<PAGE> 1
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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
------------------------
DEPUY, INC.
(NAME OF SUBJECT COMPANY)
------------------------
LIB ACQUISITION CORP.
JOHNSON & JOHNSON
(BIDDERS)
------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
249726 10 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
JAMES R. HILTON, ESQ.
LIB ACQUISITION CORP.
C/O JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933
(732) 524-2450
(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
------------------------
JULY 21, 1998
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
------------------------
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$3,536,149,365.............................................. $707,229.87
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</TABLE>
* For purposes of calculating amount of filing fee only. The amount assumes the
purchase of 101,032,839 shares of Common Stock, par value $.01 per share (the
"Shares"), at a price per Share of $35 in cash. Such number of shares
represents all the Shares outstanding as of July 21, 1998, plus the number of
Shares issuable upon the exercise of all existing options.
[ ] 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.
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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.
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CUSIP NO. 249726 10 0
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</TABLE>
14D-1 AND 13D Page 2 of 8 Pages
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Name of Reporting Persons
1 I.R.S. Identification Nos. of Above Persons (entities only)
LIB ACQUISITION CORP. (APPLIED FOR)
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Check the Appropriate Box if a Member of Group (a) []
2 (b) []
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SEC Use only
3
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Sources of Funds
4
AF
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Check if Disclosure of Legal Proceedings is Required
5 Pursuant to Items 2(d) or 2(e) []
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Citizen or Place of Organization
6
DELAWARE
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Aggregate Amount Beneficially Owned by Each Reporting Person
7
83,000,000* (COMMON STOCK)
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Check if the Aggregate Amount in Row (7) Excludes
8 Certain Shares []
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Percent of Class Represented by Amount in Row (7)
9
APPROXIMATELY 84.0% OF THE SHARES OUTSTANDING AS OF JULY 21,
1998
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Type of Reporting Person
10
CO
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</TABLE>
* See footnote on following page.
2
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CUSIP NO. 249726 10 0 14D-1 AND 13D Page 3 of 8 Pages
- -------------------------
</TABLE>
<TABLE>
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Name of Reporting Persons
1 I.R.S. Identification Nos. of Above Persons (entities only)
JOHNSON & JOHNSON (22-1024240)
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Check the Appropriate Box if a Member of Group
2 (a) [ ]
(b) [ ]
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3 SEC Use only
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4 Sources of Funds
WC
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Check if Disclosure of Legal Proceedings is
5 Required Pursuant to Item 2(d) or 2(e) []
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Citizen or Place of Organization
6
NEW JERSEY
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Aggregate Amount Beneficially Owned by Each Reporting Person
7
83,000,000* (COMMON STOCK)
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8 Check if the Aggregate Amount in Row (7) Excludes Certain
Shares []
- -------------------------------------------------------------------
Percent of Class Represented by Amount in Row (7)
9
APPROXIMATELY 84.0% OF THE SHARES OUTSTANDING AS OF JULY 21,
1998
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Type of Reporting Person
10
CO
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</TABLE>
* On July 21, 1998, Johnson & Johnson ("Parent") and LIB Acquisition Corp., a
wholly owned subsidiary of Parent (the "Purchaser"), entered into a
Stockholder Agreement (the "Stockholder Agreement") with certain stockholders
(the "Stockholders") of DePuy, Inc., which are indirect wholly owned
subsidiaries of Roche Holding Ltd, pursuant to which 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 $35 per Share, all the Shares owned by
them representing an aggregate of 83,000,000 Shares, or approximately 84.0% of
the Shares outstanding as of July 21, 1998. 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
Agreement. The Purchaser's right to purchase the Shares subject to the
Stockholder Agreement 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 exercise such purchase option immediately
following the Offer (unless all the Shares subject to the Stockholder
Agreement have been tendered by the Stockholders and accepted for payment by
the Purchaser under the Offer). Pursuant to the Stockholder Agreement, 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
Agreement 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 Agreement is described more fully in Section 12
("Purpose of the Offer; The Merger Agreement and The Stockholder Agreement")
of the Offer to Purchase dated July 27, 1998 (the "Offer to Purchase"), filed
as Exhibit (a)(1) hereto. Parent has been informed that the Stockholders
intend to file a Schedule 13D with respect to the Shares subject to the
Stockholder Agreement on or about July 27, 1998.
3
<PAGE> 4
This Tender Offer Statement on Schedule 14D-1 also constitutes an Amendment
No. 1 to Schedule 13D filed on July 27, 1998 with respect to the acquisition by
the Purchaser and Parent of beneficial ownership of the Shares subject to the
Stockholder Agreement. 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 DePuy, Inc., a Delaware corporation
(the "Company"), which has its principal executive offices at 700 Orthopaedic
Drive, Warsaw, Indiana 46580.
(b) This Schedule 14D-1 relates to the offer by the Purchaser to purchase
all outstanding Shares at a price of $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 Agreement") 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 Agreement") 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 Agreement") 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 Agreement") 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 Agreement") 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 July 21, 1998, among
the Purchaser, Parent and the Company and the Stockholder Agreement, 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.
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(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 July 27, 1998.
(a)(8) Text of Joint Press Release dated July 21, 1998, issued by
the Company, Parent and Roche Holding Ltd.
(b) None.
(c)(1) Agreement and Plan of Merger dated as of July 21, 1998,
among Parent, the Purchaser and the Company.
(c)(2) Stockholder Agreement dated as of July 21, 1998, among
Parent, the Purchaser and certain stockholders of the
Company.
(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: July 27, 1998
LIB ACQUISITION CORP.
By: /s/ JAMES R. UTASKI
------------------------------------
Name: James R. Utaski
Title: President
JOHNSON & JOHNSON
By: /s/ JAMES R. UTASKI
------------------------------------
Name: James R. Utaski
Title: Vice President, Business
Development
6
<PAGE> 7
EXHIBIT INDEX
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EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
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(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 July 27, 1998.
(a)(8).... Text of Joint Press Release dated July 21, 1998, issued by
the Company, Parent and Roche Holding Ltd.
(b)....... None.
(c)(1).... Agreement and Plan of Merger dated as of July 21, 1998,
among Parent, the Purchaser and the Company.
(c)(2).... Stockholder Agreement dated as of July 21, 1998, among
Parent, the Purchaser, and certain stockholders of the
Company.
(d)....... None.
(e)....... Not applicable.
(f)....... None.
</TABLE>
7
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEPUY, INC.
AT
$35 NET PER SHARE
BY
LIB 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, AUGUST 21, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER DATED AS OF
JULY 21, 1998 AMONG JOHNSON & JOHNSON, LIB ACQUISITION CORP. (THE "PURCHASER")
AND DEPUY, 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, (I) THE SHARES SUBJECT TO THE
STOCKHOLDER AGREEMENT REFERRED TO HEREIN HAVING BEEN VALIDLY TENDERED TO THE
PURCHASER AS REQUIRED BY THE STOCKHOLDER AGREEMENT, (II) ANY WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED,
HAVING EXPIRED OR BEEN TERMINATED AND (III) ANY APPROVAL UNDER COUNCIL
REGULATION (EEC) NO. 4064/89 OF 21 DECEMBER 1989, AS AMENDED, HAVING BEEN
OBTAINED.
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 Dealer Manager or the
Information Agent at their respective addresses and telephone numbers set forth
on the back cover of this Offer to Purchase.
The Dealer Manager for the Offer is:
[CREDIT SUISSE, FIRST BOSTON LOGO]
July 27, 1998
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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Introduction................................................ 1
1. Terms of the Offer...................................... 2
2. Procedure for Tendering Shares.......................... 4
3. Withdrawal Rights....................................... 6
4. Acceptance for Payment and Payment...................... 7
5. Certain Federal Income Tax Consequences................. 8
6. Price Range of the Shares; Dividends on the Shares...... 9
7. Effect of the Offer on the Market for the Shares; Stock
Quotation; Exchange Act Registration; Margin
Regulations............................................. 9
8. Certain Information Concerning the Company.............. 10
9. Certain Information Concerning the Purchaser and
Parent................................................... 12
10. Source and Amount of Funds.............................. 13
11. Contacts with the Company; Background of the Offer...... 13
12. Purpose of the Offer; The Merger Agreement and The
Stockholder Agreement..................................... 14
13. Dividends and Distributions............................. 22
14. Certain Conditions of the Offer......................... 22
15. Certain Legal Matters................................... 24
16. Fees and Expenses....................................... 25
17. Miscellaneous........................................... 26
Schedule I -- Directors and Executive Officers.............. 27
</TABLE>
<PAGE> 3
To the Holders of Common Stock
of DePuy, Inc.:
INTRODUCTION
LIB 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 $.01 per share, of DePuy, Inc., a Delaware corporation
(the "Company"), at $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, the Depositary or the
Dealer Manager (as defined below) or, except as set forth in Instruction 6 of
the Letter of Transmittal, 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 Credit Suisse First Boston
Corporation, which is acting as Dealer Manager for the Offer ("Credit Suisse
First Boston" or the "Dealer Manager"), 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 July 21, 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) 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 a Stockholder Agreement dated as
of July 21, 1998 (the "Stockholder Agreement") with certain stockholders of the
Company (the "Stockholders"), which are indirect wholly owned subsidiaries of
Roche Holding Ltd ("Roche"), who beneficially own 83,000,000 Shares in the
aggregate. Under the Stockholder Agreement, the Stockholders have agreed to
sell, and the Purchaser has agreed to purchase, all Shares beneficially owned by
them, representing approximately 84.0% of the outstanding Shares (approximately
82.2% on a fully diluted basis), 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
Agreement 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, (I) THE SHARES OWNED BY
THE STOCKHOLDERS HAVING BEEN VALIDLY TENDERED INTO THE OFFER OR DELIVERED TO THE
PURCHASER FOR PURCHASE IMMEDIATELY FOLLOWING THE OFFER AS REQUIRED BY THE
STOCKHOLDER AGREEMENT, (II) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, HAVING EXPIRED OR BEEN
TERMINATED AND (III) ANY APPROVAL UNDER COUNCIL REGULATION (EEC) NO. 4064/89 OF
21 DECEMBER 1989, AS AMENDED, HAVING BEEN OBTAINED.
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.
Bear, Stearns & Co. Inc. ("Bear Stearns") has delivered to the Board of
Directors of the Company its written opinion dated July 20, 1998 that, as of
such date and based upon and subject to the matters set forth therein, the
consideration to be received by the stockholders of the Company (other than the
Stockholders) in the Offer and the Merger 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 June 30, 1998, there
were 98,816,286 Shares issued and outstanding and 2,216,553 Shares reserved for
issuance upon exercise of outstanding Company Stock Options (as defined in the
Merger Agreement). Based upon the foregoing, the Purchaser believes that
approximately 50,516,420 Shares constitute a majority of the fully diluted
Shares. Because the Shares subject to the Stockholder Agreement represent
approximately 82.2% of the outstanding Shares on a fully diluted basis, if the
Purchaser accepts for payment Shares tendered pursuant to the Offer, and accepts
for payment the Shares subject to the Stockholder Agreement 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 Agreement 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 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, August 21, 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, August 21, 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 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-l(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 prior 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 there have
not been validly tendered and not properly withdrawn prior to the expiration of
the Offer such number of Shares that, together with Shares subject to the
Stockholder Agreement which have not been validly tendered, would constitute at
least 90% of the fully diluted Shares as of the date of determination and (iv)
for any reason for up to two business days; provided that no more than three
extensions are permitted under clauses (iii) and (iv) of this sentence. As used
in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1 under the Exchange Act.
In addition, the Purchaser has agreed in the Merger Agreement that it will
not, without the 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 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
(including, with the Company's consent, a waiver of the Stockholder Agreement
Condition (as defined in Section 14)), 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-l under the Exchange Act. The
3
<PAGE> 6
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
Stockholder Agreement Condition (which will be satisfied following the tendering
of the Shares subject to the Stockholder Agreement), the expiration or
termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder (the "HSR
Act"), the obtaining of approval under Council Regulation (EEC) No. 4064/89 of
21 December 1989, as amended (together with the HSR Act, the "Merger Control
Laws"), 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, 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 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.
4
<PAGE> 7
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.
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.
5
<PAGE> 8
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 July 21, 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.
