<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
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
NEUTROGENA CORPORATION
(NAME OF SUBJECT COMPANY)
------------------------
JNJ ACQUISITION CORP.
JOHNSON & JOHNSON
(BIDDERS)
------------------------
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
641246103
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
JAMES R. HILTON, ESQ.
JNJ ACQUISITION CORP.
C/O JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933
(908) 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
------------------------
AUGUST 22, 1994
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
------------------------
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
- --------------------------------------------------------------------------------
$934,171,636...................................... $186,835
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- --------------------------------------------------------------------------------
</TABLE>
* For purposes of calculating amount of filing fee only. The amount assumes the
purchase of 26,501,323 shares of Common Stock, par value $.001 per share,
including the associated preferred stock purchase rights issued pursuant to
the Rights Agreement dated as of July 23, 1990, as amended, between the
Company and U.S. Stock Transfer Corporation, as Rights Agent (the "Shares"),
at a price per Share of $35.25 in cash. Such number of shares represents all
the Shares outstanding as of August 18, 1994, plus the number of shares
issuable upon the exercise of all existing vested 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.
<TABLE>
<S> <C>
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
Page 1 of pages.
Exhibit Index on page .
</TABLE>
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<PAGE> 2
- ---------------------------------14D-1 AND 13D
CUSIP No. 641246103
- ---------------------------------
Page 2 of Pages
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JNJ ACQUISITION CORP. (22-3319445)
- -------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
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3 SEC USE ONLY
- -------------------------------------------------------------------------------------------------
4 SOURCES OF FUNDS
AF
- -------------------------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS / /
REQUIRED PURSUANT TO ITEMS 2(e) or 2(f)
- -------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
9,868,996*
- -------------------------------------------------------------------------------------------------
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES / /
CERTAIN SHARES
- -------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
APPROXIMATELY 38.4% OF THE SHARES OUTSTANDING AS OF
AUGUST 18, 1994.*
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10 TYPE OF REPORTING PERSON
CO
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</TABLE>
* See footnote on following page.
2
<PAGE> 3
14D-1 AND 13D
- ---------------------------------
CUSIP No. 641246103
- ---------------------------------
Page 3 of Pages
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JOHNSON & JOHNSON (22-1024240)
- -------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
- -------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------------------------
4 SOURCES OF FUNDS
WC
- -------------------------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS /X/
REQUIRED PURSUANT TO ITEMS 2(e) or 2(f)
- -------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW JERSEY
- -------------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
9,868,996*
- -------------------------------------------------------------------------------------------------
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES / /
CERTAIN SHARES
- -------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
APPROXIMATELY 38.4% OF THE SHARES OUTSTANDING AS OF AUGUST 18,
1994.*
- -------------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
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</TABLE>
* On August 22, 1994, Johnson & Johnson ("Parent") entered into a Stockholder
Agreement (the "Stockholder Agreement") with each of a foundation and certain
trusts affiliated with Mr. Lloyd E. Cotsen, Chairman and Chief Executive
Officer of Neutrogena Corporation (collectively, the "Selling Stockholders"),
pursuant to which the Selling Stockholders have agreed with Parent to tender
to JNJ Acquisition Corp., a wholly owned subsidiary of Parent (the
"Purchaser"), pursuant to the Offer (as defined below), or sell to Purchaser
simultaneously therewith, in each case, at a price of $35.25 per Share, all
the Shares owned by them (representing an aggregate of 9,868,996 Shares, or
approximately 38.4% of the Shares outstanding as of August 18, 1994). 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 and the
Minimum Condition (as defined in the Offer) is satisfied, the Purchaser must
exercise such purchase option as soon as practicable following the date of
such payment (unless all the Shares subject to the Stockholder Agreement have
been tendered by the Selling Stockholders and accepted for payment by the
Purchaser under the Offer). Pursuant to the Stockholder Agreement, each
Selling 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). 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 August 26, 1994 (the "Offer to Purchase").
3
<PAGE> 4
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D 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 Neutrogena Corporation, a Delaware
corporation (the "Company"), which has its principal executive offices at 5760
West 96th Street, Los Angeles, California 90045.
(b) This Schedule 14D-1 relates to the offer by the Purchaser to purchase
all outstanding Shares at a price of $35.25 per Share, net to the seller in cash
(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 "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 the Shares for each quarterly period
during the past two years 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) Since 1991, Johnson & Johnson Korea, Ltd. ("Distributor") has served as
exclusive distributor for certain products of the Company in the Republic of
Korea pursuant to a Distribution Agreement, dated as of January 1, 1991 (the
"Distribution Agreement"), between the Company and Distributor.
The Distribution Agreement prohibits Distributor from acting as a
distributor with respect to any product which is positioned in the retail market
to compete with certain skin and hair products of the Company. The term of the
Distribution Agreement is for five years, with an automatic extension for five
years; provided, that Distributor has satisfied certain minimum purchase
obligations and is otherwise in compliance with the material terms and
provisions of the Distribution Agreement.
The Distribution Agreement may be terminated by the Company with 30 days'
notice from the end of any year if Distributor's minimum purchase obligations
have not been met for such period. In addition, after the fifth year, the
Company may terminate the Distribution Agreement for any reason, upon at least
six
4
<PAGE> 5
months' prior written notice, upon payment to Distributor of an amount in cash
equal to 50% of net sales of the products covered by the Distribution Agreement
during the immediately preceding year.
In addition, the information set forth in Section 11 ("Contacts with the
Company; Background of the Offer") of the Offer to Purchase is incorporated
herein by reference.
(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 and Exchange Act Registration") of
the Offer to Purchase is incorporated herein by reference.
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 the 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.
5
<PAGE> 6
(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 August 22, 1994, among
the Purchaser, Parent and the Company and the Stockholder Agreement dated as of
August 22, 1994, among Parent, Lloyd E. Cotsen, trustee of the Cotsen 1985
Trust, Lloyd E. Cotsen, trustee of the First Cotsen Charitable Unitrust, Lloyd
E. Cotsen, trustee of the Second Cotsen Charitable Unitrust, Lloyd E. Cotsen,
trustee of the Third Cotsen Charitable Unitrust, Lloyd E. Cotsen, trustee of the
Fourth Cotsen Charitable Unitrust, Lloyd E. Cotsen, trustee of the Remainder
Trust (Trust B) under the will of Joanne Cotsen (deceased) and Cotsen Family
Foundation, a California non-profit public benefit corporation, copies of which
are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2), respectively,
is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, 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 August 26, 1994.
(a)(8) Text of Press Release dated August 22, 1994, issued by the Company and Parent.
(b) None.
(c)(1) Agreement and Plan of Merger dated as of August 22, 1994, among the Purchaser,
Parent and the Company.
(c)(2) Stockholder Agreement dated as of August 22, 1994, among Parent, Lloyd E. Cotsen,
trustee of the Cotsen 1985 Trust, Lloyd E. Cotsen, trustee of the First Cotsen
Charitable Unitrust, Lloyd E. Cotsen, trustee of the Second Cotsen Charitable
Unitrust, Lloyd E. Cotsen, trustee of the Third Cotsen Charitable Unitrust, Lloyd
E. Cotsen, trustee of the Fourth Cotsen Charitable Unitrust, Lloyd E. Cotsen,
trustee of the Remainder Trust (Trust B) under the will of Joanne Cotsen
(deceased) and Cotsen Family Foundation, a California non-profit public benefit
corporation.
(c)(3) Confidentiality Agreement dated as of August 15, 1994, between Parent and the
Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
6
<PAGE> 7
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: August 26, 1994
JNJ 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
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
- ------- ----------------------------------------------------------------------- -------
<S> <C> <C>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, 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 August 26, 1994.
(a)(8) Text of Press Release dated August 22, 1994, issued by the Company and
Parent.
(b) None.
(c)(1) Agreement and Plan of Merger dated as of August 22, 1994, among the
Purchaser, Parent and the Company.
(c)(2) Stockholder Agreement dated as of August 22, 1994, among Parent, Lloyd
E. Cotsen, trustee of the Cotsen 1985 Trust, Lloyd E. Cotsen, trustee
of the First Cotsen Charitable Unitrust, Lloyd E. Cotsen, trustee of
the Second Cotsen Charitable Unitrust, Lloyd E. Cotsen, trustee of the
Third Cotsen Charitable Unitrust, Lloyd E. Cotsen, trustee of the
Fourth Cotsen Charitable Unitrust, Lloyd E. Cotsen, trustee of the
remainder Trust (Trust B) under the will of Joanne Cotsen (deceased)
and Cotsen Family Foundation, a California non-profit public benefit
corporation.
(c)(3) Confidentiality Agreement dated as of August 15, 1994, between Parent
and the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
NEUTROGENA CORPORATION
AT
$35.25 NET PER SHARE
BY
JNJ 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, SEPTEMBER 23, 1994, UNLESS EXTENDED.
----------------------
THE BOARD OF DIRECTORS OF NEUTROGENA CORPORATION HAS, BY UNANIMOUS VOTE,
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, TOGETHER WITH THE SHARES SUBJECT TO THE STOCKHOLDER AGREEMENT
REFERRED TO HEREIN THAT SHALL NOT HAVE BEEN SO TENDERED, WOULD REPRESENT AT
LEAST A MAJORITY OF ALL OUTSTANDING SHARES.
----------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (and the associated Rights) should either (1) 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 and any other
required documents to the Depositary 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 (2) request such stockholder's broker, dealer, 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, bank,
trust company or other nominee must contact such broker, dealer, bank, trust
company or other nominee if such stockholder desires to tender such Shares.
A stockholder who desires to tender Shares (and the associated Rights) and
whose certificates for such Shares (and the associated Rights) 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 and the Notice of Guaranteed
Delivery may be directed to the Information Agent or to the Dealer Manager 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:
J.P. MORGAN SECURITIES INC.
August 26, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
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 and Exchange
Act Registration................................................................. 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...................................................... 21
14. Certain Conditions of the Offer.................................................. 22
15. Certain Legal Matters............................................................ 23
16. Fees and Expenses................................................................ 25
17. Miscellaneous.................................................................... 25
Schedule I -- Directors and Executive Officers........................................ S-1
</TABLE>
<PAGE> 3
To the Holders of Common Stock
of Neutrogena Corporation:
INTRODUCTION
JNJ 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 of Common Stock
(the "Common Stock"), par value $.001 per share, of Neutrogena Corporation, a
Delaware corporation (the "Company"), together with the associated preferred
stock purchase rights (the "Rights") issued pursuant to the Rights Agreement
(the "Rights Agreement"), dated as of July 23, 1990, as amended, between the
Company and U.S. Stock Transfer Corporation, as Rights Agent (the Rights,
together with the Common Stock, the "Shares"), at $35.25 per Share (the "Offer
Price"), net to the seller in cash, 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 will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of J.P. Morgan Securities Inc., which
is acting as Dealer Manager (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 Board of Directors of the Company has, by unanimous vote, approved the
Offer and the Merger (as defined below) and 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.
Lehman Brothers Inc., the Company's financial advisor ("Lehman Brothers"),
has delivered to the Board of Directors of the Company its written opinion to
the effect that, as of the date of such opinion, the cash consideration to be
offered to the holders of the Shares in each of the Offer and the Merger is fair
to such holders, from a financial point of view. 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 herewith.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in Section
1) that number of Shares (the "Minimum Number of Shares") which, together with
the Shares subject to the Stockholder Agreement (as defined below) that shall
not have been so tendered, would represent at least a majority of all
outstanding Shares (the "Minimum Condition"). The Purchaser reserves the right
(subject to obtaining the consent of the Company and the applicable rules and
regulations of the Securities and Exchange Commission (the "Commission")), which
it presently has no intention of exercising, to waive or reduce the Minimum
Condition and to elect to purchase, pursuant to the Offer, less than the Minimum
Number of Shares. See Sections 1 and 14.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of August 22, 1994 (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").
In the Merger, each outstanding Share (other than Shares owned by the Company as
treasury stock or by any subsidiary of the Company, 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 the per Share price paid in the Offer 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. 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. See Section 12.
1
<PAGE> 4
In connection with the execution of the Merger Agreement, the Purchaser and
Parent entered into a Stockholder Agreement, dated as of August 22, 1994 (the
"Stockholder Agreement"), with a foundation and certain trusts affiliated with
Lloyd E. Cotsen, Chairman and Chief Executive Officer of the Company
(collectively, the "Selling Stockholders"), pursuant to which such Selling
Stockholders have agreed to sell to Purchaser, and Purchaser has agreed to
purchase, all 9,868,996 Shares beneficially owned by them, representing
approximately 38.4% of the outstanding Shares (35.2% of Shares on a fully
diluted basis), at a price per Share equal to the price paid in the Offer;
provided that such obligation to sell and such obligation to purchase are
subject to the Purchaser having accepted Shares for payment under the Offer and
the Minimum Condition having been satisfied. Pursuant to the terms of the
Stockholder Agreement, the Purchaser has the right (which it intends to
exercise) to require the Selling Stockholders to tender the Shares subject to
the Stockholder Agreement into the Offer. Pursuant to the Stockholder Agreement,
each Selling Stockholder has also executed and delivered a proxy for the benefit
of the Purchaser with respect to the Shares subject to the Stockholder Agreement
owned by such Selling Stockholder to vote such Shares against certain competing
transactions, as more fully described below under Section 12 ("Purpose of the
Offer; The Merger Agreement and The Stockholder Agreement").
The Company has informed the Purchaser that, as of August 18, 1994, there
were 25,717,859 Shares issued and outstanding and 2,331,352 Shares reserved for
issuance upon the exercise of outstanding employee stock options. Based upon the
foregoing, the Purchaser believes that approximately 12,858,930 Shares
constitutes a majority of the outstanding Shares. Accordingly, the Minimum
Condition will be satisfied if at least 2,989,934 Shares (other than the Shares
subject to the Stockholder Agreement), or approximately 11.6% of the outstanding
Shares (10.7% of the Shares on a fully diluted basis), are validly tendered and
not withdrawn prior to the Expiration Date. If the Minimum Condition is
satisfied and the Purchaser accepts for payment Shares tendered pursuant to the
Offer and the Purchaser purchases the Shares subject to the Stockholder
Agreement pursuant to such agreement, or the Selling Stockholders tender such
Shares pursuant to 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.
