SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CORDIS CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(l), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[X] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which offsetting fee was
paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
PRELIMINARY COPY--DATED NOVEMBER 1, 1995
CORDIS CORPORATION
5200 Blue Lagoon Drive
Suite 200
Miami, Florida 33126
(305) 824-2000
, 1995
Dear Shareholder:
On October 19, 1995, Johnson & Johnson and its wholly owned subsidiary, JNJ
Acquisition Corp. (collectively, "J&J"), announced an unsolicited offer to
purchase all outstanding shares of common stock of the Company at a price of
$100 per share in cash. At the same time, J&J indicated its preference to pay
$105 per share in a stock-for-stock merger in which all outstanding Cordis
shares would be exchanged for common stock of J&J. One day later, on October 20,
1995, J&J filed a consent statement in preliminary form to solicit written
consents from the Company's shareholders to, among other things, remove your
directors and replace them with J&J's chosen nominees in order to carry out the
stock merger. The enclosed consent materials were filed by the Company to oppose
J&J's attempt to take control of your Board.
As previously announced, at a meeting held on October 31, 1995, the Board of
Directors of the Company determined that both the unsolicited $100 cash offer
and the $105 stock proposal by J&J are inadequate and not in the best interests
of the Company or its shareholders. THE BOARD IS ASKING YOU TO JOIN IT IN
OPPOSING J&J'S ATTEMPT TO GAIN CONTROL OF YOUR BOARD IN ORDER TO COMPLETE ITS
PLANNED ACQUISITION OF THE COMPANY AT AN INADEQUATE PRICE.
We believe that significant value will be created for shareholders through
the pursuit of the current strategic plan as an independent company. We also
continue to be committed to the maximization of shareholder value. In this
regard, management and the Company's advisors have been instructed to explore
all strategic alternatives and to report back to the Board at an early date.
YOUR BOARD UNANIMOUSLY OPPOSES THE J&J SOLICITATION OF CONSENTS AND URGES
YOU NOT TO SIGN THE BLUE CONSENT CARD SENT TO YOU BY J&J.
WHETHER OR NOT YOU HAVE PREVIOUSLY SIGNED A BLUE J&J CONSENT CARD, PLEASE
SIGN, DATE AND MAIL THE ENCLOSED WHITE CONSENT REVOCATION CARD AND RETURN IT IN
THE ENCLOSED POSTAGE PREPAID ENVELOPE.
Robert C. Strauss
Chairman, President and
Chief Executive Officer
<PAGE>
IMPORTANT
Your Board of Directors is soliciting AGAINST the J&J Proposals (as defined
herein). By executing the enclosed WHITE consent revocation card you will revoke
any earlier dated blue consent card solicited by J&J which you may have signed.
The blue consent card solicited by J&J may also be revoked by executing a later
dated written revocation of the blue card and returning it to the Secretary of
the Company (at the address set forth on the first page hereof).
EVEN IF YOU HAVE NOT PREVIOUSLY EXECUTED A BLUE CONSENT CARD SOLICITED BY
J&J, THE BOARD OF DIRECTORS URGES YOU TO EXECUTE A WHITE CONSENT REVOCATION CARD
AND RETURN IT TO THE COMPANY TO INDICATE YOUR SUPPORT FOR THE BOARD'S POSITION.
Checking a "Revoke Consent" box on the WHITE consent revocation card with
respect to the J&J Proposals will have no legal effect other than to revoke a
prior dated consent solicited by J&J and will not constitute a ratification by
shareholders of actions which the Board may determine to take in the interests
of the Company's shareholders. Any such action which would require shareholder
approval under applicable law will be submitted to shareholders at the
appropriate time. The Board nonetheless urges you to inform it of your support
by signing and dating the enclosed WHITE consent revocation card and returning
it to the Company as soon as possible.
IF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK NOMINEE OR
OTHER SIMILAR "STREET NAME" HOLDER, WE URGE YOU TO CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER TO EXECUTE THE ENCLOSED WHITE
CONSENT REVOCATION CARD ON YOUR BEHALF.
Revocations of consent effected by means of the WHITE consent revocation
card solicited by the Board are themselves revocable by a shareholder by
delivering a written notice to the Company (at the address set forth on the
first page hereof).
If you have any questions or require any assistance in executing or
delivering your consent, please call:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Banks and Brokers Call Collect: (212) 929-5500
All Others Call Toll-Free: (800) 322-2885
<PAGE>
PRELIMINARY COPY--DATED NOVEMBER 1, 1995
STATEMENT OF THE BOARD OF DIRECTORS
OF CORDIS CORPORATION
IN OPPOSITION TO THE SOLICITATION OF CONSENTS
BY JNJ ACQUISITION CORP. AND JOHNSON & JOHNSON
This Statement is furnished by the Board of Directors (the "Board") of
Cordis Corporation (the "Company") to holders of the outstanding shares of the
Company's common stock, par value $1.00 per share (the "Common Stock"), in
connection with the Board's opposition to a solicitation of written consents by
Johnson & Johnson and its wholly owned subsidiary, JNJ Acquisition Corp.
(collectively, "J&J"). THE BOARD URGES YOU TO REJECT THE J&J SOLICITATION AND TO
REVOKE ANY BLUE J&J CONSENT CARD YOU HAVE ALREADY SIGNED BY SIGNING, DATING AND
RETURNING THE ENCLOSED WHITE CONSENT REVOCATION CARD.
On October 31, 1995, the Board unanimously determined that the unsolicited
offer by J&J to acquire all the outstanding shares of Common Stock (including
associated rights (the "Rights")) at a price of $100 per share in cash (the
"Offer") and J&J's alternative proposal to acquire all the outstanding shares
("Shares") of Common Stock through a stock-for-stock merger at $105 per share
(the "Stock Merger") in which all outstanding Shares would be exchanged for
common stock of J&J are both inadequate and not in the best interests of the
Company or its shareholders.
In its effort to pursue the Stock Merger at a value your Board has found to
be inadequate, J&J has solicited your consent to the following proposals
(collectively, the "J&J Proposals"): (1) to remove all nine of the present
members of the Board; (2) to amend the Bylaws of the Company to fix the number
of directors at three; (3) to elect three J&J nominees as the directors of the
Company; and (4) to repeal each provision of the Bylaws adopted subsequent to
April of 1977 and prior to the effectiveness of the J&J Proposals.
Signing and returning the blue J&J consent card only serves to further the
interests of J&J. According to J&J's solicitation statement (the "J&J Proxy
Statement"), J&J's nominees, if elected, intend (subject to their fiduciary
duties) to approve, submit and recommend to you approval of the Stock Merger and
take such other actions as are necessary to facilitate the consummation of the
Stock Merger at a price which the Company's present Board has unanimously
determined is inadequate and not in the best interests of the Company or you.
FOR THE REASONS SET FORTH HEREIN, THE BOARD OF DIRECTORS BELIEVES THAT IT IS
NOT IN YOUR BEST INTERESTS TO CEDE CONTROL OF THE COMPANY TO THE J&J NOMINEES.
WHETHER OR NOT YOU HAVE PREVIOUSLY SIGNED A BLUE J&J CONSENT CARD, PLEASE
SIGN, DATE AND RETURN THE ENCLOSED WHITE CONSENT REVOCATION CARD IN THE POSTAGE
PREPAID ENVELOPE PROVIDED.
IF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK NOMINEE OR
OTHER SIMILAR "STREET NAME" HOLDER, WE URGE YOU TO CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER TO EXECUTE THE ENCLOSED WHITE
CONSENT REVOCATION CARD ON YOUR BEHALF.
This statement and the accompanying WHITE consent revocation card are first
being mailed to shareholders on or about , 1995.
<PAGE>
REASONS THE BOARD
OPPOSES THE J&J PROPOSALS
On October 19, 1995, J&J announced an unsolicited offer to purchase all the
outstanding Shares of the Company at a price of $100 per Share. At the same
time, J&J indicated its preference to pay $105 per Share in a stock-for-stock
merger in which all outstanding Shares would be exchanged for common stock of
J&J. On October 20, 1995, J&J filed the J&J Proxy Statement with respect to a
solicitation of written consents from the Company's shareholders to remove and
replace the Board in order to pursue the Stock Merger.
At a meeting of the Board held on October 31, 1995 (the "Meeting"), the
Board carefully considered the Company's business, financial condition and
future prospects, the terms of the Offer and the Stock Merger and other matters,
including presentations by its legal and financial advisors. After taking into
account these matters, the Board determined by unanimous vote that both the
Offer and the Stock Merger are inadequate and not in the best interests of the
Company and its shareholders. ACCORDINGLY, THE BOARD UNANIMOUSLY URGES YOU NOT
TO SIGN THE BLUE CONSENT CARD SENT TO YOU BY J&J AND TO SIGN, DATE AND RETURN
THE ENCLOSED WHITE CONSENT REVOCATION CARD TO THE COMPANY. The Board believes
that significant value will be created for shareholders through the pursuit of
the current strategic plan as an independent company. The Board also continues
to be committed to the maximization of shareholder value. In this regard, the
Board has authorized management and the Company's advisors to explore all
strategic alternatives and to report back to the Board at an early date.