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 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, the Dealer Manager
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification. The Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
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 September 24, 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
6
<PAGE> 9
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, 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, the Dealer Manager or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3. Any determination concerning the satisfaction of such
terms and conditions will be within the sole 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, including, without
limitation, the Merger Control Laws. 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).
Parent will file a Notification and Report Form with respect to the Offer
under the HSR Act. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on the 15th day after the
date such form is filed, unless early termination of the waiting period is
granted. In addition, the Antitrust Division of the Department of Justice (the
"Antitrust Division") or the Federal Trade Commission (the "FTC") may extend the
waiting period by requesting additional information or documentary material from
Parent. If such a request is made, such waiting period will expire at 11:59
p.m., New York City time, on the 10th day after substantial compliance by Parent
with such request. In addition to a Notification and Report Form under the HSR
Act, Parent will file the required notification with the European Commission
under the applicable Merger Control Laws and may make additional filings or
reports under the antitrust laws of other nations. See Section 15 for additional
information concerning the Merger Control Laws and the applicability of the
antitrust laws to 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. Upon the terms and subject to the conditions of the Offer, payment for
Shares purchased pursuant to the Offer will be
7
<PAGE> 10
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 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%.
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
8
<PAGE> 11
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 PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES. 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.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded on the NYSE under the symbol "DPU". The following
table sets forth, for each of the periods indicated, the high and low sales
prices per Share on the NYSE Composite Transaction Tape.
<TABLE>
<CAPTION>
SALES PRICE
------------------
HIGH LOW
---- ---
<S> <C> <C>
1996
Fourth Quarter (from October 31, 1996)(1)................. $20 1/4 $16 1/2
1997
First Quarter............................................. 24 18 1/8
Second Quarter............................................ 25 3/8 19 7/8
Third Quarter............................................. 27 9/16 21 1/2
Fourth Quarter............................................ 30 1/2 23 3/4
1998
First Quarter............................................. 31 24 3/8
Second Quarter............................................ 31 15/16 27 3/4
Third Quarter (through July 24, 1998)..................... 34 15/16 27 1/2
</TABLE>
- ---------------
(1) On October 30, 1996 the Company issued shares to the public through an
initial public offering. Prior to the public offering, the Company was
operated as a division of Corange Limited.
On July 20, 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 NYSE Composite Transaction Tape was $31 1/2 per
Share. On July 24, 1998, the last full day of trading before the commencement of
the Offer, the reported closing sale price of the Shares on the NYSE Composite
Transaction Tape was $34 1/8 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
Other than the dividend paid on January 2, 1998 of $0.12, since October 30,
1996 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 on the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing on
the NYSE. According to the NYSE's published guidelines, the NYSE normally gives
consideration to delisting a security of a company when (i) the number of total
stockholders is less than 400, (ii) the number of total stockholders is less
than 1,200 and the average monthly trading volume for the most recent twelve
months is less than 100,000 shares, (iii) the number of publicly held shares is
less than
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<PAGE> 12
600,000, (iv) the aggregate market value of publicly traded shares is less than
$8,000,000, (v) the aggregate market value of shares outstanding (excluding
treasury stock) is less than $12,000,000 and the average net income after taxes
for the past three years is less than $600,000, or (vi) the net tangible assets
available to common stock are less than $12,000,000 and average net income after
taxes for the past three years is less than $600,000. 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 July 23, 1998 there were approximately 1,260 holders of
record of Shares and 98,830,084 Shares were outstanding. If as a result of the
purchase of Shares pursuant to the Offer, the Shares no longer meet the
requirements of the NYSE for continued listing, the market for Shares could be
adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on other securities exchanges or in the over-the-counter
market and that price quotations would be reported by such exchanges or through
the Nasdaq National Market or other sources. The extent of the public market for
the Shares and the availability of such quotations would, however, 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 300 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
the Shares will cease to be reported on the NYSE 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 700 Orthopaedic Drive, Warsaw, Indiana 46580, telephone no. (219) 267-8143.
According to the Company's Annual Report for the fiscal year ended December 31,
1997 (the "Annual Report"), the Company designs, manufactures and distributes
orthopaedic devices and supplies.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted or derived from the
information contained in the Annual Report, as well as the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 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
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<PAGE> 13
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".
DEPUY, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------------ ----------------------------------------
1998 1997 1997 1996 1995
---------------- ----------- ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
DATA:
Net sales.............. $ 207,331 $ 187,842 $ 770,188 $ 697,273 $ 636,561
Operating income....... 34,297 52,391 193,030 187,503 170,323
Net income............. 18,848 31,265 122,786 106,748 94,929
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
---------------- --------------------------
1998 1997 1996
---------------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets......... $ 624,024 $ 605,406 $ 546,719
Total assets........... 1,096,550 1,080,657 897,961
Current liabilities.... 192,452 202,166 177,601
Stockholders' equity... 794,311 762,118 670,628
</TABLE>
Recent Developments. On June 3, 1998, the Company completed its
acquisition of all the issued and outstanding shares of capital stock of AcroMed
Corporation ("AcroMed"). AcroMed, which is based in Cleveland, Ohio, designs and
sells spinal implants and related products. The acquisition was affected through
the merger of a newly-formed, wholly owned subsidiary of the Company with and
into AcroMed, as a result of which the Company became the sole shareholder of
AcroMed. For further information regarding the provisions of the transaction,
see the Company's Current Report on Form 8-K dated June 3, 1998, which is
incorporated herein by reference.
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 Section 12) 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 available
for inspection at the library of the NYSE, 20 Broad Street, New York, New York
10005.
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 information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness
11
<PAGE> 14
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 quarter
ended March 29, 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.
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<PAGE> 15
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 $3.6 billion. 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, under available lines
of credit and pursuant to its current commercial paper program for such capital
contribution. The Purchaser therefore has not conditioned the Offer on obtaining
financing.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
In June 1998, James R. Utaski, Vice President Corporate Development of
Parent, called representatives of the Stockholders to discuss Parent's interest
in acquiring the Company. They confirmed that the Stockholders would be willing
to consider a proposal with respect to such acquisition.
On July 9, 1998, Mr. Utaski, James T. Lenehan, Worldwide Chairman Consumer
Pharmaceuticals & Professional Group of Parent, James R. Hilton, Associate
General Counsel of Parent, and William Doyle, Vice President Licensing and
Acquisitions, Professional Group, of Parent, met with certain representatives of
the Stockholders. During the meeting, representatives of Parent presented
Parent'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 Parent and the
Stockholders would be willing to proceed with the transaction, including
Parent's desire to obtain the support of the Company's Board of Directors and
senior management. Parent's representatives proposed a price of approximately
$33 to $34 per Share, subject to the accuracy of certain assumptions, completion
of due diligence and the negotiation of definitive agreements. The
representatives of the Stockholders expressed their interest in proceeding with
discussions, but indicated they would not accept a price of less than $35 per
Share.
On July 9, 1998 and July 10, 1998, Mr. Utaski had brief telephone
conversations with representatives of the Stockholders concerning the proposed
transaction, including, among other things, the possible roles of the Company's
senior management following the proposed transaction.
On July 11, 1998, Messrs. Lenehan and Utaski and William D. Dearstyne, Jr.,
Company Group Chairman of Parent, met in Chicago with James A. Lent, Chairman
and Chief Executive Officer of the Company, and Michael J. Dormer, President and
Chief Operating Officer of the Company. Parent's representatives expressed
Parent's serious interest in exploring an acquisition of the Company and
proposed general parameters pursuant to which Parent would be willing to proceed
with such a transaction as well as a timetable, senior management's roles and
responsibilities in the event a transaction were consummated, due diligence and
other actions necessary to proceed with such a transaction. Parent's
representatives repeated their proposal for a price of approximately $33 to $34
per Share. Messrs. Lent and Dormer expressed the Company's interest in
proceeding with discussions whereby the public stockholders would receive the
same price as the Stockholders and indicated their desire for a price of not
less than $35 per Share.
Between July 12, 1998 and July 20, 1998, Parent, the Company, the
Stockholders and their respective representatives conducted due diligence and
had numerous discussions and continued negotiations with respect to the purchase
price and other material terms of the transaction.
On July 14, 1998, drafts of the definitive agreements were delivered to
representatives of the Stockholders and the Company.
On July 14, 1998, the Company and Parent entered into a Confidentiality
Agreement, which was amended by the parties on July 18, 1998.
On July 16, 1998, Mr. Dearstyne, Donald Grilli, President of Johnson &
Johnson Professional, Inc., a subsidiary of Parent, Eric B. Jung, Attorney for
Parent, and Mr. Doyle met in New York with Messrs. Lent and Dormer and discussed
certain post-acquisition operating issues relating to the proposed transaction.
On July 17, 1998, Ralph S. Larsen, Chairman, Board of Directors and Chief
Executive Officer of Parent, Robert N. Wilson, Vice Chairman, Board of Directors
of Parent, Mr. Utaski and Mr. Lenehan met in New York
13
<PAGE> 16
with Messrs. Lent and Dormer and discussed the future strategic direction of the
Company assuming consummation of the transaction and other material terms of the
transaction.
During the period from July 17, 1998 to July 20, 1998, the parties
negotiated, and ultimately agreed upon, a price of $35 per Share and the other
material terms of the proposed transaction and finalized the definitive
agreements.
On July 20, 1998, Parent's Board of Directors met and approved the
transaction. In the afternoon of July 20, 1998, the Board of Directors of the
Company met with its legal and financial advisors and, after being briefed on
the transaction, approved the transaction. Following these approvals, each of
the Merger Agreement and the Stockholder Agreement were executed and delivered
and the transaction was publicly announced before the European and U.S.
financial markets opened on July 21, 1998.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENT
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), 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 such 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 Stockholder Agreement
Condition were satisfied and the Purchaser were to accept for payment Shares
tendered pursuant to the Offer, including the Shares subject to the Stockholder
Agreement sold pursuant to the Stockholder Agreement or tendered by the
Stockholders pursuant to the Offer), 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.
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 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 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 under the Merger Agreement; and (iii) Purchaser having previously
accepted for payment and paid for Shares pursuant to and subject to the
conditions (including the Stockholder Agreement Condition) of the Offer and, if
any Shares subject to the Stockholder Agreement were not purchased pursuant to
the Offer, pursuant to the Stockholder Agreement.
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<PAGE> 17
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) the Purchaser shall not have accepted for payment Shares
pursuant to the Offer prior to March 31, 1999, unless the failure of any
condition to such acceptance results from the failure by the party seeking to
terminate the Merger Agreement to perform any of its obligations under the
Merger Agreement or from facts or circumstances that constitute a willful and
intentional material breach of representation or warranty under the Merger
Agreement by such party; or (b) if any Federal, state or local government or any
court, tribunal, administrative agency or commission or other 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 complied with its obligations under the
Merger Agreement, (iii) 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, and (iv) 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.
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 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. The Merger
Agreement defines "Takeover Proposal" as any proposal or offer from any person
relating to any direct or indirect acquisition or purchase of 20% or more of the
assets of the Company and its subsidiaries, taken as a whole, or 20% 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 20% 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 agreement (an "Acquisition Agreement") with respect to any Takeover
Proposal.
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, 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
15
<PAGE> 18
informed of the status and details (including amendments or proposed amendments)
of any such Takeover Proposal, request for information or inquiry.
The Merger Agreement provides that nothing contained therein 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;
provided that 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. All fees and expenses incurred in connection with the
Merger Agreement, the Offer, the Merger and the Stockholder Agreement and the
transactions contemplated by the Merger Agreement and the Stockholder Agreement
will be paid by the party incurring such fees or expenses, whether or not the
Offer or the Merger is consummated.