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 withdrawn in accordance with Section 3. The
term "Expiration Date" means 12:00 Midnight, New York City time, on Friday,
September 23, 1994, unless and until the Purchaser 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.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Commission, the Purchaser expressly reserves the right, in
its sole discretion, 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 or shall have been determined by the Purchaser to have occurred, to (a)
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 (b) amend the Offer in
any other respect by giving oral or written notice of such amendment to the
Depositary. THE PURCHASER SHALL NOT HAVE ANY OBLIGATION TO PAY INTEREST ON THE
PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS
RIGHT TO EXTEND THE OFFER.
If by 12:00 Midnight, New York City time, on Friday, September 23, 1994 (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 (1) terminate the Offer and not accept for payment any Shares and
return all tendered Shares to tendering stockholders, (2) 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
2
<PAGE> 5
prior to the Expiration Date and not theretofore withdrawn, (3) 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 (4) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer (other than as required by the Merger Agreement). Any
extension, waiver, amendment or termination will be followed as promptly as
practicable by public announcement. In the case of an extension, Rule 14e-1(d)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that the announcement be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rule 14d-4(c) under the
Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that any material change in the
information published, sent or given to stockholders in connection with the
Offer be promptly disseminated to stockholders in a manner reasonably designed
to inform stockholders of such change), and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a 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 (1) if at the
Expiration Date any of the conditions to the Purchaser's obligation to accept
Shares for payment are not satisfied or waived, until such time as such
conditions are satisfied or waived, (2) for any period required by any rule,
regulation, interpretation or position of the Commission or the staff thereof
and (3) for an aggregate period of not more than ten business days beyond the
latest expiration date that would otherwise be permitted under the terms of the
Merger Agreement as described in this sentence in the event that there shall not
have been tendered sufficient Shares so that the Merger could be effected as a
"short-form" merger as described in Section 12. 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, (1) reduce the number of Shares subject
to the Offer, (2) reduce the Offer Price, (3) modify or add to the conditions
set forth in Section 14, (4) change the form of consideration payable in the
Offer or (5) otherwise amend 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 Minimum Condition), the
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
securities sought, 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.
3
<PAGE> 6
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition, 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") 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. However, if the Purchaser (with the Company's
consent) waives or amends the Minimum Condition during the last five business
days during which the Offer is open, the Purchaser will be required to extend
the Expiration Date so that the Offer will remain open for at least five
business days after the announcement of such waiver or amendment is first
published, sent or given to holders of Shares.
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 by the Purchaser to record holders
of Shares and will be furnished by the Purchaser to brokers, dealers, 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 (1) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees 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 (2) 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 and Midwest Securities Trust Company (the "Book-Entry
Transfer Facilities") 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 any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account in accordance with such
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 a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees 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 a Book-Entry Transfer Facility as described
above is referred to herein as a "Book-Entry Confirmation". DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY 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 (1) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) tendered therewith and
such registered holder has not completed
4
<PAGE> 7
either the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" on the Letter of Transmittal or (2) such Shares
are tendered for the account of a firm that is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
(the "NASD"), or a commercial bank or trust company having an office or
correspondent in the United States or by any other "eligible guarantor
institution", as such term is defined in Rule 17Ad-15 under the Exchange Act
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letters 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 Instruction 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:
(1) such tender is made by or through an Eligible Institution;
(2) 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
(3) 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 and any
other documents required by the Letter of Transmittal, are received by the
Depositary within five trading days after the date of execution of such
Notice of Guaranteed Delivery. A "trading day" is any day on which the New
York Stock Exchange, Inc. (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, 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 (1) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (2) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and (3) 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 ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, 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.
Appointment. By executing a Letter of Transmittal as set forth above, 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 August 22, 1994. 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
5
<PAGE> 8
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 penalties 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 October 24, 1994.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
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 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 signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. Withdrawals of tenders of Shares may not be rescinded, and
any Shares properly withdrawn will thereafter be
6
<PAGE> 9
deemed not validly tendered for any 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 will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. 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 HSR Act. 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. See Section 15 hereof for additional information concerning
the HSR Act 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 (1) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
and (3) 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 properly tendered to the Purchaser
and not 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. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, 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, any 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, certificates for any such Shares will be
returned, without expense to the tendering stockholder (or, in the case
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<PAGE> 10
of Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, such Shares will be credited to an account maintained at the
appropriate 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, but 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 the right to
receive 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 to be received 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. Under present law,
long-term capital gains recognized by a tendering individual stockholder will
generally be taxed at a maximum Federal marginal tax rate of 28%, 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. A stockholder that does not furnish its TIN may be subject to a
penalty imposed by the IRS. Each stockholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED 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.
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<PAGE> 11
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded in the over-the-counter market and prices are quoted
on The Nasdaq National Market under the symbol "NGNA". The following table sets
forth, for each of the periods indicated, the high and low last reported sales
prices per Share as reported by The Nasdaq National Market and the Dow Jones
News Retrieval Service.
<TABLE>
<CAPTION>
SALES PRICE
-----------------
HIGH LOW
----- -----
<S> <C> <C>
1992
First Quarter................................................... $ 25 $ 18
Second Quarter.................................................. 22 1/4 17 1/4
Third Quarter................................................... 22 1/4 17 1/2
Fourth Quarter.................................................. 27 21 1/4
1993
First Quarter................................................... $ 24 1/2 $ 17 3/4
Second Quarter.................................................. 20 1/4 15
Third Quarter................................................... 18 14 1/4
Fourth Quarter.................................................. 21 1/4 16 1/4
1994
First Quarter................................................... $ 22 3/4 $ 16 3/4
Second Quarter.................................................. 20 1/2 16
Third Quarter (through August 25, 1994)......................... 35 1/4 19
</TABLE>
On August 9, 1994, the last full day of trading before the public
announcement that the Company was engaged in discussions regarding the possible
sale of the Company, the reported closing price of the Shares on The Nasdaq
National Market was $20 3/4 per Share.
On August 19, 1994, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported closing sale
price of the Shares on The Nasdaq National Market was $28 3/4 per Share. On
August 25, 1994 the last full day of trading before the commencement of the
Offer, the reported closing sale price of the Shares on The Nasdaq National
Market was $35 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1993, (the "Form 10-K"), the Company paid a regular cash
dividend in January 1994 of $.27 per Share payable to shareholders of record on
December 13, 1993.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK QUOTATION AND
EXCHANGE ACT REGISTRATION
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NASD for continued inclusion
in The Nasdaq National Market (the top tier market of The Nasdaq Stock Market),
which require that an issuer have at least 200,000 publicly held shares, held by
at least 400 shareholders or 300 shareholders of round lots, with a market value
of $1,000,000, and have net tangible assets of at least either $2,000,000 or
$4,000,000, depending on profitability levels during the issuer's four most
recent fiscal years. If these standards are not met, the Shares might
nevertheless continue to be included in The Nasdaq Stock Market with quotations
published in the Nasdaq "additional list" or in one of the "local lists", but if
the number of holders of the Shares were to fall below 300, or if the number of
publicly held Shares were to fall below 100,000 or there were not at least two
registered and active market makers for the Shares, the NASD's rules provide
that the Shares would no longer be "qualified" for Nasdaq reporting and
9
<PAGE> 12
Nasdaq would cease to provide any quotations. 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 August 18, 1994, there were approximately 1,200 holders of record
of Shares and 25,717,859 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 NASD for continued inclusion in The Nasdaq Stock Market or
The Nasdaq National Market, as the case may be, the market for Shares could be
adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for quotation through Nasdaq and the Shares are no longer included in The Nasdaq
Stock Market, it is possible that the Shares would continue to trade in the
over-the-counter market and that price quotations would be reported by other
sources. The extent of the public market for the Shares and the availability of
such quotations 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 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 short-swing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to section 14(a) 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 Nasdaq Stock Market 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 5760 West 96th Street, Los Angeles, California 90045. According to the Form
10-K, the Company's principal line of business is the manufacturing and
marketing of quality skin and hair care products which are, with one exception,
non-prescription items that are sold over-the-counter in drugstores, mass volume
retail stores, food/combo stores, wholesale membership stores, department stores
and other retail outlets throughout the United States and in many foreign
countries.
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 Form 10-K, as well as the Company's Quarterly
Report on Form 10-Q for the six months ended April 30, 1994 which are
incorporated by reference herein. More comprehensive financial information is
included in such reports and other documents filed by the
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<PAGE> 13
Company with the Commission, and the following summary is qualified in its
entirety by reference to such reports and such other documents and all the
financial information (including any related notes) contained therein. Such
reports and other documents should be available for inspection and copies
thereof should be obtainable in the manner set forth below under "Available
Information".
NEUTROGENA CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 30, YEAR ENDED OCTOBER 31,
----------------- ----------------------------
1994 1993 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net revenues................................ $133.7 $136.8 $281.7 $267.5 $231.3
Operating income............................ 13.8 12.1 39.0 36.1 30.3
Net income.................................. 9.3 9.4 26.0 24.0 21.3
Net income per Share........................ $ .36 $ .35* $ .99* $ .90 $ .80
</TABLE>
<TABLE>
<CAPTION>
AT APRIL 30, AT OCTOBER 31,
----------------- -----------------
1994 1993 1993 1992
------ ------ ------ ------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets............................... $113.4 $105.2 $128.3 $123.6
Total assets................................. 184.2 171.1 196.3 181.2
Current liabilities.......................... 47.7 50.9 63.6 53.0
Long-term debt............................... -- -- 4.1 3.8
Stockholders' equity......................... $131.9 $116.4 $128.6 $124.5
</TABLE>
- ---------------
* Includes a benefit of $1,069,000 or $.04 per share representing the cumulative
impact on prior years resulting from the implementation of Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes" effective
November 1, 1992.
Recent Developments. Based on the Company's sales and operating data for
the three months ended July 31, 1994, the Company's net revenues, operating
income, net income and net income per Share for the three months ended July 31,
1994 were $77.6 million, $10.1 million, $6.4 million and $.25, respectively, as
compared with net revenues, operating income, net income and net income per
Share of $61.7 million, $10.2 million, $6.1 million and $.23, respectively, for
the three months ended July 31, 1993. In addition, the Company's stockholders'
equity at July 31, 1994 was $138.9 million as compared to $121.7 million at July
31, 1993. The foregoing results are subject to completion by the Company of its
financial statements for such period.
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. Information as of particular dates
concerning the Company's directors and officers, their remuneration, Stock
Options (as defined below) or SAR's (as defined below) 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.
Such information should also be on file at The Nasdaq National Market, 1735 K
Street, N.W., Washington, D.C. 20006.
11
<PAGE> 14
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 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
January, 1994, which is 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, (1) 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 (2) 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 (a) has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
(b) 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
12
<PAGE> 15
Section 8. Such material should also be available for inspection at the library
of the NYSE, 20 Broad Street, New York, New York 10005.
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 $950 million. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
a capital contribution which will be made by Parent to the Purchaser. Parent
plans to use funds it has available in its cash accounts, 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
Parent and the Company have from time to time engaged in discussions and
exchanges of information in an effort to examine possible joint ventures and
other business arrangements.
During the week of June 27, 1994, a representative of Lehman Brothers
contacted senior management of Parent to arrange meetings to discuss a strategic
transaction with the Company. On July 20, 1994, a representative of Lehman
Brothers met with Ralph Larsen, Chairman and Chief Executive Officer of Parent,
and Peter Larson, Chairman of Parent's Consumer Products Sector. At this
meeting, Lehman Brothers inquired about Parent's interest in exploring an
acquisition of the Company.
Following their initial July 20, 1994 meeting, a representative of Lehman
Brothers received a telephone call from Mr. Larson expressing Parent's serious
interest in exploring an acquisition of the Company. It was agreed that they
would meet in New York on July 25, 1994 for more detailed discussions.
At the July 25, 1994 meeting, the Lehman Brothers' representative
indicated, among other considerations, that a preemptive offer for the Company
would probably require a price in the range of $35 to $37 per Share in cash. At
that meeting, Mr. Larson said he understood the Company's valuation parameters
and indicated a willingness to proceed with discussions and due diligence on
that basis, provided that the Company refrain from soliciting offers while talks
with Parent were proceeding. In addition, Mr. Larson outlined certain of
Parent's due diligence requirements.
Following the July 25, 1994 meeting, Parent began its due diligence review
of certain publicly available financial and other information regarding the
Company.
On August 3, 1994, Mr. Larson called a representative of Lehman Brothers
and indicated that Parent was prepared to proceed with an acquisition of the
Company valued at approximately $34 per Share, subject to the Company having
certain minimum cash reserves and subject to completion of due diligence and the
negotiation of definitive agreements. The Lehman Brothers' representative and
Mr. Larson agreed that this price would be subject to further negotiation.
During the period from August 4 to August 11, Lehman Brothers and
representatives of Parent continued to hold discussions regarding, among other
things, the terms of, and conditions to, any possible transaction between Parent
and the Company.
On August 12, 1994, representatives of Lehman Brothers and the Company's
legal counsel met with representatives of Parent and Parent's financial and
legal advisors to review significant business and legal issues regarding
Parent's acquisition of the Company. Parent's representatives confirmed that it
was a condition to Parent's willingness to enter into an agreement to acquire
the Company that there be an agreement along the lines of the Stockholder
Agreement and that there be certain other provisions in the event of the
termination of the Merger Agreement by the Company in connection with a
competing transaction. At that meeting, the parties also discussed the
possibility of Parent's acquisition of the Company in exchange for a combination
of Parent's common stock and cash.
On August 15, 1994, the Company and Parent entered into a confidentiality
agreement preceding Parent's review of confidential information regarding the
Company. Shortly thereafter, the Company indicated to Parent that it preferred
to pursue an all cash transaction. The Company and Parent then began negotiating
the terms of a definitive agreement providing for Parent's acquisition of the
Company for cash.
13
<PAGE> 16
Following further negotiations, on August 19, 1994, Parent agreed to
recommend to its Board of Directors that Parent pay a price of $35.25 per Share
in cash to acquire the Company. Parent's willingness to agree to that price was
conditioned upon the willingness of Mr. Lloyd E. Cotsen, Chairman and Chief
Executive Officer of the Company, to sign the Stockholder Agreement providing
for the sale of the Shares beneficially owned by him to the Purchaser at a price
per Share equal to the price paid in the Offer through a tender of such Shares
in the Offer or otherwise. Negotiations between the Company and Parent continued
through August 21, 1994, culminating in the Company and Parent agreeing upon a
form of definitive agreement which was then presented to and approved by the
Company's Board of Directors at a meeting held on August 21, 1994. A meeting of
Parent's Board of Directors was held early in the morning on August 22, 1994, at
which the transactions contemplated by the Merger Agreement and the Stockholder
Agreement were approved. Following this approval, the Merger Agreement and
Stockholder Agreement were executed, and the transaction was publicly announced
before financial markets opened on August 22, 1994.