At the Meeting, the Board considered a number of factors, including the
following:
. The Company's business, financial condition, results of operations,
business strategy and future prospects, including growth opportunities in
certain markets in which the Company operates or intends to operate.
. A presentation by Morgan Stanley & Co. Incorporated, the Company's
financial advisor ("Morgan Stanley"), concerning the Company and financial
aspects of the Offer and the Stock Merger.
. The oral opinion of Morgan Stanley, confirmed in writing, to the effect
that, as of the date of such opinion, the consideration to be received by
the holders of Shares (other than J&J and its affiliates) pursuant to the
Offer is inadequate, from a financial point of view, to such holders.
. The oral advice of Morgan Stanley to the Board at the Meeting concerning
the inadequacy from a financial point of view of the purchase price
component of the Stock Merger proposal.
. The Board's belief, based in part on the factors referred to above, that
neither of the $100 per Share cash price pursuant to the Offer or the $105
per Share in stock pursuant to the Stock Merger reflects the current value
of the Company or the significant value that will be created for
shareholders through the pursuit of the current strategic plan as an
independent company.
. The Board's commitment to protecting the best interests of the Company's
shareholders and the maximization of shareholder value.
. The Board's strong belief that the current directors, not J&J's
representatives, are best equipped to determine which direction Cordis
should take to protect your interests.
GIVEN THESE REASONS, YOUR BOARD URGES YOU NOT TO SIGN THE BLUE CONSENT CARD
SENT TO YOU BY J&J. WHETHER OR NOT YOU HAVE PREVIOUSLY SIGNED A BLUE J&J CONSENT
CARD, PLEASE SIGN, DATE AND RETURN THE ENCLOSED WHITE CONSENT REVOCATION CARD IN
THE POSTAGE PREPAID ENVELOPE PROVIDED.
2
<PAGE>
THE CONSENT PROCEDURE
On October 23, 1995, the Board of Directors amended the Bylaws of the
Company to adopt a record date procedure in connection with written consent
solicitations. Under the new Bylaw, following a request for a record date in
connection with a consent solicitation, the Board is required to fix a record
date within ten (10) business days. The date fixed by the Board as the record
date must be no later than ten (10) business days after the date on which the
Board acts. On October 24, 1995, J&J requested that the Board set a record date
with respect to its solicitation. On November , 1995, the Board fixed November
, 1995 as the record date (the "Record Date") for determining shareholders
entitled to grant or revoke their written consents with respect to the J&J
Proposals. You are entitled to grant or revoke consents for all Shares that you
owned on the Record Date (even if you subsequently sold or transferred any of
those Shares). As of November , 1995, shares of Common Stock were
outstanding.
If any Shares that you owned on the Record Date were held for you in an
account with a stock brokerage firm, bank nominee or other similar "street name"
holder, you are not entitled to vote such Shares directly, but rather must give
instructions to the stock brokerage firm, bank nominee or other "street name"
holder to grant or revoke consent for the Shares held in your name. Accordingly,
you should contact the person responsible for your account and direct him or her
to execute the enclosed WHITE consent revocation card on your behalf. You are
urged to confirm in writing your instructions to the person responsible for your
account and provide a copy of those instructions to the Company in care of
MacKenzie Partners, Inc. ("MacKenzie") at the address set forth below so that
the Company will be aware of all your instruction and can attempt to insure such
instructions are followed.
You may revoke a previously delivered written consent by sending a written
notice of revocation to the Company. You are urged, however, to deliver all
revocations of consents to MacKenzie Partners, Inc., at 156 Fifth Avenue, 9th
Floor, New York, New York 10010. You will revoke any earlier dated blue card by
signing and returning the enclosed WHITE consent revocation card. You have the
right to return a WHITE consent revocation card even if you previously signed a
blue consent card in support of the J&J Proposals or sold or transferred your
Common Stock after the Record Date. Any shareholder executing and delivering the
enclosed WHITE consent revocation card may revoke such action by delivery of
written notice to the Company at the address set forth on the first page hereof.
Under Florida law, unless otherwise provided in a corporation's articles of
incorporation, shareholders may act without a meeting, without prior notice and
without a vote, if consents in writing setting forth the action to be taken are
signed by holders of outstanding shares having not less than the minimum number
of votes that would be necessary to authorize or take the action at a meeting at
which all shares entitled to vote thereon were present and voted. The action is
effective when the necessary number of written consents describing the action
taken, dated and signed by approving holders, are delivered to the corporation's
principal place of business. The Company's articles of incorporation do not
prohibit shareholder action by written consent. The unrevoked consent of the
holders of not less than (1) a majority of the Shares outstanding and entitled
to vote on the Record Date must be obtained within the time limits specified
herein to adopt the J&J Proposals (other than the J&J Proposal to elect its
nominees), and (2) a plurality of the Shares outstanding and entitled to vote on
the Record Date must be obtained within the time limits specified herein to
adopt the J&J Proposal to elect its nominees. Because the effectiveness of each
J&J Proposal is conditioned upon approval of all J&J Proposals, and because the
greatest minimum number of consents required to adopt and effect any of the J&J
Proposals is the consent of the holders of a majority of the outstanding Shares,
the effectiveness of each and all of the J&J Proposals is subject to, and
conditioned upon, delivery to the Company within the time periods specified
herein of properly executed and unrevoked written consents in favor of each of
the J&J Proposals by the holders of a majority of the Shares outstanding and
entitled to vote on the Record Date. Under Florida law, no written consent shall
be effective to take the corporate action referred to therein unless, within 60
days of the date of the earliest properly delivered dated consent, written
3
<PAGE>
consents signed by the number or shareholders required to take such action are
properly delivered to the corporation. Abstentions and broker non-votes will
have the effect of a vote against the J&J Proposals. If a shareholder consents
to the J&J Proposals, abstentions and broker non-votes with respect to the
Company's card will have the same effect as a vote for the J&J Proposals. If a
shareholder does not return J&J's consent card, abstentions and broker non-votes
with respect to the Company's card will have the same effect as a vote against
the J&J Proposals.
The Company will recognize any consent revocation dated and signed by a
record holder as effective to revoke any consent submitted which bears an
earlier date.
YOU HAVE THE RIGHT TO REVOKE, IN WHOLE OR IN PART, ANY CONSENT YOU MAY HAVE
PREVIOUSLY GIVEN TO J&J. TO DO SO, YOU NEED ONLY MARK, DATE, SIGN AND RETURN IN
THE ENCLOSED POSTAGE PREPAID ENVELOPE THE WHITE CONSENT REVOCATION CARD WHICH
ACCOMPANIES THIS STATEMENT. IF YOU DO NOT INDICATE A SPECIFIC VOTE ON THE WHITE
CONSENT REVOCATION CARD WITH RESPECT TO THE J&J PROPOSALS, THE CARD WILL BE USED
IN ACCORDANCE WITH THE BOARD'S RECOMMENDATION TO REVOKE ANY CONSENT WITH RESPECT
TO SUCH PROPOSALS.
IF YOU ARE AGAINST THE J&J PROPOSALS AND HAVE NOT SIGNED A J&J CONSENT, YOU
MAY OPPOSE THE J&J PROPOSALS BY MARKING, DATING, SIGNING AND RETURNING THE
ENCLOSED WHITE CONSENT REVOCATION CARD. ALTHOUGH DOING SO WILL NOT HAVE ANY
LEGAL EFFECT, PLEASE RETURN THE WHITE CONSENT REVOCATION CARD SO THAT THE
COMPANY MAY KEEP TRACK OF HOW MANY SHAREHOLDERS OPPOSE THE J&J PROPOSALS.
The Board has retained MacKenzie to assist the Board in communicating with
shareholders in connection with the J&J Proposals and to assist in our efforts
to obtain consent revocations. If you have any questions about how to complete
or submit your consent revocation card or any other questions, MacKenzie will be
pleased to assist you. You may call MacKenzie at (800) 322-2885. If you are a
record holder of Common Stock, you may return your consent revocation card to
MacKenzie at 156 Fifth Avenue, 9th Floor, New York, NY 10010. If your shares are
held in the name of a brokerage firm, bank nominee or other similar "street
name" holder, only it can sign a consent revocation with respect to your shares.
Please contact the person responsible for your account and direct him or her to
execute the enclosed WHITE consent revocation card on your behalf.
4
<PAGE>
BOARD OF DIRECTORS
INTRODUCTION
The following table identifies current members of the Board of Directors of
the Company.