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, except as otherwise expressly permitted by the Merger Agreement, the
Company shall not, and shall not permit any of its subsidiaries to, (without
Parent's written consent) (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 employee 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) incur any indebtedness for
borrowed money or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing except for short
term borrowings incurred in the ordinary course of business consistent with past
practice or (b) make any loans, advances or capital contributions to, or
investments in, any other person, other than advances to employees in the
ordinary course of business; (vii) make or agree to make any new capital
expenditure or expenditures with respect to property, plant or equipment except
as set forth in a schedule provided to Parent which exceeds in the aggregate (a)
with respect to the year ended December 31, 1998, 110% of the amount set forth
in the Company's capital budget for such year, (b) with respect to any quarterly
period thereafter, 25% of the amount in (a) above, and (c) $10 million for a new
computer system in the United Kingdom; (viii) make any material tax election or
settle or compromise any material income tax liability or, except as required by
generally accepted accounting principles, make any change in accounting methods,
principles or practices; (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, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in
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<PAGE> 19
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 since January 1, 1997 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 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 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 manner the compensation or
fringe benefits of, or pay any bonus to, any director, officer or "key employee"
(as defined below) (except for normal increases of cash compensation or cash
bonuses to individuals (and not across the board actions), in the ordinary
course of business consistent with past practice), (c) pay any benefit not
provided for under any benefit plan, (d) except as permitted in clause (b),
grant any awards under any bonus, incentive, performance or other compensation
plan or arrangement or benefit plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock, or the removal of existing restrictions in any benefit plans
or agreement or awards made thereunder) or (e) take any action 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. The Merger Agreement defines "key employee"
as an employee of the Company or any of its subsidiaries with annual cash
compensation in excess of $300,000.
Pursuant to the Merger Agreement, neither the Company nor any of its
subsidiaries, on the one hand, nor the Parent or the Purchaser on the other
shall take any action that could 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 untrue, (ii) any of such representations
and warranties that are not so qualified becoming untrue in any material respect
or (iii) any of the conditions to the Offer or to the Merger not being
satisfied.
BOARD OF DIRECTORS; MANAGEMENT. The Merger Agreement provides that
promptly upon the acceptance for payment of, and payment for, any Shares by the
Purchaser pursuant to and subject to the conditions (including the Stockholder
Agreement Condition) of the Offer, the Purchaser shall be entitled to designate
such number of the directors on the Board of Directors of the Company such that
the Purchaser, subject to compliance with Section 14(f) of the Exchange Act,
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 the
Purchaser's designees to be appointed to the Company's Board of Directors;
provided, however, that in the event that Purchaser's designees are elected to
the Board of Directors of the Company, until the Effective Time such Board of
Directors shall have at least two directors who are directors of the Company on
the date of the Merger Agreement and who are not officers of the Company or any
of its subsidiaries (the "Independent Directors") and; provided further that, in
such event, if the number of Independent Directors shall be reduced below two
for any reason whatsoever, the remaining Independent Director shall designate a
person to fill such vacancy who shall be deemed to be an Independent Director
for purposes of the Merger Agreement or, if no Independent Directors then
remain, the other directors of the Company on the date of the Merger Agreement
shall designate two persons to fill such vacancies who shall not be officers or
affiliates of the Company or any of its subsidiaries, or officers or affiliates
of Parent or any of its subsidiaries, and such persons shall be deemed to be
Independent Directors for purposes of the Merger Agreement. Subject to
applicable law, the Company has agreed to 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, which Information
Statement is attached as Schedule I to the Schedule 14D-9. In connection with
the foregoing, the Company will promptly, at the option of Parent, either
increase the size of the Company's Board of Directors or use its best efforts to
obtain the resignation of such number of its current directors as is necessary
to enable the
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<PAGE> 20
Purchaser's designees to be elected or appointed to, and to constitute a
majority of, the Company's Board of Directors as discussed above. The Merger
Agreement provides that the directors of the Purchaser immediately prior to the
Merger, and James A. Lent, the Chairman and Chief Executive Officer of the
Company, and Michael J. Dormer, the President and Chief Operating Officer of the
Company, 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.
Parent is currently in negotiations with Messrs. Lent and Dormer with
respect to their continued employment with the Company or Parent following the
Merger. It is currently anticipated that, subject to the successful consummation
of such negotiations, and to the consummation of the Offer, Mr. Lent would
become a Company Group Chairman of Parent with responsibility for Parent's
orthopaedic business and Mr. Dormer would become President of the Company, which
would include most of the current orthopaedic businesses of the Company and
Parent.
Both of Messrs. Lent and Dormer participated in negotiating the terms of
the Merger Agreement and participated in the Board's discussion of, and voted to
approve, the Offer, the Merger and the Merger Agreement. Further, pursuant to
the Merger Agreement, they will each serve as directors of the Surviving
Corporation after the Merger and, pursuant to their respective employment
contracts with the Company, if the Purchaser accepts a majority of the
outstanding Shares pursuant to the Offer, the Company will be deemed to have met
the target performance goals set under the DePuy, Inc. Senior Executive
Incentive Compensation Plan for 1998 with respect to Messrs. Lent and Dormer and
each will, accordingly, receive cash bonuses under the Incentive Plan.
During the 60 days following the Merger, each of Steven L. Artusi, the
Company's Senior Vice President, General Counsel and Secretary, Thomas J.
Oberhausen, the Company's Senior Vice President, Chief Financial Officer and
Treasurer and G. Taylor Seward, the Company's Senior Vice President, Personnel,
will have the right, in accordance with his existing employment contract with
the Company and the Merger Agreement, to declare that he has been
"constructively terminated" (as defined in his employment agreement with the
Company) and to discontinue his duties with the Company, whereupon the
"Company's Notice Period" (as defined in his employment agreement) will be
deemed to have commenced, and he will be entitled to continue receiving salary
and benefits as set forth in such employment agreements.
STOCK OPTIONS. The Merger Agreement provides that as soon as practicable
following the date of the Merger Agreement but in no event later than the
consummation of the Offer, the Company (or, if appropriate, the Board of
Directors of the Company or any committee administering the Stock Option Plans
(as defined below)) shall take actions such that, with certain exceptions
(including by adopting resolutions or taking any other actions), each
outstanding option to purchase Shares (a "Company Stock Option") granted under
any stock option, stock appreciation rights or stock purchase plan, program or
arrangement of the Company (collectively, the "Stock Option Plans") that is
outstanding immediately prior to the consummation of the Offer, whether or not
then exercisable, shall be cancelled immediately prior to the effective time of
the Merger (the "Effective Time") in exchange for an amount in cash, payable at
the time of such cancellation, equal to the product of (x) the number of Shares
subject to such Company Stock Option immediately prior to the Effective Time and
(y) the excess of the price per Share to be paid in the Offer over the per Share
exercise price of such Company Stock Option. The Merger Agreement further
provides that 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 remaining are cancelled 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 (except for the payment described above) without the consent of Parent.
Notwithstanding the preceding paragraph, the Board of Directors of the
Company will take action under Section 12.3(b) of the Company's Employee Stock
Option/Purchase Plan to provide that, in the case of outstanding options under
the Company's Savings-Related Share Option Scheme (the "Scheme"), participants
will, upon any exercise of an option in accordance with the Scheme (or at any
earlier time as may be permitted) and the payment of the applicable exercise
price, be entitled to receive only a cash payment for each share of Company
Common Stock reserved for purposes of the Scheme to which such participant would
otherwise be entitled upon such exercise equal to the price per Share to be paid
in the Offer. As soon as practicable following
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<PAGE> 21
the date of the Merger Agreement but not later than the consummation of the
Offer, the Company will use its best efforts to obtain the approval of each
participant holding an option under the Scheme to the surrender and cancellation
thereof in consideration of a cash payment to be made by the Company in such
amount or in accordance with such formula as will have been reviewed and
consented to by Parent prior to the seeking of any such approval by the Company.
In addition, and only to the extent permitted by applicable law, the Company
will take action to cease employee contributions to the Scheme no later than the
consummation of the Offer. The Company and the Parent agree to take such other
actions as will reasonably be required to accomplish the surrender and
cancellation of the options under the Scheme.
The Merger Agreement provides further that subject to the provisions set
forth above, 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
Merger Agreement provides that 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 that
the Company shall use its reasonable best efforts to ensure that following the
Effective Time, no holder of any remaining 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.
BENEFIT PLANS. The Merger Agreement states that it is Parent's intention
that for a period of not less than one year after the Effective Time, employees
of the Company who continue their employment after the Effective Time will be
provided compensation and employee benefits which are substantially comparable
in the aggregate to those provided for such employees in effect on the date of
the Merger Agreement. The Merger Agreement also provides that neither the Parent
nor the Surviving Corporation will have any obligation to issue, or adopt any
plans or arrangements providing for the issuance of, shares of capital stock,
warrants, options, stock appreciation rights or other rights in respect of any
shares of capital stock of any entity or any securities convertible or
exchangeable into such shares pursuant to any such plans or arrangements.
Finally, the Merger Agreement provides that any plans or arrangements of the
Company providing for such issuance shall be disregarded in determining whether
employee benefits are substantially comparable in the aggregate.
PURCHASE OF FOREIGN SUBSIDIARIES. The Merger Agreement provides that
Parent and its affiliates will have the right, at the option of Parent, to
purchase immediately prior to the consummation of the Offer any subsidiary of
the Company that is not incorporated or organized under the laws of a
jurisdiction within the United States at a price and on such terms as may be
determined by mutual agreement of the Parent and the Company; provided that all
of the conditions to Offer set forth in Section 14 have been satisfied or waived
and Parent and Purchaser are unconditionally obligated to consummate the Offer.
The Merger Agreement further provides that if the Parent and the Company are
unable to agree upon a price or terms for such sale, Parent and the Company
shall elect an independent appraisal firm to determine such price or terms and
that the conclusions of such appraisal firm shall be conclusive and binding. The
fees of such appraisal firm shall be shared equally by Parent and the Company.
Parent has agreed in the Merger Agreement that in no event will the Company be
deemed to have breached any of its representations, warranties, covenants or
other obligations under the Merger Agreement by reason of (whether directly or
indirectly, whether in whole or in part) any taxes or liabilities incurred, any
payments made, or any action taken or any omissions of any necessary action as a
result of or in connection with (i) Parent's exercise of its right to purchase
the Company's foreign subsidiaries prior to the consummation of the Offer
pursuant to this provision or (ii) any other transaction or agreement
contemplated by this provision or entered into in connection therewith.
INDEMNIFICATION, EXCULPATION AND INSURANCE. 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 Effective Time (including with respect to the transactions
contemplated by the Merger Agreement) existing now or at the Effective Time 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 Effective
Time and shall survive the Merger and shall continue in full force and effect
without amendment, modification or repeal in accordance with their terms for a
period of not less than six
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<PAGE> 22
years after the Effective Time; provided, however, that if any claims are
asserted or made within such six year period, 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, unless Parent agrees to guarantee the
indemnification obligations described in the preceding paragraph, for a period
of six years from the Effective Time, Parent shall provide officers' and
directors' liability insurance in respect of acts or omissions occurring at or
prior to the Effective Time, covering each person currently covered by the
Company's officers' and directors' liability insurance policy, or who becomes
covered by such policy prior to the Effective Time, on terms with respect to
coverage and amount no less favorable than those of such policy in effect on the
date hereof; provided that in satisfying such obligation Parent shall not be
obligated to pay premiums in excess of 200% of the amount per annum paid by the
Company in its last full fiscal year; and provided further that Parent shall
nevertheless be obligated to provide such coverage as may be obtained for such
200% amount.
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 shall 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
preceding paragraphs 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, each of the parties will use
all reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Offer and the Merger and the other
transactions contemplated by the Merger Agreement and the Stockholder 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 Agreement. The Stockholder Agreement provides that each
Stockholder will sell, and the Purchaser will purchase, all Shares beneficially
owned by such Stockholder, at a price per Share equal to $35. The obligation of
the Stockholders to sell, and the obligation of the Purchaser to purchase,
Shares under the Stockholder Agreement 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
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<PAGE> 23
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
the submission of, any Takeover Proposal; or (iv) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal.
Each of the Stockholders has also agreed, and the Stockholder Agreement
includes an irrevocable proxy provision for the benefit of the Purchaser with
respect to the Shares owned by each Stockholder, (i) to vote such Shares 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, 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 (ii) 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
Stockholder's 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 or nullify 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 each class of the Company's common stock.
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. Any such judicial
determination of the fair value of Shares 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
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, 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 and is qualified in its entirety by the full
text of Section 262 of the DGCL.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL 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
shareholders be filed with the Commission and disclosed to minority shareholders
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.
