the "Offer"). The Board of
Directors of the Company has adopted resolutions approving the Offer and the
Merger (as defined below), recommending that the Company's stockholders accept
the Offer and approving the acquisition of Shares by Sub pursuant to the Offer.
The respective Boards of Directors of Parent, Sub and the Company have each
approved the merger (the "Merger") of Sub into the Company, upon the terms and
subject to the conditions set forth in this Agreement, whereby each Share, other
than Shares owned directly or indirectly by Parent, Sub or the Company and
Dissenting Shares (as defined in Section 3.01(d)), will be converted into the
right to receive the price per Share paid in the Offer. Parent, Sub and the
Company desire to make certain representations, warranties, covenants and
agreements in connection with the Offer and the Merger and also to prescribe
various conditions to the Offer and the Merger.
Each capitalized term used herein and not otherwise defined
shall have the meaning accorded it under Section 10.03.
<PAGE> 8
NOW, THEREFORE, Parent, Sub and the Company hereby agree as
follows:
ARTICLE I
The Offer
SECTION 1.01. The Offer. (a) Provided that none of the
conditions set forth on Exhibit A hereto shall have occurred and be continuing,
as promptly as practicable but in no event later than five business days after
the date of the public announcement (on the date hereof or the following day) by
Parent and the Company of this Agreement, Sub shall, and Parent shall cause Sub
to, commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), the Offer. The obligation of Sub to,
and of Parent to cause Sub to, commence the Offer, conduct and consummate the
Offer and accept for payment, and pay for, any Shares tendered and not withdrawn
pursuant to the Offer shall be subject only to the conditions set forth in
Exhibit A (the "Offer Conditions") (any of which may be waived in whole or in
part by Sub in its sole discretion). Sub expressly reserves the right, subject
to compliance with the Exchange Act, to modify the terms of the Offer, except
that, without the express written consent of the Company, Sub shall not (i)
reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price,
(iii) add to or modify the Offer Conditions, (iv) except as provided in the next
two sentences, extend the Offer, (v) change the form of consideration payable in
the Offer or (vi) amend or alter any other term of the Offer in any manner
adverse to the holders of the Shares. Notwithstanding the foregoing, Sub may,
without the consent of the Company, (A) extend the Offer, if at the scheduled or
any extended expiration date of the Offer any of the Offer Conditions shall not
be satisfied or waived, until such time as such conditions are satisfied or
waived, (B) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or the staff thereof applicable to the Offer, (C) extend the Offer for up to ten
business days if the Minimum Tender Condition (as defined in Exhibit A) has not
been satisfied as of the scheduled expiration date of the Offer and (D) extend
the Offer for any reason for up to two business days. Without limiting the right
of Sub to extend the Offer pursuant to the immediately preceding sentence, in
the event that (i) the Minimum Tender Condition has not been satisfied or (ii)
any condition set forth in paragraph (a) of Exhibit A is not satisfied at the
scheduled expiration date of the Offer, Sub shall, and Parent shall cause Sub
to, extend the expiration date of the Offer in increments of five business days
each until the earliest to occur of (x) the satisfaction or waiver of the
Minimum Tender Condition or such other condition, or Parent reasonably
determines that any Offer Condition is not capable of being satisfied on or
prior to December 29, 1998, (y) the termination
<PAGE> 9
4
of this Agreement in accordance with its terms and (z) December 29, 1998;
provided, however, that if any person or group (within the meaning of Section
13(d)(3) of the Exchange Act) has publicly made a Takeover Proposal (as defined
in Section 6.02(a)) or disclosed in writing its intention to make a Takeover
Proposal, Sub shall not be required pursuant to this sentence to extend the
Offer for more than 20 business days beyond the date on which such Takeover
Proposal was publicly announced or such intention was disclosed if at the end of
such 20 business day period the Company has given Parent a Notice of Superior
Proposal with respect to the Takeover Proposal. Subject only to the conditions
set forth in Exhibit A, Sub shall, and Parent shall cause Sub to, accept for
payment, and pay for, all Shares validly tendered and not withdrawn pursuant to
the Offer that Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer as soon as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (such
Schedule 14D-1, as supplemented or amended from time to time, the "Schedule
14D-1") with respect to the Offer, which shall contain an offer to purchase and
a related letter of transmittal and summary advertisement (such Schedule 14D-1
and the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents") and
shall mail the Schedule 14D-1 to the stockholders of the Company. Parent and Sub
agree that the Offer Documents shall comply as to form in all material respects
with the Exchange Act and the rules and regulations promulgated thereunder, and
the Offer Documents, on the date first filed with the SEC and on the date
published, sent or given to the Company's stockholders, shall not 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 were made, not misleading, except
that no representation or warranty is made by Parent or Sub with respect to
written information supplied by the Company or any of its stockholders
specifically for inclusion or incorporation by reference in the Offer Documents.
Parent, Sub and the Company each agrees promptly to correct any written
information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect, and Parent and Sub further agree to take all steps necessary to amend
or supplement the Schedule 14D-1 and, as applicable, the Offer Documents and to
cause the Schedule 14D-1 as so amended and supplemented to be filed with the SEC
and the other Offer Documents as so amended and
<PAGE> 10
5
supplemented to be disseminated to holders of Shares, in each case as and to the
extent required by applicable Federal securities laws. The Company and its
counsel shall be given reasonable opportunity to review and comment upon the
Offer Documents prior to their filing with the SEC or dissemination to the
stockholders of the Company. Parent and Sub agree to provide the Company and its
counsel any comments Parent, Sub or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to purchase any and all Shares that Sub becomes
obligated to purchase pursuant to the Offer.
(d) Sub shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Offer such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"), or under any
provision of state, local or foreign tax law; provided, however, that Sub shall
promptly pay any amounts deducted and withheld hereunder to the applicable
governmental authority, shall promptly file all tax returns and reports required
to be filed in respect of such deductions and withholding, and shall promptly
provide to the Company proof of such payment and a copy of all such tax returns
and reports.
SECTION 1.02. Company Actions. (a) Subject to 6.02(b) the
Company hereby approves of and consents to the Offer and represents that the
Board of Directors of the Company, at a meeting duly called and held, duly
adopted resolutions approving this Agreement the Offer and the Merger,
determining that the terms of the Offer and the Merger are fair to, and in the
best interests of, the Company's stockholders and recommending that the
Company's stockholders accept the Offer, and tender their Shares pursuant to the
Offer. The Company represents that its Board of Directors has received the
opinion of Warburg Dillon Read & Co. Inc. ("WDR") that, as of the date thereof
and based upon and subject to the matters set forth therein, the cash
consideration to be offered by Parent to the holders of the Company's common
stock in the Offer and the Merger is fair, from a financial point of view, to
such stockholders, and a complete and correct signed copy of such opinion has
been delivered by the Company to Parent.
<PAGE> 11
6
(b) Promptly after the date the Offer Documents are filed with
the SEC, the Company shall file with the SEC a Solicitation/ Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as
supplemented or amended from time to time, the "Schedule 14D-9") containing the
recommendation described in Section 1.02(a) and shall mail the Schedule 14D-9 to
the stockholders of the Company. The Schedule 14D-9 shall comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder and, on the date filed with the SEC and
on the date first published, sent or given to the Company's stockholders, shall
not 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 were made,
not misleading, except that no representation or warranty is made by the Company
with respect to written information supplied by Parent or Sub specifically for
inclusion in the Schedule 14D-9. The Company, Parent and Sub each agree promptly
to correct any written information provided by it for use in the Schedule 14D-9
if and to the extent that such information shall have become false or misleading
in any material respect, and the Company further agrees to take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable Federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company
shall cause its transfer agent to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all current lists of stockholders, security
position listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Shares, and shall
furnish to Sub such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to
<PAGE> 12
7
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Parent and Sub and their agents shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated, will, upon such termination, promptly deliver,
and will use their best efforts to cause their agents promptly to deliver, to
the Company all copies of such information (and all copies of information
derived therefrom) then in their possession or control.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, in accordance with the Delaware General
Corporation Law (the "DGCL") and any other applicable State law, Sub shall be
merged with and into the Company at the Effective Time (as defined in Section
2.03). Following the Effective Time, 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 10.03) of
Parent may be substituted for Sub as a constituent corporation in the Merger. In
such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect the foregoing.
SECTION 2.02. Closing. The closing of the Merger will take
place at 10:00 a.m. (New York City time) 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 VIII (the "Closing Date"), at
the offices of Johnson & Johnson, One Johnson & Johnson Plaza, New Brunswick, NJ
08933, unless another date, time or place is agreed to in writing by the parties
hereto.
SECTION 2.03. 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
<PAGE> 13
8
the DGCL and shall make all other filings or recordings required under the DGCL
and other applicable law. 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 specified in the Certificate of Merger as Sub and the Company
shall agree (the time the Merger becomes effective being hereinafter referred to
as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and Bylaws. (a) The
Certificate of Incorporation of the Company (the "Certificate of
Incorporation"), 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.
(b) The bylaws of the Company (the "Bylaws") as in effect
immediately prior to the Effective Time shall be the bylaws of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable law.
SECTION 2.06. 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 2.07. Officers. The officers of Sub 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.
<PAGE> 14
9
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. 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 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 fully paid
and nonassessable share of Common Stock, par value $0.001 per share, of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each Share that is owned by the Company and each Share that is owned by
Parent or Sub shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange
therefor. Each Share that is owned by any direct or indirect
wholly-owned subsidiary of Parent (other than Sub) or the Company shall
remain outstanding without change.
(c) Conversion of Company Common Stock. Subject to Section
3.01(d), each issued and outstanding Share (other than Shares to be
canceled or to remain outstanding in accordance with Section 3.01(b)
and other than Dissenting Shares) shall be converted into the right to
receive from the Surviving Corporation in cash, without interest, the
Offer Price or, if applicable, such greater cash amount as may have
been paid to any holder pursuant to the Offer (the "Merger
Consideration"). As of the Effective Time, all such Shares shall no
longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing
any such Shares shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration, without interest.
<PAGE> 15
10
(d) Shares of Dissenting Stockholders. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding
Shares held by a person (a "Dissenting Stockholder") who has neither
voted in favor of the Merger nor consented in writing thereto and
otherwise complies with all the applicable provisions of applicable
state law concerning the right of holders of Company Common Stock to
dissent from the Merger and require appraisal of their Shares
("Dissenting Shares") shall not be converted as described in Section
3.01(c) but shall be converted into the right to receive such
consideration as may be determined to be due to such Dissenting
Stockholder pursuant to applicable laws. If, after the Effective Time,
such Dissenting Stockholder withdraws his demand for appraisal or fails
to perfect or otherwise loses his right to appraisal, in any case
pursuant to applicable state law, his Shares shall be deemed to be
converted as of the Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent (i) prompt notice of any
demands for appraisal of Shares received by the Company and (ii) if and
after Sub shall have accepted for payment Shares pursuant to and
subject to the Offer Conditions, the opportunity to participate in and
direct all negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time, Parent shall designate a reputable bank or trust
company to act as paying agent in the Merger (the "Paying Agent"). From time to
time prior to, or on the Effective Time, Parent shall make available, or cause
the Surviving Corporation to make available to the Paying Agent cash in amounts
and at the times necessary for the prompt payment of the Merger Consideration
upon surrender of Certificates (as defined in Section 3.02(b)). Any and all
interest earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to the Parent upon request.
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates") whose Shares were converted into the
right to receive the Merger Consideration pursuant to Section 3.01, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to
<PAGE> 16
11
the Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent and shall be in a 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 the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor, and the Paying Agent shall pay pursuant to irrevocable
instructions given by Sub or Parent, the amount of cash into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.01, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 3.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.01. No interest will be paid or will accrue on the cash payable
upon the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All
cash paid upon the surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares theretofore represented by such Certificates. At
the Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason,
except notation thereon that a stockholder has elected to exercise his right to
appraisal pursuant to applicable law, they shall be canceled and exchanged as
provided in this Article III.
<PAGE> 17
12
(d) No Liability. Any funds deposited with the Paying Agent
that remain unclaimed by the former stockholders of the Company for one year
after the Effective Time shall be paid to the Surviving Corporation upon demand,
and any former stockholders of the Company who have not theretofore complied
with the instructions for exchanging their Certificates provided herein shall
thereafter look only to the Surviving Corporation for payment of their claims
for the Merger Consideration set forth in Section 3.01 hereof for each Share
held by such stockholder, without any interest thereon. None of Parent, Sub, the
Company or the Paying Agent shall be liable to any person in respect of any cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificates shall not have been surrendered
prior to seven years after the Effective Time (or immediately prior to such
earlier date on which any payment pursuant to this Article III would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 4.05)), the cash payment in respect of such Certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person previously
entitled thereto.
(e) Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing Shares shall have been lost, stolen or destroyed, the
Paying Agent shall pay to such holder the Merger Consideration required pursuant
to Section 3.01, in exchange for such lost, stolen or destroyed Certificates,
upon the making of an affidavit of that fact by the holder thereof with such
assurances as the Paying Agent, in its discretion and as a condition precedent
to the payment of the Merger Consideration, may require of the holder of such
lost, stolen or destroyed Certificates.
(f) Withholding Rights. Parent and the Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement such amounts as may be required to be
deducted and withheld with respect to the making of such payment under the Code,
or under any provision of state, local or foreign tax law.
<PAGE> 18
13
ARTICLE IV
Representations and Warranties of the Company
Except as disclosed in the SEC Documents (as defined in
Section 4.06) filed or publicly available prior to the date of this Agreement
(the "Filed SEC Documents") or set forth on the Disclosure Schedule delivered by
the Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), it being agreed that any matter disclosed in the Company
Disclosure Schedule with respect to any subsection of this Agreement shall be
deemed to have been disclosed with respect to all subsections of this Agreement,
the Company represents and warrants to Parent and Sub as follows:
SECTION 4.01. Organization. Each of the Company and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated or
organized and has all requisite corporate power and authority to carry on its
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing individually or in the aggregate would not have a
Material Adverse Effect on the Company. The Company has made available to Parent
complete and correct copies of its Certificate of Incorporation and Bylaws, and
the certificate of incorporation and bylaws or other organizational documents of
each of its subsidiaries, in each case as amended to the date of this Agreement.
SECTION 4.02. Company Subsidiaries; Equity Interests. (a)
Schedule 4.02 hereto lists each subsidiary of the Company. All the outstanding
shares of capital stock of each subsidiary of the Company have been validly
issued and are fully paid and nonassessable and are owned by the Company, free
and clear of all pledges, liens, charges, mortgages, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens") and free of
any other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests).