<TABLE><CAPTION>
YEAR FIRST
PRINCIPAL OCCUPATION OR ELECTED A
NAME (AGE) EMPLOYMENT DIRECTOR
- ---------------------------------------- ---------------------------------------- ----------
<S> <C> <C>
Catherine M. Burzik (44) President, Chief Executive Officer and --
Director, Kodak Health Imaging Systems
Inc., a subsidiary of Eastman Kodak
Company, since 1993. From 1991 to
1993, General Manager, Electronic
Imaging Products, Health Science
Division of Eastman Kodak.
David R. Challoner, M.D. (60) Vice President for Health Affairs, 1990
University of Florida. Chairman of the
Board, Shands Hospital at the
University of Florida. Former Dean,
St. Louis University School of
Medicine. Member Institute of
Medicine, National Academy of
Sciences. Member, Directors' Advisory
Committee, National Institutes of
Health. Former President, American
Federation for Clinical Research.
Richard W. Foxen (67) Retired. Until 1988, Senior Vice 1989
President, Strategic Management and
International, Rockwell International
Corporation; Former Vice-President,
European Operations, General Electric
Corporation; Adjunct Professor,
Business Administration,
Carnegie-Mellon University and
University of Pittsburgh.
Donald F. Malin, Jr. (67) Retired. Until 1991, Partner, Simpson 1982
Thacher & Bartlett, Attorneys at Law,
New York City, legal counsel to the
Company.
William J. Razzouk (47) Executive Vice President of Worldwide --
Customer Operations, Federal Express
Corporation and Director since 1993.
From 1990 to 1993 Senior Vice
President--Sales and Customer Services
of Federal Express Corporation.
Director, Sanifill Inc. and The
National Sports Foundation.
Robert C. Strauss (54) President and Chief Executive Officer of 1987
the Company since February 1987.
Formerly Senior Vice President and
Chief Financial Officer from 1986 to
1987 and Vice President and Chief
Financial Officer from 1983 to 1986.
Trustee, University of Miami.
Director, Miami Children's Hospital,
Health Industry Manufacturers
Association (HIMA), American Bankers
Insurance Group, United Way and
Enterprise Florida.
Jan L. de Ruyter van Steveninck (65) Retired. Senior Vice President, European 1990
Operations of the Company from 1987 to
June, 1990. Before 1987, Vice
President, European Operations.
</TABLE>
5
<PAGE>
<TABLE><CAPTION>
YEAR FIRST
PRINCIPAL OCCUPATION OR ELECTED A
NAME (AGE) EMPLOYMENT DIRECTOR
- ---------------------------------------- ---------------------------------------- ----------
<S> <C> <C>
Wilton W. Webster, Jr. (67) Vice President and Senior Scientific 1994
Advisor of the Company since April,
1994. Founder and Senior Scientific
Advisor of Cordis Webster, Inc. since
December, 1994. Vice President,
Research & Development and Chief
Engineer of Cordis Webster Inc. from
April 1994 to December, 1994. Formerly
Vice President and Chief Engineer from
1993 to 1994 and Founder, Chairman of
the Board. President and Chief
Executive Officer of Webster
Laboratories, Inc. from 1980 until
1993.
Patricia K. Woolf, Ph.D (60) Consultant, author, and lecturer, 1982
Department of Molecular Biology,
Princeton University. Director,
American Balanced Fund, Income Fund of
America, Growth Fund of America, and
Small Cap World Fund. Director,
General Public Utilities Corporation,
National Life Insurance Company of
Vermont and Crompton and Knowles Corp.
Trustee, New Economy Fund.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has standing Audit, Compensation and Quality committees. It has no
nominating committee. However, in April of 1995 the Board formed a Search
Committee to identify candidates for election as Company directors. The members
of this ad hoc committee are Richard W. Foxen, Chairman, Robert Q. Marston and
Robert C. Strauss. The Committee considered various candidates and recommended
two candidates for election as directors.
The members of the Audit Committee during fiscal 1995 were Richard W. Foxen
(Chairman), Donald F. Malin, Jr., Patricia K. Woolf and David R. Challoner. The
Committee held three meetings during fiscal 1995. During that year, the Audit
Committee, among other things: (i) recommended that Deloitte & Touche be
appointed as the Company's independent auditors; (ii) reviewed the audit
activities of both the independent auditors and the internal auditor of the
Company; (iii) met separately and privately with the independent auditors, the
internal auditor and with the Company's financial, accounting and management
officers to insure that the scope of activities of the independent and internal
auditors had not been restricted and that adequate responses to their
recommendations had been received; and (iv) made periodic reports to the Board.
The members of the Compensation Committee during fiscal 1995 were Donald F.
Malin, Jr. (Chairman), Jan L. de Ruyter van Steveninck and Richard W. Foxen. The
Committee held three meetings during fiscal 1995. During that year, the
Compensation Committee, among other things: (i) reviewed salaries of the Chief
Executive Officer and corporate officers of the Company; (ii) considered
management's proposals for granting of stock options under the Cordis
Corporation Non-Qualified Stock Option Plan and approved such grants of stock
options; (iii) established performance goals for the Cordis Corporation 1991
Performance Unit Award Plan ("PUAP") and approved the grants of Awards under the
PUAP; (iv) reviewed the Cordis Corporation Director Retirement Plan and Director
compensation practices; (v) reviewed other compensation matters, including the
method of payment of Awards under the PUAP; and (vi) made periodic reports to
the Board.
6
<PAGE>
The members of the Quality Committee during fiscal 1995 were Patricia K.
Woolf, (Chairman), David R. Challoner, and Jan L. de Ruyter van Steveninck. The
Committee held four meetings during fiscal 1995. During that year, the Quality
Committee, among other things: (i) reviewed and monitored the auditing
activities of the Company and the results of those audits; (ii) reviewed the
Company's quality functions and regulatory compliance activities; (iii) reviewed
the independent quality consultant's audit of the Company's facility; (iv)
reviewed and approved the Quality Committee Charter, as restated; and (v) made
periodic reports to the Board.
MEETING ATTENDANCE
The Board of Directors held a total of six meetings during fiscal 1995. Each
Director attended in excess of 75% of the total number of meetings of the Board
and of each Committee of the Board on which such Director served during the
fiscal year. On average, each Director attended 95% of the meetings held.
COMPENSATION OF DIRECTORS
Compensation of Directors. Directors who are compensated as employees of the
Company receive no additional compensation as Directors. Each Director who is
not an employee of the Company receives an annual retainer of $20,000; a fee of
$1,250 for each Board Meeting attended; and $750 for each Committee Meeting
attended. Committee Chairmen are paid $1,000 for each Committee Meeting
attended. Dr. Marston, as Chairman of the Board during fiscal 1995, received an
annual retainer of $75,000, but received no additional compensation for meeting
attendance.
Cordis Corporation Director Non-Qualified Stock Option Plan. This plan (the
"NQSO Plan") became effective on June 5, 1990. It provides incentives in the
form of stock option grants to non-employee Directors of the Company. The grants
are intended to recognize the expertise and contributions provided to the
Company by the members of the Board of Directors and to provide the Board with a
proprietary interest in the Company, enhancing their personal interest in the
Company's continued success and progress. The NQSO Plan is administered by the
Compensation Committee of the Board.
The NQSO Plan currently authorizes the issuance of 200,000 shares of the
Company's common stock. The options, 2,000 of which are granted automatically
every year to each non-employee Director, fully vest one year after the
anniversary of the date of the grant, are granted at a price equal to the market
value of the shares on the date of the grant and must be exercised within ten
years of the date of grant. In the case of a Director's death, the options vest
immediately. The options continue to vest during the period of any disability or
retirement.
The options granted under the NQSO Plan are not assignable or transferable
by optionees. The Plan provides that if there is a change in control, defined as
the acquisition by any person of direct or indirect beneficial ownership of the
Company's outstanding voting securities in a quantity sufficient to cause a
change in the composition of the Board, completion of a tender or exchange offer
of 50% or more of the voting securities of the Company or the merger or
consolidation of the Company with another corporation or the transfer of all or
substantially all of the assets of the Company, all options will be 100% vested.
Cordis Corporation Director Retirement Policy. Under this policy (the
"Policy") each non-employee director who retires from the Board after he or she
has served on the Board for five years is eligible for benefits, for a period
equal to two times his or her years of active service as a Director, equal to
the annual retainer paid at the time of his or her retirement, increased by
one-half of any subsequent increase in the annual retainer awarded to active
Directors.
The Policy waives the years-of-service eligibility requirement if a Director
is forced to retire as a result of a disability or incapacity or, as of October
31, 1995, terminates as a result of a change in
7
<PAGE>
control of the Company. The Policy, unless waived by the Board, requires a
Director to retire from active service on the Board if his or her 72nd birthday
occurs on or before the 15th day of October in any year in which such Director
shall stand for reelection to the Board.