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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, the Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to 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 (i) the Stockholder Agreement is valid,
binding and in full force and effect and enforceable by Parent and the Purchaser
in accordance with its terms and no party thereto (other than Parent or the
Purchaser) is in material breach thereof and the Shares subject to the
Stockholder Agreement shall have been either tendered into the Offer or
delivered to the Purchaser for purchase immediately following the Offer (the
"Stockholder Agreement Condition"), (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated and (iii) Parent, the Purchaser and the Company shall have
received in respect of the Merger and any matters arising therefrom confirmation
by way of a decision from the Commission of the European Union (the "European
Commission") under Council Regulation (EEC) No. 4064/89 of 21 December 1989, as
amended (with or without the initiation of proceedings under Article 6(1)(c)
thereof), that the Merger and any matters arising therefrom are compatible with
the common market. 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
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<PAGE> 25
the Merger Agreement and before the acceptance of such Shares for payment or the
payment therefor, any of the following conditions exists:
(a) there shall be instituted or pending by any Governmental Entity
any suit, action or proceeding (or by any other person any suit, action or
proceeding that has a reasonable likelihood of success) (i) challenging the
acquisition by Parent or the Purchaser of any Shares under the Offer or
pursuant to the Stockholder Agreement, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any
of the other transactions contemplated by the Merger Agreement or the
Stockholder Agreement, or seeking to obtain 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) seeking to prohibit or materially limit 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 to compel 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 Agreement, (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 or purchased under
the Stockholder Agreement including, without limitation, the right to vote
such Shares on all matters properly presented to the stockholders of the
Company or (iv) seeking to prohibit Parent or any of its subsidiaries from
effectively controlling in any material respect any material 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, other than the application to the Offer or
the Merger of the applicable waiting period under the Merger Control Laws,
that is reasonably likely to result, 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) 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;
(e) 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; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of Parent or the Purchaser in any such case,
and regardless of the circumstances (including any action or omission by Parent
or the Purchaser) giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payments therefor.
The Merger Agreement provides that the foregoing conditions in paragraphs
(a) through (f) 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 and circumstances
and each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
23
<PAGE> 26
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 Agreement 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 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 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.
24
<PAGE> 27
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the purchase of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. Parent is in the process of preparing such filing. If, within the
initial 15-day waiting period, either the Antitrust Division or the FTC requests
additional information or material from Parent concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance by Parent with
such request. Only one such extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only with the consent of Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or the
FTC raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The consummation of the Merger is also contingent upon confirmation from
the European Commission under Council Regulation (EEC) No. 4064/89 of 21
December 1989, as amended, that the Merger does not create or strengthen a
dominant position as a result of which effective competition would be
significantly impeded in the European common market. Parent and the Company will
jointly prepare and file with the European Commission the required notification
of the Merger. The European Commission has one month from the date on which such
information is supplied in which to complete its preliminary investigation into
the Merger. If, following such one month period, the European Commission
considers that it needs to examine the Merger more closely, it may initiate a
Phase II investigation; if it does initiate a Phase II investigation, the
European Commission must make a final determination as to whether or not the
Merger is compatible with the European common market no later than four months
after the initiation of such investigation. If the European Commission does not
make a decision within this four month period, the Merger would automatically be
deemed to be compatible with the European common market and would be allowed to
proceed. Parent and the Company believe it is likely that the European
Commission will determine that the Merger is compatible with the common market.
However, no assurance can be given that the European Commission will not impose
certain conditions or restrictions on the Merger.
Filings with, notifications to, and authorizations and approvals of certain
antitrust authorities in jurisdictions other than the United States and the
European Union 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.
Antitrust enforcement agencies frequently scrutinize the legality under the
antitrust laws of transactions such as the Purchaser's proposed acquisition of
the Company. At any time before or after the Purchaser's purchase of Shares
pursuant to the Offer, such an 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
Credit Suisse First Boston is acting as Dealer Manager in connection with
the Offer and as financial advisor to Parent in connection with Parent's
proposed acquisition of the Company, for which services Credit Suisse First
Boston will receive customary compensation. Parent also has agreed to reimburse
Credit Suisse First Boston for
25
<PAGE> 28
its out-of-pocket expenses, including the fees and expenses of legal counsel and
other advisors if the retention of such advisors was approved in writing by
Parent, incurred in connection with its engagement, and to indemnify Credit
Suisse First Boston and certain related persons against certain liabilities and
expenses in connection with its engagement, including certain liabilities under
the Federal securities laws.
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 Dealer Manager and 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 the Dealer Manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser 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).
LIB ACQUISITION CORP.
July 27, 1998
26
<PAGE> 29
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>
27
<PAGE> 30
<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>
28
<PAGE> 31
<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>
29
<PAGE> 32
<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.
<TABLE>
<CAPTION>
POSITION WITH THE PURCHASER;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME 5-YEAR EMPLOYMENT HISTORY
---- -----------------------------------
<S> <C>
Peter S. Galloway......................... Director and Vice President of the Purchaser since July
of 1998. Associate General Counsel since 1988; Secretary
since 1994.
James R. Hilton........................... Director, Vice President, Secretary and Treasurer of the
Purchaser since July of 1998. Associate General Counsel
since March of 1998. Assistant General Counsel 1990 to
1998.
James R. Utaski........................... Director and President of the Purchaser since July of
1998. Corporate Vice President, Business Development
since 1990.
</TABLE>
30
<PAGE> 33
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 -- DPU 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 or
the Dealer Manager at their respective addresses 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, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free (800) 223-2064
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 881-8320
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
DEPUY, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 27, 1998
BY
LIB 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, AUGUST 21, 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 -- DPU 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.
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
------------------------------------------------------------------------
Number of Shares represented by the lost or destroyed certificates:
------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
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 NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
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 LIB 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 $.01 per share (the "Shares"), of DePuy, Inc., a
Delaware corporation (the "Company"), upon Purchaser's offer to purchase all
outstanding Shares at a price of $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 July 27, 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.
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 July 21, 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 July 21, 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 James R. Utaski, James R.
Hilton and Peter S. Galloway, 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 July 21, 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.
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.
<PAGE> 4
------------------------------------------------------------
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> 5
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> 6
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.
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> 7
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 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 or the Dealer Manager at
their respective addresses 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 the Depositary at 1-800-251-4215. 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> 8
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF, 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> 9
<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 or to the Dealer Manager at their respective addresses 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 or the Dealer Manager. 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 and the Dealer Manager) for soliciting tenders of Shares pursuant to the
Offer.
The Information Agent for the Offer is:
f
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free (800) 223-2064
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
(800) 881-8320 (toll free)
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
DEPUY, 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, AUGUST 21, 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
$.01 per share (the "Shares"), of DePuy, 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 -- DPU 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 LIB 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 July 27, 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
[LETTERHEAD OF CREDIT SUISSE FIRST BOSTON CORPORATION]
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEPUY, INC.
AT
$35 NET PER SHARE
BY
LIB 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, AUGUST 21, 1998, UNLESS THE OFFER IS EXTENDED.
July 27, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by LIB Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of Johnson & Johnson, a New
Jersey corporation ("Parent"), to act as Dealer Manager in connection with the
Purchaser's offer to purchase all outstanding shares of common stock, par value
$.01 per share (the "Shares"), of DePuy, Inc., a Delaware corporation (the
"Company"), at $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 July 27, 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, AUGUST 21, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of July 21, 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
<PAGE> 2
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 dissenters'
rights under Delaware law) will be converted into the right to receive $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 a Stockholder Agreement dated as of
July 21, 1998 (the "Stockholder Agreement") with certain stockholders of the
Company (the "Stockholders"), which are direct or indirect wholly owned
subsidiaries of Roche Holding Ltd, who beneficially own 83,000,000 Shares in the
aggregate, or approximately 82.2% of the outstanding Shares on a fully diluted
basis. Under the Stockholder Agreement, the Stockholders have agreed to sell all
such Shares to the Purchaser for $35 per Share in cash, without interest.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THE SHARES OWNED BY
THE STOCKHOLDERS HAVING BEEN VALIDLY TENDERED TO THE PURCHASER AS REQUIRED BY
THE STOCKHOLDER AGREEMENT, (II) ANY WAITING PERIOD UNDER THE HART-SCOTT RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, HAVING EXPIRED OR BEEN
TERMINATED AND (III) ANY APPROVAL UNDER COUNCIL REGULATION (EEC) NO. 4064/89 OF
21 DECEMBER 1989, AS AMENDED, HAVING BEEN OBTAINED.
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 Dealer Manager, Georgeson &
Company Inc. (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 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 or the Dealer Manager at their respective
addresses and telephone numbers set forth on the back cover of the enclosed
Offer to Purchase.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
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, THE DEALER MANAGER 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
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEPUY, INC.
AT
$35 NET PER SHARE
BY
LIB 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, AUGUST 21, 1998, UNLESS THE OFFER IS EXTENDED.
July 27, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated July 27, 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 LIB 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 $.01 per
share (the "Shares"), of DePuy, Inc., a Delaware corporation (the "Company"), at
$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 $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 July 21, 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) will be converted into the right to receive $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 a Stockholder Agreement
dated as of July 21, 1998 (the "Stockholder Agreement") with certain
stockholders of the Company (the "Stockholders"), which are direct or
indirect wholly owned subsidiaries of Roche Holding Ltd, who beneficially
own 83,000,000 Shares in the aggregate, or approximately 82.2% of the
outstanding Shares on a fully diluted basis. Under the Stockholder
Agreement, the Stockholders have agreed to tender all such Shares to the
Purchaser for $35 per Share in cash, without interest.
<PAGE> 2
5. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THE SHARES
OWNED BY STOCKHOLDERS HAVING BEEN TENDERED TO THE PURCHASER AS REQUIRED BY
THE STOCKHOLDER AGREEMENT, (II) ANY WAITING PERIOD UNDER THE HART-SCOTT-
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, HAVING EXPIRED OR
BEEN TERMINATED AND (III) ANY APPROVAL UNDER COUNCIL REGULATION (EEC) NO.
4064/89 OF 21 DECEMBER 1989, AS AMENDED, HAVING BEEN OBTAINED.
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, August 21, 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 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 DEPUY, INC.
The undersigned acknowledges receipt of your letter enclosing the Offer to
Purchase, dated July 27, 1998, of LIB 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 $.01 per share of DePuy, 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
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
July 27, 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 Credit Suisse First Boston Corporation
("Credit Suisse First Boston" or the "Dealer Manager") or 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
DEPUY, INC.
AT
$35 NET PER SHARE
BY
LIB ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
JOHNSON & JOHNSON
LIB 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 $.01 per share (the "Shares"), of DePuy, Inc., a Delaware corporation
(the "Company"), at $35 per Share, net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated July 27, 1998 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, AUGUST 21, 1998, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of July 21, 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) will be converted into
the right to receive $35 in cash, without interest. The Merger Agreement is
more fully described in the Offer to Purchase.
The Purchaser and Parent have entered into a Stockholder Agreement dated
as of July 21, 1998 (the "Stockholder Agreement") with certain stockholders of
the Company (the "Stockholders"), which are direct or indirect wholly owned
subsidiaries of Roche Holding Ltd, who beneficially own 83,000,000 Shares in
the aggregate, or approximately 82.2% of the outstanding Shares on a fully
diluted basis. Under the Stockholder Agreement, the Stockholders have agreed to
tender all such Shares to the Purchaser for $35 per Share in cash, without
interest.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THE SHARES OWNED BY
THE STOCKHOLDERS HAVING BEEN VALIDLY TENDERED TO THE PURCHASER AS REQUIRED BY
THE STOCKHOLDER AGREEMENT, (II) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, HAVING EXPIRED OR BEEN
TERMINATED AND (III) ANY APPROVAL UNDER COUNCIL REGULATION (EEC) NO. 4064/89 OF
21 DECEMBER 1989, AS AMENDED, HAVING BEEN OBTAINED.
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 purchased 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, August 21, 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.