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 any subsidiary of the Company, 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 an amount in cash equal to the price per Share paid
pursuant to the Offer.
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 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 Minimum Condition were satisfied and the
Purchaser were to accept for payment Shares tendered pursuant to the Offer and
the Purchaser were to purchase the Shares subject to the Stockholder Agreement
pursuant to the Stockholder Agreement, or the Selling Stockholders were to
tender the Shares subject to the Stockholder Agreement 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 of certain conditions, including the following: (1)
the Merger Agreement having been approved and adopted by the affirmative vote of
the Company's stockholders by the requisite vote in accordance with applicable
law and the Company's certificate of incorporation and (2) no 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 each of the Company, the Purchaser and Parent has used reasonable efforts
to prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated at
any time prior to the effective time of the Merger, whether before or after
approval by the stockholders of the Company, (1) by
14
<PAGE> 17
mutual written consent of the Company and Parent, (2) by either the Company or
Parent if (a)(i) as a result of any of the conditions to the Offer not being
satisfied, the Offer shall have been terminated or expired in accordance with
its terms without the Purchaser having accepted for payment any Shares pursuant
to the Offer or (ii) the Purchaser shall not have accepted for payment any
Shares pursuant to the Offer by December 31, 1994, 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 (b) if any Federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (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, (3) by Parent or the
Purchaser (a) prior to the purchase of Shares 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 (x) any
of the representations or warranties of the Company set forth in the Merger
Agreement that are qualified as to materiality not being true and correct or any
such representations and warranties that are not so qualified not being true and
correct in any material respect or (y) the Company having failed to perform in
any material respect any material obligation or to comply in any material
respect with any material agreement or covenant of the Company to be performed
or complied with by it under the Merger Agreement and (ii) cannot be or has not
been cured within 30 days after the giving of written notice to the Company; or
(b) if either Parent or the Purchaser is entitled to terminate the Offer as a
result of (i) the Board of Directors of the Company or any committee thereof
having withdrawn or modified in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger or the Merger Agreement, or
approved or recommended any takeover proposal (as defined below) (ii) the
Company having entered into any agreement with respect to any superior proposal
under circumstances described below under "Takeover Proposals"; or (c) by the
Company (i) in connection with entering into a definitive agreement in
accordance with terms of the Merger Agreement as described below under "Takeover
Proposal", provided it has complied with all provisions thereof, including the
notice provisions therein, and that it makes simultaneous payment of the
Expenses and the Termination Fee (each as defined below under "Fees and
Expenses") provided for therein or (ii) if Parent or the Purchaser shall have
breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in the Merger Agreement,
which failure to perform is incapable of being cured or has not been cured
within 30 days after the giving of written notice to Parent or the Purchaser,
except in any case, such failures which 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 will not,
nor will it permit any of its subsidiaries to, nor will it authorize or permit
any director, officer or employee, of or any investment banker, attorney or
other advisor or representative, of the Company or any of its subsidiaries,
directly or indirectly, to: (1) solicit, initiate or encourage the submission of
any takeover proposal or (2) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any takeover proposal;
provided, however, that prior to the acceptance for payment of Shares pursuant
to the Offer, if in the opinion of the Board of Directors of the Company after
consultation with counsel, such failure to act would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law, the Company
may, in response to an unsolicited takeover proposal, and subject to compliance
with the notification provisions discussed below, (i) furnish information with
respect to the Company to any person pursuant to a confidentiality agreement and
(ii) participate in negotiations regarding such takeover proposal. The Merger
Agreement defines "takeover proposal" as any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase of a
substantial amount of the assets of the Company or any of its subsidiaries
(other than investors in the ordinary course of business) or of over 20% of any
class of equity securities of the Company or of any class of equity securities
of the Company or any of its subsidiaries or any tender offer or exchange offer
that if consummated would result in any person beneficially owning 20% or more
of any class of equity securities of the Company or any of its subsidiaries, or
any merger, consolidation, business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar
15
<PAGE> 18
transaction involving the Company or any of its subsidiaries other than the
transactions contemplated by the Merger Agreement, or any other transaction the
consummation of which would reasonably be expected to dilute materially the
benefits to Parent of the transactions contemplated thereby.
The Merger Agreement provides further that except as set forth therein,
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or the Purchaser, the approval or recommendation by such Board of
Directors or any such committee of the Offer, the Merger Agreement or the
Merger, (ii) approve or recommend, or propose to approve or recommend, any
takeover proposal or (iii) enter into any agreement with respect to any takeover
proposal. Notwithstanding the foregoing, in the event prior to the time of
acceptance for payment of Shares in the Offer if in the opinion of the Board of
Directors of the Company, after consultation with counsel, failure to do so
would be inconsistent with its fiduciary duties to the Company's stockholders
under applicable law, such Board of Directors may (subject to the terms of this
and the following sentences) withdraw or modify its approval or recommendation
of the Offer, the Merger Agreement or the Merger, approve or recommend a
superior proposal, or enter into an agreement with respect to a superior
proposal, in each case at any time after the second business day following
Parent's receipt of written notice (a "Notice of Superior Proposal") advising
Parent that the Board of Directors of the Company has received a superior
proposal, specifying the material terms and conditions of such superior proposal
and identifying the person making such superior proposal; provided that the
Company shall not enter into an agreement with respect to a superior proposal
unless the Company shall have furnished Parent with written notice no later than
12:00 noon one day in advance of any date that it intends to enter into such
agreement. In addition, if the Company proposes to enter into an agreement with
respect to any takeover proposal, it shall concurrently with entering into such
agreement pay, or cause to be paid, to Parent the Expenses and the Termination
Fee. For purposes of the Merger Agreement, a "superior proposal" means any bona
fide takeover proposal to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, more than 50% of the Shares then
outstanding or all or substantially all the assets of the Company and otherwise
on terms which the Board of Directors of the Company determines in its good
faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders than
the Offer and the Merger.
In addition to the obligations of the Company set forth in the preceding
paragraph, the Merger Agreement provides that the Company shall immediately
advise Parent orally and in writing of any request for information or of any
takeover proposal, or any inquiry with respect to or which could lead to any
takeover proposal, the material terms and conditions of such request, takeover
proposal or inquiry, and the identity of the person making any such takeover
proposal or inquiry. The Company is further required under the terms of the
Merger Agreement to keep Parent fully informed of the status and details
(including amendments or proposed amendments) of any such request, takeover
proposal 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 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders if, in the opinion of the Board of
Directors of the Company, after consultation with counsel, failure to so
disclose would be inconsistent with its fiduciary duties to the Company's
stockholders under applicable law; provided that the Company does not, except as
permitted by the Merger Agreement, withdraw or modify, or propose to withdraw or
modify, its position with respect to the Offer or the Merger or approve or
recommend, or propose to approve or recommend, a takeover proposal.
FEES AND EXPENSES. The Merger Agreement provides that the Company will pay, or
cause to be paid, in same day funds to Parent the sum of (x) all of Parent's
out-of-pocket expenses in an amount up to but not to exceed $2,500,000 (the
"Expenses") and (y) $25,000,000 (the "Termination Fee") upon demand if (i)
Parent or the Purchaser terminates the Merger Agreement by reason of (A) the
Board of Directors of the Company or any committee thereof having withdrawn or
modified in a manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer, the Merger or the Merger Agreement or approved or
recommended any takeover proposal or (B) the Company having entered into any
agreement with respect to any superior proposal in accordance with the Merger
Agreement, (ii) the Company terminates the Merger
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Agreement in connection with entering into a definitive agreement with respect
to any takeover proposal (other than the Offer and the Merger) in accordance
with the provisions described under "Takeover Proposals" above, or (iii) prior
to the termination of the Merger Agreement (other than by the Company by reason
of Parent or the Purchaser having breached, in any material respect, any of
their respective representations, warranties, covenants or other agreements
contained in the Merger Agreement, which failure to perform is incapable of
being cured or has not been cured within 30 days after the giving of written
notice to Parent or Purchaser, as applicable, except, in any case, such failures
which are not reasonably likely to affect adversely Parent's or Purchaser's
ability to complete the Offer or the Merger), a takeover proposal shall have
been made and within one year of such termination, the Company shall have
entered into an agreement with respect to, approved or recommended or taken any
action to facilitate (including taking action with respect to the Rights
Agreement), such takeover proposal. The amount of Expenses so payable shall be
the amount set forth in an estimate delivered by Parent, subject to upward or
downward adjustment (not to be in excess of the amount set forth in clause (x)
above) upon delivery of reasonable documentation therefor.
CONDUCT OF BUSINESS BY THE COMPANY. The Merger Agreement provides that during
the term of the Merger Agreement, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course and
use all reasonable efforts to preserve intact their current business
organizations, keep available the services of their current officers and
employees and preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them to the end
that their goodwill and ongoing businesses shall be unimpaired in all material
respects at the time the Merger takes effect (the "Effective Time"). The Merger
Agreement further provides that, except as otherwise expressly contemplated by
the Merger Agreement, the Company shall not, and shall not permit any of its
subsidiaries to (without Parent's prior written consent, which consent may be
withheld in Parent's sole and absolute discretion), (1) (a) declare, set aside
or pay any dividends on, or make any other distributions in respect of, any of
its capital stock, other than dividends and distributions by any direct or
indirect wholly owned subsidiary of the Company to its parent, (b) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (c) except as shall be required under any
employee stock-based benefit plan, purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities; (2) 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 upon the exercise of employee stock options outstanding on the date of
the Merger Agreement in accordance with their present terms); (3) amend its
certificate of incorporation or by-laws; (4) acquire or agree to acquire (a) by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division thereof or
(b) any assets that are material, individually or in the aggregate, to the
Company and its subsidiaries taken as a whole, except purchases of inventory in
the ordinary course of business consistent with past practice; (5) sell, lease,
license, mortgage or otherwise encumber or subject to any lien or otherwise
dispose of any of its properties or assets, except sales of inventory in the
ordinary course of business consistent with past practice; (6) (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 or (b) make
any loans, advances or capital contributions to, or investments in, any other
person, other than to the Company or any direct or indirect wholly owned
subsidiary of the Company and other than advances to employees in the ordinary
course of business consistent with past practice; (7) make any tax election or
settle or compromise any material income tax liability; (8) 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 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
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<PAGE> 20
included in any report of the Company filed with the Commission since November
1, 1993 and publicly available prior to the date of the Merger Agreement or
incurred in the ordinary course of business consistent with past practice, or
waive the benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any of its subsidiaries
is a party; (9) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which the Company or any
subsidiary is a party or waive, release or assign any material rights or claims;
or (10) authorize any of, or commit or agree to take any of, the foregoing
actions.
Pursuant to the Merger Agreement, the Company shall not, and shall not
permit any of its subsidiaries to, take any action that would result in (1) any
of its representations and warranties set forth in the Merger Agreement that are
qualified as to materiality becoming untrue, (2) any of such representations and
warranties that are not so qualified becoming untrue in any material respect or
(3) except as otherwise permitted by the provisions of the Merger Agreement
described above under "Takeover Proposals", any of the conditions to the Offer
or to the Merger not being satisfied.
BOARD OF DIRECTORS. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment for, any Shares by the Purchaser pursuant
to the Offer, the number of directors on the Board of Directors shall be reduced
to five and the Purchaser shall be entitled to designate three of such number of
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. 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.
RIGHTS AGREEMENT. The Merger Agreement provides that the Board of Directors
shall take all action necessary in order to render the Rights Agreement
inapplicable to the Offer, the Merger, the Merger Agreement, the Stockholder
Agreement and the transactions contemplated thereby. The Merger Agreement
provides further that the Board of Directors of the Company shall not, except as
requested by Parent, amend the Rights Agreement or take any action with respect
to, or make any determination under, the Rights Agreement (including a
redemption of the Rights) including any action to facilitate a takeover
proposal, provided that any of such actions may be taken simultaneously with
entering into an agreement in connection with a superior proposal in accordance
with the provisions described under "Takeover Proposals" above.
STOCK OPTIONS. The Merger Agreement provides that as soon as practicable
following the date of the Merger Agreement, the Board of Directors of the
Company (or, if appropriate, any committee administering the Stock Option Plans
(as defined below)) shall adopt such resolutions or take such other actions as
are required to provide that each outstanding stock option to purchase Shares (a
"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") outstanding immediately prior to the
consummation of the Offer, whether or not then exercisable, shall be cancelled
immediately prior to the consummation of the Offer in exchange for an amount in
cash, payable at the time of such cancellation, equal to the product of (y) the
number of Shares subject to such Stock Option immediately prior to the
consummation of the Offer and (z) the excess of the price per Share to be paid
in the Offer over the per share exercise price of such Stock Option and (ii)
each stock appreciation right ("SAR") granted under the Stock Option Plans
outstanding immediately prior to the consummation of the Offer shall be
cancelled immediately prior to the consummation of the Offer in exchange for an
amount of cash, payable at the time of such cancellation, equal to the product
of (y) the number of Shares covered by such SAR and (z) the excess of the price
per Share to be paid in the Offer over the appreciation base per share of such
SAR; provided, however, that no such cash payment shall be made with respect to
any SAR which is related to a Stock Option with respect to which such a cash
payment has been made. Any Stock Option or SAR not cancelled in accordance with
this paragraph immediately prior to the consummation of the Offer, shall be
cancelled at the Effective Time in exchange for an amount in cash, payable at
the Effective Time, equal to the amount which would have been paid had such
Stock Option or SAR been cancelled immediately prior to the consummation of the
Offer.
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<PAGE> 21
The Merger Agreement provides further that all Stock Option Plans shall
terminate as of the Effective Time and the provisions in any other benefit plan
of the Company providing for the issuance, transfer or grant of any capital
stock of the Company or any interest in respect of any capital stock of the
Company shall be deleted as of the Effective Time, and the Company shall ensure
that following the Effective Time no holder of a Stock Option or any participant
in any Stock Option Plan shall have any right thereunder to acquire any capital
stock of the Company, Parent or the Surviving Corporation, except as provided in
the Merger Agreement.