Effective as of October 31, 1995, the Policy was amended by adding the term
"change in control", defined as:
(a) any person or persons acting in concert (excluding Company benefit
plans) becomes the beneficial owner of securities of the Company having at
least 25% of the voting power of the Company's then outstanding securities
(unless the event causing the 25% threshold to be crossed is an acquisition
of securities directly from the Company); or
(b) the shareholders of the Company shall approve any merger or other
business combination of the Company, sale of more than 50% of the Company's
assets or combination of the foregoing transactions (the "Transactions")
other than a Transaction immediately following which the shareholders of the
Company immediately prior to the Transaction and any trustee or fiduciary of
any Company employee benefit plan own, immediately following the
Transaction, at least 75% of the voting securities of the surviving company
(or its parent) in the event of a merger or other business combination, or,
in the event of a sale of assets, of the purchaser of such assets; or
(c) within any 24 month period, the persons who were directors
immediately before the beginning of such period (the "Incumbent Directors")
shall cease (for any reason other than death) to constitute at least a
majority of the Board or the board of directors of a successor to the
Company. For this purpose, any director who was not a director at the
beginning of such period shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with
the approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors (so long as such director was not nominated by a person
who has entered into an agreement to effect a change in control).
If a retired Director dies during the period in which retirement benefits
are payable, such payments shall be paid to the Director's designated
beneficiary or to his or her estate, for a period of one year after his or her
death or for the remaining period for which such retirement benefits are
payable, whichever occurs first. Any Director who has been an employee of the
Company shall not be eligible for benefits under the Policy except for
reimbursement of expenses incurred in meeting attendance and meeting fees equal
to the meeting fees paid to active Directors. Effective as of October 31, 1995,
the Policy provides that in the event that a Director terminates from the Board
as a result of a change in control of the Company, the Policy allows such
Director to elect acceleration of benefits under the Policy by requesting a
present value, lump sum payment; to request the Company to purchase an annuity
which would pay to the Director a sum equal to the benefits he or she would have
received under the Policy; or to elect payments of benefits in accordance with
the terms and provisions of the Policy.
Cordis Corporation Director Deferred Compensation Plan. This Plan, restated
and amended, effective July 1, 1995, allows non-employee directors to defer up
to 100% of their compensation. The amounts deferred may be invested among a
portfolio of funds selected and managed by the Company. Participants elect the
timing and manner in which the amounts deferred shall be paid. All elections
made by the participants are irrevocable except as specifically provided in this
Plan. Effective as of October 31, 1995, a participant shall have his or her
entire account balance paid in a lump sum as soon as administratively
practicable following a change in control (as defined in the Policy).
Indemnification Agreements with Directors and Officers. At a Board meeting
held on October 9, 1995, the Board authorized the Company to enter into
indemnification agreements with each member of the Board and certain executive
officers. The agreements replace the existing agreements with directors
described in the Company's 1995 Proxy Statement.
8
<PAGE>
The indemnification agreements supplement the protections afforded to the
Company's directors and executive officers under the Company's Bylaws. In
general, the indemnification agreements provide for the Company to indemnify the
directors and executive officers against expenses, judgments, fines, penalties,
and amounts paid in settlement arising in connection with third party
proceedings and proceedings by or in the right of the Company against any
director or executive officer relating to his or her services to the Company if
such director or executive officer acted in good faith and in a manner such
director or executive officer reasonably believed to be in the best interests of
the Company, and, with respect to criminal proceedings, had no reasonable cause
to believe his or her behavior was unlawful. The Company, pursuant to the
indemnification agreements, retains subrogation rights to recover any advances
which are subsequently paid by a third party. The indemnification agreements are
binding on the Company and any successor to the Company.
9
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following Summary Compensation Table represents, for each of the last
three fiscal years, the annual compensation paid by the Company, together with
long-term and other compensation, for the Chief Executive Officer and the four
most highly compensated Executive Officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE><CAPTION>
LONG TERM
COMPENSATION
------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------ ----------- --------
SECURITIES LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS OTHER ANNUAL UNDERLYING PAYOUTS COMPENSATION
POSITION YEAR ($)(1) ($)(1)(2) COMPENSATION ($) OPTIONS ( ) ($)(3) ($)(4)
- -------------------------- ---- -------- --------- ---------------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert C. Strauss......... 1995 $459,039 $ 22,750 25,000 $563,477 $8,386
President and Chief 1994 $430,000 30,000 $312,247 $8,174
Executive Officer 1993 $420,000 $ 183,951 22,000 $8,088
Rudy J. Kranys............ 1995 $235,961 $ 11,750 12,500 $256,231 $7,687
Senior Vice President 1994 $220,000 15,000 $149,687 $7,119
Worldwide Research and 1993 $215,000 $ 91,976 11,000 $7,036
Product Development
Alfred J. Novak........... 1995 $235,961 $ 41,750 12,500 $281,705 $6,217
Vice President and 1994 $220,000 15,000 $156,122 $5,073
Chief Financial Officer 1993 $215,000 $ 91,976 11,000 $4,066
Philip J. Monks........... 1995 $199,464 $ 10,000 $ 36,258(5) 12,500 $283,331 N/A
Vice President, Worldwide 1994 $196,622 $ 49,777(6) 15,000 $150,181 N/A
Marketing and Sales 1993 $191,891 $ 91,976 $ 46,158(7) 11,000 N/A
Egbert Ratering........... 1995 $199,464 $ 10,000 12,500 $283,331 N/A
Vice President, Worldwide 1994 $196,717 $ 13,833(8) 15,000 $150,181 N/A
Manufacturing 1993 $192,061 $ 91,976 11,000 N/A
</TABLE>
- ------------
(1) Amounts shown include each compensation earned by the named executive during
the year covered, including amounts deferred at the election of those
officers. Bonuses for fiscal 1995, 1994 and 1993 were paid in the fiscal
year subsequent to the fiscal year in which they were earned.
(2) For 1995, the cash bonus amounts were awarded pursuant to the individual
objective performance program. Mr. Novak received a special bonus in the
amount of $30,000 to reward him for his efforts in connection with various
business transactions and his temporary assumption of responsibility for the
U.S. Marketing and Sales organization. For 1993 the amounts awarded pursuant
to the 1991 Performance Unit Award Plan were in the form of Company stock.
The value of the units was calculated according to the fair market value of
Company stock on or about the date of payout based on the number of units
awarded and percentage of achievement. The 1993 awards were based on
one-year performance periods whereby the target amounts for return on assets
and sales growth yielded payments of 100.941%.
(3) In 1994 the amounts paid pursuant to the 1991 Performance Unit Award Plan
were distributed as follows: 50% in the form of Company stock and 50% in
cash. The value of the units awarded in stock was calculated according to
the fair market value of Company stock on or about the date of payout based
on the number of units awarded and percentage of achievement. The value of
the units awarded in cash was calculated according to the average of the
last twenty trading days in the month of June 1994. In 1995, the amounts
paid were distributed 100% in the form of Company stock and the value of the
units awarded was calculated according to the fair market value of Company
stock as of the date of the Compensation Committee meeting, August 21, 1995,
based on the number of units awarded and percentage of achievement. The 1994
and 1995 awards were based on three-year performance periods whereby the
target performance achievements for return on assets, sales growth and
targeted sales per employee yielded in 1994 a payment of 110.38% for the
Corporate group, 105.83% for the Miami group and 106.18% for the European
group, and in 1995 a payment of 138.61% for the Corporate group, 126.08% for
the Miami group and 139.40 for the European group.
(4) Company contributions to the Tax-Sheltered Investment Plan and dollar value
of life insurance premiums paid by the Company. European Officers do not
participate in the Tax-Sheltered Investment Plan.
(5) Includes reimbursements of $17,052 for schooling of dependents under the
Company's Expatriate Policy and automobile reimbursement allowance of
$19,206.
(6) Includes reimbursements of $33,638 for schooling of dependents under the
Company's Expatriate Policy and automobile reimbursement allowance of
$16,139.
(7) Includes reimbursements of $32,118 for schooling of dependents under the
Company's Expatriate Policy and automobile reimbursement allowance of
$14,040.
(8) Mr. Ratering received a bonus in 1994 for twenty years of service with the
Company.