<PAGE> 19
14
(b) Except for its interests in its subsidiaries, the Company
does not own, directly or indirectly, any capital stock, membership interest,
partnership interest, limited liability interest, joint venture interest or
other ownership interest in any person.
SECTION 4.03. Capitalization. The authorized capital stock of
the Company consists of 40,000,000 shares of Company Common Stock, par value
$0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per
share ("Company Preferred Stock"). At the close of business on September 30,
1998, (i) 8,933,547 Shares were issued and outstanding, (ii) the Company did not
hold any Shares in its treasury, (iii) 1,441,174 Shares were reserved for
issuance upon exercise of outstanding Company Stock Options under the Stock
Option Plans (each as defined in Section 7.05), (iv) 50,000 Shares were reserved
for issuance upon exercise of a warrant, (v) 1 Share was reserved for issuance
in connection with the ESPP (as defined in Section 7.05(b)) and (vi) no shares
of Company Preferred Stock were issued and outstanding. Except as set forth
above, since September 30, 1998, no shares of capital stock or other voting
securities of the Company were issued, and no other shares of such stock or
securities were reserved for issuance, issuable or outstanding. All outstanding
Shares are, and all Shares which may be issued will be, when issued in
accordance with the terms of the agreements, plans or other documents governing
their issuance, duly authorized, validly issued, fully paid and nonassessable
and not subject to or issued in violation of any purchase option, call option,
right of first refusal, preemptive right, subscription right or any similar
right under any provision of the DGCL, the Certificate of Incorporation or the
Bylaws of the Company or any contract, agreement, arrangement or understanding
to which the Company is a party or otherwise bound. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of the Company may vote. Except as set
forth above, there are not any securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or any of its subsidiaries, or securities
convertible into or exercisable for or exchangeable into any such shares, or
obligating the Company to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment,
<PAGE> 20
15
agreement, arrangement or undertaking. There are not any outstanding contractual
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries is a party to any
voting agreement with respect to the voting of any of its securities.
SECTION 4.04. Authority. Except as set forth in Schedule 4.04
of the Company Disclosure Schedule, the Company has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the
Shares if required by law (the "Company Stockholder Approval")). The execution,
delivery and performance of this Agreement and the consummation by the Company
of the Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated (in
each case, other than, with respect to the Merger, the Company Stockholder
Approval if required by law and except as set forth in Schedule 4.04 to the
Company Disclosure Schedule). This Agreement has been duly executed and
delivered by the Company and, assuming this Agreement constitutes a legal, valid
and binding obligation of Parent and Sub, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
SECTION 4.05. Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including the
filing with the SEC of the Schedule 14D-9 and a proxy or information statement
relating to any required approval by or meeting of the Company's stockholders
with respect to this Agreement (the "Proxy Statement")), the Merger Control Laws
(as defined below), the DGCL and the laws of other states in which the Company
is qualified to do or is doing business, neither the execution, delivery and
performance of this Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the Certificate of Incorporation or the Bylaws of the
Company, (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 other
<PAGE> 21
16
regulatory authority or agency, domestic, foreign or supranational (a
"Governmental Entity"), (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any of its subsidiaries is a party or by which any of them or any
of their properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or any
of its subsidiaries or any of their properties or assets, except in the case of
clause (ii), (iii) and (iv) for failures, violations, breaches or defaults that
individually or in the aggregate would not have a Material Adverse Effect on the
Company. "Merger Control Laws" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and all other applicable
bills, acts, decrees, regulations or ordinances relating thereto.
SECTION 4.06. SEC Documents; Financial Statements. The Company
has filed with the SEC all reports, forms, schedules and statements and other
documents required to be filed by it since January 1, 1997 (the "SEC
Documents"). As of their respective filing dates, (i) the SEC Documents complied
in all material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and (ii) none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any SEC Document has been revised or superseded by
a later-filed SEC Document, none of the SEC Documents contained at the date of
filing any untrue statement of a material fact or omitted 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. There has been no Material Adverse Change with respect to the
Company since the last SEC Document was filed. 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 (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied
<PAGE> 22
17
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present, in all material respects, the
consolidated 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). Except
as set forth or reflected in the most recent financial statements included in
the Filed SEC Documents, or incurred in the ordinary course of business
consistent with past practice since the date of such statements, neither the
Company nor any of its subsidiaries has any liabilities of any nature (whether
accrued, absolute, contingent or otherwise) which individually or in the
aggregate are reasonably likely to have a Material Adverse Effect on the
Company.
SECTION 4.07. Information Supplied. None of the information
supplied or to be supplied by the Company in writing for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the information to be filed by the Company in connection with the Offer
pursuant to Rule 14f-1 promulgated under the Exchange Act (the "Information
Statement") or (iv) the Proxy Statement will 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. In the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement the foregoing
representation and warranty shall be effective at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC and when they are first published, sent or given to the Company's
stockholders. In the case of the Proxy Statement (as it may be amended or
supplemented), the foregoing representation and warranty shall be effective at
the time the Proxy Statement is first mailed to the Company's stockholders and
at the time of the Stockholders Meeting (as defined in Section 7.01). The
Schedule 14D-9, the Information Statement and 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 or warranty
is made by the Company with respect to statements made or incorporated by
reference therein based on written information supplied by Parent or Sub
specifically for inclusion or incorporation by reference therein.
SECTION 4.08. Absence of Certain Changes or Events. Since the
date of the most recent financial statements included in the Filed SEC
Documents, the Company and its subsidiaries have conducted their respective
<PAGE> 23
18
businesses only in the ordinary course consistent with past practice, and there
has not been (i) any Material Adverse Change in the Company, (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock, (iii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iv) (A) any granting by the Company or any of its subsidiaries
to any director, officer or key employee (as defined below) of any increase in
compensation, except in the ordinary course of business consistent with past
practice or as was required under employment agreements in effect as of the date
of the most recent financial statements included in the Filed SEC Documents, (B)
any granting by the Company or any of its subsidiaries to any director, officer
or key employee 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 financial statements included in the Filed SEC
Documents or (C) any entry by the Company or any of its subsidiaries into, or
amendment of, any employment, severance or termination agreement with any
director, officer or key employee except for employment agreements with Andrew
Thompson and George Savage entered into concurrently herewith, (v) any damage,
destruction or loss to property, whether or not covered by insurance, that
individually or in the aggregate has or might have a Material Adverse Effect on
the Company, (vi) any change in accounting methods, principles or practices by
the Company materially affecting its assets, liabilities or business except
insofar as may have been required by a change in GAAP, or (vii) any tax election
that individually or in the aggregate might have a Material Adverse Effect on
the Company.
SECTION 4.09. Litigation. Except as disclosed in Schedule 4.09
of the Company Disclosure Schedule, there is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened in writing against the
Company or any of its subsidiaries that individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect on the Company, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company having, or which, insofar as
reasonably can be foreseen, in the future could reasonably be expected to have,
a Material Adverse Effect.
<PAGE> 24
19
SECTION 4.10. Contracts. (a) Except as disclosed in the Filed
SEC Documents, there are no contracts or agreements that are material contracts
(as defined in Securities Act Regulation 601(b)(10)) with respect to the Company
and its subsidiaries taken as a whole. Neither the Company nor any of its
subsidiaries is in violation of or 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 material lease, permit,
concession, franchise, license or any other contract or agreement 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 result in
a Material Adverse Effect on the Company.
(b) Section 4.10(b) of the Company Disclosure Schedule sets
forth a complete list of each contract or agreement to which the Company or any
of its subsidiaries is a party or bound (A) with any affiliate of the Company
other than any direct or indirect wholly-owned subsidiary of the Company or (B)
that includes any non-competition or similar provisions. The Company has made
available to Parent and its representatives true and correct copies of all the
agreements, contracts and arrangements set forth in Section 4.10(b) of the
Company Disclosure Schedule.
SECTION 4.11. Compliance with Laws. Each of the Company and
its subsidiaries is in compliance with all applicable statutes, laws,
ordinances, regulations, rules, judgments, decrees and orders of any
Governmental Entity applicable to its business or operations, including the
Federal Food, Drug, and Cosmetic Act (the "FDC Act") and regulations of the
Federal Food and Drug Administration (the "FDA"), except for instances of actual
or possible noncompliance that individually or in the aggregate would not have a
Material Adverse Effect on the Company. Except as disclosed in the Filed SEC
Documents, each of the Company and its subsidiaries has in effect all Federal,
state, local and foreign governmental approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits and rights, including all
authorizations under Environmental Laws (as defined in Section 4.12(a))
(collectively, "Permits"), necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, except for
the failure to have such Permits that individually or in the aggregate would not
have a Material Adverse Effect on the Company. There has occurred no default
under any Permit, except for defaults under Permits that individually or in the
aggregate would not have a Material Adverse Effect on the Company. No
<PAGE> 25
20
investigation or review by any Governmental Entity with respect to the Company
or any of its subsidiaries is pending or, to the best knowledge of the Company,
threatened, nor has any Governmental Entity indicated an intention to conduct
any investigation or review, other than, in each case, those the outcome of
which individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect on the Company.
SECTION 4.12. Environmental Matters. (a) None of the Company
or any of its subsidiaries has received written notice that it is not in
compliance with all applicable Environmental Laws, except for actual or possible
noncompliance which individually or in the aggregate would not have a Material
Adverse Effect on the Company. The term "Environmental Laws" means any
applicable and binding Federal, state, provincial, regional, municipal, local or
foreign judgment, order, decree, statute, law, ordinance, rule, regulation,
code, permit, consent, approval, license, writ, decree, directive, injunction or
other enforceable requirement, including any registration requirement, relating
to: (A) Releases (as defined below) or threatened Releases of Hazardous
Materials (as defined below) into the environment; (B) the generation,
treatment, storage, disposal, use, handling, manufacturing, transportation or
shipment of Hazardous Materials; or (C) otherwise relating to pollution or
protection of health or safety or the environment.
(b) There has been no Release or threatened Release of
Hazardous Materials, in, on, under or affecting any property owned, leased or
operated by the Company or any of its subsidiaries or, to the knowledge of the
Company, any adjacent site or any property previously owned, leased or operated
by the Company or any of its subsidiaries, except in each case for those
Releases which individually or in the aggregate would not have a Material
Adverse Effect on the Company. The term "Release" has the meaning set forth in
42 U.S.C. Section 9601(22). The term "Hazardous Materials" means (1) hazardous
substances (as defined in 42 U.S.C. Section 9601(14) (2) petroleum, crude oil
and any fractions thereof, (3) natural gas, synthetic gas and any mixtures
thereof, (4) asbestos or asbestos-containing material, (5) radon and (6)
polychlorinated biphenyls ("PCBs"), or materials or fluids containing PCBs.
(c) Neither the Company nor any of its subsidiaries has
received any notice of a pending or threatened action, demand, investigation or
inquiry by any Governmental Entity or other person relating to any actual or
potential violations of Environmental Law or any actual or potential obligation
to
<PAGE> 26
21
investigate or remediate a Release or threatened Release of any Hazardous
Materials.
(d) Neither the Company nor any of its subsidiaries has
assumed, whether by contract or, to the best of Company's knowledge, operation
of law, any liabilities or obligations arising under Environmental Laws in
connection with formerly owned, leased or operated properties or facilities or
in connection with any formerly owned divisions, subsidiaries, companies or
other entities.
SECTION 4.13. Absence of Changes in Benefit Plans; Labor
Relations. Since the date of the most recent financial statements included in
the Filed SEC Documents, there has not been any adoption or amendment in any
material respect by the Company or any of its subsidiaries of any employment
contract, collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan or arrangement providing
benefits to any current or former employee, officer or director of the Company
or any of its subsidiaries. Except as disclosed in Schedule 4.13 to the Company
Disclosure Schedule, there exist no employment, consulting, severance,
termination or indemnification agreements or arrangements between the Company or
any of its subsidiaries and any current or former key employee, officer or
director of the Company or any of its subsidiaries. There are no collective
bargaining or other labor union agreements to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound. Neither the Company nor any of its subsidiaries had any actual employee
strikes, work stoppages, slowdowns, lockouts or labor union organizing activity
nor, to the best of Company's knowledge, has it been subject to any threatened
employee strikes, work stoppages, slowdowns or lockouts, or labor union
organizing activity.
SECTION 4.14. ERISA Compliance. (a) Schedule 4.14(a) to the
Company Disclosure Schedule contains a list 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"), severance, termination or change in control plans and all other stock
option, stock purchase, equity based, deferred compensation or incentive plans
or programs (in each case, whether or not subject to ERISA) maintained or
contributed to by the Company, any of its subsidiaries or any other person or
entity that, together with the Company and its subsidiaries, is treated as a
single
<PAGE> 27
22
employer under Section 414(b), (c), (m) or (o) of the Code (the Company and each
such other person or entity, a "Commonly Controlled Entity") for the benefit of
any current or former employees, officers or directors of the Company or any of
its subsidiaries (collectively, "Benefit Plans"). The Company has delivered or
made available to Parent true, complete and correct copies of (i) each Benefit
Plan (or, in the case of any unwritten Benefit Plans, descriptions thereof),
(ii) 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),
(iii) the most recent summary plan description for each Benefit Plan for which
such summary plan description is required, (iv) the most recent financial or
actuarial valuation, if any, prepared with respect to any Benefit Plan and (v)
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. Each of the Company and its subsidiaries and all the Benefit
Plans are all in compliance in all material respects with applicable provisions
of ERISA, the Code (as applicable to such Plans) and all other applicable laws,
rules or regulations thereunder.
(b) All Pension Plans intended to qualify under Section 401(a)
of the Code 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 Section 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor has any such Pension
Plan been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs. All amendments to Pension Plans
required under ERISA and the Code to be adopted by the Company by the date of
this Agreement have been adopted.
(c) Neither the Company nor its subsidiaries has within the
five-year period immediately preceding the date of this Agreement maintained,
contributed to or been obligated to contribute to any Benefit Plan that is
subject to Title IV of ERISA. Neither the Company nor its subsidiaries is
required to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from any multiemployer plan where such
withdrawal has resulted or would result in any "withdrawal liability" (within
the meaning of Section 4201 of ERISA) that has not been fully paid. There is no
material unsatisfied liability with respect to any Benefit Plan. No event has
occurred with respect to any Pension Plan, other than a Benefit Plan, maintained
or contributed
<PAGE> 28
23
to by any Commonly Controlled Entity which has resulted or will likely result in
the Company or any of its subsidiaries becoming subject to liability under Title
IV of ERISA or the minimum funding requirements of Section 412 of the Code or
Part 3 of Title I of ERISA, including withdrawal liability with respect to any
multiemployer plan.
(d) With respect to any plan that is an employee welfare
benefit plan of the Company or its subsidiaries, (i) except to the extent
required under Federal "COBRA" law, no such plan provides post-retirement
benefits to former employees and (ii) 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.