BENEFIT PLANS. Parent has agreed in the Merger Agreement to cause the Surviving
Corporation to take such actions as are necessary so that, for a period of not
less than one year after the Effective Time, nonunion employees of the Company
and its subsidiaries who continue their employment after the Effective Time will
be provided employee benefits which in the aggregate are at least generally
comparable to those provided to such employees in effect on the date of the
Merger Agreement; provided, that it is understood that after the Effective Time
(x) neither Parent nor the Surviving Corporation will have any obligation to
issue or adopt any plans or arrangements to provide 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 plan or
program, (y) nothing therein shall require the Surviving Corporation to maintain
any particular plan or arrangement and (z) nothing therein shall prevent or
preclude the Surviving Corporation from continuing any requirement for employee
contributions under any employee benefit plans in the same proportions as the
employee-paid portion under such plans constituted prior to the Effective Time.
The Merger Agreement also provides that it is Parent's current intention,
following the first anniversary of the Effective Time, to provide employee
benefit plans, programs, arrangements and policies for the benefit of employees
of the Company and its subsidiaries which are at least generally comparable in
the aggregate to the employee benefit plans, programs arrangements and policies
provided for the benefit of other employees of Parent and its subsidiaries. In
connection therewith, all service credited to each employee by the Company
through the Effective Time (and by the Surviving Corporation thereafter) would
be recognized by Parent for all purposes, including for purposes of eligibility,
vesting and benefit accruals under any employee benefit plan provided by Parent
for the benefit of employees; provided, however, that such service need not be
credited to the extent it would result in a duplication of benefits, including,
without limitation, benefit accrual service under defined benefit plans.
In addition, Parent has agreed to cause the Surviving Corporation to honor
(without modification) and assume certain employment agreements and individual
benefit arrangements between the Company and specified executive officers.
INDEMNIFICATION, EXCULPATION AND INSURANCE. The Purchaser and Parent have
agreed in the Merger Agreement that they will not amend, repeal or otherwise
modify the provisions of the certificate of incorporation and the by-laws of the
Company and its subsidiaries with respect to indemnification and exculpation
from liability for a period of six years from the Effective Time of the Merger
in any manner that would adversely affect the rights thereunder of individuals
who on or prior to the Effective Time of the Merger were directors, officers,
employees or agents of the Company or its subsidiaries.
The Merger Agreement provides that, unless Parent agrees to guarantee the
indemnification obligations described in the preceding paragraph, Parent will
maintain in effect for a period of six years from the Effective Time of the
Merger, the Company's current liability insurance for all persons who are
covered by the Company's directors' and officers' liability insurance on the
date of the Merger Agreement; provided that in no event will Parent be required
to expend in any one year an amount in excess of 150% of the annual premium
currently paid by the Company for such insurance, which the Company has
represented to Parent and the Purchaser to be $160,000 for the fiscal year
ending October 31, 1994; and, provided, further, that if the annual premiums of
such insurance coverage exceed such amount, Parent shall obtain a policy with
the greatest coverage available for a cost not exceeding such 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
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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 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 NOTIFICATION. 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 the directors
of the Company not designated by Parent or 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
Selling Stockholder will sell, and Purchaser will purchase, all Shares
beneficially owned by such Selling Stockholder, at a price per Share equal to
the price paid in the Offer. Such obligations to sell and to purchase are
subject to the Purchaser having accepted Shares for payment under the Offer and
there having been validly tendered and not withdrawn prior to the expiration of
the Offer such number of Shares which (together with Shares subject to the
Stockholder Agreement that shall not have been so tendered) would constitute a
majority of the outstanding Shares. The Stockholder Agreement also provides that
each Selling Stockholder may, and at the request of Parent shall, tender its
Shares subject to the Stockholder Agreement in the Offer. Any Shares of any
Selling Stockholder not purchased in the Offer will be purchased at the same
time as payment is made pursuant to the Offer.
Each of the Selling Stockholders has agreed, until the Stockholder
Agreement has expired, not to: (i) sell, transfer, pledge or otherwise dispose
of, or enter into any contract, option or other arrangement with respect to the
sale, transfer, pledge, or other disposition of, the Shares subject to the
Stockholder Agreement owned by such Selling Stockholder to any person other than
the Purchaser or the Purchaser's designee; (ii) acquire any additional Shares
without the prior consent of the Purchaser; or (iii) deposit any Shares subject
to the Stockholder Agreement owned by such Selling Stockholder into a voting
trust or grant a proxy, power-of-attorney or other authorization or enter into a
voting agreement or arrangement with respect to any Shares subject to the
Stockholder Agreement except as described in the next succeeding paragraph.
The Stockholder Agreement includes an irrevocable proxy provision for the
benefit of the Purchaser with respect to the Shares subject to the Stockholder
Agreement owned by each Selling Stockholder to vote such Shares at any annual,
special or adjourned meeting of the stockholders of the Company against (i) any
merger agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization, joint
venture, recapitalization, dissolution, liquidation or winding up of or by the
Company and (ii) any amendment of the Company's certificate of incorporation or
by-laws or other proposal or transaction involving the Company or any of its
subsidiaries, which amendment or other proposal or transaction would in any
manner impede, frustrate, prevent or nullify, or result in a breach of any
covenant, representation or warranty or any other obligation or agreement of the
Company under or with respect to, the
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Offer, the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement.
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 stockholder 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.
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. Parent intends to conduct a detailed review of the Company
and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing, and reserves the right to
take such actions or effect such changes as it deems desirable. Such changes
could include changes in the Company's business, corporate structure,
capitalization, Board of Directors, management or dividend policy.
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 or any of its subsidiaries,
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, any change in the Company's capitalization or dividend policy or
any other material change in the Company's business, corporate structure or
personnel.
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 two succeeding paragraphs, 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, warrants 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
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<PAGE> 24
sole discretion, may make such adjustments as it deems appropriate in the Offer
Price and other terms of the Offer, including, without limitation, the number or
type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any cash dividend on the Shares or other distribution on the
Shares, or issue with respect to the Shares any additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to stockholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to the Purchaser or its nominee or transferee on the Company's stock
transfer records, then, subject to the provisions of Section 14 below, (a) the
Offer Price may, in the sole discretion of the Purchaser, be reduced by the
amount of any such cash dividend or cash distribution and (b) the whole of any
such noncash dividend, distribution or issuance to be received by the tendering
stockholders will (i) be received and held by the tendering stockholders for the
account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer, or (ii) at
the direction of the Purchaser, be exercised for the benefit of the Purchaser,
in which case the proceeds of such exercise will promptly be remitted to the
Purchaser. Pending such remittance and subject to applicable law, the Purchaser
will be entitled to all rights and privileges as owner of any such noncash
dividend, distribution, issuance or proceeds and may withhold the entire Offer
price or deduct from the Offer price the amount or value thereof, as determined
by the Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser will 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 (1) the Minimum Condition
shall have been satisfied and (2) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated. Furthermore, notwithstanding any other term of the Offer or the
Merger Agreement, the Purchaser will 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 or amend the Offer, with the consent of the
Company or if, at any time on or after August 22, 1994, and before the
acceptance of such Shares for payment or the payment therefor, any of the
following conditions exist (other than as a result of any action or inaction of
Parent of any of its subsidiaries which constitutes a breach of the Merger
Agreement):
(a) there shall be threatened or pending by any Governmental Entity
any suit, action or proceeding, (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 (including the voting provisions thereunder), or seeking to
obtain from the Company, Parent or the Purchaser any damages that are
material in relation to the Company and its subsidiaries taken as whole,
(ii) seeking to prohibit or 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,
taken as a whole, or Parent and its subsidiaries, 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,
taken as a whole, or Parent and its subsidiaries, taken as a whole, as a
result of the Offer or any of the other transactions contemplated by the
Merger 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 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, (iv) seeking to prohibit Parent or any
of its subsidiaries from effectively controlling in any material respect
the business or operations of the Company and its subsidiaries, taken as a
whole, or (v) which otherwise is reasonably likely to have a
22
<PAGE> 25
material adverse effect on the business, financial condition or results of
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 applicable waiting periods under the HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any material adverse change (or any
development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any material adverse change) in the business, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole;
(d)(i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any takeover proposal or (ii)
the Company shall have entered into any agreement with respect to any
superior proposal in accordance with the terms of the Merger Agreement;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
case as of the date of the Merger Agreement and as of the Expiration Date;
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms.
Notwithstanding anything set forth above to the contrary, no condition
involving (i) performance of agreements by the Company or (ii) the accuracy of
representations and warranties made by the Company (without giving effect to any
"materiality" limitation set forth therein), shall be deemed not fulfilled, and
Parent and Purchaser shall not be entitled to fail to accept Shares for payment
or terminate the Offer on such basis, if the respects in which such agreements
have not been performed or the representations and warranties are inaccurate, in
the aggregate, are not materially adverse to the business, financial condition
or results of operations of the Company and its subsidiaries, taken as a whole.
The Merger Agreement provides that the foregoing conditions 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,
the Purchaser or any other affiliate of Parent 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.
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
23
<PAGE> 26
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 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.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) 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 DGCL is inapplicable to the
Merger.
Based on information supplied by the Company, 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
obliged to accept payment or pay for any Shares tendered pursuant to the Offer.
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 making 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 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 by court order or 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.
24
<PAGE> 27
The provisions of the HSR Act would similarly apply to any purchase of the
Shares subject to the Stockholder Agreement pursuant to the Stockholder
Agreement (other than purchases effected through a tender pursuant to the
Offer), except that the initial waiting period would expire 30 days following
the filing of HSR Act Notification Forms by Parent and the Company and a request
for additional information or material from Parent or the Company during the
initial 30-day waiting period would extend the waiting period until 11:59 p.m.
New York City time on the 20th day after the date of substantial compliance by
Parent and the Company with such request. Parent and the Company are in the
process of filing HSR Notification Forms with respect to the Stockholder
Agreement. If, as is expected, the purchase of Shares permitted by the
Stockholder Agreement is effected through a tender of such Shares pursuant to
the Offer, the HSR requirements applicable to the Offer described in the prior
paragraph would apply rather than the requirements described in this paragraph.
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 FTC and the Antitrust Division 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, the Antitrust Division or FTC 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
J.P. Morgan Securities Inc. is acting as Dealer Manager in connection with
the Offer and has provided certain financial advisory services to Parent in
connection with the Offer and the Merger. The Dealer Manager will receive from
Parent reasonable and customary compensation for all such services, payable
whether or not the Purchaser accepts for payment or pays for any Shares pursuant
to the Offer. In addition, Parent has agreed (i) to reimburse the Dealer Manager
for its out-of-pocket expenses, including the reasonable fees and expenses of
its counsel, in connection with the Offer and (ii) to indemnify the Dealer
Manager and certain related persons against certain liabilities and expenses,
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, 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. None of the Purchaser or Parent is aware of any jurisdiction in
which the making
25
<PAGE> 28
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 the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being 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).
JNJ ACQUISITION CORP.
August 26, 1994
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 Sir James
Black and Arnold G. Langbo who are citizens of the United Kingdom and Canada,
respectively.
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
James W. Black, M.D. Director of Parent since 1989; Chairman, Science and
The James Black Foundation Technology Advisory Committee; Consultant. Professor
68 Half Moon Lane of Analytical Pharmacology at the Rayne Institute,
Dulwich, London SE249JE King's College School of Medicine since 1984. Chairman
England of the James Black Foundation.
Gerard N. Burrow, M.D. Director of Parent since 1993. Dean of the Yale
Yale New Haven School of Medicine University School of Medicine since 1992. Vice
333 Cedar Street Chancellor for health sciences and Dean of the
New Haven, CT 06510 University of California, San Diego School of Medicine
from 1988 to 1992. Member, the Institute of Medicine
of the National Academy of Sciences and the Society
for Clinical Investigation; Fellow, the American
Association for the Advancement of Science.
Robert E. Campbell Vice Chairman, Board of Directors of Parent since
1989; Chairman of the Professional Sector since 1985;
Member, Executive Committee since 1980. Trustee of The
Robert Wood Johnson Foundation and Member of the Board
of Directors of New Jersey Bell Telephone Co.
Joan Ganz Cooney Director of Parent since 1978; Member, Compensation
Children's Television Workshop Committee and Benefits Committee. Chairman, Executive
One Lincoln Plaza Committee of Children's Television Workshop since
New York, NY 10023 1990; Chairman-CEO from 1988 to 1990. Director of The
Chase Manhattan Corporation and The Chase Manhattan
Bank, N.A., Metropolitan Life Insurance Company and
Xerox Corporation; Trustee, the Educational
Broadcasting Corporation (Channel 13/WNET, New York
City) and the National Child Labor Committee.
Roger S. Fine Member, Executive Committee and Corporate Vice
President, Administration of Parent since 1991;
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>
George S. Frazza Member, Executive Committee of Parent since 1987; Vice
President and General Counsel since 1978. Vice Chair
of ABA Section of Business Law; Member, Executive
Committee of the Pharmaceutical Manufacturers
Association Law Section; Member of the Board of
Directors of the Food and Drug Law Institute, the
American Corporate Counsel Association and the
Foundation for American Communications.
Philip M. Hawley Director of Parent since 1988; Member, Compensation
Suite 2280 Committee and Benefits Committee. Chairman and Chief
444 South Flower Street Executive Officer of Carter Hawley Hale Stores, Inc.
Los Angeles, CA 90071-2900 from 1983 to December 31, 1992, Chairman until March,
1993. Director, American Telephone and Telegraph
Company, Atlantic Richfield Company, BankAmerica
Corporation and Weyerhaeuser Company. Senior Member,
the Conference Board; Member of The Business Counsel;
Trustee, The California Institute of Technology.
Clark H. Johnson Member, Executive Committee and Vice President,
Finance of Parent since 1988. Trustee, Fairleigh
Dickinson University; Member, Executive Committee of
the Institute of Management Accountants.
Ann Dibble Jordan Director of Parent since 1981; Member, Audit 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, Capital Cities/ABC, Inc., the Hechinger
Company, National Health Laboratories Inc., Salant
Corporation and Travelers Inc.; Director, The Phillips
Collection, The Child Welfare League and the National
Symphony Orchestra.
Arnold G. Langbo Director of Parent since 1991; Member, Audit
111 Capital Avenue, S.W. Committee; Member, Compensation Committee. Chairman of
Battle Creek, MI 49015 the Board and Chief Executive Officer of Kellogg
Company since January of 1992; President and Chief
Operating Officer from December, 1990 to January,
1992; President of Kellogg International from 1986 to
1992; Director of Kellogg Company. Member, Advisory
Board of J.L. Kellogg Graduate School of Management,
Northwestern University. Member, Board of Trustees of
Albion College.