10
<PAGE>
STOCK OPTIONS
The following table provides information on grants of options to purchase
the Common Stock pursuant to the Cordis Corporation Non-Qualified Stock Option
Plan (the "Plan") during the fiscal year ended June 30, 1995 to the named
Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE><CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------
% OF TOTAL POTENTIAL REALIZATION VALUE
OPTIONS AT ASSUMED ANNUAL RATES OF
NUMBER OF SECURITIES GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING OPTIONS EMPLOYEES EXERCISE OPTION TERM (10 YEARS)(2)
GRANTED IN FISCAL OR BASE EXPIRATION -----------------------------
NAME (#((1) YEAR PRICE ($/SH) DATE 0%($) 5%($) 10%($)
- ----------------------------- -------------------- ---------- ------------ ---------- ----- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert C. Strauss............ 25,000 10.03% $63.00 6/12/05 $ 0 $990,500 $2,510,250
Rudy J. Kranys............... 12,500 5.02% $63.00 6/12/05 $ 0 $495,250 $1,255,125
Alfred J. Novak.............. 12,500 5.02% $63.00 6/12/05 $ 0 $495,250 $1,255,125
Philip J. Monks.............. 12,500 5.02% $63.00 6/12/05 $ 0 $495,250 $1,255,125
Egbert Ratering.............. 12,500 5.02% $63.00 6/12/05 $ 0 $495,250 $1,255,125
</TABLE>
- ------------
(1) The Cordis Corporation Non-Qualified Stock Option Plan, as amended, provides
for the grant of options for a period of ten (10) years from the date of
grant. Under the Plan, the vesting schedule for the above executives is 10%
during the second year, 20% during the third year, 30% during the fourth
year, and the balance during the fifth year. All remaining options are
exercisable and expire on the tenth anniversary of the date of grant. The
exercise price of each share subject to options is equal to the fair market
value of the share on the date of grant.
(2) Optionees will not realize value under the 1995 option grants without a
stock price appreciation which will benefit all shareholders. If the
Company's stock does not appreciate in value above the option price set
forth above, there will be no benefit to shareholders or to optionees. If
the Company's stock appreciates 5% in value, the potential appreciation in
stock value to shareholders would be approximately $648,245,000. If the
Company's stock appreciates 10% in value, the potential appreciation in
stock value to shareholders would be approximately $1,642,865,000. Total
number of shares outstanding as of June 30, 1995, was 16,361,568. The
assumed rates of stock price appreciation are set by the Securities and
Exchange Commission's proxy statement disclosure rules. These assumptions
are not intended to forecast future price appreciation of the Company's
stock price. The Company's stock price may increase or decrease over the
time period set forth above.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table contains information relating to the exercise of stock
options by the named Executive Officers in fiscal 1995 as well as the number and
value of their unexercised options as of June 30, 1995:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE><CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE- MONEY OPTIONS AT
SHARES OPTIONS AT FY-END(#) FY-END($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Strauss.............. 24,000 $ 1,059,000 44,800 76,200 $ 1,530,900 $ 1,551,850
Rudy J. Kranys................. 13,000 $ 645,125 22,400 38,100 $ 765,450 $ 775,925
Alfred J. Novak................ 23,000 $ 1,020,375 22,400 38,100 $ 765,450 $ 775,925
Philip J. Monks................ 19,000 $ 708,375 16,400 38,100 $ 585,450 $ 775,925
Egbert Ratering................ 13,000 $ 557,375 22,400 38,100 $ 765,450 $ 775,925
</TABLE>
- ------------
(1) Market value of underlying securities at exercise minus the exercise price.
(2) Market value of underlying securities at June 30, 1995 closing ($66.75)
minus the option price. The values were calculated only for "In-the-Money"
options, which consist of those options with an exercise price below $66.75
per share.
11
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The following table provides information relating to performance units
awarded to the named Executive Officers under the Cordis Corporation 1991
Performance Unit Award Plan:
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE><CAPTION>
NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIODS UNTIL ------------------------------
OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#)(1) OR PAYOUT (#) (#) (#)
- ------------------------------------- ------------ -------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Robert C. Strauss.................... 6,000 7/1/95-6/30/98 0 6,000 11,250
Rudy J. Kranys....................... 3,000 7/1/95-6/30/98 0 3,000 5,625
Alfred J. Novak...................... 3,000 7/1/95-6/30/98 0 3,000 5,625
Philip J. Monks...................... 3,000 7/1/95-6/30/98 0 3,000 5,625
Egbert Ratering...................... 3,000 7/1/95-6/30/98 0 3,000 5,625
</TABLE>
- ------------
(1) The performance objectives are based on the following weightings: 50% of a
payout is based on achievement of sales growth, 25% is based on achievement
of return on assets and 25% is based on targeted improvement on sales per
employee.
RETIREMENT BENEFITS
The following table illustrates the estimated aggregate annual retirement
benefits under the Company's U.S. Retirement Plan and the U.S. Supplemental
Executive Retirement Plan, assuming retirement at age 65, based on years of
credited service and the highest five consecutive years' average pay. (Primary
Social Security Benefits are not included. Effective July 1, 1989, the benefit
formula under the Plan was changed from a Social Security Offset formula).
PENSION PLAN TABLE (U.S. PLAN)
ANNUAL RETIREMENT
<TABLE><CAPTION>
YEARS OF CREDITED SERVICE
----------------------------------------------------
AVERAGE SALARY 15 20 25 30 35
- ----------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000....................................... $ 35,900 $ 47,900 $ 59,900 $ 59,900 $ 59,900
$200,000....................................... $ 48,700 $ 64,900 $ 81,100 $ 81,100 $ 81,100
$250,000....................................... $ 61,400 $ 81,900 $102,400 $102,400 $102,400
$300,000....................................... $ 74,200 $ 98,900 $123,600 $123,600 $123,600
$350,000....................................... $ 86,900 $115,900 $144,900 $144,900 $144,900
$400,000....................................... $ 99,700 $132,900 $166,100 $166,100 $166,100
$450,000....................................... $112,400 $149,900 $187,400 $187,400 $187,400
$500,000....................................... $125,200 $166,900 $208,600 $208,600 $208,600
$550,000....................................... $137,900 $183,900 $229,900 $229,900 $229,900
$600,000....................................... $150,700 $200,900 $251,100 $251,100 $251,100
</TABLE>
The Retirement Plan is a defined benefit plan to which the Company
contributes amounts required to fund this Plan as computed by standard actuarial
methods. The Retirement Plan provides a monthly pension to qualifying employees
who terminate from the Company with at least five years of service. A
participant who is eligible to receive a retirement benefit will receive a
monthly benefit equal to the sum of: (1) 1.1% of his average monthly earnings
over his five highest consecutive years of pay, including bonus and overtime up
to 50% of base pay times his years of pay, including bonus and overtime up of
the average monthly earnings in excess of Covered Compensation (average of
taxable wage bases under Section 230 of the Social Security Act) times credited
service (maximum 25 years).
12
<PAGE>
The credited years of service and current pay covered for each of the
individuals named in the Cash Compensation Table is as follows:
<TABLE><CAPTION>
1995 COVERED
YEARS CREDITED COMPENSATION
-------------- ------------
<S> <C> <C>
Robert C. Strauss................................. 12 $775,921
Rudy J. Kranys.................................... 11 $389,294
Alfred J. Novak................................... 11 $394,884
Philip J. Monks................................... --
Egbert Ratering................................... --
</TABLE>
- ------------
(1) Philip J. Monks is a member of and contributes a percentage of his salary to
the United Kingdom Plan which does not provide a guaranteed pension at
retirement, but is based on funds accrued to purchase a pension to the
member's requirement. The Company also contributes a percentage of Mr.
Monks' salary to the United Kingdom Plan. Egbert Ratering is covered under
the Dutch Plan, as set forth in the pension table below.
The following table illustrates the estimated aggregate annual retirement
benefits under the Company's Dutch Retirement Plan based on years of credited
service and last annual pay, as defined:
PENSION TABLE (DUTCH PLAN)
<TABLE><CAPTION>
YEARS OF CREDITED SERVICE
----------------------------------------------------
AVERAGE SALARY 15 20 25 30 35
- ----------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000....................................... $ 33,768 $ 45,024 $ 56,280 $ 67,537 $ 78,793
$200,000....................................... $ 46,893 $ 62,524 $ 78,155 $ 93,787 $109,418
$250,000....................................... $ 60,018 $ 80,024 $100,030 $120,037 $140,043
$300,000....................................... $ 73,143 $ 97,524 $121,905 $146,287 $170,668
$350,000....................................... $ 86,268 $115,024 $143,780 $172,537 $201,293
$400,000....................................... $ 99,393 $132,524 $165,655 $198,787 $231,918
$450,000....................................... $112,518 $150,024 $187,530 $225,037 $262,543
$500,000....................................... $125,643 $167,524 $209,405 $251,287 $293,168
$550,000....................................... $138,768 $185,024 $231,280 $277,537 $323,793
$600,000....................................... $151,893 $202,524 $253,155 $303,787 $354,418
</TABLE>
The Dutch Plan, available to all Roden employees, provides supplemental
retirement benefits calculated on the basis of the number of years of service
multiplied by 1.75% multiplied by the pension earnings (annual salary minus the
social security offset of approximately $21,400). The Dutch Plan is designed to
provide a pension benefit equal to 70% of the recipient's last pension earnings
after 40 years of service; however, salary increases subsequent to age 55 are
only partially taken into account. Both the Company and the employee contribute
only the Plan.