(e) Schedule 4.14(e) to the Company Disclosure Schedule lists
all outstanding Stock Options as of September 30, 1998, showing for each such
Option: the number of Shares issuable, the date of grant and the exercise price.
(f) No employee of the Company or any of its subsidiaries will
be entitled to any additional compensation or benefits or any acceleration of
the time of payment or vesting of any compensation or benefits under any Benefit
Plan as a result of the transactions contemplated by this Agreement except for
the acceleration of all unvested options disclosed in Schedule 4.14(c) of the
Company Disclosure Schedule. Any equity-related, bonus or incentive compensation
program maintained by the Company or its subsidiaries to provide payments or
benefits to any current or former employee or director of the Company or any of
its subsidiaries satisfies the requirements of Section 162(m) of the Code, to
the extent that such programs reasonably may be expected to provide remuneration
with respect to one or more covered employees in excess of One Million Dollars.
Actions taken by Parent or the Company after the Effective Time shall not be
taken into account for purposes of the preceding sentence.
(g) There are no pending or, to the knowledge of the Company,
threatened claims, suits, investigations or audits involving the Benefit Plans
(other than claims for benefits in the ordinary course).
<PAGE> 29
24
SECTION 4.15. Taxes. (a) Each of the Company and its
subsidiaries has filed all material tax returns and reports required to be filed
by it prior to the date hereof (after giving effect to properly requested
extensions) with respect to the tax periods ending on or before the date hereof,
which tax returns and reports are true, complete and accurate in all material
respects, and has paid all material taxes due and 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 and its
subsidiaries for all taxable periods and portions thereof through the date of
such financial statements. No deficiencies for any taxes which remain
outstanding have been proposed, asserted or assessed in writing against the
Company or any of its subsidiaries, and no requests for waivers of the time to
assess any such taxes are pending. Neither the Company nor any of its
subsidiaries has or will have any material liability with respect to taxes of
any person (other than the Company or any of its subsidiaries) which,
immediately prior to the consummation of the Offer, is an affiliate of the
Company or of any of its subsidiaries.
(b) None of the Federal consolidated income tax returns of the
Company or of any of its affiliates that have joined in the filing of such
returns have been examined by and settled with the United States Internal
Revenue Service for all years through the date hereof.
(c) Except as set forth in Schedule 4.15 to the Company
Disclosure Schedule, none of the Company or any of its subsidiaries is a party
to or is bound by any agreement, arrangement or practice with respect to taxes
(including any tax sharing agreements with any taxing authority). The Company
has delivered to Parent and Sub complete and accurate copies of any such written
agreement, arrangement or practice, and complete and accurate descriptions of
any such oral agreement, arrangement or practice.
(d) The Company is not, and has not been during the five-year
period ending on the date on which the Effective Time occurs, a "United States
real property holding corporation" within the meaning of Section 897(c) of the
Code.
(e) As used in this Agreement, "taxes" shall mean all Federal,
state, local and foreign income, franchise, property, sales, excise, employment,
payroll, social security, value-added, ad valorem, transfer, withholding and
other taxes, tariffs, levies, impositions, assessments or other governmental
<PAGE> 30
25
charges in the nature of a tax as well as any interest, penalties and additions
to tax.
SECTION 4.16. No Excess Parachute Payments. No amount that
would be received, or benefit provided, in connection with any of the
transactions contemplated by this Agreement by any employee, officer or director
of the Company or any of its subsidiaries who is a "disqualified individual" (as
such term is defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or Benefit Plan currently in effect would be an "excess parachute payment" (as
such term is defined in Section 280G(b)(1) of the Code). To the best knowledge
of the Company, no disqualified individual is entitled to receive any additional
payment from the Company or any of its subsidiaries, the Surviving Corporation,
or any other person referred to in Q&A 10 under proposed Treasury Regulation
Section 1.280G-1 (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 during the six months prior to the date of this
Agreement granted to any officer, director or employee of the Company any right
to receive any Parachute Gross-Up Payment.
SECTION 4.17. Title to Properties. (a) Each of the Company and
its subsidiaries has good and valid title to, or valid leasehold interests in or
valid rights to, all its material tangible properties and assets except for such
as are no longer used or useful 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 do not materially interfere with its ability to conduct its
business as currently conducted. All such material tangible assets and
properties, other than assets and properties in which the Company or any of its
subsidiaries has a leasehold interest, are free and clear of all Liens except
for Liens that individually or in the aggregate do not materially interfere with
the ability of the Company and its subsidiaries to conduct their respective
businesses as currently conducted.
(b) Each of the Company and its subsidiaries 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. Each of the Company and its subsidiaries enjoys peaceful and
undisturbed
<PAGE> 31
26
possession under all such material leases, except for failures to do so that
individually or in the aggregate would not have a Material Adverse Effect on the
Company.
SECTION 4.18. Intellectual Property. Each of the Company and
its subsidiaries owns, or is validly licensed or otherwise has the right to use,
without any obligation to make any fixed or contingent payments, including any
royalty payments, 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
(certain of which computer programs may require royalty payments) that are
material to the conduct of its business as now operated (collectively,
"Intellectual Property Rights"), except as disclosed in Schedule 4.18 to the
Company Disclosure Schedule. Schedule 4.18 to the Company Disclosure Schedule
sets forth a description of all patents, trademarks and copyrights and
applications therefor owned by or licensed to the Company or any of its
subsidiaries that are material to the conduct of the business of the Company or
any of its subsidiaries as now operated. Except as disclosed on Schedule 4.18 to
the Company Disclosure Schedule, no claims are pending or, to the knowledge of
the Company, threatened that the Company or any of its subsidiaries is
infringing or otherwise adversely affecting the rights of any person with regard
to any Intellectual Property Right. To the knowledge of the Company, no person
is infringing the rights of the Company or any of its subsidiaries with respect
to any Intellectual Property Right except as disclosed on Schedule 4.18 to the
Company Disclosure Schedule. Neither the Company nor any of its subsidiaries has
licensed, or otherwise granted, to any third party, any rights in or to any
Intellectual Property Rights except as disclosed on Schedule 4.18 to the Company
Disclosure Schedule.
SECTION 4.19. Material Agreements. Schedule 4.19 to the
Company Disclosure Schedule is a complete list of all material contracts or
agreements to which the Company or any of its subsidiaries is a party.
SECTION 4.20. Voting Requirements. Except as set forth in
Schedule 4.20 to the Company Disclosure Schedule, the affirmative vote of the
holders of a majority of the outstanding Shares is the only vote of the holders
of any class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated by this Agreement.
<PAGE> 32
27
SECTION 4.21. State Takeover Statutes. The Board of Directors
of the Company has approved the Merger, this Agreement and the form of
agreements between Parent, Sub and certain stockholders of the Company
(collectively, the "Stockholder Agreements"), and such approval is sufficient to
render inapplicable to the Merger, this Agreement, the Stockholder Agreements
and the transactions contemplated hereby and thereby the provisions of Section
203 of the DGCL.
SECTION 4.22. Brokers; Schedule of Fees and Expenses. (a) No
broker, investment banker, financial advisor or other person, other than WDR,
the fees and expenses of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The amount of such fees and
expenses payable in connection with this Agreement and the transactions
contemplated by this Agreement (other than printing and mailing costs and
expenses), including the fees and expenses of WDR, Ernst & Young LLP, the
Company's independent public accountants, and Cooley Godward LLP, the Company's
legal advisor, will be as set forth on Schedule 4.22(a) to the Company
Disclosure Schedule.
(b) Except as otherwise contemplated by this Agreement, the Company has
no liability for borrowed money. Except as described in Schedule 4.22(b) to the
Company Disclosure Schedule, the Company has no capitalized lease obligations.
SECTION 4.23. Opinion of Financial Advisor. The Board of
Directors of the Company has received the opinion of WDR that, as of the date
thereof and based upon and subject to the matters set forth therein, the cash
consideration to be offered by Parent to the holders of the Company's common
stock in the Offer and the Merger is fair, from a financial point of view, to
such stockholders, a signed copy of which opinion has been delivered to Parent.
<PAGE> 33
28
ARTICLE V
Representations and Warranties
of Parent and Sub
Parent and Sub represent and warrant to the Company as
follows:
SECTION 5.01. Organization. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation 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 or
leasing of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed and
in good standing individually or in the aggregate would not prevent or
materially delay the consummation of the Offer or the Merger. Parent has made
available to the Company complete and correct copies of its certificate of
incorporation and bylaws and the certificate of incorporation and bylaws of Sub,
in each case as amended to the date of this Agreement.
SECTION 5.02. Authority. Parent and Sub have the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement, have been duly authorized by all
necessary corporate action on the part of Parent and Sub and no other corporate
proceedings on the part of Parent and Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. No vote of
Parent stockholders is required to approve this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and Sub, and, assuming such agreement constitutes a valid and binding
obligation of the other parties thereto, constitutes a valid and binding
obligation of Parent and Sub enforceable against Parent and Sub in accordance
with its terms.
SECTION 5.03. Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including the
<PAGE> 34
29
filing with the SEC of the Offer Documents), the Merger Control Laws, the DGCL
and the laws of other states in which Parent is qualified to do or is doing
business, neither the execution, delivery and performance of this Agreement by
Parent and Sub, nor the consummation by Parent and Sub of the transactions
contemplated hereby and thereby will (i) conflict with or result in any breach
of any provision of the respective certificate of incorporation or bylaws of
Parent or Sub, (ii) require any filing with, or permit, authorization, consent
or approval of, any Governmental Entity, (iii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which any of them or any of their properties or assets may be bound or
(iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent or any of its subsidiaries or any of their properties or
assets, except in the case of clauses (ii), (iii) and (iv) for violations,
breaches or defaults that individually or in the aggregate would not prevent or
materially delay the consummation of the Offer or the Merger.
SECTION 5.04. Information Supplied. None of the information
supplied or to be supplied by Parent or Sub in writing for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the Information Statement, or (iv) the Proxy Statement will 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. In the
case of the Offer Documents, the Schedule 14D-9 and the Information Statement,
the foregoing representation and warranty shall be effective at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC and when they are first published, sent or given to the
Company's stockholders. In the case of the Proxy Statement (as it may be amended
or supplemented), the foregoing representation and warranty shall be effective
at the time the Proxy Statement is first mailed to the Company's stockholders
and at the time of the Stockholders Meeting (as defined in Section 7.01). The
Schedule 14D- 9, the Information Statement and 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 or
warranty is made by Parent or Sub with respect to statements
<PAGE> 35
30
made or incorporated by reference therein based on written information supplied
by the Company specifically for inclusion or incorporation by reference therein.
SECTION 5.05. Interim Operations of Sub. Sub (and any other
wholly-owned subsidiary of Parent which may be used to effect the Offer and the
Merger pursuant to Section 2.01) 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.
SECTION 5.06. 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.
SECTION 5.07. Financing. At the expiration of the Offer and at
the Effective Time, Parent and Sub will have available all the funds necessary
to purchase all the Shares pursuant to the Offer and the Merger and to pay all
fees and expenses payable by Parent or Sub related to the transactions
contemplated by this Agreement.
SECTION 5.08. Section 203. Neither Parent nor Sub is an
"interested stockholder" within the meaning of Section 203 of the DGCL. Neither
Parent nor any of Parent's affiliates beneficially owns any Shares.
<PAGE> 36
31
ARTICLE VI
Covenants
SECTION 6.01. Conduct of Business. During the period from the
date of this Agreement to the Effective Time or termination of this Agreement
pursuant to Section 9.01 hereof, except as otherwise contemplated hereby or to
the extent that Parent shall otherwise consent in writing, the Company shall,
and shall cause each of its subsidiaries to, carry on its business in the
ordinary course consistent with past practice and, to the extent consistent
therewith, use reasonable efforts to preserve intact its current business
organization, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers, licensors, licensees,
distributors and others having significant business dealings with it. Parent
acknowledges that the announcement of this Agreement may impair the Company's
business or employee relationships. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time, or termination of this Agreement pursuant to Section 9.01 hereof, the
Company shall not, and shall not permit any of its subsidiaries to (except as
expressly permitted by this Agreement or as set forth in Schedule 6.01 to the
Company Disclosure Schedule or to the extent that Parent shall otherwise consent
in writing):
(i) other than dividends and distributions by a direct or
indirect wholly-owned subsidiary of the Company to its parent, (A)
declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (B) split,
combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (C) purchase, redeem
or otherwise acquire any shares of its capital stock or any other
securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than the issuance of shares of Company Common Stock upon the
exercise of Company Stock Options -- outstanding on the date of this
Agreement in accordance with their present terms or as accelerated as
described in Section 7.05(a) hereof);
<PAGE> 37
32
(iii) amend its Certificate of Incorporation or Bylaws or
other comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the
assets or any stock of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof or (B) except as set forth on Schedule
6.01(iv) to the Company Disclosure Schedule, any assets that are
material, individually or in the aggregate, to the Company, except
purchases of inventory in the ordinary course of business consistent
with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets, except sales of inventory or sales or licenses of immaterial
assets, in each case in the ordinary course of business consistent with
past practice;
(vi) (A) except as otherwise provided in Section 7.13 of this
Agreement and paragraph (h) of Exhibit A, incur or suffer to exist any
indebtedness for borrowed money or guarantee any such indebtedness of
another person, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of another person, enter
into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, or (B) make any
loans, advances (other than to employees of the Company in the ordinary
course of business) or capital contributions to, or investments in, any
other person;
(vii) except as set forth on Schedule 6.01(vii) to the Company
Disclosure Schedule, make or agree to make any capital expenditure or
expenditures with respect to property, plant or equipment in excess of
$25,000 in the aggregate;
(viii) make any material tax election or settle or compromise
any material income tax liability or make any change in accounting
methods, principles or practices, except insofar as may have been
required by a change in generally accepted accounting principles;
<PAGE> 38
33
(ix) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent consolidated
financial statements (or the notes thereto) of the Company included in the
Filed SEC Documents or incurred thereafter in the ordinary course of
business consistent with past practice, or waive any material benefits of,
or agree to modify in any material respect, any confidentiality,
standstill or similar agreements to which the Company or any of its
subsidiaries is a party;
(x) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which the Company or any
of its subsidiaries is a party, or knowingly waive, release or assign any
material rights or claims;
(xi) enter into any material contracts or agreements relating to the
distribution, sale or marketing by third parties of the products of, or
products licensed by, the Company or any of its subsidiaries;
(xii) except as required to comply with applicable law or
agreements, plans or arrangements existing on the date hereof or as set
forth in Schedule 6.01(xii) of the Company Disclosure Schedule, (A) adopt,
enter into, terminate or amend any employment agreement or Benefit Plan
for the benefit or welfare of any director, officer or current or former
employee, (B) increase in any material respect the compensation or fringe
benefits of, or pay any bonus to, any director, officer or key employee,
(C) pay any material benefit not provided for under any Benefit Plan, (D)
grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock, or the removal of existing
restrictions in any Benefit Plans or agreement or awards made thereunder
except as provided in Schedule 6.01(xii) of the Company Disclosure
Schedule), or (E) take any action other than in the ordinary course of
business to fund or in any other way secure the payment of compensation or
benefits under any employee plan, agreement, contract or arrangement
<PAGE> 39
34
or Benefit Plan or except for the acceleration of Company Stock Options as
described in Section 7.05(a);
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 6.02. No Solicitation. (a) The Company shall not, and shall
not authorize or permit any of its subsidiaries or any of its or their officers,
directors or employees to, and shall use its reasonable efforts to cause any
investment banker, financial advisor, attorney, accountant or other
representative of the Company or of any of its subsidiaries not to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
information), 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 (as defined below) or (ii) participate in any
discussions or negotiations regarding any Takeover Proposal; provided, however,
that, in the event that prior to the acceptance for payment of Shares pursuant
to the Offer an unsolicited Takeover Proposal is made and the Board of Directors
of the Company determines in good faith, after consultation with outside
counsel, that failure to do so would be inconsistent with its fiduciary duties
to the Company's stockholders under applicable law, the Company may deliver a
written notice to the effect to Parent and thereafter, subject to compliance
with Section 6.02(c), (x) furnish, pursuant to a confidentiality agreement that
is not less favorable to the Company than the Confidentiality Agreement, dated
September 17, 1998, between the Company and Ethicon, Inc., an Affiliate of
Parent (the "Confidentiality Agreement"), information with respect to the
Company to the person making such unsolicited Takeover Proposal and (y)
participate in discussions or negotiations regarding such Takeover Proposal. For
purposes of this Agreement, "Takeover Proposal" means any proposal or offer from
any person relating to any direct or indirect acquisition or purchase of 50% or
more of the assets of the Company and its subsidiaries, taken as a whole, or 50%
or more of any class of outstanding equity securities of the Company or any of
its subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 50% or more of any class of equity
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than the transactions contemplated by
this Agreement.