Ralph S. Larsen Chairman, Board of Directors and Chief Executive
Officer; Chairman, Executive Committee of Parent since
1989. Director, Xerox Corporation and The New York
Stock Exchange. Member, Executive Committee of The
Business Council and the Policy Committee of the
Business Roundtable. Member of the Board of the United
Negro College Fund and the Board of Governors of the
United Way of America.
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
Peter N. Larson Chairman of the Consumer Sector and Member, Executive
Committee of Parent since August, 1992; Company Group
Chairman and member of the Consumer Sector Operating
Committee from January, 1991 to August, 1992. Member
of a partnership managing consumer businesses from
1989 to 1990. Employed by Kimberly Clark Corporation
from 1978 to 1988 in a variety of positions, including
President of their Health Care Sector and member of
their Board of Directors. Director, Compaq Computer
Corporation; Trustee, Advertising Education
Foundation. Member, National Association of Chain Drug
Stores Advisory Committee; Member, Executive Committee
of the Joint Industry Committee on Efficient Consumer
Response.
Dr. John S. Mayo Director of Parent since 1986; Member, Science and
AT&T Bell Laboratories, Inc. Technology Advisory Committee; Chairman, Public Policy
600 Mountain Avenue Advisory Committee. President, AT&T Bell Laboratories
Murray Hill, NJ 07974 since 1991; 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;
Fellow, Institute of Electrical and Electronic
Engineers; Member, Boards of Trustees of Polytechnic
University, the Liberty Science Center, the Kenan
Institute for Engineering, Technology and Science; the
Board of Overseers for the New Jersey Institute of
Technology.
Thomas S. Murphy Director of Parent since 1980; Chairman of the
Capital Cities/ABC, Inc. Compensation Committee. Chief Executive Officer of
77 West 66th Street Capital Cities/ABC, Inc. since February 1994 and from
New York, NY 10023-6298 1966 to June 1990; Chairman of the Board since 1966.
Director, International Business Machines Corporation
and Texaco Inc. Chairman, New York University Medical
Center Board; Member, Board of Overseers of Harvard
University.
Paul J. Rizzo Director of Parent since 1982; Chairman, Benefits
IBM Corporation Committee; Member, Audit Committee. Vice Chairman of
Old Orchard Road International Business Machines Corporation since
Armonk, NY 10504 1993. 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 International Business Machines Corpora-
tion and McGraw-Hill, Inc.
Maxine F. Singer, Ph.D. Director of Parent since 1991; Member, Science and
Carnegie Institution of Technology Advisory Committee; Member, Public Policy
Washington Advisory Committee. President of the Carnegie
1530 P Street, N.W. Institution of Washington since 1988. Member of the
Washington, D.C. 20005-1910 National Academy of Services, the American
Philosophical Society, the Pontifical Academy of
Sciences, the Governing Board of the Weizmann
Institute of Science and the Whitehead Institute.
</TABLE>
29
<PAGE> 32
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
------------------------- -----------------------------------
<S> <C>
Roger B. Smith Director of Parent since 1985; Chairman,
Audit Committee; Member, Benefits
Committee. Retired as Chairman of General
Motors Corporation in 1990. Member of the
Business Council; Trustee of the Alfred
P. Sloan Foundation; Member, Board of
Directors of Citicorp/Citibank, N.A.,
International Paper Company and PepsiCo.,
Inc.
Robert N. Wilson Vice Chairman, Board of Directors of Parent since
1989; Chairman of the Pharmaceutical/Diagnostics
Sector since 1985; Member, Executive Committee since
1983. Director, U.S. Trust 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 except for such information relating to Peter N. Larson that is set
forth above. 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 N. Larson Director and Chairman of the Purchaser since August
1994.
James R. Utaski Director and President of the Purchaser since August
1994; Corporate Vice President, Business Development
since 1990; Company Group Chairman from 1986 to 1990.
Gerald M. Ostrov Director and Vice President of the Purchaser since
August 1994; Company Group Chairman since 1992;
President of Parent's Personal Products Company from
1991 to 1992; President, Ciba-Geigy's Consumer
Pharmaceuticals Company from 1985 to 1991.
</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, 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>
By Hand/Overnight Courier By Mail:
14 Wall Street, 8th Floor P.O. Box 2563
Suite 4680-NEU Mail Suite 4660
New York, NY 10005 Jersey City, NJ 07303-2563
Attn: Reorganization Department
</TABLE>
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
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
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:
J.P. MORGAN SECURITIES INC.
60 Wall Street
New York, NY 10260
(800) 576-7664
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS)
OF
NEUTROGENA CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED AUGUST 26, 1994
BY
JNJ 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, SEPTEMBER 23, 1994, UNLESS EXTENDED.
The Depositary:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Hand/Overnight Courier: By Mail:
14 Wall Street, 8th Floor P.O. Box 2563
Suite 4680-NEU Mail Suite 4660
New York, New York 10005 Jersey City, New Jersey 07303-2563
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL 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 if delivery of Shares (as defined below) is to be made by
book-entry transfer to an account maintained by the Depositary at either The
Depository Trust Company or Midwest Securities Trust Company (each, a
"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.
<PAGE> 2
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
Check Box of Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities 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 by Book-Entry Transfer check box of Book-Entry
Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
Account Number
Transaction Code Number
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS SHARES TENDERED
NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
_______________________________________________ _______________________________________________________
<S> <C> <C> <C>
TOTAL NUMBER OF
CERTIFICATE SHARES REPRESENTED NUMBER OF SHARES
NUMBER(S)(1) BY 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 described
above are being tendered. See Instruction 4.
* See footnote on following page.
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to JNJ Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Johnson &
Johnson, a New Jersey corporation ("Parent"), the above-described shares of
common stock, par value $.001 per share (the "Common Stock"), of Neutrogena
Corporation, a Delaware corporation (the "Company"), and the associated
preferred stock purchase rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of July 23, 1990, as amended, between the Company and U.S.
Stock Transfer Corporation, as Rights Agent (the Rights, together with the
Common Stock, the "Shares"), pursuant to the Purchaser's offer to purchase all
outstanding Shares at a price of $35.25 per Share, net to the seller in cash, in
accordance with the terms and conditions of the Purchaser's Offer to Purchase
dated August 26, 1994 (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
of such Shares on or after August 22, 1994) 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 a 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 Shares or other securities or rights issued or issuable
in respect of such Shares on or after August 22, 1994), 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 such other Shares or
other 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
<PAGE> 4
any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after August 22, 1994). 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
one 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 the Special Delivery Instructions and the
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.
The undersigned recognizes that the Purchaser has no obligation pursuant to the
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> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not accepted
for payment and/or the check for the purchase price of Shares accepted for
payment are to be issued in the name of someone other than the undersigned, or
if Shares delivered by book-entry transfer that are not accepted for payment are
to be returned by credit to an account maintained at a Book-Entry Transfer
Facility other than the account indicated above.
Issue check and/or certificate(s) to:
Name:_________________________________________________________________________
(PLEASE PRINT)
Address:______________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
______________________________________________________________________________
(TAXPAYER 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 indicated above.
Mail check and/or certificate(s) to:
Name:________________________________________________________________________
(PLEASE PRINT)
Address:_____________________________________________________________________
_____________________________________________________________________________
(INCLUDE ZIP CODE)
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Signature(s) of Stockholder(s))
Dated:__________, 1994
(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._______________________________________
Taxpayer Identification or Social Security No.____________________
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:______________________________________________________, 1994
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signature. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loans associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program
or 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 a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares) of
Shares tendered herewith, unless such holder(s) has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
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 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 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.
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 and
any other documents required by this Letter of Transmittal, must be received by
the Depositary within five New York Stock Exchange, Inc. trading days after the
date of execution of the Notice of Guaranteed Delivery
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. 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
<PAGE> 8
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 expiration of
the Offer. All Shares represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letters 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.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or accepted for payment are to be issued to
a person other than the registered holder(s). Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of 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.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it 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 persons other than the registered holder(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 should 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 a 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.
<PAGE> 9
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, 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 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 the 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 should be directed to the
Information Agent at its addresses set forth below. Questions or requests for
assistance may be directed to the Information Agent or the Dealer Manager.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE COPY THEREOF (TOGETHER
WITH CERTIFICATES FOR, OR A BOOK-ENTRY CONFIRMATION WITH RESPECT TO, TENDERED
SHARES WITH ANY REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS)
MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, PRIOR TO THE EXPIRATION DATE.
<PAGE> 10
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- ----------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE Social Security Number
BOX AT RIGHT AND CERTIFY BY SIGNING AND Employer Identification Number
DATING BELOW. OR
---------------------------------------------------------------------------------
FORM W-9 PART 2--CERTIFICATES--Under penalties of perjury, I certify that:
DEPARTMENT OF THE TREASURY (1) The number shown on this form is my correct Taxpayer Identification Number
INTERNAL REVENUE SERVICE (or I am waiting for a number to be issued for me) and
(2) I am not subject to backup withholding either 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.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. However, if
after being notified by the IRS that you are subject to backup withholding, you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out such item (2).
---------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART 3--
IDENTIFICATION NUMBER ("TIN") SIGNATURE______________________ DATE____________ Awaiting TIN [ ]
- ----------------------------------------------------------------------------------------------------------------------
</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 penalties 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 or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager as set forth below.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON AND COMPANY INC.
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect:
(212) 440-9800
All Others Call Toll Free:
1-800-223-2064
THE DEALER MANAGER FOR THE OFFER IS:
J.P. MORGAN SECURITIES INC.
60 Wall Street
New York, New York 10260
1-800-576-7664
(Call Toll Free)
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
NEUTROGENA CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates representing shares of common stock, par value
$.001 per share (the "Shares"), of Neutrogena Corporation, 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). Such form may be
delivered by hand or transmitted by telegram or 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:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Hand/Overnight Courier: By Mail:
14 Wall Street, 8th Floor P.O. Box 2563
Suite 4680-NEU Mail Suite 4660
New York, New York 10005 Jersey City, New Jersey 07303-2563
</TABLE>
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
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 JNJ 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 August 26, 1994 (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.
<TABLE>
<S> <C>
Number of Shares:____________________________ Name(s) of Record Holder(s):
Certificate Nos. (if available):_____________ _____________________________
_____________________________________________ _____________________________
(Please Print)
Address(es):_________________
_____________________________
Zip Code
Area Code and Tel.No.:_______
(Check one box if Shares will be tendered by book-entry transfer)
[ ] The Depository Trust Company
[ ] Midwest Securities Trust Company
Account Number:______________________________ Signature(s):________________
Dated:_______________________________________ _____________________________
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities exchange or
of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or an
"eligible guarantor institution", as such term is defined in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, 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, and
any other documents required by the Letter of Transmittal within five New York
Stock Exchange, Inc. trading days after the date hereof.
<TABLE>
<S> <C>
Name of Firm:________________________________ _____________________________
Authorized Signature
Address:_____________________________________ Title:_______________________
_____________________________________
Zip Code
Area Code and
Tel. No.:____________________________________ Dated:_______________________
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
J.P. MORGAN SECURITIES INC.
60 WALL STREET
NEW YORK, NEW YORK 10260
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
NEUTROGENA CORPORATION
AT
$35.25 NET PER SHARE
BY
JNJ 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, SEPTEMBER 23, 1994, UNLESS EXTENDED.
August 26, 1994
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We have been appointed by JNJ 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
$.001 per share (the "Common Stock", with the associated rights, the "Shares"),
of Neutrogena Corporation, a Delaware corporation (the "Company"), at $35.25 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Purchaser's Offer to Purchase dated August 26, 1994 (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 President 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 address 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, SEPTEMBER 23, 1994, UNLESS EXTENDED.
<PAGE> 2
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which, together with the shares subject to the Stockholder Agreement
referred to in the Offer to Purchase that shall not have been so tendered, would
represent at least a majority of all outstanding Shares.
The Board of Directors of the Company has, by unanimous vote, approved the
Offer and the Merger (as defined below) and 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 being made pursuant to the Agreement and Plan of Merger dated
as of August 22, 1994 (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 any subsidiary
of the Company, 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 $35.25
per Share, without interest, as set forth in the Merger Agreement and described
in the Offer to Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2 of the Offer to Purchase), a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by the Letter of Transmittal.
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 as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
upon request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your customers.
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent or to 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,
J.P. MORGAN SECURITIES INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM 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.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
NEUTROGENA CORPORATION
AT
$35.25 NET PER SHARE
BY
JNJ 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, SEPTEMBER 23, 1994, UNLESS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated August 26,
1994 (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 JNJ Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of Johnson & Johnson, a New
Jersey corporation ("Parent"), to purchase shares of Common Stock, par value
$.001 per share (the "Common Stock", together with the associated rights, the
"Shares"), of Neutrogena Corporation, a Delaware corporation (the "Company"), at
$35.25 per Share, net to the seller in cash, 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 $35.25 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer.
2. The Board of Directors of the Company has, by unanimous vote,
approved the Offer and the Merger (as defined below) and 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 the
stockholders of the Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
4. The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of August 22, 1994 (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 any subsidiary of the Company, 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 $35.25 per Share, without
interest, as set forth in the Merger Agreement and described in the Offer
to Purchase.
<PAGE> 2
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which, together with the Shares subject to the
Stockholder Agreement referred to in the Offer to Purchase that shall not
have been so tendered, would represent at least a majority of all
outstanding Shares.
6. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, September 23, 1994, 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 certificates for such Shares (or timely Book-Entry
Confirmation of a transfer of such Shares as described in Section 2 of the
Offer to Purchase), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by the
Letter of Transmittal.
7. The Purchaser will pay any stock transfer taxes with respect to the
transfer and sale of Shares to it 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
NEUTROGENA CORPORATION
The undersigned acknowledges receipt of your letter enclosing the Offer to
Purchase dated August 26, 1994, of JNJ Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Johnson & Johnson, a New Jersey corporation,
and the related Letter of Transmittal, relating to shares of Common Stock, par
value $.001 per share (the "Common Stock"), of Neutrogena Corporation, a
Delaware corporation, and the associated preferred stock purchase rights
(together with the Common Stock, 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:____________________ 1994
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.