SEVERANCE AGREEMENTS
At the Meeting, in order to ensure the continued dedication and objectivity
of certain key executives and managers of the Company in the context of a
threatened change of control of the Company, the Board authorized the Company to
enter into severance compensation arrangements ("Severance Agreements") with
such executives and managers ("Executives"). There are four types of Severance
Agreements, with the type of agreement with each Executive being determined by
reference to a four-tiered severance structure adopted by the Board: Messrs.
Strauss, Kranys, Novak, McDowell, Monks and Ratering are parties to Tier 1
Severance Agreements, and there are 10, 21 and 25 Tier 2 Severance Agreements,
Tier 3 Severance Agreements, and Tier 4 Severance Agreements with Executives,
respectively.
The agreements provide for certain severance benefits to those individuals
in the event of certain terminations of their employment following a Change in
Control (as defined below). Other than the Tier
13
<PAGE>
4 Severance Agreements, each of the Severance Agreements has a three-year term.
All Severance Agreements provide for payment of severance benefits ("Severance")
in the event of an Executive's termination of employment by the Company (or its
successor) without Cause or by the Executive with Good Reason within three years
(one year for Tier 4 Severance Agreements) following a Change in Control. In
addition, the Chief Executive Officer ("CEO") and Chief Financial Officer
("CFO") are entitled to payment under their Tier 1 Severance Agreements upon any
termination of employment by them within 60 days after the first anniversary of
a Change in Control.
The Tier 1 Severance Agreements provide for Severance consisting of: (i) a
lump sum payment equal to 2.99 times the sum of (A) Executive's base salary
(including the annual amount of any automobile allowance) immediately prior to
the Change in Control and (B) the highest bonus paid to Executive under the
Company's executive incentive compensation plans during the three years
preceding the Change in Control; (ii) continued medical benefits until the
earlier of (A) the third anniversary of Executive's termination or (B) the
commencement of comparable coverage with a subsequent employer; (iii) three
years of age and service credit under the Company's retirement plans; and (iv) a
gross-up payment for any excise taxes imposed on any "excess parachute payments"
under the Internal Revenue Code of 1986, as amended (the "Code").
The Tier 2 Severance Agreements provide for Severance consisting of: (i) a
lump sum payment equal to 2 times the sum of (A) Executive's base salary
(including the annual amount of any automobile allowance) immediately prior to
the Change in Control and (B) the highest bonus paid to Executive under the
Company's executive incentive compensation plans during the three years
preceding the Change in Control; (ii) continued medical benefits until the
earlier of (A) the twenty-four months after Executive's termination or (B) the
commencement of comparable coverage with a subsequent employer; (iii)
twenty-four months of age and service credit under the Company's retirement
plans; and (iv) a gross-up payment for any excise taxes imposed on any "excess
parachute payments" under the Code.
The Tier 3 Severance Agreements provide for Severance consisting of: (i) a
lump sum payment equal to 1.5 times the sum of (A) Executive's base salary
immediately prior to the Change in Control and (B) the highest bonus paid to
Executive under the Company's executive incentive compensation plans during the
three years preceding the Change in Control; (ii) continued medical benefits
until the earlier of (A) the eighteen months after Executive's termination or
(B) the commencement of comparable coverage with a subsequent employer; and
(iii) eighteen months of age and service credit under the Company's retirement
plans.
The Tier 4 Severance Agreements expire upon the earlier of one year after a
Change in Control or three years. These agreements provide for Severance
consisting of: (i) a lump sum payment equal to 1 times the sum of (A)
Executive's base salary immediately prior to the Change in Control and (B) the
highest bonus paid to Executive under the Company's executive incentive
compensation plans during the three years preceding the Change in Control; and
(ii) continued medical benefits until the earlier of (A) the first anniversary
of Executive's termination or (B) the commencement of comparable coverage with a
subsequent employer.
All agreements provide for payment, in a cash lump sum, of all amounts
deferred by Executive under any non-qualified plan of deferred compensation
maintained by the Company (notwithstanding the payment provisions of any such
plans to the contrary) and any accrued but unused vacation time.
Payments and benefits under the Tier 3 and Tier 4 Severance Agreements are
limited by the parachute limit imposed by Section 280G of the Code, unless an
Executive would realize a greater net after tax benefit if no limitation were
imposed.
A "Change in Control" for purposes of the Severance Agreements is identical
to the definition of such term contained in the Policy.
Under all Severance Agreements, "Cause" is defined as (i) fraud, dishonesty
or willful malfeasance in connection with Executive's employment which results
in material harm to the Company; (ii)
14
<PAGE>
Executive's continued failure to substantially perform his duties and
responsibilities after written notice thereof which is not cured within 10
business days; (iii) Executive's willful and material breach of the
confidentiality or non-competition provisions of the Agreement; or (iv)
Executive's plea of guilty or nolo contendere to, or nonappealable conviction
of, a felony.
Termination of an Executive for Cause under a Tier 1, Tier 2 or Tier 3
Severance Agreement can only be made by delivery to the Executive of a copy of a
resolution duly adopted by a two-thirds majority of the Directors of the Company
(after 30 days prior written notice and reasonable opportunity for the Executive
to be heard before the Board prior to such vote), finding that in the reasonable
judgment of such Board, the relevant conduct or event set forth in any of
clauses (i) through (iv) in the definition of "Cause" above has occurred and
that such occurrence warrants Executive's termination.
Under the Tier 1, Tier 2 and Tier 3 Severance Agreements, "Good Reason" is
defined as any (i) material diminution in the Executive's position, duties or
responsibilities (in the case of the CEO and the CFO, the Company's stock
ceasing to be publicly traded or the Company's becoming a subsidiary of a
company whose stock is publicly traded, in each case, does not by itself
constitute a diminution in position, duties or responsibilities); (ii) material
adverse change in the Executive's salary and incentive compensation; (iii)
failure by the Company either to continue in effect, or to provide reasonably
similar benefit plans; (iv) relocation of the Executive's employment to a
location in excess of 50 miles from the Executive's work site prior to the
Change in Control; (v) reduction in paid vacation days; (vi) any material breach
by the Company of any provision of the agreement; and (vii) failure of a
successor of the Company to assume the agreement.
Under the Tier 4 Severance Agreements, "Good Reason" is defined as any (i)
material diminution in the Executive's position, duties or responsibilities;
(ii) material adverse change in the Executive's salary and incentive
compensation; and (iii) relocation of the Executive's employment to a location
in excess of 50 miles from the Executive's work site prior to the Change in
Control.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of August 22, 1995, the number of shares
of Common Stock beneficially owned by each Director and by each of the Executive
Officers named below.
<TABLE><CAPTION>
NUMBER OF PERCENTAGE
COMMON SHARES OF OWNERSHIP
BENEFICIALLY (*DESIGNATES
BENEFICIAL OWNERS(1) OWNED LESS THAN 1%)
- ------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Catherine M. Burzik.......................................... --
David R. Challoner, M.D...................................... 11,700(2) *
Richard W. Foxen............................................. 11,000(2) *
Donald F. Malin, Jr.......................................... 9,500(2) *
Robert Q. Marston, M.D....................................... 8,000(2) *
William J. Razzouk........................................... --
Jan L. de Ruyter van Steveninck.............................. 4,000(2) *
Wilton W. Webster, Jr........................................ 1,004,740(3) 6.1%
Patricia K.Woolf, Ph.D....................................... 12,350(2) *
Robert C. Strauss............................................ 161,176(3) 1.0%
Rudy J. Kranys............................................... 145,068(3) *
Alfred J. Novak.............................................. 81,260(3) *
Philip J. Monks.............................................. 58,682(3) *
Egbert Ratering.............................................. 112,085(3) *
All Directors and Executive Officers as a group (23)
including the above........................................ 1,981,846(4) 12.1%
</TABLE>
(Footnotes on following page)
15
<PAGE>
(Footnotes for preceding page)
- ------------
(1) Beneficial ownership, as listed in the chart, includes shares of Common
Stock directly owned or held by the persons named and the group referred to
or by certain of their families.
(2) Includes shares of Common Stock which may be acquired, when vested by the
exercise of options granted under the Cordis Corporation Director
Non-Qualified Stock Option Plan as follows. Dr. Challoner--10,000; Mr.
Foxen--10,000; Mr. Malin--8,000; Dr. Marston--8,000; Mr. van
Steveninck--4,000; Dr. Woolf--10,000.
(3) Includes shares of Common Stock which may be acquired, when vested, by the
exercise of options granted under the Cordis Corporation Non-Qualified Stock
Option Plan, as follows: Mr. Webster-- 3,000; Mr. Strauss--121,000; Mr.
Kranys--60,500; Mr. Novak--60,500; Mr. Monks--54,500; and Mr.
Ratering--39,600.
(4) Includes 648,900 shares of Common Stock which may be acquired, when vested,
by the exercise of options granted under the Cordis Corporation
Non-Qualified Stock Option Plan and Director Non-Qualified Stock Option
Plan.