<PAGE> 40
35
(b) Except as set forth in this Section 6.02(b), 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, the
approval or recommendation by such Board of Directors or such committee of the
Offer, 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 agreement (an "Acquisition Agreement") with respect to any Takeover
Proposal. Notwithstanding the foregoing, in the event that prior to the
acceptance for payment of Shares pursuant to the Offer, the Board of Directors
of the Company determines in good faith, after consultation with outside
counsel, that failure to do so would be inconsistent with its fiduciary duties
to the Company's stockholders under applicable law, the Board of Directors of
the Company may withdraw or modify its adoption, approval or recommendation of
the Offer, this Agreement and the Merger at any time following Parent's receipt
of written notice (a "Notice of Superior Proposal") advising Parent that the
Board of Directors of the Company has received a Superior Proposal. For purposes
of this Agreement, a "Superior Proposal" means any bona fide Takeover Proposal
for all outstanding Shares on terms that the Board of Directors of the Company
determines in its good faith judgment (based on the written opinion of WDR or
another financial advisor of nationally recognized reputation, which opinion
takes into account all the terms and conditions of the Takeover Proposal,
including any break-up fees, expense reimbursement provisions and conditions to
consummation) are not more favorable to the person of persons making such
Takeover Proposal and provide greater present value to all the Company's
stockholders, in each case, than this Agreement, the Offer and the Merger taken
as a whole.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall immediately
advise Parent orally and in writing of any Takeover Proposal, any request for
information concerning the Company or its subsidiaries in relation to or any
inquiry regarding the making of a Takeover Proposal, and, unless to do so would
be inconsistent with the fiduciary duties of the Board of Directors, the
material terms and conditions of such Takeover Proposal, request for information
or inquiry and the identity of the person making such Takeover Proposal, request
for information or inquiry. The Company will keep Parent fully informed of the
status and, unless to do so would be inconsistent with the
<PAGE> 41
36
fiduciary duties of the Board of Directors to the Company's stockholders under
applicable law, the material terms (including amendments or proposed amendments)
of any such Takeover Proposal, request for information or inquiry.
(d) Nothing contained in this Section 6.02 shall prohibit the
Company from at any time taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act
or from making any disclosure to the Company's stockholders if the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that failure to so disclose would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law; provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 6.02(b) hereof, withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Offer, the Merger or this Agreement or approve or recommend, or propose to
approve or recommend, a Takeover Proposal.
SECTION 6.03. Certain Tax Matters. From the date hereof until the
Effective Time, (i) the Company and each of its subsidiaries will timely file
all tax returns and reports ("Post-Signing Returns") required to be filed (in
each case, at the Company's own cost and expense and in a manner that is
consistent with past practice and that is not likely to materially defer income
to a tax period that ends after the Closing Date or to materially accelerate
deductions to a tax period that ends on or before the Closing Date, except to
the extent that any such deferral of income or acceleration of deductions is
required by applicable law); (ii) the Company and each of its subsidiaries will
timely pay all taxes shown as due and payable on their Post-Signing Returns that
are so filed; (iii) the Company and each of its subsidiaries will make provision
for all taxes payable by the Company and each of its subsidiaries for which no
Post-Signing Return is due prior to the Effective Time; and (iv) the Company
will promptly notify Parent of any action, suit, proceeding, claim or audit
pending against or with respect to the Company or any of its subsidiaries in
respect of any tax where there is a reasonable possibility of a determination or
decision which might have a significant adverse effect on the tax liabilities or
tax attributes of the Company or any of its subsidiaries.
SECTION 6.04. Other Actions. Except as otherwise contemplated by
this Agreement, neither the Company nor any of its subsidiaries, on the one
hand, nor the Parent nor Sub or any of their respective
<PAGE> 42
37
subsidiaries on the other hand, shall take any action that would reasonably be
expected to result in (i) any of the representations and warranties of the
Company on the one hand, or of Parent or Sub on the other hand, set forth in
this Agreement that are qualified as to materiality becoming inaccurate, which
inaccuracy would have a Material Adverse Effect on the Company, (ii) any of such
representations and warranties that are not so qualified becoming inaccurate in
any material respect, which inaccuracy would have a Material Adverse Effect on
the Company or (iii) except as otherwise permitted by Section 6.02, any of the
Offer Conditions not being satisfied.
SECTION 6.05. Advice of Changes; Filings. The Company shall confer
with Parent on a regular and frequent basis as reasonably requested by Parent
concerning operational matters and promptly advise Parent orally and in writing
of any Material Adverse Change with respect to the Company. The Company shall
promptly provide to Parent (or its counsel) copies of all filings made by the
Company with any Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
ARTICLE VII
Additional Agreements
SECTION 7.01. Company Stockholder Approval; Preparation of Proxy
Statement. (a) If the Company Stockholder Approval is required by law, the
Company will, as soon as practicable following the acceptance for payment of,
and payment for, Shares by Sub pursuant to and subject to the conditions of the
Offer, duly call, give notice of, convene and hold a meeting of its stockholders
(the "Stockholders Meeting") for the purpose of obtaining the Company
Stockholder Approval. The Company will, through its Board of Directors,
recommend to its stockholders that the Company Stockholder Approval be given,
except to the extent that the Board of Directors of the Company shall have
withdrawn or modified its approval or recommendation of the Offer, this
Agreement or the Merger as permitted by Section 6.02(b). Notwithstanding the
foregoing, if Sub or any other subsidiary of Parent shall acquire at least 90%
of the outstanding Shares, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer without a stockholders meeting
in accordance with Section 253 of the DGCL.
<PAGE> 43
38
(b) If the Company Stockholder Approval is required by law, the
Company will, at Parent's request, as soon as practicable following the
expiration of the Offer, prepare and file a preliminary Proxy Statement with the
SEC and will use its best efforts to respond to any comments of the SEC or its
staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to
the satisfaction of the staff. The Company will notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Stockholders Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company will promptly prepare and mail to its stockholders and
file with the SEC such an amendment or supplement. The Company will not mail any
Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects; provided, that Parent shall identify its objections and
fully cooperate with the Company to create a mutually satisfactory Proxy
Statement.
(c) Parent agrees to cause all Shares purchased pursuant to the
Offer and all other Shares owned by Parent or any subsidiary of Parent to be
voted in favor of the Company Stockholder Approval.
<PAGE> 44
39
SECTION 7.02. Access to Information; Confidentiality. Upon
reasonable notice, the Company shall, and shall cause each of its subsidiaries
to, afford to Parent, and to Parent's officers, employees, accountants, counsel,
financial advisers and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel (including
consultants and independent public accountants) and records and, during such
period, the Company shall furnish promptly 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 (including patent applications filed or being
prepared to be filed with the U.S. Patent and Trademark Office or analogous
foreign authorities, filings made or proposed to be made with the FDA pursuant
to the FDC Act and applicable regulations of the FDA and all correspondence with
the FDA); provided, however, that the Company shall be required to disclose
information that would otherwise jeopardize protections offered under the
attorney-client privilege or the work-product doctrine or might violate any
confidentiality obligations of the company only to appropriate counsel to the
parties -whose access to such information would not jeopardize such privileges.
Except as required by law, Parent will hold, and will cause its officers,
employees, accountants, counsel, financial advisers and other representatives
and affiliates to hold, any and all information received from the Company or any
of its subsidiaries, directly or indirectly, in confidence, according to the
terms of the Confidentiality Agreement dated September 17, 1998 between the
Company and Ethicon, Inc., an Affiliate of Parent (the "Confidentiality
Agreement").
<PAGE> 45
40
SECTION 7.03. Reasonable Efforts; Notification. (a) Upon the terms
and subject to the conditions set forth in this Agreement, unless, to the extent
permitted by Section 6.02(b), the Board of Directors of the Company approves or
recommends a Superior Proposal, each of the parties agrees to use its 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 Offer and the Merger, and the other
transactions contemplated by this 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 obtain an approval or waiver from, or 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 consummation of any 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. In connection with and without
limiting the foregoing, the Company and its Board of Directors shall (i) take
all reasonable actions available to them to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to the Offer,
the Merger, this Agreement, or any of the other transactions contemplated by
this Agreement and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Offer, the Merger, this Agreement, or any
other transaction contemplated by this Agreement, take all reasonable actions
available to them to ensure that the Offer, the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Offer, the Merger, this
Agreement, and the other transactions contemplated by this Agreement.
Notwithstanding the foregoing, the Board of Directors of the Company shall not
be prohibited from taking any action permitted by Section 6.02(b). Nothing in
this Agreement shall be deemed to require Parent to agree to dispose of any
significant assets or businesses of the Company, Parent or any of their
respective subsidiaries.
<PAGE> 46
41
(b) The Company shall give prompt notice to Parent and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any material
respect, which untruth or inaccuracy would have a Material Adverse Effect or
(ii) the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement and which failure would have a Material Adverse Effect; 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.
SECTION 7.04. Cooperation. Without limiting the generality of
Section 7.03, Parent, Sub and Company shall together, or pursuant to an
allocation of responsibility to be agreed between them, coordinate and cooperate
(i) in determining whether any action by or in respect of, or filing with, any
governmental body, agency or official, or authority is required and (ii) in
promptly seeking any such action or permit or making any such filing, furnishing
information required in connection therewith and seeking timely to obtain any
such actions or permits.
<PAGE> 47
42
SECTION 7.05. Stock Option Plans / Employee Stock Purchase Plan. (a)
As soon as practicable after the date of this Agreement, the Board of Directors
of the Company (or, if appropriate, any committee administering the Company
stock option plan) shall adopt such resolutions and take such other actions, if
any, as may be required to adjust the terms of each Company Stock Option listed
in Schedule 4.14(e) of the Company Disclosure Schedule to provide that (i) five
business days prior to the earliest date on which Sub can purchase any Shares
pursuant to the Offer (and contingent upon such purchase), such option shall
vest and become exercisable in full, (ii) upon the consummation of the Offering
each outstanding option to purchase Shares (a "Company Stock Option") heretofore
granted under any stock option, stock appreciation right, stock purchase program
or arrangement of the Company (other than the Employee Stock Purchase Plan
("ESPP") which is dealt with in Section 7.05(b)) that is outstanding immediately
prior to the consummation of the Offer, whether or not then exercisable, shall
be cancelled concurrently with (and contingent upon) the consummation of the
Offering. The Company (or, if appropriate, the Board of Directors of the Company
or any committee administering the Stock Option Plans) shall take actions such
that immediately prior to the Effective Time the Company Stock Options set forth
on Schedule 4.14(c) to the Company Disclosure Schedule are canceled as set forth
above. The Company shall not make, or agree to make, any payment of any kind to
any holder of a Company Stock Option without the consent of Parent.
(b) As of the date of the consummation of the Offering (and
contingent thereon), the ESPP shall terminate. All funds deposited with the
Company in connection with the ESPP shall be returned to the respective
participant, without interest, as soon as practicable after the consummation of
the Offering. Prior to the consummation of the Offering, the Company shall take
all actions (including, if appropriate, amending the terms of the ESPP) that are
necessary to give effect to the transactions contemplated by this Section
7.05(b).
(c) Subject to Section 7.05(a), 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. The Company shall ensure that following the
consummation of the Offer no holder of a Company 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, and the
<PAGE> 48
43
Company shall use its reasonable best efforts to ensure that following the
Effective Time, no holder of a Company Stock Option set forth on Schedule
4.14(c) to the Company Disclosure Schedule 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.
SECTION 7.06. Indemnification, Exculpation and Insurance. (a)
Through the sixth anniversary of the Effective Time, Parent shall maintain in
effect for the benefit of current or former directors and officers of the
Company, the current level and scope of directors' and officers' liability
insurance policies; provided, however, that in no event shall Parent be required
to expend an aggregate amount in excess of One Hundred Fifty Thousand Dollars
($150,000.00) for such insurance, it being understood that if the aggregate
premium payable for such insurance coverage exceeds such amount, Parent shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount. (b) Parent agrees that all rights to indemnification and
exculpation (including the advancement of expenses) from liabilities for acts or
omissions occurring at or prior to the time of the consummation of the offer
(including with respect to the transactions contemplated by this Agreement)
existing now or at the time of the consummation of the offer in favor of the
current or former directors or officers of the Company as provided in its
Certificate of Incorporation, its Bylaws (each as in effect on the date hereof)
and indemnification agreements shall be assumed and performed by the Surviving
Corporation in the Merger, without further action, as of the time of the
consummation of the offer and shall survive the Merger and shall continue in
full force and effect without amendment, modification or repeal in accordance
with their terms; provided, however, that if any claims are asserted or made
during the continuance of such terms, all rights to indemnification (and to
advancement of expenses) hereunder in respect of any such claims shall continue,
without diminution, until disposition of any and all such claims.