2
<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>
<S> <C> <C> <C>
- ------------------------------------------------------- ---------------------------------------------------------------
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF -- NUMBER OF --
- ------------------------------------------------------- ---------------------------------------------------------------
1. An individual's account The individual 6. A valid trust, estate, or pension trust The legal entity (Do
2. Two or more individuals (joint The actual owner of not furnish the identi-
account) the account or, if fying number of the
combined funds, any personal representa-
one of the individu- tive or trustee unless
als(1) the legal entity itself
3. Custodian account of a minor The minor(2) is not designated in
(Uniform Gift to Minors Act) the account title.)(4)
4. a. The usual revocable savings The grantor- 7. Corporate account The corporation
trust account (grantor is trustee(1)
also trustee) 8. Religious, charitable, or educational The organization
b. So-called trust account that The actual owner(1) organization account
is not a legal or valid trust 9. Partnership The partnership
under State law 10. Association, club, or other The organization
5. Sole proprietorship account The owner(3) tax-exempt organization
11. A broker or registered nominee The broker or nomi-
nee
12. 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 paments
</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) Show the name of the owner. You may also enter your business name. You may
use your Social Security Number or Employer Identification Number.
(4) 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.
- 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 non-resident 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) 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.
(3) 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
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 August 26, 1994 and the related Letter of Transmittal
and 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 the securities laws of
which require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed 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.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Neutrogena Corporation
at
$35.25 Net Per Share
by
JNJ Acquisition Corp.
a wholly owned subsidiary of
Johnson & Johnson
JNJ 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 outstanding
shares of Common Stock, par value $.001 per share (the "Shares"), of
Neutrogena Corporation, a Delaware corporation (the "Company"), at
$35.25 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated August 26,
1994 and in the related Letter of Transmittal (which together
constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, SEPTEMBER 23, 1994, UNLESS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration
of the Offer that number of Shares which, together with the Shares
subject to the Stockholder Agreement referred to below that shall not
have been so tendered, would represent at least a majority of all
outstanding Shares (the "Minimum Condition").
The Offer is being made pursuant to an Agreement and Plan of Merger
dated as of August 22, 1994 (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 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 $35.25 in cash,
without interest.
The Board of Directors of the Company has approved the Offer and the
Merger and 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 Purchaser and Parent have also entered into a Stockholder Agreement
dated as of August 22, 1994 (the "Stockholder Agreement")
with certain stockholders of the Company who beneficially own 9,868,996
Shares in the aggregate. Under the Stockholder Agreement, those
stockholders have agreed to sell all such Shares to the Purchaser for
$35.25 per Share in cash if the Minimum Condition is satisfied and the
Purchaser shall have accepted Shares for payment under the Offer. Such
stockholders may, and at the request of the Purchaser shall, tender
their Shares into the Offer.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment, and thereby purchased, Shares properly
tendered to the Purchaser and not 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 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. In all cases,
payment for Shares purchased pursuant to the Offer will be made only
after timely receipt by the Depositary of (a) certificates for such
Shares or timely confirmation of book-entry transfer of such Shares
into the Depositary's account at a 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, (b) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantees and (c) any other documents required by
the Letter of Transmittal. The tender and purchase of Shares shall be
deemed to include the associated preferred stock purchase rights. Under
no circumstances will interest be paid by the Purchaser on the purchase
price of the Shares, regardless of any delay in making such payment.
<PAGE> 2
The term "Expiration Date" means 12:00 Midnight, New York City time,
on Friday, September 23, 1994, 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, 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. The Purchaser shall not have any obligation to pay interest
on the purchase price for tendered Shares in the event the Purchaser
exercises its right to extend the period of time during which the Offer
is open. There can be no assurance that the Purchaser will exercise its
right to extend the Offer (other than as required by the Merger
Agreement). Any such extension will be followed by a public
announcement thereof no later than 9:00 A.M., New York City time, on
the next business day after the previously scheduled Expiration Date.
During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the right of a
tendering stockholder to withdraw such stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn
at any time prior to 12:00 Midnight, New York City time, on Friday,
September 23, 1994, or, if the Purchaser shall have extended the period
of time during which the Offer is open, the latest time and date at
which the Offer, as so extended by the Purchaser, shall expire and,
unless theretofore accepted for payment, may also be withdrawn at any
time after October 24, 1994. For a withdrawal to be effective, a
written, telegraphic 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 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 signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares
have been delivered 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
appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with such 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 Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares
and furnished to brokers, dealers, 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 Letter of Transmittal contain important
information which should be read before any decision
is made with respect to the Offer.
Requests for copies of the Offer to Purchase, the Letter of Transmittal
and all other tender offer materials may be directed to the Information
Agent or the Dealer Manager as set forth below, and copies will be
furnished promptly at the Purchaser's expense.
The Information Agent for the Offer is:
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:
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
(800) 576-7664
August 26, 1994
<PAGE> 1
[LOGO]
CONTACT: ROBERT V. ANDREWS -- MEDIA RELATIONS
JOHNSON & JOHNSON
(908) 524-3535
ANNIE LO -- INVESTOR RELATIONS
JOHNSON & JOHNSON
(908) 524-6491
DONALD R. SCHORT
NEUTROGENA CORPORATION
(310) 642-1150
DAVID HARDACRE
BLUM, PROPPER & HARDACRE
(310) 826-7900
FOR IMMEDIATE RELEASE
JOHNSON & JOHNSON TO ACQUIRE
NEUTROGENA CORPORATION FOR $35.25 PER SHARE
New Brunswick, NJ (August 22, 1994) -- Johnson & Johnson, the world's
leading health care corporation, and Neutrogena Corporation, producer of high
quality skin and hair care products, today announced they have entered into a
definitive agreement through which Johnson & Johnson will acquire Neutrogena.
Under the agreement, Johnson & Johnson (NYSE: JNJ) is to begin a cash
tender offer for all outstanding shares of Neutrogena (NASDAQ: NGNA) common
stock for $35.25 per share. Any shares not purchased in the offer will be
acquired for the same price in cash, in a second-step merger. Neutrogena has
approximately 25,700,000 shares outstanding.
The boards of directors of both companies have given approval to the
acquisition.
Johnson & Johnson Board Chairman Ralph S. Larsen termed the acquisition "a
very important strategic addition to our substantial worldwide skin and hair
care business." He added, "We are pleased to have been able to enter into this
agreement with Neutrogena."
Lloyd E. Cotsen, chairman and chief executive officer of Neutrogena, said:
"Our stated corporate goal -- to be a growth-oriented company with an image for
credibility and trust in the care and maintenance of healthy looking skin and
hair -- will, in fact, be enhanced with our association with Johnson & Johnson.
Throughout the world, Johnson & Johnson has established a strong presence and
reputation that we have long admired, and we now look forward to joining in a
partnership spirit to optimize the potential of the Neutrogena family of
products."
Mr. Cotsen has entered into an agreement with Johnson & Johnson under which
he has agreed to tender all 9,869,000 shares beneficially owned by him in the
offer. All outstanding Neutrogena options to purchase shares, a total of
approximately 2,300,000 shares, will be acquired for cash at the offer price.
The offer and merger are subject to the purchase of a majority of the
outstanding shares of Neutrogena common stock, as well as other customary
conditions including clearance under the Hart-Scott-Rodino Anti-
<PAGE> 2
Trust Improvements Act. The offer will begin by Friday, August 26, and will
remain open for a minimum of 20 business days.
Lehman Brothers Inc. provided financial advisory services to Neutrogena's
Board of Directors and has rendered a fairness opinion on this transaction. In
the event an unsolicited, alternative transaction is agreed to by Neutrogena,
there would be a total fee payable to Johnson & Johnson of $27.5 million.
Johnson & Johnson, with 1993 sales of $14.14 billion, is the world's
leading and most comprehensive manufacturer of health care products serving the
consumer, pharmaceutical, diagnostic and professional markets. Johnson & Johnson
has 79,000 employees and 167 operating companies in more than 50 countries
around the world, selling products in more than 150 countries.
Neutrogena had 1993 sales of $282 million. Neutrogena's high quality skin
and hair care products are sold in 72 countries. The company is headquartered in
Los Angeles and has 840 employees.
<PAGE> 1
CONFORMED COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 22, 1994
AMONG
JOHNSON & JOHNSON
JNJ ACQUISITION CORP.
AND
NEUTROGENA CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Parties and Recitals................................................................ 1
ARTICLE I
The Offer
SECTION 1.01. The Offer......................................................... 1
SECTION 1.02. Company Actions................................................... 2
ARTICLE II
The Merger
SECTION 2.01. The Merger........................................................ 3
SECTION 2.02. Closing........................................................... 3
SECTION 2.03. Effective Time.................................................... 3
SECTION 2.04. Effects of the Merger............................................. 4
SECTION 2.05. Certificate of Incorporation and By-Laws.......................... 4
SECTION 2.06. Directors......................................................... 4
SECTION 2.07. Officers.......................................................... 4
ARTICLE III
Effect of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
SECTION 3.01. Effect on Capital Stock........................................... 4
SECTION 3.02. Exchange of Certificates.......................................... 5
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of the Company..................... 6
SECTION 4.02. Representations and Warranties of Parent and Sub.................. 12
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business............................................... 13
SECTION 5.02. No Solicitation................................................... 15
ARTICLE VI
Additional Agreements
SECTION 6.01. Stockholder Meeting; Preparation of Proxy Statement............... 16
SECTION 6.02. Access to Information; Confidentiality............................ 16
SECTION 6.03. Reasonable Efforts; Notification.................................. 17
SECTION 6.04. Stock Options Plans............................................... 17
SECTION 6.05. Indemnification and Insurance..................................... 18
SECTION 6.06. Directors......................................................... 18
SECTION 6.07. Fees and Expenses................................................. 19
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
SECTION 6.08. Public Announcements.............................................. 19
SECTION 6.09. Rights Agreements................................................. 19
SECTION 6.10. Benefit Plans..................................................... 19
SECTION 6.11. Stop Transfer..................................................... 20
SECTION 6.12. Excess Parachute Payments......................................... 20
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger........ 20
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination....................................................... 20
SECTION 8.02. Effect of Termination............................................. 21
SECTION 8.03. Amendment......................................................... 21
SECTION 8.04. Extension; Waiver................................................. 21
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver......... 22
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties..................... 22
SECTION 9.02. Notices........................................................... 22
SECTION 9.03. Definitions....................................................... 23
SECTION 9.04. Interpretation.................................................... 23
SECTION 9.05. Counterparts...................................................... 23
SECTION 9.06. Entire Agreement; No Third-Party Beneficiaries.................... 24
SECTION 9.07. Governing Law..................................................... 24
SECTION 9.08. Assignment........................................................ 24
SECTION 9.09. Enforcement....................................................... 24
EXHIBITS
EXHIBIT A Conditions of the Offer
</TABLE>
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AGREEMENT AND PLAN OF MERGER dated as of August 22, 1994, among
JOHNSON & JOHNSON, a New Jersey corporation ("Parent"), JNJ ACQUISITION
CORP., a Delaware corporation ("Sub") and a wholly owned subsidiary of
Parent, and NEUTROGENA CORPORATION, a Delaware corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved 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 (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the issued and outstanding
shares of Common Stock, par value $.001 per share, of the Company (together with
any associated Rights (as hereinafter defined), the "Company Common Stock"), at
a price per share of Company Common Stock of $35.25 net to the seller in cash
(such price, the "Offer Price"), upon the terms and subject to the conditions
set forth in this Agreement; and the Board of Directors of the Company has
approved the Offer and is recommending that the Company's stockholders accept
the Offer;
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved the Offer and the Merger of Sub into the Company, as set forth
below (the "Merger"), upon the terms and subject to the conditions set forth in
this Agreement, whereby each issued and outstanding share of Company Common
Stock, 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, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, certain stockholders of the
Company, Parent and Sub are entering into an Agreement (the "Stockholder
Agreement") pursuant to which such stockholders have, among other things, agreed
to tender all such stockholders' shares of Company Common Stock into the Offer;
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 representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
The Offer
SECTION 1.01. The Offer. (a) Subject to the provisions of this Agreement,
as promptly as practicable, but in no event later than August 26, 1994, Sub
shall, and Parent shall cause Sub to, commence the Offer. The obligation of Sub
to, and of Parent to cause Sub to, commence the Offer and accept for payment,
and pay for, any shares of Company Common Stock tendered pursuant to the Offer
shall be subject to the conditions set forth in Exhibit A (any of which may be
waived by Sub in its sole discretion) and to the terms and conditions of this
Agreement; provided, however, that Sub shall not, without the Company's consent,
waive the Minimum Condition (as defined in Exhibit A). Sub expressly reserves
the right to modify the terms of the Offer, except that, without the consent of
the Company, Sub shall not (i) reduce the number of shares of Company Common
Stock to be purchased in the Offer, (ii) reduce the Offer Price, (iii) modify or
add to the conditions set forth in Exhibit A, (iv) except as provided in the
next sentence, extend the Offer, (v) change the form of consideration payable in
the Offer or (vi) amend any other term of the Offer in a manner adverse to the
holders of Company Common Stock. Notwithstanding the foregoing, Sub may, without
the consent of the Company, (i) extend the Offer beyond the scheduled expiration
date (the initial scheduled expiration date being 20 business days following
commencement of the Offer), if at the scheduled expiration date of the Offer any
of the conditions to Sub's obligation to accept for payment, and pay for, shares
of Company Common Stock shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, (ii) 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
and (iii) extend the Offer for an
<PAGE> 5
aggregate period of not more than 10 business days beyond the latest expiration
date that would otherwise be permitted under clause (i) or (ii) of this sentence
if there shall not have been tendered sufficient Shares so that the Merger could
be effected as provided in the last sentence of Section 6.01(a). Subject to the
terms and conditions of the Offer and this Agreement, Sub shall, and Parent
shall cause Sub to, accept for payment, and pay for, all shares of Company
Common Stock 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 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 Securities Exchange Act of 1934, as amended (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 is made by Parent or Sub with respect
to information supplied by the Company specifically for inclusion in the Offer
Documents. Each of Parent, Sub and the Company agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect, and each of Parent and Sub further agrees to take all steps necessary
to amend or supplement the Offer Documents and to cause the Offer Documents as
so amended or supplemented to be filed with the SEC and to be disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable Federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment upon the Offer Documents and all
amendments and supplements thereto prior to their filing with the SEC or
dissemination to stockholders of the Company. Parent and Sub agree to provide
the Company and its counsel any comments Parent, Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely basis
the funds necessary to accept for payment, and pay for, any shares of Company
Common Stock that Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
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 and unanimously adopted resolutions
approving this Agreement, the Offer and the Merger, determining that the terms
of the Offer and the Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that the Company's stockholders approve
and adopt this Agreement, and accept the Offer and tender their shares pursuant
to the Offer. The Company has been advised by each of its directors and by each
executive officer who as of the date hereof is aware of the transactions
contemplated hereby, that each such person intends to tender pursuant to the
Offer all shares of Company Common Stock owned by such person.