Certain information regarding transactions by the members of the Board since
November 1, 1993 is included on Appendix A.
COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(A)
There was a failure to file on a timely basis one Form 4, Statement of
Changes in Beneficial Ownership, with the Securities and Exchange Commission, as
required under Section 16(a) of the Securities Exchange Act of 1934, by Egbert
Ratering, Vice President, Worldwide Manufacturing, relating to four sale
transactions that occurred in March, 1995. The Form 4 was filed one day late.
SECURITY OWNERSHIP OF CERTAIN OTHER BENEFICIAL OWNERS
The following chart names all beneficial owners (other than management of
the Company) of the Company's voting stock known to the Company to own more than
5% of the voting stock based on their last 13G filing.
<TABLE><CAPTION>
NAME AND ADDRESS NUMBER OF COMMON PERCENTAGE OF
OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED OWNERSHIP
- ---------------------------------------------------------- ------------------------- -------------
<S> <C> <C>
AIM Management Group, Inc................................. 2,126,000 13.0%
11 Greenway Plaza
Houston, TX 77046
Twentieth Century Companies............................... 875,000 5.3%
4500 Main Street
Kansas City, MO 64141-9210
</TABLE>
16
<PAGE>
CERTAIN MATTERS
LITIGATION
On October 19, 1995, a complaint (the "J&J Complaint") entitled Johnson &
Johnson and JNJ Acquisition Corp. v. Cordis Corporation, Civ. Action No.
95-2295, was filed against the Company in the United States District Court for
the Southern District of Florida. Among other things, the J&J Complaint seeks
injunctive and declaratory relief to prevent the Company from impeding or
delaying the Offer, and the Stock Merger with the Company, through the use of
the Company's anti-takeover devices or other defensive measures, and,
specifically, an order compelling the Company, among other things, to redeem the
Rights, or to amend the Rights Agreement to make the Rights inapplicable to the
Offer and the Stock Merger. The J&J Complaint also seeks, among other things,
costs and attorneys' fees.
On October 26, 1995, the J&J Complaint was amended (the "Amended J&J
Complaint") to allege violations of Florida law, and breach of fiduciary duty by
the directors, in the Board's adoption of certain provisions of the Rights
Agreement. The Amended J&J Complaint seeks, among other things, injunctive and
declaratory relief against the operation or enforcement of those provisions. On
that same date, J&J filed an emergency motion for expedited discovery. The
emergency motion seeks immediate entry of a scheduling order for expedited
discovery and a briefing and hearing schedule on a proposed motion for a
preliminary injunction that J&J has not yet filed. The Company filed a
memorandum in opposition to J&J's emergency motion on October 31, 1995. A reply
memorandum was served upon the Company's Florida counsel, White & Case, that
same day. The motion is currently pending before the United States District
Court for the Southern District of Florida.
On October 19, 1995, a purported class action complaint (the "State
Shareholders Complaint") entitled Brickell Partners v. Robert C. Strauss, et
al., Case No. 95-20617, was filed against the Company and eight of its current
and former directors in the Circuit Court of the 11th Judicial Circuit in and
for Dade County, Florida, alleging, among other things, breach of fiduciary duty
to maximize shareholder value by failing to adequately consider the Offer, and
failing to exercise independent business judgment in evaluating the Offer. The
State Shareholders Complaint seeks, among other things, an order directing the
defendants to take all appropriate steps to maximize value for, and protect the
interests of, the Company's shareholders, including such steps in connection
with any merger or acquisition of the Company. It further seeks, among other
things, an injunction with respect to the implementation of the Rights, as well
as damages and costs.
On October 20, 1995, a purported class action complaint (the "Federal
Shareholders Complaint") entitled Brickell Partners, et al. v. Robert C.
Strauss, et al., Civ. Action No. 95-2320, was filed against the Company and its
current directors in the United States District Court for the Southern District
of Florida, alleging, among other things, violation of Section 14(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14a-9
thereunder, and breach of fiduciary duty. As relief, the Federal Shareholders
Complaint seeks a declaration that defendants have violated Section 14(a), and
have breached their fiduciary duties, and, further, that the election of the
Company's directors at the Annual Meeting of Stockholders is null and void. It
also seeks, among other things, an order directing the defendants to fairly
evaluate alternatives designed to maximize value for the Company's shareholders,
and an injunction with respect to the implementation of the Rights and other
defensive measures, as well as damages and costs.
On October 26, 1995, the Federal Shareholders Complaint was amended (the
"Amended Federal Shareholders Complaint") to allege further breaches of
fiduciary duty by defendants, including with respect to the adoption of a Bylaw
amendment, as well as certain provisions of the Company's Rights Agreement. The
Amended Federal Shareholders Complaint seeks, among other things, a declaration
that those provisions, as well as the Bylaw amendment, are null and void.
On October 23, 1995, a purported class action complaint (the "Schneider
Complaint") entitled Laz L. Schneider v. Robert C. Strauss, et al, Civ. Action
No. 95-2338, was filed against the Company and its directors in the United
States District Court for the Southern District of Florida, alleging, among
other things, violation of Section 14(a) of the Exchange Act and Rule 14a-9
thereunder, and
17
<PAGE>
breach of fiduciary duty. As relief, the Schneider Complaint seeks a declaration
that defendants have violated Section 14(a), and have breached their fiduciary
duties, and, further, that the election of the Company's directors at the Annual
Meeting of Stockholders is null and void. It also seeks injunctive relief,
including, among other things, an order directing defendants to fairly evaluate
alternatives designed to maximize value for the Company's shareholders, as well
as damages and costs.
On October 24, 1995, a purported class action complaint (the "Pratt
Complaint") entitled Mary Pratt v. Catherine M. Burzik, et al., Civ. Action No.
95-2345, was filed against the Company and ten of its current and former
directors in the United States District Court for the Southern District of
Florida, alleging, among other things, violation of Section 14(a) of the
Exchange Act and Rule 14a-9 thereunder, and breach of fiduciary duty to maximize
shareholder value by failing to adequately consider the Offer, and failing to
exercise independent business judgment in evaluating the Offer. As relief, the
Pratt Complaint seeks a declaration that defendants have violated Section 14(a),
and have breached their fiduciary duties, and, further, that the election of the
Company's directors at the Annual Meeting of Stockholders is null and void. It
also seeks injunctive relief, including, among other things, an order directing
defendants to take appropriate steps to facilitate a premium acquisition of the
Company in a manner designed to maximize value for the Company's stockholders,
as well as damages and costs.
SOLICITATION OF CONSENT REVOCATIONS
Consent revocations may be solicited by mail, telephone, facsimile
transmission or other electronic media and in person. Solicitation of consent
revocations may be made by directors, officers and regular employees of the
Company for which they will receive no additional compensation.
In addition, the Company has retained MacKenzie to assist in the
solicitation of the consent revocations, for which MacKenzie will receive
reasonable and customary compensation and will be reimbursed for its reasonable
out-of-pocket expenses. The Company has also agreed to indemnify MacKenzie for
certain liabilities in connection with this solicitation. Approximately 35
persons will be employed by MacKenzie to solicit shareholders.
Banks, brokers, custodians, nominees and fiduciaries will be requested to
forward solicitation material to beneficial owners of the Shares. The Company
will reimburse banks, brokers, custodians, nominees and fiduciaries for their
reasonable expenses for sending solicitation material to the beneficial owners.
The entire cost of soliciting the consent revocations (including, without
limitation, costs, if any, relating to advertising, printing, fees of attorneys,
financial advisors, proxy solicitors, accountants, public relations,
transportation, litigation and related expenses and filing fees) will be borne
by the Company. The Company estimates that total expenditures relating to the
Board's solicitation of the consent revocations will be approximately $ .
Approximately $ has been expended by the Company to date.
SHAREHOLDER PROPOSALS FOR 1996
Shareholders who wish to propose matters for consideration at the 1996
Annual Meeting must deliver them to the Company by May 18, 1996 for inclusion in
the proxy statement for that Meeting.
ABSENCE OF DISSENTERS' RIGHTS
Pursuant to Section 607.1302 of the Florida Business Corporation Law, the
shareholders of the Company are not entitled to dissenters'rights in connection
with the J&J Proposals.
18
<PAGE>
APPENDIX A
Because the J&J Proposals contemplate the removal of the Board of Directors
of the Company and the election of J&J's nominees to the newly created
vacancies, the rules of the Securities and Exchange Commission require the
Company to include in this Statement certain additional information with respect
to "Participants" (as defined in Schedule 14A promulgated pursuant to the
Securities Exchange Act of 1934, as amended). Pursuant to those rules, the
members of the Board are deemed Participants in the solicitation of consent
revocations. Unless otherwise indicated below, the business address of the
Participants is the address of Cordis Corporation's principal executive offices.