(c) In the event that Parent, the Surviving Corporation or any of
their successors or assigns (i) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision will be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall expressly assume the
obligations set forth in this Section 7.06. In the event the Surviving
Corporation transfers any material
<PAGE> 49
44
portion of its assets, in a single transaction or in a series of transactions,
Parent will either guarantee the indemnification obligations referred to in
Section 7.06(a) or take such other action to insure that the ability of the
Surviving Corporation, legal and financial, to satisfy such indemnification
obligations will not be diminished in any material respect.
(d) The provisions of this Section 7.06 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 7.07. Directors.
Promptly upon the acceptance for payment of, and payment for, any
Shares by Sub pursuant to the Offer, the number of directors on the Board of
Directors of the Company shall be reduced to five (5) and Sub shall be entitled,
subject to compliance with Section 14(f) of the Exchange Act, to designate three
(3) of such number of directors on the Board of Directors of the Company, such
that Sub will control a majority of such directors, and the Company and its
Board of Directors shall, at such time, take all such action needed to cause
Sub's designees to be appointed to the Company's Board of Directors. Subject to
applicable law, the Company shall take all action requested by Parent necessary
to effect any such election, including mailing to its stockholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company agrees
to make such mailing with the mailing of the Schedule 14D-9 (provided that Sub
shall have provided to the Company on a timely basis all information required to
be included in the Information Statement with respect to Sub's designees).
SECTION 7.08. Fees and Expenses. (a) All fees and expenses incurred
in connection with the Offer, the Merger, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Offer or the Merger is consummated. The Company
shall use reasonable efforts to cause each firm described in Section 4.22(a) to
render a final bill for its services in connection with the this Agreement and
related transactions on the day prior to the date then most-recently set for the
consummation of the purchase of the Shares pursuant to the
<PAGE> 50
45
Tender Offer, and the legal fees set forth in Schedule 4.22(a) to the Company
Disclosure Schedule plus reasonable expenses incurred to such date shall be paid
on the date of the consummation of the Offer.
SECTION 7.09. FIRPTA Certificate. The Company shall deliver to
Parent and Sub a certificate in form and substance satisfactory to Parent, duly
executed and acknowledged, certifying facts that would exempt the transactions
contemplated hereby from withholding pursuant to the provisions of the Foreign
Investment in Real Property Tax Act.
SECTION 7.10. Public Announcements. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing,
and provide each other with a reasonable opportunity to review and comment upon,
any press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Offer and the Merger, and shall
not issue, or permit any of their respective subsidiaries to 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, in which case the party making such
release will use reasonable efforts to obtain comments from the other party
before issuance of such release or statement. The parties agree that the initial
press release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 7.11. Arrangements for Key Employees. At and after the date
hereof, the Company shall cooperate with Sub as may reasonably be required to
encourage key employees to enter into agreements acceptable to such key
employees and to Sub relating to their employment with the Company at and after
the Effective Time if the Merger shall be consummated. The foregoing provisions
of this Section 7.11 shall not, however, require that Sub or Parent or both
proceed with or consummate the Offer or the Merger except upon satisfaction of
and in accordance with the express terms and conditions of this Agreement
(including without limitation Exhibit A hereto).
SECTION 7.12. Stop Transfer. The Company shall not register the
transfer of any certificate representing any Subject Shares (as defined in the
Stockholder Agreements), unless such transfer is made to Parent or Sub or
otherwise in compliance with the Stockholder Agreements. The Company will
<PAGE> 51
46
inscribe upon any certificates representing Subject Shares tendered by a
Stockholder (as defined in the Stockholder Agreements) for such purpose the
following legend: "The shares of Common Stock, $0.001 par value, of FemRx, Inc.
represented by this certificate are subject to a Stockholder Agreement dated as
of October 3, 1998, and may not be sold or otherwise transferred, except in
accordance therewith. Copies of such Agreement may be obtained at the principal
executive offices of FemRx, Inc."
SECTION 7.13 Credit Facility. Sub shall establish a credit facility
to provide loans to the Company in an aggregate amount of up to Three Million
Five Hundred Thousand Dollars ($3,500,000.00) for working capital needs from the
date hereof to the date on which the Stockholder Agreements terminate pursuant
to their terms. Such advances shall be documented by a promissory note payable
to the order of Sub in such form as Sub may reasonably request. Such facility
shall provide that the Company may require advances of up to Two Hundred Fifty
Thousand Dollars ($250,000.00) every two weeks, commencing on November 2, 1998,
provided that (i) Company is not then in default under this Agreement (provided
that the foregoing condition shall be deemed waived in the event that the
Company shall have terminated this Agreement pursuant to Section 9.01(g)
hereof), (ii) Company shall not have provided to Sub a Notice of Superior
Proposal, and (iii) this Agreement shall not have been terminated by any of the
parties in accordance with its terms other than by the Company as permitted
pursuant to Section 9.01(g) hereof. The aggregate principal amount of all such
advances shall be payable to Sub in cash on December 31, 1999 by wire transfer
of immediately available funds. Interest shall accrue on each such advance from
the date of such advance to the date of repayment at a per annum rate equal to
Prime plus two percent. Interest shall be payable quarterly beginning April 1,
1999 and at maturity. All such advances and accrued interest shall be secured by
a first priority security interest in all of the Company's patents. The Company
shall cooperate with Sub as may reasonably be required to document, record,
file, maintain and perfect such security interest. Any advances made by Sub to
the Company under this provision shall be deemed disclosed in the Company
Disclosure Schedule.
SECTION 7.14 Information Agent. Parent shall or shall cause Sub to
engage a reputable agent, such as D.F. King or Georgeson & Co. to provide
information to stockholders of the Company with respect to the Offer subsequent
to its commencement and to encourage stockholders to tender their shares to the
Offer. The fees and expenses of such agent shall be borne by
<PAGE> 52
47
Parent or Sub, but Parent and Sub together shall not be required to spend in the
aggregate more than $25,000 for such fees and expenses.
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction or waiver prior to the Closing Date of the following
conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained; provided that
Parent and Sub shall vote all their Shares in favor of the Merger.
(b) No Injunctions or Restraints. No statute, rule, decision,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other Governmental Entity or other legal
restraint or prohibition preventing the consummation of the Merger shall
be in effect; provided, however, that the party seeking to invoke such
condition shall have performed its obligations under Sections 7.03 and
7.04.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after approval of the
terms of this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
<PAGE> 53
48
(b) by either Parent or the Company:
(i) if, as the result of the failure of any of the conditions
set forth in Exhibit A to this Agreement, Sub shall have terminated
the Offer in accordance with its terms without Sub having purchased
any Shares pursuant to the Offer; provided, however, that the right
to terminate this Agreement pursuant to this Section 9.01(b)(i)
shall not be available to any party whose failure to fulfill any of
its obligations under, or breach of any provisions of, this
Agreement or results in the failure of any such condition;
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of,
or payment for, Shares pursuant to the Offer or the Merger and such
order, decree or ruling or other action shall have become final and
nonappealable; provided, however, that the Party seeking to
terminate this Agreement pursuant to this Section 9.01(b)(ii) shall
have performed its obligations under Section 7.03 and 7.04.
(c) by the Company if (i) the Company shall have given Parent a
Notice of Superior Proposal with respect to a Takeover Proposal, (ii) at
least five business days later, the Board of Directors of the Company
shall have determined in good faith (based on the written opinion of WDR
or another financial advisor of nationally recognized reputation, which
opinion takes in account all the terms and conditions of the Takeover
Proposal including any break-up fees, expense reimbursement provision and
conditions to consummation) that the terms of such Takeover Proposal are
not more favorable to the person or persons making such Takeover Proposal
and provide greater present value to all the Company's stockholders, in
each case, than this Agreement, the Offer and the Merger taken as a whole
in light of any improved terms proposed by Parent or Sub prior to the
expiration of such five business day period, and (iii) the Company shall
have paid to Parent the fee required pursuant to Section 9.02;
(d) by Parent or Sub prior to Sub's obligation to accept Shares for
payment pursuant to the Offer in the event of a breach by the Company of
any representation, warranty, covenant or other agreement contained in
<PAGE> 54
49
this Agreement which (i) would give rise to the failure of a condition set
forth in paragraph (d) or (e) of Exhibit A and (ii) cannot be or has not
been cured within 20 days after the giving of written notice to the
Company;
(e) by the Company, if Sub or Parent shall have (A) failed to
commence the Offer within five business days after the public announcement
(on the date hereof or the following day) by Parent and the Company of
this Agreement, (B) failed to pay for Shares pursuant to the Offer in
accordance with Section 1.01(a) hereof or (C) breached in any material
respect any of their respective representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to
perform in respect of clause (C) is incapable of being cured or has not
been cured within 20 days after the giving of written notice to Parent or
Sub, as applicable, except, in any case under clause (C), such breaches
and failures which individually or in the aggregate are not reasonably
likely to affect adversely Parent's or Sub's ability to complete the Offer
or the Merger subject to the terms and conditions of this Agreement;
(f) by Parent if (i) Parent shall not have materially breached this
Agreement and (ii) the Company's Board of Directors shall have failed to
recommend that the Company's stockholders accept the Offer or shall have
withdrawn or amended, in a manner materially adverse to Parent, its
recommendation that the Company's stockholders accept the Offer, or shall
have recommended acceptance of any Superior Proposal; or
(g) by the Company if the Offer shall not have been consummated by
December 30, 1998.
SECTION 9.02. Effect of Termination. In the event of a termination
of this Agreement by either the Company or Parent as provided in Section 9.01,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to the last sentence of Section
1.02(c), Section 5.06, the last sentence of Section 7.02, Section 7.08, Section
7.13, this Section 9.02 and Article X; provided, however, that nothing herein
shall relieve any party for liability for any willful and intentional breach
hereof. Further, if Parent and Sub shall terminate this Agreement as a result of
<PAGE> 55
50
a breach by the Company of any of the provisions of Section 6.02(a) or (b), or
the Company shall terminate this Agreement pursuant to Section 9.01(c), the
Company shall pay to Parent the amount of Eight Hundred Eighty Thousand Dollars
($880,000.00) as liquidated damages and not as a penalty. The parties agree that
such amount is a reasonable estimate of the costs and expenses that would be
incurred and the value of services consumed by and on behalf of Parent and Sub
if the transactions contemplated hereunder were not to go forward as a result of
such a breach.
SECTION 9.03. Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after obtaining the Company Stockholder
Approval (if required by law), but, after any such approval, no amendment shall
be made which by law requires further approval by such shareholders without
obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 9.04. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (iii) subject
to Section 9.03, waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
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 those rights.
SECTION 9.05. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 9.01, an amendment
of this Agreement pursuant to Section 9.03 or an extension or waiver pursuant to
Section 9.04 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors; provided, however, that in the event that Sub's
designees are appointed or elected to the Board of Directors of the Company as
provided in Section 7.07, after the acceptance for payment and payment of Shares
pursuant to and subject to the Conditions of the Offer and
<PAGE> 56
51
prior to the Effective Time, the affirmative vote of a majority of the directors
of the Company that were not designated by Parent or Sub shall be required by
the Company to (i) amend or terminate this Agreement by the Company, (ii)
exercise or waive any of the Company's rights or remedies under this Agreement,
(iii) extend the time for performance of Parent's and Sub's respective
obligations under this Agreement or (iv) take any action to amend or otherwise
modify the Company's Certificate of Incorporation or Bylaws.
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties and
Agreements. Except as otherwise provided in this Section 10.01, none of the
representations, warranties or covenants in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time or, in the
case of the Company, shall survive the acceptance for payment of, and payment
for, any Shares by Sub pursuant to the Offer. This Section 10.01 shall not limit
any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 10.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
by facsimile (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses or by facsimile numbers (or at such
other address or facsimile number for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Attention: General Counsel
Facsimile No.: (732) 524-2788
<PAGE> 57
52
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Robert A. Kindler, Esq.
Facsimile No.: (212) 474-3700
and
(b) if to the Company, to
FemRx, Inc.
1221 Innsbruck Drive
Sunnyvale, CA 94089
Attention: President
Facsimile No.: (408) 752-8590
with a copy to:
Cooley Godward LLP
3000 Sand Hill Road
Building 3, Suite 230
Menlo Park, CA 94025
Attention: Craig E. Dauchy
Facsimile No.: (650) 854-2691
SECTION 10.03. Interpretation. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article or a
Section of 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,
including Exhibit A, they shall be deemed to be followed by the words "without
limitation". As used in this Agreement, including Exhibit A, the term
"subsidiary" of any person means another person whether foreign or domestic, 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
<PAGE> 58
53
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. As used in this Agreement, a corporate party's "knowledge"
means the actual knowledge of any director or executive officer. As used in this
Agreement, including Exhibit A, the term "affiliate" of any person means any
person, whether foreign or domestic, that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, such first person. As used in this Agreement, including Exhibit A, the
term "key employee" shall mean those employees identified in a separate letter
dated approximately the date hereof from Sub to the Company. As used in this
Agreement, including Exhibit A, "Material Adverse Effect" means, when used in
connection with the Company, any effect that is materially adverse to the
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, or would prevent or materially delay the
consummation of the Offer or the Merger; provided, however, that in determining
whether there has been a "Material Adverse Effect on the Company," the following
shall be disregarded: any material adverse effect that results substantially
from (i) the taking of any action required by this Agreement, (ii) the breach by
Parent of this Agreement, (iii) the announcement or pendancy of the Offer, the
Merger or any of the transactions contemplated by this Agreement or (iv) any
decline in the Company's stock price (which shall not, in and of itself,
constitute a "Material Adverse Effect"). As used in this Agreement, including
Exhibit A, "Material Adverse Change" means any change that is reasonably likely
to have a Material Adverse Effect. "Prime" shall mean the rate per annum
announced by The Chase Manhattan Bank, New York, NY as its prime rate, as such
rate shall change from time to time.
SECTION 10.04. Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein) (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 hereof, and (b) except as
provided
<PAGE> 59
54
in Article III and Section 7.06 and Section 7.11, are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
SECTION 10.06. 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.
SECTION 10.07. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly-owned
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.
SECTION 10.08. 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
pursuant to Section 10.11(g) below. With Respect to any such court proceeding,
each of the parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court 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, (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware or a Delaware state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
SECTION 10.09. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
<PAGE> 60
55
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.