<PAGE> 3
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
September 24, 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 WHICH 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 or to the Dealer Manager at their respective addresses 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 or the Dealer Manager. 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 Dealer Manager
and the Information Agent) for soliciting tenders of Shares pursuant to the
Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. 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
The Dealer Manager for the Offer is:
[CREDIT SUISSE/FIRST BOSTON LOGO]
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 881-8320
July 27, 1998
<PAGE> 1
EXHIBIT (a)(8)
CONFIDENTIAL
<TABLE>
<S> <C> <C>
Contact: Robert V. Andrews - Media Relations David R. Sheffield - Investor Relations
Johnson & Johnson Johnson & Johnson
732 524-3348 732 534-6491
James R. Goff - Media and Investor Relations
DePuy, Inc.
219 372-7305
Daniel Piller - Media Relations Max Wolfgang Gurtner - Investor Relations
Roche Roche
41 61 687 05 29 41 61 688 55 54
</TABLE>
FOR IMMEDIATE RELEASE
Johnson & Johnson to Acquire DePuy
For $35.00 Per Share or $3.5 Billion
New Brunswick, NJ., and Warsaw, IN, (July 21, 1998) -- Johnson & Johnson
(NYSE: JNJ), the world's most comprehensive and broadly-based manufacturer of
health care products, and DePuy, Inc. (NYSE: DPU), one of the world's leading
orthopaedic products companies, today announced they have entered into a
definitive agreement under which Johnson & Johnson will acquire DePuy for
$35.00 per share, for an aggregate transaction value of $3.5 billion.
Pursuant to the agreement, Johnson & Johnson will begin a cash tender
offer for all outstanding shares of DePuy for $35.00 per share. The offer is
expected to commence on July 27 and will remain open for a minimum of 20
business days. Any shares not purchased in the offer will be acquired for the
same price in cash in a second step merger.
Simultaneously, Johnson & Johnson and Roche, of Basel, Switzerland,
announced they have entered into an agreement under which Roche, which owns 84%
of the outstanding shares of DePuy, has agreed to tender all of its shares.
DePuy has approximately 99,000,000 shares outstanding.
The boards of directors of Johnson & Johnson and DePuy have given approval
to the acquisition.
(more)
<PAGE> 2
Johnson & Johnson Board Chairman Ralph S. Larsen termed the acquisition "a
very important strategic addition to our worldwide orthopaedic business." He
added, "We are delighted that this acquisition would place the new entity in a
position to become the leading company in the $9 billion orthopaedic market. The
excellent product synergies of both organizations would create a platform for
ongoing growth, and the quality and breadth of these product lines would enable
us to better serve the needs of hospitals, physicians and patients in today's
rapidly changing health care environment."
Mr. Larsen said that the new orthopaedic entity would be known as DePuy, a
Johnson & Johnson Company, and would join another Johnson & Johnson affiliate,
Codman & Shurtleff, under the umbrella of Johnson & Johnson Professional.
Based upon 1997 results, combined sales of Johnson & Johnson Professional
would be more than $1.4 billion.
James A. Lent, chairman and chief executive officer of DePuy, said, "Our
tradition of innovation and excellence can only be enhanced by joining forces
with Johnson & Johnson, which has a strong presence and a wonderful reputation
throughout the world. This partnership is in the best interest of our
shareholders, employees and customers, and the expanded technologies and
resources assure the development of innovative new products across the
orthopaedic spectrum."
Mr. Lent would have responsibility for Johnson & Johnson Professional as a
company group chairman of Johnson & Johnson. Michael J. Dormer, president and
chief operating officer of DePuy, Inc., would become president of the new
worldwide orthopaedic entity -- DePuy, a Johnson & Johnson Company.
The headquarters for the combined orthopaedic businesses would be in
Warsaw, IN, with the exception of DePuy International, which would be in Leeds,
U.K. Codman & Shurtleff would remain in Raynham, MA.
The acquisition is subject to clearance under the Hart-Scott-Rodino
Anti-Trust Improvements Act and under the European Union merger control
regulation.
(more)
<PAGE> 3
DePuy was founded in 1895 and is a market leader in the global orthopaedic
industry. The company's products are used by orthopaedic surgeons and medical
specialists to reconstruct damaged or diseased joints, to facilitate fusion of
elements of the spine and correct spinal deformities, to repair bone fractures,
and to rehabilitate sports-related injuries.
Johnson & Johnson, with 1997 sales of $22.6 billion, is the world's most
comprehensive and broadly-based manufacturer of health care products for the
consumer, pharmaceutical and professional markets. Johnson & Johnson has 91,000
employees and 180 operating companies in 51 countries around the world, selling
products in more than 175 countries.
Roche, headquartered in Basel, is a world leader in research-based health
care with principal businesses in pharmaceuticals, diagnostics, vitamins, and
fragrances and flavors. Roche has over 70,000 employees and sells its products
in more than 100 countries. In the first half of 1998 the company reached sales
of 13.4 billion Swiss francs.
* * *
Johnson & Johnson will sponsor a conference call for the investment
community on Tuesday, July 21, at 11:30 a.m. (EDT) to discuss its announcement
today to acquire DePuy for $3.5 billion. Telephone number for the conference
call is 973 633-1010. A rebroadcast of the conference call will be available for
a two-week period through August 4, 1998. Telephone number for the rebroadcast
is 402 220-0873.
* * *
<PAGE> 1
CONFORMED COPY
Exhibit (c)(1)
================================================================================
AGREEMENT AND PLAN OF MERGER
among
JOHNSON & JOHNSON,
LIB ACQUISITION CORP.
and
DEPUY, INC.
Dated as of July 21, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
ARTICLE I
THE OFFER
Page
----
Section 1.01 The Offer .................................................... 2
Section 1.02 Company Actions .............................................. 4
ARTICLE II
THE MERGER
Section 2.01 The Merger ................................................... 6
Section 2.02 Closing ...................................................... 6
Section 2.03 Effective Time ............................................... 7
Section 2.04 Effects of the Merger ........................................ 7
Section 2.05 Certificate of Incorporation and Bylaws ...................... 7
Section 2.06 Directors .................................................... 7
Section 2.07 Officers ..................................................... 7
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.01 Effect on Capital Stock ...................................... 8
Section 3.02 Exchange of Certificates ..................................... 9
ARTICLE IV
REPRESENTATIONS & WARRANTIES OF THE COMPANY
Section 4.01 Organization ................................................ 12
Section 4.02 Company Subsidiaries; Equity Interests ...................... 12
Section 4.03 Capitalization .............................................. 13
<PAGE> 3
3
Section 4.04 Authority ................................................... 14
<PAGE> 4
4
Section 4.05 Consent and Approvals; No Violations ........................ 14
Section 4.06 SEC Documents; Financial Statements ......................... 15
Section 4.07 Information Supplied ........................................ 16
Section 4.08 Absence of Certain Changes or Events ........................ 17
Section 4.09 Litigation .................................................. 18
Section 4.10 Contracts ................................................... 18
Section 4.11 Compliance with Laws ........................................ 18
Section 4.12 Environmental Matters ....................................... 19
Section 4.13 Absence of Changes in Benefit Plans; Labor Relations ........ 20
Section 4.14 ERISA Compliance ............................................ 20
Section 4.15 Taxes ....................................................... 23
Section 4.16 No Excess Parachute Payments ................................ 24
Section 4.17 Title to Properties ......................................... 25
Section 4.18 Intellectual Property ....................................... 25
Section 4.19 Agreements for Distribution Outside the United States ....... 26
Section 4.20 Voting Requirements ......................................... 26
Section 4.21 State Takeover Statutes ..................................... 26
Section 4.22 Brokers; Schedule of Fees and Expenses ...................... 26
Section 4.23 Opinion of Financial Advisor ................................ 27
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Section 5.01 Organization ................................................ 27
Section 5.02 Authority ................................................... 27
Section 5.03 Consents and Approvals; No Violations ....................... 28
Section 5.04 Information Supplied ........................................ 28
Section 5.05 Interim Operations of Sub. .................................. 29
Section 5.06 Brokers ..................................................... 29
Section 5.07 Financing ................................................... 29
ARTICLE VI
COVENANTS
<PAGE> 5
5
Section 6.01 Conduct of Business ......................................... 30
Section 6.02 No Solicitation ............................................. 33
Section 6.03 Certain Tax Matters ......................................... 34
Section 6.04 Other Actions ............................................... 35
Section 6.05 Advice of Changes; Filings .................................. 35
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 Company Stockholder Approval; Preparation of Proxy
Statement ................................................. 35
Section 7.02 Access to Information; Confidentiality ...................... 36
Section 7.03 Reasonable Efforts; Notification ............................ 37
Section 7.04 Cooperation ................................................. 38
Section 7.05 Stock Option Plans .......................................... 38
Section 7.06 Indemnification, Exculpation and Insurance .................. 40
Section 7.07 Directors ................................................... 41
Section 7.08 Fees and Expenses ........................................... 42
Section 7.09 Transfer Taxes .............................................. 43
Section 7.10 Public Announcements ........................................ 43
Section 7.11 Severance Agreements ........................................ 43
Section 7.12 Continuation of Benefits .................................... 44
Section 7.13 Stop Transfer ............................................... 44
Section 7.14 Purchase of Foreign Subsidiaries ............................ 44
ARTICLE VIII
CONDITIONS
Section 8.01 Conditions to Each Party's Obligation to
Effect the Merger ......................................... 45
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.01 Termination ................................................. 46
Section 9.02 Effect of Termination ....................................... 47
Section 9.03 Amendment ................................................... 47
<PAGE> 6
6
Section 9.04 Extension; Waiver ........................................... 47
Section 9.05 Procedure for Termination, Amendment, Extension or
Waiver .................................................... 48
ARTICLE X
MISCELLANEOUS
Section 10.01 Nonsurvival of Representations, Warranties and Agreements .. 48
Section 10.02 Notices .................................................... 48
Section 10.03 Interpretation ............................................. 50
Section 10.04 Counterparts ............................................... 50
Section 10.05 Entire Agreement; Third Party Beneficiaries ................ 51
Section 10.06 Governing Law .............................................. 51
Section 10.07 Assignment ................................................. 51
Section 10.08 Enforcement ................................................ 51
Section 10.09 Severability ............................................... 52
Section 10.10 Compliance with Law ........................................ 52
EXHIBIT A Conditions of the Offer A-1
<PAGE> 7
AGREEMENT AND PLAN OF MERGER dated as of July 21, 1998,
among JOHNSON & JOHNSON, a New Jersey corporation ("Parent"),
LIB ACQUISITION CORP., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and DEPUY, INC., a
Delaware corporation (the "Company").
WHEREAS, 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;
WHEREAS, 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 $0.01 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 $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");
and 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 and the Stockholder Agreement (as defined below);
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have each approved the merger of Sub into the Company (the "Merger"),
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 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;
WHEREAS, as an inducement to Parent to enter into this Agreement,
Parent, Sub and certain stockholders of the Company have entered into a
Stockholder Agreement dated as of the date hereof pursuant to which such
stockholders have, among other things, agreed to sell all such stockholders'
Shares to Sub at a cash price per Share equal to the Offer Price, upon the terms
and subject to the conditions set
<PAGE> 8
2
forth in such Stockholder Agreement (the "Stockholder Agreement"); and
WHEREAS, 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.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, 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; provided that, without the express written
consent of the Company, Sub may not waive the Stockholder Agreement Condition
(as defined in Exhibit A)). 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 sentence,
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
<PAGE> 9
3
Offer for a specified period, 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
there have not been validly tendered and not withdrawn prior to the expiration
of the Offer such number of Shares that, together with Shares subject to the
Stockholder Agreement which have not been validly tendered, would constitute at
least 90% of the fully diluted Shares as of the date of determination and (D)
extend the Offer for any reason for up to two business days; provided that no
more than three extensions shall be permitted under clauses (C) and (D) of this
sentence. 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"). 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 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
<PAGE> 10
4
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 cause the Schedule 14D-1 as so corrected to be filed with the
SEC and the other Offer Documents as so corrected 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 sufficient to accept for payment, and pay for, any and all
Shares that Sub becomes obligated to accept for payment, and pay for, 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) 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 and the Stockholder 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, tender their Shares pursuant to the
Offer and approve and adopt this Agreement (if required). The Company represents
that its Board of Directors has received the opinion of Bear, Stearns & Co. Inc.
("Bear, Stearns") that, as of such date and based upon
<PAGE> 11
5
and subject to the matters set forth therein, the cash consideration to be
received by the holders of Shares pursuant to the Offer and the Merger was fair
from a financial point of view to such holders, and a complete and correct
signed copy of such opinion has been delivered by the Company to Parent.