Set forth below is certain required information with respect to Participants:
CERTAIN INFORMATION REGARDING DIRECTORS WHO ARE DEEMED PARTICIPANTS
The principal occupations of the Company's directors who are deemed
Participants in the solicitation are set forth on pages 5 and 6 of this
Statement. The principal business address of Messrs. Strauss and Webster is that
of the Company. The name, business and address of the other Participants'
organization of employment are as follows: Ms. Burzik is employed by Kodak
Health Imaging Systems ("KHIS"), a subsidiary of the Eastman Kodak Company which
sells medical diagnostic imaging systems. KHIS is located at 18325 Waterview
Parkway, Dallas, Texas 75252. Dr. Challoner is employed by the University of
Florida in Gainsville. Mr. Razzouk is employed by the Federal Express
Corporation, the provider of overnight delivery service. Federal Express is
located at 2005 Corporate Avenue, Memphis, Tennessee 38132. Ms. Woolf is an
independent consultant and a lecturer at Princeton University in Princeton, New
Jersey. Messrs. Foxen, Malin and van Steveninck are all retired.
INFORMATION REGARDING OWNERSHIP OF THE COMPANY'S SECURITIES BY PARTICIPANTS
None of the Participants owns any of the Company's securities of record but
not beneficially. The number of shares of Common Stock held by Participants is
set forth on pages 15 and 16 of this Statement
INFORMATION REGARDING TRANSACTIONS IN THE COMPANY'S SECURITIES
Except as set forth in the table below, none of the Participants has
purchased or sold or otherwise disposed of any securities of the Company since
November 1, 1993.
<TABLE><CAPTION>
AMOUNT OF
NAME DATE TRANSACTION SHARES PRICE
- ------------------------------------------ -------- -------------------- --------- -------
<S> <C> <C> <C> <C>
David R. Challoner, M.D................... 5/18/95 exercise of options 2,000 $19.50
5/18/95 sale 1,000 70.00
9/07/95 gift 700
Richard W. Foxen.......................... 8/31/94 exercise of options 2,000 19.50
8/31/94 sale 2,000 55.50
Donald F. Malin, Jr....................... 2/01/95 exercise of options 2,000 19.50
2/01/95 exercise of options 2,000 29.50
2/01/95 sale 6,000 62.75
</TABLE>
<PAGE>
<TABLE><CAPTION>
AMOUNT OF
NAME DATE TRANSACTION SHARES PRICE
- ------------------------------------------ -------- -------------------- --------- -------
<S> <C> <C> <C> <C>
Robert C. Strauss......................... 8/25/95 sale 6,000 32.75
1/26/95 sale 10,000 48.50
6/28/94 exercise of options 30,000 14.50
7/11/94 sale 5,000 40.00
8/29/94 sale 18,300 55.50
8/29/94 sale 3,000 55.125
8/30/95 sale 10,000 55.25
8/30/94 sale 5,000 55.375
2/02/95 exercise of options 24,000 19.875
2/02/95 sale 24,000 64.00
8/31/95 sale 5,000 75.00
9/07/95 sale 1,000 77.00
Jan L. de Ruyter van Steveninck........... 2/11/94 exercise of options 2,000 29.50
2/11/94 sale 2,000 49.56
10/07/94 exercise of options 2,000 22.50
10/07/94 sale 2,000 54.50
2/14/95 exercise of options 2,000 32.00
2/14/95 sale 2,000 66.50
Wilton W. Webster, Jr..................... 10/14/94 gift 10,000
Patricia K. Woolf, Ph.D................... 3/23/95 exercise of options 2,000 19.50
3/23/95 sale 1,000 70.00
5/01/95 gift 50
</TABLE>
MISCELLANEOUS INFORMATION CONCERNING PARTICIPANTS
Except as disclosed below and elsewhere in this Statement and to the best of
the Company's knowledge: (a) none of the Participants identified above was or is
a party to a contract, arrangement or understanding with respect to the
Company's securities; (b) there are no contracts, arrangements or understandings
between the Company and Participants and associates of Participants with respect
to employment by the Company and its affiliates or with respect to transactions
in which the Company or any of its affiliates are or will be parties; and (c) no
securities of the Company are owned by any associates of the Participants.
Wilton W. Webster, Jr. has an employment agreement with the Company and
Cordis Webster, Inc., dated April 25, 1994, which, among other things, contains
the following: provision for a severance payment of 12 months salary,
confidentiality provisions and a non-competition agreement.
<PAGE>
[FORM OF CONSENT CARD]
PRELIMINARY COPY--NOVEMBER 1, 1995
<TABLE>
<S> <C>
WHITE
CONSENT THIS REVOCATION OF CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF
CARD DIRECTORS OF CORDIS CORPORATION
</TABLE>
Revocation of any and all consents heretofore executed with respect to the
matters set forth herein, as described in the statement enclosed herewith.
THE BOARD OF DIRECTORS RECOMMENDS A "REVOKE CONSENT."
YOUR REVOCATION OF CONSENT IS IMPORTANT. PLEASE INDICATE YOUR OPPOSITION TO THE
J&J PROPOSALS BY MARKING, SIGNING, DATING AND MAILING THIS CARD TODAY IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE. IF NOT OTHERWISE MARKED, THIS REVOCATION OF
CONSENT REVOKES ALL PREVIOUS CONSENTS.
1. The removal of each of the following incumbent directors of the Company:
Catherine M. Burzik, David R. Challoner, M.D., Richard W. Foxen, Donald F.
Malin, Jr., William J. Razzouk, Robert C. Strauss, Jan L. de Ruyter van
Steveninck, Wilton W. Webster, Jr. and Patricia K. Woolf, Ph.D., and any
other person who is a director of the Company immediately prior to the
effectiveness of the actions proposed to be taken by written consent.
/ / REVOKE CONSENT / / DO NOT REVOKE CONSENT / / ABSTAIN
2. The amendment of Section 2 of the Article II of the Company's Bylaws to read,
in its entirety, as follows: "The number of directors of the Corporation
shall be three."
/ / REVOKE CONSENT / / DO NOT REVOKE CONSENT / / ABSTAIN
3. The election of each of Donaldson Pillsbury, Robert Glauber and Karl von der
Heyden (collectively, the "Nominees") as the directors of the Company to hold
office until their successors are elected and qualified (or, if any such
Nominee is unable to serve as a director of the Company due to death,
disability or otherwise, any person designated as a Nominee by the remaining
Nominee or Nominees).
/ / REVOKE CONSENT / / DO NOT REVOKE CONSENT / / ABSTAIN
(continued and to be dated and signed on reverse side)
<PAGE>
INSTRUCTION: TO REVOKE CONSENT, WITHHOLD REVOCATION OF CONSENT OR ABSTAIN FROM
REVOKING THE CONSENT FOR THE ELECTION OF ALL THE PERSONS NAMED ON
THE REVERSE, CHECK THE APPROPRIATE BOX ON THE REVERSE. IF YOU WISH
TO REVOKE THE CONSENT TO THE ELECTION OF CERTAIN OF THE PERSONS
NAMED ON THE REVERSE, BUT NOT ALL OF THEM, CHECK THE "REVOKE
CONSENT" BOX ON THE REVERSE AND WRITE THE NAME OF EACH SUCH PERSON
AS TO WHOM YOU DO NOT WISH TO REVOKE CONSENT IN THE FOLLOWING
SPACE:
- --------------------------------------------------------------------------------
4. The repeal of each provision of the Company Bylaws, and the repeal of any
amendment to the Company's Bylaws, in each case adopted subsequent to April
of 1977 and prior to the effectiveness of the actions proposed to be revoked
by this written consent revocation.
/ / REVOKE CONSENT / / DO NOT REVOKE CONSENT / / ABSTAIN
IN THE ABSENCE OF DISSENT OR ABSTENTION BEING INDICATED ON THE REVERSE OR ABOVE,
THE UNDERSIGNED HEREBY REVOKES CONSENT TO EACH ACTION LISTED ON THE REVERSE AND
ABOVE.
The effectiveness of each of the proposals set forth on the reverse and above is
subject to, and conditioned upon, the adoption of each of the other proposals
set forth on the reverse and above by the holders of record at the close of
business on November , 1995 of a majority of the shares of Company Common Stock
then outstanding.
Please sign exactly as name appears on
stock certificates or on label affixed
hereto. When shares are held by joint
tenants, both should sign. In case of
joint owners, EACH joint owner should
sign. When signing as attorney,
executor, administrator, trustee,
guardian, corporate officer, etc., give
full title as such.
Dated: _______________________________________________
____________________________________________________
Signature
____________________________________________________
Signature, if held jointly
____________________________________________________
Title of Authority
IN ORDER FOR YOUR REVOCATION OF CONSENT TO BE VALID, IT MUST BE DATED.
PLEASE MARK, SIGN, DATE AND MAIL YOUR REVOCATION OF CONSENT PROMPTLY IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE.