SECTION 10.10. Compliance with Law. Nothing in this Agreement,
including Section 1.02 or 6.02, shall in any way prevent the Company or the
Board of Directors of the Company from making any disclosure to the stockholders
of the Company, or taking any position, that is required by Federal or state
law. Nothing in this Agreement, including Section 6.01, shall require the
Company or any of its subsidiaries to take any action prohibited by, or refrain
from taking any action required by, applicable Merger Control Laws.
SECTION 10.11. Dispute Resolution
(a) Notwithstanding the provision of Section 10.08 above, any
dispute, claim or controversy arising from or related in any way to this
Agreement or the interpretation, application, breach, termination or validity
thereof, including without limitation any claim of inducement of this agreement
by fraud or otherwise, or to any transactions contemplated thereby shall be
submitted for resolution to arbitration pursuant to the commercial arbitration
rules then pertaining of the Center for Public Resources ("CPR"), New York, NY,
except where those rules conflict with these provisions, in which case these
provisions control. The arbitration shall be held in Dover, Delaware unless the
parties agree otherwise.
(b) The arbitration panel shall consist of three arbitrators chosen
from the CPR Panels of Distinguished Neutrals for Delaware each of whom shall be
either (1) a lawyer specializing in business litigation with at least 15 years
experience with a law firm having more than 25 lawyers or (2) a judge of a court
of general jurisdiction in Delaware. Notwithstanding the foregoing, in the event
the aggregate damages sought by the claimant are stated to be less than Five
Million Dollars, and the aggregate damages sought by the counterclaimant are
stated to be less than Five Million Dollars, and neither party seeks equitable
relief, then a single arbitrator shall be chosen, having the same qualifications
and experience specified above.
<PAGE> 61
56
(c) The parties agree to cooperate (1) to obtain selection of the
arbitrator(s) within 30 days after initiation of the arbitration, (2) to meet
with the arbitrator(s) within 30 days after selection and (3) to agree at that
meeting or before upon procedures for discovery and as to the conduct of the
hearing which shall result in the hearing being concluded within no more than 9
months after selection of the arbitrator(s) and in the award being rendered
within 60 days after the conclusion of the hearings, or of any post-hearing
briefing, which briefing shall be completed by both sides within 20 days after
the conclusion of the hearings. In the event no such agreement is reached, the
CPR shall select arbitrator(s), allowing appropriate strikes for reasons of
conflict or other cause and three peremptory challenges for each side. The
arbitrator(s) shall set a date for the hearing, commit to the rendering of the
award within 60 days after the conclusion of the presentation of evidence at the
hearing, or of any post-hearing briefing (which briefing shall be completed by
both parties in no more than 20 days after the conclusion of the hearings), and
provide for discovery according to these time limits, giving recognition to the
understanding of the parties hereto that they contemplate reasonable discovery,
including document demands and depositions, but that such discovery be limited
so that the time limits specified herein may be met without undue difficulty. In
no event shall the arbitrator(s) allow either side to obtain more than a total
of 40 hours of deposition testimony from all witnesses, including both fact and
expert witnesses. In the event multiple hearing days are required, they shall be
scheduled consecutively to the greatest extent possible.
(d) The arbitrator(s) shall be bound by, and this Agreement shall be
governed by, the substantive law of Delaware, exclusive of conflict of laws
rules. Further, the arbitrator(s) shall be bound by the express terms of this
Agreement. The arbitrator(s) shall render a written opinion setting forth
findings of fact and conclusions of law with the reasons therefor stated. A
transcript of the evidence adduced at the hearing shall be made and shall, upon
request, be made available to each party.
(e) To the extent possible, the arbitration hearings and award shall
be maintained in confidence.
(f) The United States District Court for the District of Delaware
may enter judgment upon any award. In the event the panel's award exceeds Five
Million Dollars in monetary damages or includes or consists of equitable
<PAGE> 62
57
relief, then such court shall vacate, modify or correct any award where the
arbitrator's or arbitrators' findings of fact are clearly erroneous, and/or
where the arbitrators' conclusions of law are erroneous. It is the intention of
the parties that such court shall undertake the same review as if it were a
Federal appellate court reviewing a district court's findings of fact and
conclusions of law rendered after a bench trial. An award for less than Five
Million Dollars in damages and not including equitable relief may be vacated,
modified or corrected only upon the grounds for such an action specified in the
Federal Arbitration Act. The parties consent to the jurisdiction of the
above-specified Court for the enforcement of these provisions, the entry of
judgment on any award, and the vacatur, modification and correction of any award
as above specified. In the event such Court lacks jurisdiction, then any court
having jurisdiction of this matter may enter judgment upon any award and provide
the same relief, and undertake the same review, as specified herein.
(g) Each party has the right before or during the arbitration to
seek and obtain from the appropriate court provisional remedies such as
attachment, preliminary injunction, replevin, etc. to avoid irreparable harm,
maintain the status quo, or preserve the subject matter of the arbitration.
(h) EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY
JURY.
(i) EACH PARTY HERETO WAIVES ANY CLAIM TO PUNITIVE OR EXEMPLARY
DAMAGES FROM THE OTHER.
(j) EACH PARTY HERETO WAIVES ANY CLAIM OF CONSEQUENTIAL DAMAGES FROM
THE OTHER UNLESS (1) THE FORESEEABILITY OF SUCH DAMAGES AT THE TIME OF THE
CONTRACT AND (2) THE AMOUNT OF SUCH DAMAGES ARE PROVEN BY CLEAR AND CONVINCING
EVIDENCE.
SECTION 10.12. Mediation. (a) Any dispute, controversy or claim
arising out of or related to this agreement, or the interpretation, application,
breach, termination or validity thereof, including any claim of inducement by
fraud or otherwise, or any transaction contemplated hereby which claim would,
but for this provision, be submitted to arbitration pursuant to Section 10.11
above shall, before submission to arbitration, first be mediated
<PAGE> 63
58
through non-binding mediation in accordance with the Model Procedures for the
Mediation of Business Disputes then in effect promulgated by the Center for
Public Resources ("CPR"), except where those rules conflict with the provisions
of this Agreement, in which case these provisions control. The mediation shall
be conducted in Dover, Delaware and shall be attended by a senior executive of
each party to this Agreement with authority to resolve the dispute.
(b) The mediator shall be appointed from the list of neutrals
maintained by CPR and shall be either (1) an attorney specializing in business
litigation who has at least 15 years of experience as a lawyer with a law firm
having more than 25 lawyers, or (2) a former judge of a court of general
jurisdiction.
(c) The parties shall promptly confer in an effort to select a
mediator by mutual agreement. In the absence of such an agreement, the mediator
shall be selected from a list generated by CPR with each party having the right
to exercise challenges for cause and two peremptory challenges within 72 hours
of receiving the CPR list.
(d) The mediator shall confer with the parties to design procedures
to conclude the mediation within no more than 45 days after initiation. Under no
circumstances shall the commencement of arbitration under Section 10.11 above be
delayed more than 45 days by the mediation process specified herein.
(e) Each party agrees to toll all applicable statutes of limitation
during the mediation process and not to use the period or pendancy of the
mediation to disadvantage the other party procedurally or otherwise. No
statements made by either side during the mediation may be used by the other
during any subsequent arbitration or other proceedings.
(f) Each party has the right to pursue from any court of competent
jurisdiction provisional relief, such as attachment, preliminary injunction,
replevin, etc., to avoid irreparable harm, maintain the status quo, or preserve
the subject matter of the arbitration, even though mediation has not been
commenced or completed.
SECTION 10.13. Obligation of Parent. Parent shall cause Sub and the
Surviving Corporation to have sufficient resources to perform, satisfy and
discharge on a timely basis each of the covenants, obligations and liabilities
of Sub and the Surviving Corporation under this Agreement.
<PAGE> 64
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
JOHNSON & JOHNSON,
By:/s/ James Lenehan
________________________________
Name: James Lenehan
Title: Member, Executive Committee
ET/FM ACQUISITION CORP.,
By:/s/ Philip P. Crowley
________________________________
Name: Philip P. Crowley
Title: Vice President
FEMRX, INC.,
By:/s/ Andrew M. Thompson
________________________________
Name: Andrew M. Thompson
Title: President, Chief Executive Officer
<PAGE> 65
EXHIBIT A Conditions of the Offer A-1
<PAGE> 66
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless the number of Shares tendered and not withdrawn not later
than the date of expiration of the Offer, shall equal at least 90% of the Fully
Diluted Shares (defined below) (such number of Shares, the "Minimum Tender
Condition"). For purposes of this Agreement: (i) "Fully Diluted Shares" shall
mean all outstanding securities entitled generally to vote in the election of
directors of the Company after giving effect to the exercise or conversion of
all options, rights and securities exercisable or convertible into such voting
securities with exercise or conversion prices at or below the Offer Price, and
(ii) both "Shares tendered" and "Fully Diluted Shares" shall include those
shares that would be received upon the exercise of stock options contingently
tendered to the Offer. Furthermore, notwithstanding any other term of the Offer,
Sub shall not be required to accept for payment or, subject as aforesaid, to pay
for any Shares not theretofore accepted for payment or paid for, and may
terminate the Offer if, at any time on or after the date of this Agreement and
before the acceptance of such Shares for payment or the payment therefor, any of
the following conditions exists:
(a) there shall be issued by any U.S. Federal or state court of
competent jurisdiction in connection with any legal proceeding, any order
or ruling (that has not been vacated, withdrawn or overturned), (i)
restraining or prohibiting the acquisition by Parent or Sub of any Shares
under the Offer or pursuant to the Stockholder Agreements or the making or
consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by this Agreement or the Stockholder
Agreements, or obtaining from the Company, Parent or Sub any damages in
connection with the aforesaid transactions that are material in relation
to the Company and its subsidiaries taken as a
1
<PAGE> 67
whole, (ii) prohibiting or materially limiting the ownership or operation
by a whole, (ii) prohibiting or materially limiting the ownership or
operation by the Company, Parent or any of their respective subsidiaries
of a material portion of the business or assets of the Company and its
subsidiaries, or Parent and its subsidiaries, in each case taken as a
whole, or compelling the Company or Parent to dispose of or hold separate
any material portion of the business or assets of the Company and its
subsidiaries, or Parent and its subsidiaries, in each case taken as a
whole, as a result of the Offer or any of the other transactions
contemplated by this Agreement or the Stockholder Agreements, (iii)
seeking to impose material limitations on the ability of Parent or Sub to
acquire or hold, or exercise full rights of ownership of, any Shares to be
accepted for payment pursuant to the Offer including, without limitation,
the right to vote such Shares on all matters properly presented to the
stockholders of the Company, or (iv) prohibiting Parent or any of its
subsidiaries from effectively controlling in any material respect any
significant portion of the business or operations of the Company and its
subsidiaries taken as a whole;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Entity or court, that results, directly or indirectly, in any
of the consequences referred to in clauses (i) through (iv) of paragraph
(a) above;
(c) there shall have occurred any Material Adverse Change with
respect to the Company;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have (A) withdrawn or modified in a manner adverse to Parent
or Sub its approval or recommendation of the Offer, the Merger or this
Agreement or (B) approved or recommended any Takeover Proposal, (ii) the
Company shall have entered into any agreement with respect to any Takeover
Proposal or (iii) the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing;
(e) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct or any such
2
<PAGE> 68
representations and warranties that are not so qualified shall not be true
and correct in any material respect, in each case at the date of the
Agreement and at the scheduled or extended expiration of the Offer (except
to the extent that any such representation or warranty refers specifically
to another date, in which case such representation or warranty shall be
accurate as of such other date) and, individually or in the aggregate,
such untruth or incorrectness has a Material Adverse Effect on the
Company;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under this Agreement, which failure to perform or
comply is not substantially cured within 15 days after Parent provide the
Company with notice of such failure;
(g) this Agreement shall have been terminated in accordance
with its terms; or
(h) the Company shall have any debt for borrowed money other than as
permitted under Section 7.13 hereof or under the Company's lease line of
credit in an aggregate amount not exceeding Three Hundred Thousand Dollars
($300,000.00).
which, in the reasonable judgment of Parent or Sub in any such case makes it
inadvisable to proceed with such acceptance for payment or payments therefor.
The foregoing conditions in paragraphs (a) through (h) are for the sole
benefit of Sub and Parent and may, subject to the terms of this Agreement, be
waived by Sub and Parent in whole or in part at any time and from time to time
in their sole discretion. The failure by Parent or Sub at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time. Terms used herein but not defined herein shall have
the meanings assigned to such terms in the Agreement of which this Exhibit A is
a part.
3
<PAGE> 1
EXHIBIT (c)(2)
Following is the form of Stockholder Agreement
entered into by each Stockholder.
Following the form are schedules
and conformed signature pages for
each Stockholder Agreement.
<PAGE> 2
STOCKHOLDER AGREEMENT dated as of October 3,
1998, among JOHNSON & JOHNSON, a New Jersey
corporation ("Parent"), ET/FM ACQUISITION CORP., a
Delaware corporation and a wholly owned subsidiary of
Parent ("Sub") and _________ (the "Stockholder").
Preliminary Statement
Parent, Sub and FemRx, 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") providing for (i) the making of a cash tender offer (as such offer
may be amended from time to time as permitted under the Merger Agreement, the
"Offer") by Sub for all the outstanding shares of common stock, par value $0.001
per share, of the Company ("Company Common Stock") and (ii) 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. Each Stockholder is the record and
beneficial owner of the number of shares of Company Common Stock set forth
opposite such Stockholder's name on Schedule A attached hereto (such shares of
Company Common Stock, together with any other shares of capital stock of the
Company acquired by the 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"). As a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholder enter into this
Agreement.
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
<PAGE> 3
1. Purchase and Sale of Shares. (a) The Stockholder hereby
agrees to sell to Sub, and Sub hereby agrees to purchase, all Subject Shares of
such Stockholder at a price equal to the Offer Price; provided that such
obligation to sell and such obligation to purchase are subject to Sub having
accepted shares of Company Common Stock for payment under the Offer in
accordance with Section 1.01 of the Merger Agreement. Each Stockholder may
tender its Subject Shares into the Offer and Sub may direct that each
Stockholder tender its Subject Shares. Any Subject Shares not purchased in the
Offer will be purchased by Sub immediately following the purchase of shares of
Company Common Stock in the Offer. Sub shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement such amounts
as may be required to be deducted and withheld with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended, or under any
provision of state, local or foreign tax law.
(b) The Stockholder shall not be required to tender its
Subject Shares in the event of any amendment to the Merger Agreement that
creates any additional Offer Condition, reduces the Offer Price or otherwise
adversely affects the Stockholder without the prior written approval of the
Stockholder.