(b) On 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
<PAGE> 12
6
to such date, together with copies of all 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 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 request, 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, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time. 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 Parent or Sub,
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 Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, New York 10019, unless
<PAGE> 13
7
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 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, and Michael J. Dormer and James A. Lent, 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 the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
<PAGE> 14
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. 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 $.01 per share, of the
Surviving Corporation.
(b) Cancelation 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 (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.
(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 the DGCL concerning the right of holders
of Company Common Stock to dissent from the Merger and
<PAGE> 15
9
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 the laws of the State of Delaware. 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 the DGCL, 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 substantial bank or trust company
to act as paying agent in the Merger (the "Paying Agent"). Parent shall cause
the Surviving Corporation to deposit with the Paying Agent in separate trust for
holders of the Certificates (as defined in Section 3.02(b)) immediately
available funds in an amount sufficient for the payment of the aggregate Merger
Consideration for the Shares converted pursuant to Section 3.01(c) (it being
understood that any and all interest earned on funds made available to the
Paying Agent pursuant to this Agreement shall be turned over to Parent).
(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"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the 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
<PAGE> 16
10
surrender of a Certificate for cancelation 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 the DGCL, they shall be canceled and exchanged as provided
in this Article III.
(d) No Liability. Any funds deposited with the Paying Agent that
remain unclaimed by the former
<PAGE> 17
11
stockholders of the Company for six months 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; provided, however, that Parent and
the Surviving Corporation 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.
<PAGE> 18
12
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, partnership, limited liability company or other company 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
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 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, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing individually or
in the aggregate would not reasonably be expected to have a material adverse
effect (as defined in Section 10.03) 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) Exhibit
21.1 to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 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 (with the exception, in the case
of certain non-U.S. subsidiaries, of shares held of record by nominees of the
Company) are owned by the Company, by another subsidiary of the Company or by
the Company and another subsidiary of the Company, free and clear of all
<PAGE> 19
13
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).
(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 with a fair market value as of the date of this
Agreement in excess of $5,000,000 in any person.
SECTION 4.03. Capitalization. The authorized capital stock of the
Company consists of 130,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, par value $1.00 per share ("Company Preferred
Stock"). At the close of business on June 30, 1998, (i) 98,816,286 Shares were
issued and outstanding, (ii) the Company did not hold any Shares in its
treasury, (iii) 2,216,553 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) 513,574 Shares were reserved for issuance pursuant to the
Company's Employee Stock Purchase Plan and (v) no shares of Company Preferred
Stock were issued and outstanding. Except as set forth above, since June 30,
1998, 7,964 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
<PAGE> 20
14
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, 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. The Shares set forth in Exhibit A to the
Stockholder Agreement represent in excess of 80% of the outstanding shares of
Company Common Stock on a fully diluted basis.
SECTION 4.04. Authority. 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). This Agreement has been duly executed and
delivered by the Company and, assuming this Agreement constitutes a valid and
binding obligation of Parent and Sub, constitutes a 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
<PAGE> 21
15
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 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, cancelation 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 reasonably be expected to have a
material adverse effect on the Company. "Merger Control Laws" means (i) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (ii) Council Regulation (EEC) No. 4064/89 of 21 December 1989 and
(iii) all amendments of, and all other applicable bills, acts, decrees,
regulations or ordinances relating to, the foregoing legislative acts.
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
<PAGE> 22
16
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any SEC
Document has been revised or superseded by a later-filed SEC Document, none of
the SEC Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present,
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 would reasonably be expected 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, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement at the respective times the Offer Documents,
the Schedule 14D-9 and the Information Statement are filed with the SEC or first
published, sent or given to the Company's stockholders, or in the case of the
Proxy Statement, at the time the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Stockholders Meeting (as defined in
Section 7.01), as such Proxy Statement may be amended or supplemented, contain
any untrue statement of a material
<PAGE> 23
17
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The 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 businesses only in
the ordinary course consistent with past practice, and there has not been (i)
any material adverse change (as defined in Section 10.03) in the Company, (ii)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock, (iii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iv) (x) any granting by the Company or any of its subsidiaries
to any 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, (y)
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 (z) 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, (v) any damage, destruction or loss to
property, whether or not covered by insurance, that individually or in the
aggregate has or would reasonably be expected to 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,
<PAGE> 24
18
except insofar as may have been required by a change in generally accepted
accounting principles or (vii) any tax election that individually or in the
aggregate would reasonably be expected to have a material adverse effect on the
Company.
SECTION 4.09. Litigation. There is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries that individually or in the aggregate would 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 would reasonably be
expected to have, any such effect.
SECTION 4.10. Contracts. (a) 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 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 reasonably be expected to 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 (x) with any affiliate of the Company other
than any direct or indirect wholly-owned subsidiary of the Company or (y) 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, except for instances of actual or
possible noncompliance that individually or in the aggregate would not
reasonably be
<PAGE> 25
19
expected to have a material adverse effect on the Company. Each of the Company
and its subsidiaries has in effect all Federal, state, local and foreign
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights, including all authorizations under
Environmental Laws (as defined in Section 4.12(a)) ("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 reasonably be expected to 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
reasonably be expected to have a material adverse effect on the Company. No
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 would not reasonably be expected to have
a material adverse effect on the Company.
SECTION 4.12. Environmental Matters. (a) Each of the Company and its
subsidiaries is, and has been, in compliance with all applicable Environmental
Laws, except for actual or possible noncompliance which individually or in the
aggregate would not reasonably be expected to have a material adverse effect on
the Company. The term "Environmental Laws" means any 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
<PAGE> 26
20
aggregate would not reasonably be expected to have a material adverse effect on
the Company. The term "Release" has the meaning set forth in 42 U.S.C. ss.
9601(22). The term "Hazardous Materials" means any pollutant, contaminant,
hazardous, radioactive or toxic substance, material, constituent or waste, or
any other waste, substance, chemical or material regulated under any
Environmental Law, including (1) petroleum, crude oil and any fractions thereof,
(2) natural gas, synthetic gas and any mixtures thereof, (3) asbestos or
asbestos-containing material, (4) radon and (5) polychlorinated biphenyls
("PCBs"), or materials or fluids containing PCBs.
(c) Neither the Company nor any of its subsidiaries has received any
written or, to the knowledge of the Company, oral 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 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 Company's knowledge based on written notification
or opinion of counsel, 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, except in each case for those which
individually or in the aggregate would not reasonably be expected to have a
material adverse effect on the Company.
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. There exist no employment, consulting, severance,
termination or indemnification agreements or arrangements between the
<PAGE> 27
21
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. To the best knowledge of the Company, since January 1,
1997, neither the Company nor any of its subsidiaries has encountered any labor
union organizing activity, or had any actual or threatened employee strikes,
work stoppages, slowdowns or lockouts.
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 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 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 and all other applicable laws, rules or
regulations.
(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
<PAGE> 28
22
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 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) 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 June 30, 1998, showing for each such Option: (i)
the number of Shares issuable, (ii) the number of vested Shares, (iii) the date
of grant and (iv) the exercise price.
<PAGE> 29
23
(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. 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. 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).
(h) As a result of the transactions contemplated by this Agreement,
no current or former employee or director of the Company or any of its
subsidiaries shall be eligible for compensation or benefits duplicative of those
provided or made available as a result of the acquisition of the shares of
Corange Limited by an indirect wholly-owned subsidiary of Roche Holding Ltd in
March, 1998.
SECTION 4.15. Taxes. (a) Each of the Company and its subsidiaries
has filed all tax returns and reports required to be filed by it, 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 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) The Federal consolidated income tax returns of the Company and
each of its affiliates that have joined
<PAGE> 30
24
in the filing of such returns have been examined by and settled with the United
States Internal Revenue Service for all years through the year ended December
31, 1992. The statute of limitations on assessment or collection of any Federal
income taxes due from the Company or any other members of the affiliated group
with which the Company files Federal consolidated income tax returns has expired
for all taxable years of the Company and such group through the year ended
December 31, 1992.
(c) Section 4.15 of the Company Disclosure Schedule sets forth a
complete list of each tax sharing agreement, tax indemnity obligation or similar
agreement or arrangement with respect to taxes pursuant to which the Company or
any of its subsidiaries would have any material obligation after the date of
this Agreement.
(d) 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
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.
<PAGE> 31
25
SECTION 4.17. Title to Properties. (a) Each of the Company and its
subsidiaries has good and marketable title to, or valid leasehold interests in
or valid rights to, all its material 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 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
possession under all such material leases, except for failures to do so that
individually or in the aggregate would not reasonably be expected to 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"). 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. 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
<PAGE> 32
26
is infringing the rights of the Company or any of its subsidiaries with respect
to any Intellectual Property Right. 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.
SECTION 4.19. Agreements for Distribution Outside the United States.
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, other than contracts between the Company and its wholly-owned
subsidiaries or between wholly-owned subsidiaries of the Company, relating to
the distribution, sale or marketing outside of the United States by third
parties of the products of, or products licensed by, the Company or any of its
subsidiaries. The Company has made available to Parent and its representatives
true and correct copies of all contracts and agreements to which the Company or
any of its subsidiaries is a party relating to the distribution, sale or
marketing outside of the United States by third parties of the products of, or
products licensed by, the Company or any of its subsidiaries.
SECTION 4.20. Voting Requirements. 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.
SECTION 4.21. State Takeover Statutes. The Board of Directors of the
Company has approved the Merger, this Agreement and the Stockholder Agreement,
and such approval is sufficient to render inapplicable to the Merger, this
Agreement, the Stockholder Agreement, and the transactions contemplated by this
Agreement and the Stockholder Agreement, the provisions of Section 203 of the
DGCL.
SECTION 4.22. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Bear, Stearns,
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. Such fees and expenses
incurred and to be incurred in connection with this Agreement and the
transactions contemplated by this Agreement (other than printing and mailing
costs and
<PAGE> 33
27
expenses), including the fees and expenses of Bear, Stearns, shall be as set
forth on Schedule 4.22 to the Company Disclosure Schedule.
SECTION 4.23. Opinion of Financial Advisor. The Board of Directors
of the Company has received the opinion of Bear, Stearns that, as of such date
and based upon and subject to the matters set forth therein, the cash
consideration to be received by holders of Shares pursuant to the Offer and the
Merger was fair from a financial point of view to such holders, a signed copy of
which opinion has been delivered to Parent.
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 qualifications or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed individually
or in the aggregate would not reasonably be expected to 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 the Stockholder
Agreement, and to consummate the transactions contemplated by this Agreement and
the Stockholder Agreement. The execution, delivery and performance of this
Agreement and the Stockholder Agreement, and the consummation of the
transactions contemplated by this Agreement and the Stockholder Agreement, have
been duly authorized by all necessary corporate action on the part of
<PAGE> 34
28
Parent and Sub and no other corporate proceedings on the part of Parent and Sub
are necessary to authorize this Agreement or the Stockholder Agreement or to
consummate the transactions contemplated hereby or thereby. No vote of Parent
stockholders is required to approve this Agreement or the Stockholder Agreement
or the transactions contemplated hereby or thereby. Each of this Agreement and
the Stockholder Agreement has been duly executed and delivered by Parent and
Sub, and, assuming each 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
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 and
the Stockholder 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 and 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, cancelation 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 reasonably be expected to 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
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29
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Information
Statement or (iv) the Proxy Statement will, in the case of the Offer Documents,
the Schedule 14D-9 and the Information Statement, at the respective times the
Offer Documents, the Schedule 14D-9 and the Information Statement are filed with
the SEC or first published, sent or given to the Company's stockholders, or, in
the case of the Proxy Statement, at the time the Proxy Statement is first mailed
to the Company's stockholders or at the time of the Stockholders Meeting, as
such Proxy Statement may be amended or supplemented, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Offer Documents
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
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, other than Credit Suisse First Boston Corporation, the
fees and expenses of which will be paid by Parent, 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.