(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 amended from time to
time, the "Schedule 14D-9") containing the recommendation described in paragraph
(a) and shall mail the Schedule 14D-9 to the stockholders of the Company. The
Company agrees that 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 is made by the Company with respect to information
supplied by Parent or Sub specifically for inclusion in the Schedule 14D-9. Each
of the Company, Parent and Sub agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
2
<PAGE> 6
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 a reasonable opportunity to review and comment
upon the Schedule 14D-9 and all amendments and supplements thereto prior to
their filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide Parent and its counsel in writing with 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, the Company shall cause its transfer
agent to furnish Sub promptly with mailing labels containing the names and
addresses of the record holders of Company Common Stock as of a recent date and
of those persons becoming record holders subsequent 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 Company Common Stock, 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, deliver, and will use their
best efforts to cause their agents to deliver, to the Company all copies of such
information 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 (as hereinafter defined). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of the Company in accordance with the DGCL.
Notwithstanding the foregoing, Parent may elect at any time prior to the Merger,
instead of merging Sub into the Company as provided above, to merge the Company
with and into Sub; provided, however, that the Company shall not be deemed to
have breached any of its representations, warranties, covenants or agreements
set forth in this Agreement solely by reason of such election. In such event,
the parties agree to execute an appropriate amendment to this Agreement in order
to reflect the foregoing and, where appropriate, to provide that the Sub shall
be the Surviving Corporation and will continue under the name "Neutrogena
Corporation". At the election of Parent, any direct or indirect wholly owned
subsidiary (as defined in Section 9.03) 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. on a date to be specified by the Parent or Sub, which may be on, but shall
be no later than the third business day after, the day on which there shall have
been satisfaction or waiver of the conditions set forth in Article VII (the
"Closing Date"), at the offices of Cravath, Swaine & Moore, Worldwide Plaza, 825
Eighth Avenue, New York, N.Y. 10019, unless another date or place is agreed to
in writing by the parties hereto.
SECTION 2.03. Effective Time. On the Closing Date, or as soon as
practicable thereafter, the parties shall file a certificate of merger or other
appropriate documents (in any such case, the "Certificate of Merger") executed
in accordance with the relevant provisions of the DGCL and shall make all other
filings or recordings required under the DGCL. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with the Delaware
Secretary of State, or at such other time as Sub and the Company shall
3
<PAGE> 7
agree should be specified in the Certificate of Merger (the time the Merger
becomes effective being 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 By-laws. (a) The
certificate of incorporation of the Company as in effect immediately prior to
the Effective Time shall be amended as of the Effective Time so that Section 4
of such certificate of incorporation reads in its entirety as follows: "The
total number of shares of all classes of stock which the corporation shall have
the authority to issue is 100 shares of Common Stock, par value $1.00 per share"
and, as so amended, such certificate of incorporation shall be the certificate
of incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(b) The By-laws of the Company as in effect at the Effective Time shall be
the by-laws of the Surviving Corporation, until thereafter changed or amended as
provided therein or by applicable law.
SECTION 2.06. Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of the Company immediately prior to
the Effective Time shall become the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE 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 of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $1.00 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each share
of Company Common Stock that is owned by the Company or by any subsidiary
of the Company and each share of Company Common Stock that is owned by
Parent, Sub or any other subsidiary of Parent shall automatically be
canceled and retired and shall cease to exist, and no consideration shall
be delivered in exchange therefor.
(c) Conversion of Common Stock. Subject to Section 3.01(d), each
issued and outstanding share of Company Common Stock (other than shares to
be canceled in accordance with Section 3.01(b)) shall be converted into the
right to receive from the Surviving Corporation in cash, without interest,
the price paid for each share of Company Common Stock in the Offer (the
"Merger Consideration"). As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to receive
the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding shares of
Company Common Stock held by a person (a "Dissenting Stockholder") who
objects to the Merger and complies with all the provisions of Delaware law
concerning the right of holders of Company Common Stock to dissent from the
Merger and require appraisal of their shares of Company Common Stock
("Dissenting Shares") shall not be converted as described in Section
3.01(c) but shall become the right to receive such consideration as may be
4
<PAGE> 8
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 of appraisal, in any case pursuant to the DGCL,
his shares of Company Common Stock shall be deemed to be converted as of
the Effective Time into the right to receive the Merger Consideration,
without interest. The Company shall give Parent (i) prompt notice of any
demands for appraisal of shares of Company Common Stock received by the
Company and (ii) 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 bank or trust company to act as paying
agent in the Merger (the "Paying Agent"), and, from time to time on, prior to or
after the Effective Time, Parent shall make available, or cause the Surviving
Corporation to make available, to the Paying Agent immediately available funds
in amounts and at the times necessary for the payment of the Merger
Consideration upon surrender of certificates representing Company Common Stock
as part of the Merger pursuant to Section 3.01, 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 which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted into the right to receive the Merger Consideration
pursuant to Section 3.01, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by the 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 the amount of cash into which the shares of Company Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.01, and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of Company Common Stock which
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
Parent 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 of Company
Common Stock 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 of Company Common Stock theretofore represented by such
Certificates, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be cancelled and
exchanged as provided in this Article III, except as otherwise provided by law.
(d) No Liability. 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.
5
<PAGE> 9
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of the Company. Except as set
forth on the Disclosure Schedule delivered by the Company to Parent prior to the
execution of this Agreement (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
and each of its Significant Subsidiaries (as defined below) is a
corporation or partnership duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and
has the requisite corporate or partnership power and authority to carry on
its business as now being conducted. Each of the Company and its
subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed (individually or in the aggregate) would not
have a material adverse effect on the Company. The Company has delivered to
Parent complete and correct copies of its certificate of incorporation and
by-laws and the certificates of incorporation and by-laws or other
organizational documents of its Significant Subsidiaries, in each case as
amended to the date of this Agreement. For purposes of this Agreement, a
"Significant Subsidiary" means any subsidiary of the Company that
constitutes a significant subsidiary within the meaning of Rule 1-02 of
Regulation S-X of the SEC.
(b) Subsidiaries. All the outstanding shares of capital stock of each
Significant Subsidiary are owned by the Company, by another wholly owned
subsidiary of the Company or by the Company and another wholly owned
subsidiary of the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens").
(c) Capital Structure. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock and 7,000,000 shares
of preferred stock, par value $.001 per share ("Company Preferred Stock").
At the close of business on August 18, 1994, (i) 25,717,859 shares of
Company Common Stock and no shares of Company Preferred Stock were issued
and outstanding, (ii) 1,006,985 shares of Company Common Stock were held by
the Company in its treasury, (iii) 2,331,352 shares of Company Common Stock
were reserved for issuance upon exercise of outstanding Stock Options (as
defined in Section 6.04) and (iv) no shares of Company Common Stock and
310,713 Shares of Company Preferred Stock were reserved for issuance in
connection with the rights (the "Rights") to purchase shares of Company
Common Stock issued pursuant to the Rights Agreement dated as of July 23,
1990 (as amended from time to time, the "Rights Agreement"), between the
Company and U.S. Stock Transfer Corporation, as Rights Agent (the "Rights
Agent"). Except as set forth above, as of the date of this Agreement, no
shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. There are no outstanding
stock appreciation rights which were not granted in tandem with a related
Stock Option. All outstanding shares of capital stock of the Company are,
and all shares which may be issued will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, 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, as of the date of this
Agreement, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company or any of its subsidiaries is a party or by which any
of them is bound obligating the Company or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the
Company or of any of its subsidiaries or obligating the Company or any of
its subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. 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. The
6
<PAGE> 10
Company has delivered to Parent a complete and correct copy of the Rights
Agreement as amended and supplemented to the date of this Agreement.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to
approval of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock, to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of this
Agreement, to approval of this Agreement by the holders of a majority of
the outstanding shares of Company Common Stock. This Agreement has been
duly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding obligation of Parent and Sub, constitutes
the valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of this Agreement will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its subsidiaries under,
(i) the certificate of incorporation or by-laws of the Company or the
comparable charter or organizational documents of any of its subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license
applicable to the Company or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or
any of its subsidiaries or their respective properties or assets, other
than, in the case of clauses (ii) or (iii), any such conflicts, violations,
defaults, rights or Liens that individually or in the aggregate would not
(x) have a material adverse effect on the Company, (y) impair in any
material respect the ability of the Company to perform its obligations
under this Agreement or (z) prevent the consummation of any of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state or local government or any court, administrative or regulatory agency
or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), is required by the Company or any of its
subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (ii)
the filing with the SEC of (x) the Schedule 14D-9, (y) a proxy statement
relating to the approval by the Company's stockholders of this Agreement
(as amended or supplemented from time to time, the "Proxy Statement") and
(z) such reports under Section 13(a) of the Exchange Act as may be required
in connection with this Agreement and the transactions contemplated by this
Agreement, (iii) the filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities
of other states in which the Company is qualified to do business (iv) the
filing of appropriate documents with the relevant authorities of states
other than Delaware in which the Company or any of its subsidiaries is
authorized to do business, (v) in connection with any state or local tax
which is attributable to the beneficial ownership of the Company's or its
subsidiaries, real property, if any (collectively, the "Gains Taxes"), (vi)
as may be required by any applicable state securities or "blue sky" laws or
state takeover laws, (vii) such filings and consents as may be required
under any environmental, health or safety law or regulation pertaining to
any notification, disclosure or required approval triggered by the Merger
or the transactions contemplated by this Agreement, (viii) such filings,
consents, approvals, orders, registrations and declarations as may be
required under the laws of any foreign country in which the Company or any
of its subsidiaries conducts any business or owns any assets, and (ix) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would
not, individually or in the aggregate (A) have a material adverse effect on
the Company, (B) impair in any material respect the ability of the Company
to
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<PAGE> 11
perform its obligations under this Agreement or (C) prevent or
significantly delay the consummation of the transactions contemplated by
this Agreement.
(e) SEC Documents; Financial Statements. The Company has filed all
required reports, forms, and other documents with the SEC since November 1,
1993 (the "SEC Documents"). As of their respective dates, (i) the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933 (the "Securities Act"), or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and (ii) none of the SEC
Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except to the extent that information
contained in any SEC Document has been revised or superseded by a
later-filed SEC Document filed and publicly available prior to the date of
this Agreement, none of the SEC Documents contains any untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents 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 the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments). Except as
set forth in the SEC Documents filed and publicly available prior to the
date of this Agreement, and except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since the
date of the most recent consolidated balance sheet included in the SEC
Documents filed and publicly available prior to the date of this Agreement
and liabilities and obligations which would not, individually or in the
aggregate, have a material adverse effect on the Company, neither the
Company nor any of its subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be set forth on a consolidated
balance sheet of the Company and its consolidated subsidiaries or in the
notes thereto.
(f) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents, (ii) the Schedule 14D-9 or (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"), will, 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, 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 Schedule
14D-9 and the Information 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 information supplied by Parent or Sub specifically for
inclusion or incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents filed and publicly available prior to the date of this
Agreement, since April 30, 1994, the Company has conducted its business
only in the ordinary course, and there has not been (i) any material
adverse change in the Company, (ii) 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, (iii) (x) any
granting by the Company or any of its subsidiaries to any officer of the
Company or any of its subsidiaries of any increase in compensation, except
in the ordinary course of business consistent with prior practice, as
disclosed in the Company Disclosure Schedule or as was required under
employment agreements in effect as of the date of the most recent audited
financial
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<PAGE> 12
statements included in the SEC Documents filed and publicly available prior
to the date of this Agreement, (y) any granting by the Company or any of
its subsidiaries to any such officer of any increase in severance or
termination pay, except as was required under employment, severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the SEC Documents filed and publicly
available prior to the date of this Agreement or as disclosed on the
Company Disclosure Schedule or (z) any entry by the Company or any of its
subsidiaries into any employment, severance or termination agreement with
any such officer, (iv) any damage, destruction or loss, whether or not
covered by insurance, that has or reasonably could be expected to have a
material adverse effect on the Company or (v) any change in accounting
methods, principles or practices by the Company materially affecting its
assets, liabilities or business, except insofar as may have been required
by a change in generally accepted accounting principles.
(h) Litigation. Except as disclosed in the SEC Documents filed and
publicly available prior to the date of this Agreement, 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, could reasonably be expected to have a
material adverse effect on the Company; it being understood that this
representation shall not include any litigation of the nature described in
clauses (i)-(iv) of paragraph (a) of Exhibit A.
(i) Absence of Changes in Benefit Plans. Except as disclosed in
Schedule 4.01(i), Schedule 4.01(j) or in the SEC Documents filed and
publicly available prior to the date of this Agreement or as required by
applicable law, since November 1, 1993, there has not been any adoption or
amendment in any material respect by the Company or any of its subsidiaries
of any collective bargaining agreement or any Benefit Plan (as defined in
Section 4.01(j) hereof). Except as disclosed in Schedule 4.01(i), Schedule
4.01(j) or the SEC Documents, there exist no employment, consulting,
severance, termination or indemnification agreements, arrangements or
understandings between the Company or any of its subsidiaries and any
current or former officer or director of the Company or any of its
subsidiaries.
(j) ERISA Compliance. (i) Schedules 4.01(i) and 4.01(j) contain 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"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) and all other plans,
arrangements or policies relating to stock options, stock purchases,
compensation, deferred compensation, severance, fringe benefits and other
employee benefits, in each case maintained, or contributed to, or required
to be maintained or contributed to, by the Company, any of its subsidiaries
or any other person or entity that, together with the Company, is treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code
(each a "Commonly Controlled Entity") for the benefit of any current or
former employees, officers or directors (or any beneficiaries thereof) of
the Company or any of its subsidiaries (collectively, "Benefit Plans").
(ii) Each Benefit Plan has been administered in all material respects
in accordance with its terms. The Company and all the Benefit Plans are all
in compliance in all material respects with applicable provisions of ERISA
and the Code and all other applicable laws.
(iii) Neither the Company nor any Commonly Controlled Entity has
suffered or otherwise caused a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in Section 4203 and Section 4205,
respectively, of ERISA) with respect to any "multiemployer plan" (within
the meaning of Section 4001(a)(3) of ERISA) that could lead to the
imposition of any withdrawal liability under Section 4201 of ERISA; and no
action has been taken that alone or with the passage of time could result
in either a partial or complete withdrawal by any Commonly Controlled
Entity in respect of any such multiemployer plan.