2. Representations and Warranties of the
Stockholder. The Stockholder hereby represents and warrants
to Parent and Sub as follows:
<PAGE> 4
3
(a) Authority. Each Stockholder has all requisite corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by each Stockholder, and the
consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of each
Stockholder. This Agreement has been duly executed and delivered by
each Stockholder and constitutes a valid and binding obligation of each
Stockholder enforceable against each such Stockholder in accordance
with its terms. Except for the expiration or termination of the
applicable waiting periods, if any, under the Merger Control Laws (as
defined below) and required filings with the Securities and Exchange
Commission, the execution and delivery of this Agreement do not, and
the consummation by Stockholder 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, 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 any Stockholder or to the property or assets
of any Stockholder, (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 any Stockholder or
any of the properties or assets of any Stockholder, including the
Subject Shares. "Merger Control Laws" means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and all
amendments of, and all other applicable bills, acts, decrees,
regulations or ordinances relating thereto.
<PAGE> 5
4
(b) Capitalization. At the close of business on September 30,
1998, the Stockholder was the record and beneficial owner of the number
of Shares set forth in Schedule A hereto.
(c) The Subject Shares. Each Stockholder is the record and
beneficial owner of, and has good and valid title to, the Subject
Shares set forth opposite its name on Schedule A attached hereto, free
and clear of any claims, liens, encumbrances, security interests,
options, charges and restrictions of any kind (other than restrictions
pursuant to applicable securities laws). Each Stockholder does not own,
of record or beneficially, any shares of capital stock of the Company
other than the Subject Shares set forth opposite its name on Schedule A
attached hereto. Each Stockholder has the sole right to vote such
Subject Shares, and none of such Subject Shares are 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, except for __________ shares that are subject to a
right of repurchase by the Company that will expire upon the
consummation of the Offer.
(d) 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 the Stockholder.
<PAGE> 6
5
3. Representation and Warranty of Parent and Sub. Parent and
Sub hereby jointly and severally represent and warrant to the Stockholder as
follows:
(a) Authority. Parent and Sub have all requisite corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by each of Parent and Sub,
and the consummation of the transactions contemplated hereby, have been
duly authorized by all necessary corporate action on the part of each
of Parent and Sub. This Agreement has been duly executed and delivered
by Parent and Sub and constitutes a valid and binding obligation of
Parent and Sub enforceable against Parent and Sub in accordance with
its terms. Except for the expiration or termination of the applicable
waiting periods under the Merger Control Laws and required filings with
the Securities and Exchange Commission, the execution and delivery of
this Agreement do not, and the consummation by Parent and Sub 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, 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 Sub
or to the property or assets of Parent or Sub, (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 Parent or
Sub or any of the properties or assets of Parent or Sub.
<PAGE> 7
6
(b) Securities Act. The Subject Shares will be acquired in
compliance with, and Sub will not offer to sell or otherwise dispose of
any Shares so acquired by it in violation of the registration
requirements of, the Securities Act of 1933, as amended.
(c) Financing. Sub has, or will have at the time that any
payment is required to be made to any Stockholder hereunder, the funds
necessary to make such payment to such Stockholder.
(d) 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.
4. Covenants of Stockholder. The Stockholder
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 (including by written consent) with respect to the
Merger and the Merger Agreement is sought, the Stockholder shall vote
(or cause to be voted) the Subject Shares 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; provided that no amendment to the Merger Agreement
will be made that creates additional Offer Conditions, reduces the
Offer Price or otherwise adversely affects the Stockholder without the
prior approval of the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's votes, consents or other approvals are sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares
against (i) any Takeover Proposal (as such term is
<PAGE> 8
7
defined in Section 6.02 of the Merger Agreement) and (ii) any amendment
of the Company's Certificate of Incorporation or Bylaws or other
proposal or transaction involving the Company, which amendment or other
proposal or transaction would be reasonably likely to impede,
frustrate, prevent, delay or nullify the Offer, the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement or change in any manner the voting rights of any class of
Company Common Stock or other voting securities of the Company. The
Stockholder further agrees not to enter into any agreement inconsistent
with the foregoing.
(c) The Stockholder shall not (i) sell, transfer, give,
pledge, assign or otherwise dispose of (including by gift)
(collectively, "Transfer"), or consent to any Transfer of, any or all
of such Subject Shares or any interest therein or enter into any
contract, option or other arrangement (including any profit sharing
arrangement) with respect to the Transfer of, the Subject Shares to any
person other than pursuant to the terms of the Offer or the Merger or
otherwise to Sub in accordance with Section 1 or (ii) enter into any
voting arrangement, whether by proxy, voting agreement, voting trust,
power-of-attorney or otherwise, with respect to the Subject Shares in
connection with, directly or indirectly, any Takeover Proposal. The
Stockholder shall not commit or agree to take any of the foregoing
actions.
(d) The Stockholder shall not, and shall use its reasonable
efforts to cause any investment banker, financial advisor, attorney,
accountant or other representative of any such Stockholder not to,
directly or indirectly, (i) solicit, initiate or encourage (including
by way of furnishing information), 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 or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal. The
<PAGE> 9
8
foregoing provisions of this Paragraph (d) shall not, however, prohibit
an individual Stockholder, or any partner, stockholder, officer or
affiliate of a Stockholder that is a legal entity, who is a director of
the Company from performing his or her legally required fiduciary
duties as a director of the Company as permitted or required under the
Merger Agreement.
5. Grant of Irrevocable Proxy; Appointment of Proxy. (a) Each
Stockholder hereby irrevocably grants to, and appoints, Sub and Howard
Zauberman, Philip P. Crowley and James Bergin, in their respective capacities as
officers of Sub, and any individual who shall hereafter succeed to any such
office of Sub, 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 against (i) any
Takeover Proposal or (ii) any amendment of the Company's Certificate of
Incorporation or Bylaws, or other proposal or transaction (including any consent
solicitation to remove or elect any directors of the Company) involving the
Company which amendment or other proposal or transaction would be reasonably
likely to impede, frustrate, prevent, delay or nullify the Offer, the Merger,
the Merger Agreement or any of the other transactions contemplated by the Merger
Agreement.
(b) Each Stockholder represents that any proxies heretofore
given in respect of such Stockholder's Subject Shares are not irrevocable, and
that any such proxies are hereby revoked.
(c) Each Stockholder hereby affirms that the irrevocable proxy
set forth in this Section 5 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 such Stockholder in accordance with 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
<PAGE> 10
9
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"). Such irrevocable proxy shall be valid until the earlier to occur of (i)
eleven months from the date hereof or (ii) the termination of this Agreement
pursuant to Section 9.
6. Further Assurances. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use all
reasonable efforts (as described in Section 7.03(a) of the Merger Agreement) to
consummate and make effective, in the most expeditious manner practicable, the
Offer and the Merger, and the other transactions contemplated by this Agreement
and the Merger Agreement. The foregoing provisions of this Section shall not,
however, prohibit an individual Stockholder, or any partner, stockholder,
officer or affiliate of a Stockholder that is a legal entity, who is a director
of the Company from performing his or her legally required fiduciary duties as a
director of the Company as permitted or required under the Merger Agreement.
7. 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 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 Company Common Stock, or the acquisition of additional shares of
Company 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 deemed adjusted appropriately and this Agreement
and the obligations hereunder shall attach to any additional shares of Company
Common Stock or other voting securities of the Company issued to or acquired by
such Stockholder.
<PAGE> 11
10
(b) Each Stockholder agrees that it will deliver 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 solely for the purpose of the Company inscribing
upon such certificates the following legend:
"The shares of Common Stock, $0.001 par value, of FemRx, Inc.
represented by this certificate are subject to a Stockholder Agreement
dated as of October 3, 1998, and may not be sold or otherwise
transferred, except in accordance therewith. Copies of such Agreement
may be obtained at the principal executive offices of FemRx, Inc."
8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that (i) Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to any U.S. subsidiary of Parent that may be substituted
for Sub as contemplated by Section 2.01 of the Merger Agreement, and (ii) Parent
may assign, in its sole discretion, any and all of its rights, interests and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, provided that Parent will remain liable for its obligations hereunder in
the event of any assignment pursuant to this clause (ii). 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.
9. Termination. This Agreement, and all rights and obligations
of the parties hereunder, shall terminate as follows: (i) in the case of a
termination of the Merger Agreement by the Company pursuant to Section 9.01(c)
or Section 9.01(g) thereof, on the date 120 days after the date of such
termination of the Merger Agreement, provided, that Sub continues to fulfill its
obligations under the credit
<PAGE> 12
11
arrangement entered into pursuant to Section 7.13 of the Merger Agreement, and,
if Sub shall cease to fulfill such obligations after such a termination pursuant
to Section 9.01(c) or Section 9.01(g), then on the date five days after the date
of such cessation, and (ii) in the case of a termination of the Merger Agreement
other than pursuant to Section 9.01(c) or Section 9.01(g) thereof, on the date
five days after the date of such termination of the Merger Agreement.
Notwithstanding the foregoing, Sections 8, 9 and 10 shall survive any
termination of this Agreement.
10. 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,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to Parent and Sub in accordance with Section 10.02 of the Merger Agreement and
to the Stockholder at its address or telecopier number set forth on Schedule A
attached hereto (or at such other address or telecopier number 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". Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to them in the Merger Agreement.
<PAGE> 13
12
(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) 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.
11. Public Announcements. Parent and Sub, on the one hand, and
the Stockholder, on the other hand, will consult with each other before issuing,
and provide each other with a reasonable opportunity to review and comment upon,
any press release or other public statements with respect to the transactions
contemplated by this Agreement
<PAGE> 14
13
and the Merger Agreement, including the Offer and the Merger, and shall not
issue, or permit any of their respective subsidiaries to 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, in which case the party making such release will
use reasonable efforts to obtain comments from the other party before issuance
of such release or statement.
12. Dispute Resolution. (a) Any dispute, claim or controversy
arising from or related in any way to this Agreement or the interpretation,
application, breach, termination or validity thereof, including without
limitation any claim of inducement of this agreement by fraud or otherwise, or
to any transactions contemplated thereby shall be submitted for resolution to
arbitration pursuant to the commercial arbitration rules then pertaining of the
Center for Public Resources ("CPR"), New York, NY, except where those rules
conflict with these provisions, in which case these provisions control. The
arbitration shall be held in Dover, Delaware unless the parties agree otherwise.
(b) The arbitration panel shall consist of three arbitrators
chosen from the CPR Panels of Distinguished Neutrals for Delaware each of whom
shall be either (1) a lawyer specializing in business litigation with at least
15 years experience with a law firm having more than 25 lawyers or (2) a judge
of a court of general jurisdiction in Delaware. Notwithstanding the foregoing,
in the event the aggregate damages sought by the claimant are stated to be less
than Five Million Dollars, and the aggregate damages sought by the
counterclaimant are stated to be less than Five Million Dollars, and neither
party seeks equitable relief, then a single arbitrator shall be chosen, having
the same qualifications and experience specified above.
(c) The parties agree to cooperate (1) to obtain selection of
the arbitrator(s) within 30 days after
<PAGE> 15
14
initiation of the arbitration, (2) to meet with the arbitrator(s) within 30 days
after selection and (3) to agree at that meeting or before upon procedures for
discovery and as to the conduct of the hearing which shall result in the hearing
being concluded within no more than 9 months after selection of the
arbitrator(s) and in the award being rendered within 60 days after the
conclusion of the hearings, or of any post-hearing briefing, which briefing
shall be completed by both sides within 20 days after the conclusion of the
hearings. In the event no such agreement is reached, the CPR shall select
arbitrator(s), allowing appropriate strikes for reasons of conflict or other
cause and three peremptory challenges for each side. The arbitrator(s) shall set
a date for the hearing, commit to the rendering of the award within 60 days
after the conclusion of the presentation of evidence at the hearing, or of any
post-hearing briefing (which briefing shall be completed by both parties in no
more than 20 days after the conclusion of the hearings), and provide for
discovery according to these time limits, giving recognition to the
understanding of the parties hereto that they contemplate reasonable discovery,
including document demands and depositions, but that such discovery be limited
so that the time limits specified herein may be met without undue difficulty. In
no event shall the arbitrator(s) allow either side to obtain more than a total
of 40 hours of deposition testimony from all witnesses, including both fact and
expert witnesses. In the event multiple hearing days are required, they shall be
scheduled consecutively to the greatest extent possible.
(d) The arbitrator(s) shall be bound by, and this Agreement
shall be governed by, the substantive law of Delaware, exclusive of conflict of
laws rules, except for such matters as are expressly governed by the DGCL.
Further, the arbitrator(s) shall be bound by the express terms of this
Agreement. The arbitrator(s) shall render a written opinion setting forth
findings of fact and conclusions of law with the reasons therefor stated. A
transcript of the evidence adduced at the hearing shall be made and shall, upon
request, be made available to each party.
<PAGE> 16
15
(e) To the extent possible, the arbitration hearings and award
shall be maintained in confidence.
(f) The United States District Court for the District of
Delaware may enter judgment upon any award. In the event the panel's award
exceeds Five Million Dollars in monetary damages or includes or consists of
equitable relief, then such court shall vacate, modify or correct any award
where the arbitrator's or arbitrators' findings of fact are clearly erroneous,
and/or where the arbitrators' conclusions of law are erroneous. It is the
intention of the parties that such court shall undertake the same review as if
it were a Federal appellate court reviewing a district court's findings of fact
and conclusions of law rendered after a bench trial. An award for less than Five
Million Dollars in damages and not including equitable relief may be vacated,
modified or corrected only upon the grounds for such an action specified in the
Federal Arbitration Act. The parties consent to the jurisdiction of the
above-specified Court for the enforcement of these provisions, the entry of
judgment on any award, and the vacatur, modification and correction of any award
as above specified. In the event such Court lacks jurisdiction, then any court
having jurisdiction of this matter may enter judgment upon any award and provide
the same relief, and undertake the same review, as specified herein.
(g) Each party has the right before or during the arbitration
to seek and obtain from the appropriate court provisional remedies such as
attachment, preliminary injunction, replevin, etc. to avoid irreparable harm,
maintain the status quo, or preserve the subject matter of the arbitration.
(h) EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE
BY JURY.
(i) EACH PARTY HERETO WAIVES ANY CLAIM TO PUNITIVE OR
EXEMPLARY DAMAGES FROM THE OTHER.
(j) EACH PARTY HERETO WAIVES ANY CLAIM OF CONSEQUENTIAL
DAMAGES FROM THE OTHER UNLESS (1) THE
<PAGE> 17
16
FORESEEABILITY OF SUCH DAMAGES AT THE TIME OF THE CONTRACT AND (2) THE AMOUNT OF
SUCH DAMAGES ARE PROVEN BY CLEAR AND CONVINCING EVIDENCE.