<PAGE> 36
30
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. Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, the Company shall not, and shall not
permit any of its subsidiaries to (except as expressly 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, (x) declare, set
aside or pay any dividends on, or make any other distributions in respect
of, any of its capital stock, (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital
stock, or (z) 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);
<PAGE> 37
31
(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) (y) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with
past practice, or (z) 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 which exceeds in
the aggregate (a) with respect to the year ended December 31, 1998, 110%
of the amount set forth in the Company's capital budget for such year, (b)
with respect to any quarterly period thereafter, 25% of the amount in (a)
above, and (c) $10 million for a new computer system in the United
Kingdom;
<PAGE> 38
32
(viii) make any material tax election or settle or compromise any
material income tax liability or, except as required by generally accepted
accounting principles, make any change in accounting methods, principles
or practices;
(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 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 or
other arrangement for the benefit or welfare of any director, officer or
current or former employee, (B) increase in any manner the compensation or
fringe benefits of, or pay any bonus to, any director, officer or key
employee (except for normal increases of cash compensation or cash bonuses
to individuals (and not across the board actions), in the ordinary course
of business consistent with past practice), (C) pay any benefit not
provided for under
<PAGE> 39
33
any Benefit Plan, (D) except as permitted in clause (B), grant any awards
under any bonus, incentive, performance or other compensation plan or
arrangement or Benefit Plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance
units or restricted stock, or the removal of existing restrictions in any
Benefit Plans or agreement or awards made thereunder) or (E) take any
action 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.
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. 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 20% or more of the
assets of the Company and its subsidiaries, taken as a whole, or 20% 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 20% 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.
(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
<PAGE> 40
34
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.
(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, 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 details
(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;
provided, however, neither the Company nor its Board of Directors nor any
committee thereof shall 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
<PAGE> 41
35
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
possibility of a determination or decision which would reasonably be expected to
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. Neither the Company nor any of its
subsidiaries, on the one hand, nor the Parent nor Sub or any of their respective
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 untrue, (ii) any of
such representations and warranties that are not so qualified becoming untrue in
any material respect or (iii) 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, if
requested by Parent, 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 (including the Stockholder Agreement Condition), 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. Notwithstanding the
<PAGE> 42
36
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.
(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.
SECTION 7.02. Access to Information; Confidentiality. 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 and records and, during such period, the
Company shall furnish promptly to Parent
<PAGE> 43
37
(a) a copy of each report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements of Federal or state
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except as required by
law, Parent will hold, and will cause its officers, employees, accountants,
counsel, financial 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 July 11, 1998, as amended, between the Company
and Parent (the "Confidentiality Agreement").
SECTION 7.03. Reasonable Efforts; Notification. (a) Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Offer and the
Merger, and the other transactions contemplated by this Agreement and the
Stockholder 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 Stockholder 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, the Stockholder Agreement or any of the
other transactions contemplated by this Agreement or
<PAGE> 44
38
the Stockholder Agreement and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to the Offer, the Merger, this
Agreement, the Stockholder Agreement or any other transaction contemplated by
this Agreement or the Stockholder Agreement, take all reasonable actions
available to them to ensure that the Offer, the Merger and the other
transactions contemplated by this Agreement and the Stockholder Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and the Stockholder Agreement and otherwise to minimize the effect of
such statute or regulation on the Offer, the Merger, this Agreement, the
Stockholder Agreement and the other transactions contemplated by this Agreement
or the Stockholder Agreement. 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.
(b) The Company shall give prompt notice to Parent 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 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; 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 making any such filing, furnishing
information required in connection therewith and seeking timely to obtain any
such actions.
SECTION 7.05. Stock Option Plans. (a) As soon as practicable
following the date of this Agreement but in no event later than the consummation
of the Offer, the Company (or, if appropriate, the Board of Directors of the
Company or any committee administering the Stock Option Plans (as defined
below)) shall take actions such that
<PAGE> 45
39
(including by adopting resolutions or taking any other actions) each outstanding
option to purchase Shares (a "Company Stock Option") heretofore granted under
any stock option, stock appreciation rights or stock purchase plan, program or
arrangement of the Company (collectively, the "Stock Option Plans") that is
outstanding immediately prior to the consummation of the Offer, whether or not
then exercisable, shall be canceled immediately prior to the Effective Time in
exchange for an amount in cash, payable at the time of such cancelation, equal
to the product of (y) the number of Shares subject to such Company Stock Option
immediately prior to the Effective Time and (z) the excess of the price per
Share to be paid in the Offer over the per Share exercise price of such Company
Stock Option. 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 7.05(a) 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 (except for the
payment described above) without the consent of Parent.
(b) Notwithstanding Section 7.05(a), in the case of the Company's
Savings-Related Share Option Scheme (the "Scheme") under the Company's Employee
Stock Option/Purchase Plan, the provisions of Section 7.05(a) shall not apply
and, in lieu thereof, (i) the Board of Directors of the Company shall take
action under Section 12.3(b) of the Company's Employee Stock Option/Purchase
Plan to provide that, in the case of outstanding options under the Scheme,
participants shall, upon any exercise of an option in accordance with the Scheme
(or at any earlier time as may be permitted) and the payment of the applicable
exercise price, be entitled to receive only a cash payment for each share of
Company Common Stock reserved for purposes of the Scheme to which such
participant would otherwise be entitled upon such exercise equal to the price
per Share to be paid in the Offer and (ii) as soon as practicable following the
date of this Agreement but in no event later than the consummation of the Offer,
the Company shall use its best efforts to obtain the approval of each
participant holding an option under the Scheme to the surrender and cancellation
thereof in consideration of a cash payment to be made by the Company in such
amount or in accordance with such formula as shall have been reviewed and
consented to by Parent prior to the seeking of any such approval by the Company.
In addition, and only to the extent permitted by applicable law, the
<PAGE> 46
40
Company shall take action to cease employee contributions to the Scheme no later
than the consummation of the Offer. The Company and the Parent agree to take
such other actions as shall reasonably be required to accomplish the surrender
and cancellation of the options under the Scheme as contemplated by the
foregoing.
(c) Subject to Section 7.05(a) and Section 7.05(b), all Stock Option
Plans shall terminate as of the Effective Time and the provisions in any other
Benefit Plan providing for the issuance, transfer or grant of any capital stock
of the Company or any interest in respect of any capital stock of the Company
shall be deleted as of the Effective Time. 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 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
7.05(a) 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) 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 Effective Time (including with respect to the transactions
contemplated by this Agreement) existing now or at the Effective Time 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 by the Surviving Corporation in
the Merger, without further action, as of the Effective Time and shall survive
the Merger and shall continue in full force and effect without amendment,
modification or repeal in accordance with their terms for a period of not less
than six years after the Effective Time; provided, however, that if any claims
are asserted or made within such six year period, 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.
(b) In the event that Parent, the Surviving Corporation or any of
their successors or assigns
<PAGE> 47
41
(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 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.
(c) For six years after the Effective Time, Parent shall, unless
Parent agrees in writing to guarantee the indemnification obligations set forth
in Section 7.06(a), provide officers' and directors' liability insurance in
respect of acts or omissions occurring at or prior to the Effective Time,
covering each person currently covered by the Company's officers' and directors'
liability insurance policy, or who becomes covered by such policy prior to the
Effective Time, on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date hereof; provided that in
satisfying its obligation under this Section 7.06(c) Parent shall not be
obligated to pay premiums in excess of 200% of the amount per annum paid by the
Company in its last full fiscal year; and provided further that Parent shall
nevertheless be obligated to provide such coverage as may be obtained for such
200% amount. The Company represents that it paid officers' and directors'
liability insurance premiums as set forth in Schedule 7.06(c).
(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 and subject to the conditions
(including the Stockholder Agreement Condition) of the Offer, Sub shall be
<PAGE> 48
42
entitled to designate such number of directors on the Board of Directors of the
Company as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, a majority of such directors, and the Company shall, at such time,
cause Sub's designees to be so elected by its existing Board of Directors;
provided, however, that in the event that Sub's designees are elected to the
Board of Directors of the Company, until the Effective Time such Board of
Directors shall have at least two directors who are directors of the Company on
the date of this Agreement and who are not officers of the Company or any of its
subsidiaries (the "Independent Directors") and; provided further that, in such
event, if the number of Independent Directors shall be reduced below two for any
reason whatsoever, the remaining Independent Director shall designate a person
to fill such vacancy who shall be deemed to be an Independent Director for
purposes of this Agreement or, if no Independent Directors then remain, the
other directors of the Company on the date hereof shall designate two persons to
fill such vacancies who shall not be officers or affiliates of the Company or
any of its subsidiaries, or officers or affiliates of Parent or any of its
subsidiaries, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. 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 in writing all information required to be included in the Information
Statement with respect to Sub's designees). In connection with the foregoing,
the Company will promptly, at the option of Parent, either increase the size of
the Company's Board of Directors or use its best efforts to obtain the
resignation of such number of its current directors as is necessary to enable
Sub's designees to be elected or appointed to, and to constitute a majority of,
the Company's Board of Directors as provided above.
SECTION 7.08. Fees and Expenses. All fees and expenses incurred in
connection with the Offer, the Merger, this Agreement and the Stockholder
Agreement and the transactions contemplated by this Agreement and the
Stockholder Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Offer or the Merger is consummated.
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43
SECTION 7.09. Transfer Taxes. All state, local or foreign sales,
use, real property transfer, stock transfer or similar taxes (including any
interest or penalties with respect thereto) attributable to the Merger shall be
timely paid by the Company.
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 and the Stockholder 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. Severance Agreements. Parent acknowledges and agrees
that (1) the letter agreements dated May 1, 1996 in effect between the Company
and Steven L. Artusi, G. Taylor Seward and Thomas J. Oberhausen, respectively
(collectively, the "Severance Agreements"), are, and following consummation of
the transactions contemplated by this Agreement will continue to be, valid, in
full force and effect and enforceable in accordance with their respective terms
by the parties thereto; (2) Parent shall honor the Severance Agreements in
accordance with their terms; (3) each of the three individuals subject to a
Severance Agreement shall be entitled, on any date within sixty days following
the Effective Time, to declare that he has been "constructively terminated" (by
virtue of the Offer and the Merger resulting in an involuntary material change
in such person's duties) and to discontinue his duties with the Company,
whereupon the "Company's Notice Period" (as such term is defined in each of the
Severance Agreements) shall be deemed to have commenced; provided that if such
person continues his employment with the Company (or its successor) for more
than sixty days following the Effective
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44
Time, any right arising solely by virtue of (3) above shall terminate.
SECTION 7.12. Continuation of Benefits. It is Parent's intention
that, for a period of not less than one year after the Effective Time, employees
of the Company who continue their employment after the Effective Time will be
provided compensation and employee benefits which are substantially comparable
in the aggregate to those provided for such employees as of the date hereof.
Neither the Parent nor the Surviving Corporation will have any obligation to
issue, or adopt any plans or arrangements providing for the issuance of, shares
of capital stock, warrants, options, stock appreciation rights or other rights
in respect of any shares of capital stock of any entity or any securities
convertible or exchangeable into such shares pursuant to any such plans or
arrangements. Any plans or arrangements of the Company providing for such
issuance shall be disregarded in determining whether employee benefits are
substantially comparable in the aggregate.
SECTION 7.13. Stop Transfer. The Company shall not register the
transfer of any certificate representing any Subject Shares (as defined in the
Stockholder Agreement), unless such transfer is made to Parent or Sub or
otherwise in compliance with the Stockholder Agreement. The Company will
inscribe upon any certificates representing Subject Shares tendered by a
Stockholder (as defined in the Stockholder Agreement) for such purpose the
following legend: "The shares of Common Stock, $.01 par value, of DePuy, Inc.
represented by this certificate are subject to a Stockholder Agreement dated as
of July 21, 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 DePuy, Inc."