13. Mediation. (a) Any dispute, controversy or claim arising
out of or related to this agreement, or the interpretation, application, breach,
termination or validity thereof, including any claim of inducement by fraud or
otherwise, or any transaction contemplated hereby which claim would, but for
this provision, be submitted to arbitration pursuant to Section 12 above shall,
before submission to arbitration, first be mediated through non-binding
mediation in accordance with the Model Procedures for the Mediation of Business
Disputes then in effect promulgated by the Center for Public Resources ("CPR"),
except where those rules conflict with the provisions of this Agreement, in
which case these provisions control. The mediation shall be conducted in Dover,
Delaware and shall be attended by a senior executive of each party to this
Agreement with authority to resolve the dispute.
(b) The mediator shall be appointed from the list of neutrals
maintained by CPR and shall be either (1) an attorney specializing in business
litigation who has at least 15 years of experience as a lawyer with a law firm
having more than 25 lawyers, or (2) a former judge of a court of general
jurisdiction.
(c) The parties shall promptly confer in an effort to select a
mediator by mutual agreement. In the absence of such an agreement, the mediator
shall be selected from a list generated by CPR with each party having the right
to exercise challenges for cause and two peremptory challenges within 72 hours
of receiving the CPR list.
(d) The mediator shall confer with the parties to design
procedures to conclude the mediation within no more than 45 days after
initiation. Under no circumstances shall the commencement of arbitration under
Section 10.11 above be delayed more than 45 days by the mediation process
specified herein.
<PAGE> 18
17
(e) Each party agrees to toll all applicable statutes of
limitation during the mediation process and not to use the period or pendancy of
the mediation to disadvantage the other party procedurally or otherwise. No
statements made by either side during the mediation may be used by the other
during any subsequent arbitration or other proceedings.
(f) Each party has the right to pursue from any court of
competent jurisdiction provisional relief, such as attachment, preliminary
injunction, replevin, etc., to avoid irreparable harm, maintain the status quo,
or preserve the subject matter of the arbitration, even though mediation has not
been commenced or completed.
<PAGE> 19
18
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have
caused this Agreement to be duly executed and delivered as of the date first
written above.
JOHNSON & JOHNSON,
By:___________________________
Name:
Title:
ET/FM ACQUISITION CORP.,
By:___________________________
Name:
Title:
[NAME OF STOCKHOLDER]
By:___________________________
Name:
Title:
<PAGE> 20
SCHEDULE A
Name, Address Number of Shares
and Telecopier of Company Common
Number of Stockholder Stock Owned of Record
<PAGE> 21
Following are schedules and
conformed signature pages
for each Stockholder Agreement.
<PAGE> 22
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
------------------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
------------------------------------
Name:
Title:
ANDREW M. THOMPSON
/s/ Andrew M. Thompson
- ---------------------------------------
<PAGE> 23
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- ----------------------------------- --------------------------------
Andrew M. Thompson -0-
FemRx, Inc.
1221 Innsbruck Drive
Sunnyvale, CA 94089
(408) 752-8594
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ---------- -------------- ----------------------------
<S> <C> <C>
03/03/97 $2.9375 80,000
</TABLE>
<PAGE> 24
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
---------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
---------------------------
Name:
Title:
ANDREW MARKHAM THOMPSON AND
SYLVIA ASTRID KISTLER THOMPSON
TTEES THOMPSON FAMILY TRUST
U/A DTD 04/22/93
By: /s/ Andrew M. Thompson
---------------------------
Andrew M. Thompson
Trustee
<PAGE> 25
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- ----------------------------------- ----------------------------------
Andrew Markham Thompson and Sylvia 448,128
Astrid Kistler Thompson TTEES Thompson
Family Trust U/A DTD 04/22/93
FemRx, Inc.
1221 Innsbruck Drive
Sunnyvale, Ca 94089
(408)752-8594
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ------------------- ---------------------- ---------------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 26
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
------------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /S/ P. Crowley
-------------------------------
Name:
Title:
BRINSON TRUST COMPANY AS TRUSTEE
OF THE BRINSON MAP VENTURE CAPITAL
FUND III
By: /s/ Terry Gould
-------------------------------
Name: Terry Gould
Title: Assistant Trust Officer
<PAGE> 27
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- --------------------------------------- ----------------------------
Brinson Trust Company as Trustee of the 61,345
Brinson MAP Venture Capital Fund III
209 South LaSalle Street, Suite 114
Chicago, IL 60604
(312) 220-7110
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ----------------- ------------------- ----------------------------
<S> <C> <C>
0
</TABLE>
<PAGE> 28
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
-------------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
-------------------------------
Name:
Title:
BRINSON VENTURE CAPITAL FUND III, L.P.
By: /s/ Terry Gould
-------------------------------
Name:
Title:
<PAGE> 29
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDERS COMMON STOCK OWNED OF RECORD
- ------------------------------------- ----------------------------
Brinson Venture Capital Fund III, L.P. 376,154
209 South LaSalle Street, #114
Chicago, IL 60604
(312) 220-7110
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ---------------------- ---------------- ----------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 30
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
--------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
--------------------------
Name:
Title:
DLJ CAPITAL CORPORATION
By: /s/ Kathleen LaPorte
--------------------------
Name: Kathleen LaPorte
Title: Attorney In Fact
<PAGE> 31
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- ------------------------------------- ----------------------------
DLJ Capital Corporation 113,181
3000 Sand Hill Road
Building 4, Suite 270
Menlo Park, CA 94025
(650) 854-8779
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ---------------------- ---------------- ----------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 32
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
------------------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
------------------------------------
Name:
Title:
EDWARD W. UNKART
/s/ Edward W. Unkart
- ---------------------------------------
<PAGE> 33
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- -------------------------------- -----------------------------
Edward W. Unkart 15,105
FemRx, Inc.
1221 Innsbruck Drive
Sunnyvale, CA 94089
(408) 734-8231
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ---------- -------------- ----------------------------
<S> <C> <C>
03/03/97 $2.9375 75,000
</TABLE>
<PAGE> 34
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
--------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
--------------------------
Name:
Title:
EDWARD W. UNKART AND MICHELE T.
UNKART, TRUSTEES OF THE TAKEI UNKART
FAMILY TRUST U/D/A AUGUST 26, 1987
By: /s/ Edward W. Unkart
--------------------------
Edward W. Unkart
Trustee
<PAGE> 35
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- ---------------------------------- --------------------------------
Edward W. Unkart and Michele T. Takei, 78,125
Trustees of the Takei Unkart Family Trust
U/D/A August 26, 1987
FemRx, Inc.
1221 Innsbruck Drive
Sunnyvale, CA 94089
(408) 752-8594
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
----------- ---------------- ------------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 36
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
---------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
---------------------------
Name:
Title:
GEORGE M. SAVAGE
/s/ George M. Savage
- ---------------------------
<PAGE> 37
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- --------------------------------- -----------------------------
George M. Savage, M.D. -0-
FernRx, Inc.
1221 Innsbruck Drive
Sunnyvale, CA 94089
(408)752-8594
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ---------------- --------------------- --------------------------------
<S> <C> <C>
03/03/97 $2,9375 80,000
</TABLE>
<PAGE> 38
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
---------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
---------------------------
Name:
Title:
GEORGE M. SAVAGE AND NANCY SAVAGE,
TRUSTEES OF THE GEORGE AND NANCY
SAVAGE LIVING TRUST
By: /s/ George M. Savage
---------------------------
George M. Savage
Trustee
<PAGE> 39
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- --------------------------------- -----------------------------
George M. Savage and Nancy Savage, Trustees 458,128
of the George and Nancy Savage Living Trust
FemRx, Inc.
1221 Innsbruck Drive
Sunnyvale, CA 94089
(408)752-8594
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ---------------- --------------------- --------------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 40
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
--------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
--------------------------
Name:
Title:
KRESCH MEDICAL RESEARCH, L.L.C.
By: /s/ Arnold J. Kresch, M.D.
-------------------------
Arnold J. Kresch, M.D.
Manager
<PAGE> 41
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED AND RECORD
- -------------------------------- -----------------------------
Kresch Medical Research, L.L.C. 451,626
780 Welch Road, Suite 206
Palo Alto, CA 94304
(650) 833-7909
<TABLE>
<CAPTION>
GRANT DATA EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ------------------- --------------------- -------------------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 42
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
-------------------------------
Name:
Title:
ET/FM ACQUISITION CORP.
By: /s/ P. Crowley
--------------------------------
Name:
Title:
SAVAGE-THOMPSON MANAGEMENT
By: /s/ Andrew M. Thompson
-------------------------------
Andrew M. Thompson
Partner
<PAGE> 43
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- ----------------------------------- ----------------------------------
Savage-Thompson Management 10,000
FemRx, Inc.
1221 Innsbruck Drive
Sunnyvale, CA 94089
(408) 752-8594
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ---------------- -------------------- ----------------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 44
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
----------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
----------------------
Name:
Title:
SECOND VENTURES II, L.P.
By: Presidio Management Group; its General Partner
By: /s/ Philip M. Young
-------------------------
Name: Philip M. Young
Title:General Partner
<PAGE> 45
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- ------------------------------------ --------------------------------------
Second Ventures II, L.P. 114,843
2180 Sand Hill Road, Suite 300
Menlo Park, CA 94025
(650) 854-3018
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- -------------- ---------------------- ------------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 46
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
------------------------------
name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
------------------------------
Name:
Title:
SPROUT CAPITAL VI, L.P.
By: DLJ Capital Corporation
Its Managing General Partner
By: /s/ Kathleen La Porte
------------------------------
Name: Kathleen La Porte
Title: General Partner and
Attorney In Fact
<PAGE> 47
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- ----------------------------------- ------------------------------------
Sprout Capital VI, L.P. 714,700
3000 Sand Hill Road
Building 4, Suite 270
Menlo Park, CA 94025
(650) 854-8779
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ----------------- ------------------ ----------------------------------
<S> <C> <C>
0
</TABLE>
<PAGE> 48
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
-------------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
-------------------------------
Name:
Title:
SPROUT CAPITAL VII, L.P.
By: DLJ Capital Corporation
Its Managing General Partner
By: /s/ Kathleen LaPorte
-------------------------------
Name: Kathleen LaPorte
Title: General Partner and
Attorney In Fact
<PAGE> 49
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- --------------------------------------- ----------------------------
Sprout Capital VII, L.P. 1,359,618
3000 Sand Hill Road
Building 4, Suite 270
Menlo Park, CA 94025
(650) 854-8779
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ----------------- ------------------- ----------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 50
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
--------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
--------------------------
Name:
Title:
U.S. VENTURE PARTNERS IV, L.P.
By: Presidio Management Group IV, L.P.
Its General Partner
By: /s/ Philip M. Young
--------------------------
Name: Philip M. Young
Title: General Partner
<PAGE> 51
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- -------------------------------- -----------------------------
U.S. Venture Partners IV, L.P. 946,093
2180 Sand Hill Road, Suite 300
Menlo Park, CA 94025
(650) 854-3018
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ---------- --------------- ----------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 52
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
JOHNSON & JOHNSON,
By: /s/ J. Lenehan
-------------------------
Name:
Title:
ET/FM ACQUISITION CORP.,
By: /s/ P. Crowley
-------------------------
Name:
Title:
USVP ENTREPRENEUR PARTNERS II, L.P.
By: /s/ Philip M. Young
-------------------------
Name: Philip M. Young
Title: General Partner
<PAGE> 53
SCHEDULE A
NAME, ADDRESS AND NUMBER OF SHARES OF COMPANY
TELECOPIER NUMBER OF STOCKHOLDER COMMON STOCK OWNED OF RECORD
- --------------------------------------- ----------------------------
USVP Entrepreneur Partners II, L.P. 32,812
2180 Sand Hill Road, Suite 300
Menlo Park, CA 94025
(650) 854-3018
<TABLE>
<CAPTION>
GRANT DATE EXERCISE PRICE NUMBER OF OUTSTANDING SHARES
- ----------------- ------------------- ----------------------------
<S> <C> <C>
-0-
</TABLE>
<PAGE> 1
EXHIBIT (c)(3)
[ETHICON, INC. LETTERHEAD]
October 1, 1998
Subject: Employment Agreement -- Andrew Thompson
This serves to document the following understanding between Ethicon, Inc. and
Andrew Thompson:
1. As founder of FemRx, Andrew has expressed his commitment to assist, as
needed, with the transition and integration of FemRx, with Ethicon, Inc.
2. While Andrew's role in the transition is not fully defined, it is agreed that
Ethicon, Inc. would capitalize upon his experience as founder and leader of
the organization in making the transition successful.
3. The duration of the commitment will be determined as integration plans are
finalized, however Ethicon, Inc. commits to 6 months salary compensation at
the current base salary beginning upon the closing date.
4. While any salary or separation payments are being made by Ethicon, Inc. it is
agreed that Andrew will not take employment with nor actively engage in the
development of businesses that directly compete with the FemRx products
without the prior written consent of Ethicon, Inc.
5. In no event shall Andrew Thompson have any commitment to Ethicon, Inc. beyond
May 30, 1999 unless there is a separate agreement.
Signature of this document denotes acceptance by the signing parties.
/s/ Andrew M. Thompson /s/ Gary Loudamy
- -------------------------------- -------------------------------------------
Andrew M. Thompson Gary Loudamy
President & CEO, FemRx Director, HR Systems & Business Improvement
<PAGE> 1
EXHIBIT (c)(4)
[ETHICON, INC. LETTERHEAD]
October 1, 1998
Subject: Employment Agreement -- George Savage, M.D.
As co-founder of FemRx, George Savage has expressed his commitment to assist
Ethicon, Inc. in the successful transition and integration of FemRx with
Ethicon, Inc.
The duration of George's commitment to Ethicon, Inc. is undeclared at this
point. Ethicon, Inc. would like to accept the offer of 6 months of continued
service beyond the close date in George's current capacity and requests a
commitment at least through June 30, 2000.
Details of a retention agreement will be finalized during discussion with
George over the next 2 weeks.
While any separation payments are being made, it is agreed that George will not
take employment with nor actively engage in the development of businesses that
directly compete with the FemRx products without the prior written consent of
Ethicon, Inc.
Signature of this document denotes acceptance. Additional details will be
developed through discussion during the next 2 weeks.
It is our intent that this agreement will be replaced by a more detailed
agreement within one month from this date.
In no event shall George Savage have any commitment to Ethicon, Inc. beyond May
30, 1999 unless there is a separate agreement.
/s/ George Savage /s/ Gary Loudamy
- ----------------------- -----------------------------
George Savage, M.D. Gary Loudamy
Sr. Vice-President, Director, HR Systems & Business
Research & Development Improvement