SECTION 7.14. Purchase of Foreign Subsidiaries. Parent and its
affiliates shall have the right, at the option of Parent, to purchase
immediately prior to the consummation of the Offer any subsidiary of the Company
that is not incorporated or organized under the laws of a jurisdiction within
the United States at a price and on such terms as may be determined by mutual
agreement of the Parent and the Company; provided that all of the conditions set
forth in Exhibit A have been satisfied or waived and Parent and Sub are
unconditionally obligated to consummate the Offer. If the Parent and the Company
are unable to agree upon a price or terms for such sale, Parent and the Company
shall elect an independent appraisal firm to determine such
<PAGE> 51
45
price or terms. The conclusions of such appraisal firm shall be conclusive and
binding. The fees of such appraisal firm shall be shared equally by Parent and
the Company. Parent agrees that in no event will the Company be deemed to have
breached any of its representations, warranties, covenants or other obligations
under this Agreement (including Section 4.15) by reason of (whether directly or
indirectly, whether in whole or in part) any taxes or liabilities incurred, any
payments made, or any action taken or any omissions of any necessary action as a
result of or in connection with (i) Parent's exercise of its right to purchase
the Company's foreign subsidiaries prior to the consummation of the Offer
pursuant to this Section 7.14 or (ii) any other transaction or agreement
contemplated by this Section 7.14 or entered into in connection therewith.
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 and subject to the conditions
(including the Stockholder Agreement Condition) of the Offer and, if any
Subject Shares were not purchased pursuant to the Offer, pursuant to the
Stockholder Agreement.
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46
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;
(b) by either Parent or the Company:
(i) if Sub shall not have accepted for payment Shares pursuant
to the Offer prior to March 31, 1999; 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
perform any of its obligations under this Agreement results in the
failure of any Offer Condition or if the failure of such condition
results from facts or circumstances that constitute a willful and
intentional material breach of representation or warranty under this
Agreement by such party; or
(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 the provision shall have
performed its obligations under Section 7.03 and 7.04.
(c) 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
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; or
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47
(d) by the Company, if Sub or Parent shall have (A) failed to
commence the Offer within five business days of 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.
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, 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.
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
<PAGE> 54
48
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 (including the Stockholder Agreement
Condition) of the Offer and 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
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49
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 the parties at the following
addresses or telecopier numbers (or at such other address or telecopier 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
Telecopy No.: (732) 524-2788
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Robert A. Kindler, Esq.
Telecopy No.: (212) 474-3700
and
(b) if to the Company, to
DePuy, Inc.
700 Orthopaedic Drive
Warsaw, Indiana 46581-0988
Attention: President
Telecopy No.: (219) 269-5675
<PAGE> 56
50
with a copy to:
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
Attention: Jeffrey E. Cohen, Esq.
Telecopy No.: (212) 626-4120
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 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, 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" means an employee
of the Company or any of its subsidiaries with annual cash compensation in
excess of $300,000. 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. As used
in this Agreement, including Exhibit A, "material adverse change" means any
change that is reasonably likely to have a material adverse effect.
SECTION 10.04. Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall
<PAGE> 57
51
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 in Section 7.06 and Section 7.11, Articles II and III 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 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,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (i) consents to submit such
party to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court
<PAGE> 58
52
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 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.
<PAGE> 59
53
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 R. UTASKI
---------------------------
Name: James R. Utaski
Title: Vice President
LIB ACQUISITION CORP.,
by /s/ JAMES R. HILTON
---------------------------
Name: James R. Hilton
Title: Vice President
DEPUY, INC.,
by /s/ JAMES A. LENT
---------------------------
Name: James A. Lent
Title: Chairman and Chief
Executive Officer
<PAGE> 60
1
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer, 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 (i) the Stockholder Agreement is valid, binding and in full force
and effect and enforceable by Parent and Sub in accordance with its terms and no
party thereto (other than Parent or Sub) is in material breach thereof, and the
Shares subject to the Stockholder Agreement shall have been either tendered into
the Offer or delivered to Sub for purchase immediately following the Offer (the
"Stockholder Agreement Condition"), (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated and (iii) Parent, Sub and Company shall have received in respect
of the Merger and any matters arising therefrom confirmation by way of a
decision from the Commission of the European Union under Regulation 4064.89
(with or without the initiation of proceedings under Article 6(1)(c) thereof)
that the Merger and any matters arising therefrom are compatible with the common
market. 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 instituted or pending by any Governmental Entity
any suit, action or proceeding (or by any other person any suit, action or
proceeding that has a reasonable likelihood of success) (i) challenging
the acquisition by Parent or Sub of any Shares under the Offer or pursuant
to the Stockholder Agreement, seeking to restrain or prohibit 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
Agreement, or seeking to obtain 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 whole, (ii)
seeking to prohibit or materially limit the ownership or operation by the
Company, Parent or any of their respective subsidiaries of a material
portion of
<PAGE> 61
2
the business or assets of the Company and its subsidiaries, or Parent and
its subsidiaries, in each case taken as a whole, or to compel 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 Agreement, (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
or purchased under the Stockholder Agreement including, without
limitation, the right to vote such Shares on all matters properly
presented to the stockholders of the Company or (iv) seeking to prohibit
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, other than the application to the Offer or
the Merger of the applicable waiting period under the Merger Control Laws,
that is reasonably likely to result, 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) 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 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 this Agreement and at the scheduled or extended
expiration of the Offer;
(e) 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
<PAGE> 62
3
performed or complied with by it under this Agreement; or
(f) this Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Parent or Sub in any such case, and
regardless of the circumstances (including any action or omission by Parent or
Sub) giving rise to any such condition, makes it inadvisable to proceed with
such acceptance for payment or payments therefor.
The foregoing conditions in paragraphs (a) through (f) 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.
<PAGE> 1
EXHIBIT (c)(2)
CONFORMED COPY
STOCKHOLDER AGREEMENT dated as of July 21, 1998, among
JOHNSON & JOHNSON, a New Jersey corporation ("Parent"), LIB
ACQUISITION CORP., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub") and the parties listed on
Schedule A attached hereto (the "Stockholders").
WHEREAS Parent, Sub and DePuy, 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 in accordance with
this Agreement, 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 $.01 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;
WHEREAS 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
Stockholders after the date hereof and during the term of this Agreement
(including through the exercise of any stock options, warrants or similar
instruments), being collectively referred to herein as the "Subject Shares");
and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have requested that the Stockholders 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:
1. Purchase and Sale of Shares. (a) The Stockholders hereby jointly
and severally agree to sell to
<PAGE> 2
2
Sub, and Sub hereby agrees to purchase, all Subject Shares of such Stockholders
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; 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 Stockholders proof of such
payment and a copy of all such tax returns and reports.
(b) The Stockholders shall not be required to tender their 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 Stockholders without the prior written approval of the Stockholders.
2. Representations and Warranties of the Stockholders. The
Stockholders hereby jointly and severally represent and warrant to Parent and
Sub as follows:
(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
<PAGE> 3
3
terms. Except for the expiration or termination of the applicable waiting
periods 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 Stockholders 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 (i) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and (ii) Council
Regulation (EEC) No. 4064/89 of 21 December 1989 and (iii) all amendments
of, and all other applicable bills, acts, decrees, regulations or
ordinances relating to, the foregoing legislative acts.
(b) Capitalization. At the close of business on July 20, 1998, the
Stockholders were the record and beneficial owners of 83,000,000 Shares.
(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
<PAGE> 4
4
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.
(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 Stockholders.
3. Representation and Warranty of Parent and Sub. Parent and Sub
hereby jointly and severally represent and warrant to the Stockholders 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,
<PAGE> 5
5
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.
(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, other than Credit Suisse First Boston Corporation, the fees
and expenses of which will be paid by Parent, 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 Stockholders. The Stockholders jointly and severally
agree 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 Stockholders 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 Stockholders without the prior approval of the Stockholders.
<PAGE> 6
6
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholders' votes, consents or other approvals are sought, the
Stockholders shall vote (or cause to be voted) the Subject Shares against
(i) any Takeover Proposal (as such term is 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. The Stockholders further
agree not to enter into any agreement inconsistent with the foregoing.
(c) The Stockholders 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 Stockholders shall not commit or agree to take
any of the foregoing actions.
(d) The Stockholders shall not, and shall use their 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.
<PAGE> 7
7
5. Grant of Irrevocable Proxy; Appointment of Proxy. (a) Each
Stockholder hereby irrevocably grants to, and appoints, Parent and James R.
Utaski and Peter S. Galloway, in their respective capacities as officers of
Parent, and any individual who shall hereafter succeed to any such office of
Parent, and each of them individually, such Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of such Stockholder, to vote such Stockholder's Subject Shares, or
grant a consent or approval in respect of such Subject Shares 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 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.
(d) Any action taken by Parent pursuant to the proxy granted under
Section 5(a)(ii) shall provide that the Stockholders may revoke such action
effective upon termination of the Merger Agreement.
<PAGE> 8
8
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.
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.
(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 legend in accordance with Section 7.13 of the Merger
Agreement.
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,
<PAGE> 9
9
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. (a) This Agreement, and all rights and obligations
of the parties hereunder, shall terminate upon the date upon which the Merger
Agreement is terminated in accordance with its terms. Notwithstanding the
foregoing, Sections 8, 9 and 10 shall survive any termination of this Agreement.
(b) Notwithstanding Section 9(a) above, Stockholders may terminate
this Agreement in the event the Company has the right to terminate the Merger
Agreement pursuant to Section 9.01(b) thereof.
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 Stockholders at their respective addresses or
telecopier numbers 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".
<PAGE> 10
10
Capitalized terms used and not otherwise defined in this Agreement shall
have the respective meanings assigned to them in the Merger Agreement.
(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. 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
<PAGE> 11
11
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in any court of the United States located in the State of Delaware or in a
Delaware state court, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit such party to the personal jurisdiction of any 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 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.
12. Public Announcements. Parent and Sub, on the one hand, and the
Stockholders, 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 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.
13. Indemnification. Parent agrees to indemnify and hold harmless
each Stockholder from all liability for taxes, costs and other expenses incurred
by any Stockholder or any affiliate of any Stockholder (other than the Company
or any of its foreign or domestic subsidiaries) solely as a result of Parent's
exercise of its right to purchase the Company's foreign subsidiaries prior to
the closing of the Offer pursuant to Section 7.14 of the Merger Agreement, to
<PAGE> 12
12
the extent such taxes, costs or other expenses are in excess of the taxes, costs
or other expenses that would have been incurred by such Stockholder or such
affiliate of such Stockholder (other than the Company or any of its foreign or
domestic subsidiaries) if Parent had not exercised such right prior to closing
of the Offer.
<PAGE> 13
13
IN WITNESS WHEREOF, Parent, Sub and the Stockholders have caused
this Agreement to be duly executed and delivered as of the date first written
above.
JOHNSON & JOHNSON,
By: /s/ James R. Utaski
------------------------------------
Name: James R. Utaski
Title: Vice President
LIB ACQUISITION CORP.,
By: /s/ James R. Hilton
------------------------------------
Name: James R. Hilton
Title: Vice President
CORANGE LIMITED,
By: /s/ John R. Talbot
------------------------------------
Name: John R. Talbot
Title: Director
CORANGE INTERNATIONAL LIMITED,
By: /s/ John R. Talbot
------------------------------------
Name: John R. Talbot
Title: Director
CORANGE INTERNATIONAL HOLDING B.V.,
By: /s/ W. J. VAN DER HOEK
------------------------------------
Name: W. J. van der Hoek
Title: Director
<PAGE> 14
14
PHARMINVEST S.A.,
By: /s/ JURGEN FRIEDRICH
------------------------------------
Name: Jurgen Friedrich
Title: President & GM
<PAGE> 15
SCHEDULE A
<TABLE>
<CAPTION>
Name, Address Number of Shares
and Telecopier of Company Common
Number of Stockholder Stock Owned of Record
--------------------- ---------------------
<S> <C>
Corange Limited 3,168,745
Corner House, Church and Parliament
Streets
Hamilton HM 12, Bermuda
Attention: President
Tel: ++1 441 295 33 91
Fax: ++1 441 295 41 65
Corange International Limited 528,247
Corner House, Church and Parliament
Streets
Hamilton HM 12, Bermuda
Attention: President
Tel: ++1 441 295 33 91
Fax: ++1 441 295 41 65
Corange International Holding B.V. 13,272,193
c/o Roche Nederland B.V.
Nijverheidsweg 38
NL-3641 AA Mijdrecht The Netherlands
Attention: General Manager
Tel: ++31 297 29 12 22
Fax: ++31 297 28 31 58
Pharminvest S.A. 66,030,815
145 Rue de Treves
L-2630 Luxembourg, Luxembourg
Attention: President
Tel: ++352 42 2020-1
Fax: ++352 43 10 01
</TABLE>