(iv) To the knowledge of the Company and its subsidiaries, there are
no understandings, agreements or undertakings that would prevent any
Benefit Plan that is an employee welfare benefit plan (including any such
Benefit Plan covering retirees) from being amended or terminated without
material liability to the Company or any of its subsidiaries on or at any
time after the consummation of the Offer.
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<PAGE> 13
(v) No Commonly Controlled Entity has incurred any material liability,
and no event has occurred that would result in any material liability, to a
Pension Plan (other than for contributions not yet due) or to the Pension
Benefit Guaranty Corporation (other than for payment of premiums not yet
due) that has not been fully paid as of the date hereof.
(k) Taxes. (i) Each of the Company and each of its subsidiaries has
filed all Federal income tax returns and all other material tax returns and
reports required to be filed by it. All such returns are complete and
correct in all material respects. Each of the Company and each of its
subsidiaries has paid (or the Company has paid on its subsidiaries' behalf)
all taxes shown as due on such returns and all material taxes for which no
return was required to be filed, and the most recent financial statements
contained in the 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.
(ii) No material deficiencies for any taxes 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. The
Federal income tax returns of the Company and each of its subsidiaries
consolidated in such returns have been examined by and settled with the
Internal Revenue Service for all years through 1991.
(iii) As used in this Agreement, "taxes" shall include all Federal,
state, local and foreign income, property, sales, excise and other taxes,
tariffs or governmental charges of any nature whatsoever.
(l) No Excess Parachute Payments. Sections 4.01(i), 4.01(j) and
4.01(l) of the Company Disclosure Schedule set forth all written contracts,
arrangements or understandings (excluding Stock Options or SARs (as defined
in Section 6.04)) pursuant to which any person may receive any amount or
entitlement from the Company or the Surviving Corporation or any of their
respective subsidiaries (including cash or property or the vesting of
property) that may be characterized as an "excess parachute payment" (as
such term is defined in Section 280G(B)(1) of the Code) (any such amount
being an "Excess Parachute Payment") as a result of any of the transactions
contemplated by this Agreement. To the best knowledge of the Company, no
person is entitled to receive any additional payment from the Company, the
Surviving Corporation, their respective subsidiaries or any other person (a
"Parachute Gross-Up Payment") in the event that the 20 per cent parachute
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.
(m) Compliance with Applicable Laws. (i) 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 ("Permits"), necessary for it to own, lease or operate
its properties and assets and to carry on its business as now conducted,
and there has occurred no default under any such Permit, except for the
lack of Permits and for defaults under Permits which lack or default
individually or in the aggregate would not have a material adverse effect
on the Company. Except as disclosed in the SEC Documents filed and publicly
available prior to the date of this Agreement, the Company and its
subsidiaries are in compliance with all applicable statutes, laws,
ordinances, rules, orders and regulations of any Governmental Entity,
except for possible noncompliance which individually or in the aggregate
would not have a material adverse effect on the Company.
(ii) To the knowledge of the Company, each of the Company and its
subsidiaries is, and has been, and each of the Company's former
subsidiaries, while a subsidiary of the Company, was in compliance with all
applicable Environmental Laws, except for possible noncompliance which
individually or in the aggregate would not have a material adverse effect
on the Company. The term "Environmental Laws" means any Federal, state,
local or foreign statute, ordinance, rule, regulation, policy, permit,
consent, approval, license, judgment, order, decree, injunction or other
authorization, relating to: (A) Releases (as defined in 42 U.S.C.
sec. 9601(22)) or threatened Releases of Hazardous Material (as hereinafter
defined) into the environment or (B) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Material.
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<PAGE> 14
(iii) During the period of ownership or operation by the Company and
its subsidiaries of any of their respective current or previously owned or
leased properties, there have been no Releases of Hazardous Material in,
on, under or affecting such properties or, to the knowledge of the Company,
any surrounding site, and none of the Company or its subsidiaries have
disposed of any Hazardous Material or any other substance in a manner that
has led, or could reasonably be anticipated to lead to a Release except in
each case for those which individually or in the aggregate are not
reasonably likely to have a material adverse effect on the Company. Prior
to the period of ownership or operation by the Company and its subsidiaries
of any of their respective current or previously owned or leased
properties, to the knowledge of the Company, no Hazardous Material was
generated, treated, stored, disposed of, used, handled or manufactured at,
or transported shipped or disposed of from, such current or previously
owned or leased properties, and there were no Releases of Hazardous
Material in, on, under or affecting any such property or any surrounding
site, except in each case for those which individually or in the aggregate
are not reasonably likely to have a material adverse effect on the Company.
The term "Hazardous Material " means (1) hazardous substances (as defined
in 42 U.S.C. sec. 9601(14)), (2) petroleum, including crude oil and any
fractions thereof, (3) natural gas, synthetic gas and any mixtures thereof,
(4) asbestos and/or asbestos-containing material, (5) PCBs, or materials
containing PCBs in excess of 50 ppm, and any material regulated as a
medical waste or infectious waste.
(n) State Takeover Statutes. The Board of Directors of the Company
has approved the Offer, the Merger and this Agreement and such approval is
sufficient to render inapplicable to the Offer, the Merger, this Agreement
and the Stockholder Agreement and the transactions contemplated by this
Agreement and the Stockholder Agreement, the provisions of Section 203 of
the DGCL.
(o) Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than Lehman Brothers Inc.,
the fees and expenses of which will be paid by the Company, is entitled to
any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
estimated fees and expenses incurred and to be incurred by the Company in
connection with this Agreement and the transactions contemplated by this
Agreement (including the fees of the Company's legal counsel) are set forth
in the Company Disclosure Schedule. The Company has provided Parent true
and correct copies of all agreements between Company and Lehman Brothers
Inc.
(p) Opinion of Financial Advisor. The Company has received the opinion
of Lehman Brothers Inc., to the effect that, as of the date of this
Agreement, the consideration to be received in the Offer and the Merger by
the Company's stockholders is fair to the Company's stockholders from a
financial point of view, and a complete and correct signed copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to
Parent.
(q) Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock approving this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this agreement and the
transactions contemplated by this Agreement.
(r) Rights Agreement. The Company and the Board of Directors of the
Company have taken all necessary action to (i) render the Rights Agreement
inapplicable with respect to the Offer and the Merger and the other
transactions contemplated by this Agreement and the Stockholder Agreement
and (ii) ensure that (y) neither Parent nor Sub nor any of their Affiliates
or Associates is considered to be an Adverse Person and (z) a Distribution
Date (as defined in the Rights Agreement) does not occur by reason of the
announcement or consummation of the Offer, the Merger or the consummation
of any of the other transactions contemplated by this Agreement or the
Stockholder Agreement.
(s) Trademarks, etc. The Company Disclosure Schedule sets forth a
true and complete list of all material patents, trademarks (registered or
unregistered), trade names, service marks and copyrights and applications
therefor owned, used or filed by or licensed to the Company and its
subsidiaries ("Intellectual Property Rights") and, with respect to
registered trademarks, contains a list of all jurisdictions in
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<PAGE> 15
which such trademarks are registered or applied for and all registration
and application numbers. The Company or its subsidiaries owns or has the
right to use, without payment to any other party, the patents, trademarks
(registered or unregistered), trade names, service marks, copyrights and
applications therefor referred to in such Schedule, and the consummation of
the transactions contemplated hereby will not alter or impair such rights
in any material respect. To the best knowledge of the Company, no claims
are pending by any person with respect to the ownership, validity,
enforceability or use of any such Intellectual Property Rights challenging
or questioning the validity or effectiveness of any of the foregoing which
claims could reasonably be expected to have a material adverse effect on
the Company.
(t) Distribution Agreements. The Company has made available to Parent
and its representatives true and correct copies of all contracts,
agreements, arrangements or understandings to which the Company or any of
its subsidiaries is a party, except those that are immaterial in any one
country or jurisdiction, relating to the distribution of its products or
products licensed by the Company or its subsidiaries in any foreign country
or jurisdiction ("Foreign Distribution Agreements").
SECTION 4.02. Representations and Warranties of Parent and Sub. Parent and
Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
each of its Significant Subsidiaries and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which each is incorporated and has the requisite corporate
power and authority to carry on its business as now being conducted. Each
of Parent and Sub is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed (individually or in the aggregate) would not
have a material adverse effect on Parent. Parent has delivered to the
Company complete and correct copies of its certificate of incorporation and
by-laws and the certificate of incorporation and by-laws of Sub, in each
case as amended to the date of this Agreement.
(b) Authority; Noncontravention. Parent and Sub have all requisite
corporate power and authority to enter into this Agreement and, in the case
of Parent, the Stockholder Agreement, and to consummate the transactions
contemplated by this Agreement and, in the case of Parent, the Stockholder
Agreement. The execution and delivery of this Agreement and, in the case of
Parent, the Stockholder Agreement, and the consummation of the transactions
contemplated by this Agreement and, in the case of Parent, the Stockholder
Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Sub, as applicable. This Agreement has been duly
executed and delivered by Parent and Sub and the Stockholder Agreement has
been duly executed and delivered by Parent and, assuming this Agreement
constitutes the valid and binding obligation of the Company, each
constitutes a valid and binding obligation of each such party, enforceable
against each such party in accordance with its terms. The execution and
delivery of this Agreement and the Stockholder Agreement do not, and the
consummation of the transactions contemplated by this Agreement and the
Stockholder Agreement and compliance with the provisions of this Agreement
and the Stockholder Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Parent under,
(i) the certificate of incorporation or by-laws of Parent or Sub, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable
to Parent or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or Sub or
their respective properties or assets, other than, in the case of clauses
(ii) or (iii), any such conflicts, violations, defaults, rights or Liens
that individually or in the aggregate would not (x) have a material adverse
effect on Parent, (y) impair in any material respect the ability of Parent
and Sub to perform their respective obligations under this Agreement or the
Stockholder Agreement or (z) prevent the consummation of any of the
transactions contemplated by this Agreement or the Stockholder Agreement.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental
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<PAGE> 16
Entity is required by Parent or Sub in connection with the execution and
delivery of this Agreement and the Stockholder Agreement or the
consummation by Parent or Sub, as the case may be, of any of the
transactions contemplated by this Agreement and, in the case of the Parent,
the Stockholder Agreement, except for (i) the filing of a premerger
notification and report form under the HSR Act, (ii) the filing with the
SEC of (x) the Offer Documents and (y) such reports under Sections 13(a),
13(d) and 16 of the Exchange Act as may be required in connection with this
Agreement and the Stockholder Agreement and the transactions contemplated
by this Agreement and the Stockholder Agreement, (iii) the filing of the
Certificate of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which the
Company is qualified to do business, and (iv) such other consents,
approvals, orders, authorizations, registrations, declarations and filings
the failure of which to be obtained or made would not, individually or in
the aggregate (A) have a material adverse effect on Parent, (B) impair the
ability of Parent and Sub to perform their respective obligations under
this Agreement or (C) prevent or significantly delay the consummation of
any transactions contemplated by this Agreement. Neither Parent nor any of
its affiliates or associates (as each such term is defined in Section 203
of the DGCL) was prior to the execution and delivery of the Stockholder
Agreement, an Interested Stockholder (as such term is defined in Section
203 of the DGCL) of the Company.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in
the Offer Documents, the Schedule 14D-9, the Information Statement or 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 date the Proxy Statement is
first mailed to the Company's stockholders or at the time of the meeting of
the Company's stockholders held to vote on approval and adoption of this
Agreement, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The Offer Documents will comply as to form in all
material respects with the requirements of the Exchange Act and the rules
and regulations promulgated 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 information supplied by the
Company specifically for inclusion or incorporation by reference therein.
(d) Brokers. No broker, investment banker, financial advisor or other
person, other than J.P. Morgan & Co., Inc., 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.
(e) Financing. Parent has sufficient funds available to purchase all
the outstanding shares on a fully diluted basis of Company Common Stock
pursuant to the Offer and the Merger and to pay all fees and expenses
related to the transactions contemplated by this Agreement.
(f) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby and has not engaged in
any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. (a) Conduct of Business. During the term of this Agreement,
the Company shall and shall cause its subsidiaries to carry on their respective
businesses in the ordinary course and use all reasonable efforts to preserve
intact their current business organizations, keep available the services of
their current officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired in all material respects at the Effective Time.
Without limiting the generality
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of the foregoing, the Company shall not, and shall not permit any of its
subsidiaries to (without Parent's prior written consent, which consent may be
withheld in Parent's sole and absolute discretion):
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by any direct or indirect wholly owned subsidiary of the
Company to its parent, (B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock or (C)
except as shall be required under any employee stock-based benefit plan,
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the
issuance of Company Common Stock upon the exercise of Employee Stock
Options outstanding on the date of this Agreement in accordance with their
present terms);
(iii) amend its Certificate of Incorporation, By-laws 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 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
and its subsidiaries taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets, except
sales of inventory in the ordinary course of business consistent with past
practice;
(vi) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing or (B) make any loans, advances
or capital contributions to, or investments in, any other person, other
than to the Company or any direct or indirect wholly owned subsidiary of
the Company and other than advances to employees in the ordinary course of
business consistent with past practice;
(vii) make any tax election or settle or compromise any material
income tax liability;
(viii) 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 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
SEC Documents filed and publicly available prior to the date of this
Agreement or incurred in the ordinary course of business consistent with
past practice, or waive the benefits of, or agree to modify in any manner,
any confidentiality, standstill or similar agreement to which the Company
or any of its subsidiaries is a party;
(ix) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which the Company or any
subsidiary is a party or waive, release or assign any material rights or
claims; or
(x) authorize any of, or commit or agree to take any of, the foregoing
actions.
(b) Other Actions. The Company shall not, and shall not permit any of its
subsidiaries to, take any action that would result in (i) any of its
representations and warranties set forth in this Agreement that are
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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 set forth in Exhibit A not being
satisfied (subject to the Company's right to take action specifically permitted
by Section 5.02).
SECTION 5.02. No Solicitation. (a) The Company shall not, nor shall it
permit any of its subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, (i) solicit or
initiate, or encourage the submission of, any takeover proposal or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any takeover proposal; provided, however, that, prior to
the acceptance for payment of shares of Company Common Stock pursuant to the
Offer, if in the opinion of the Board of Directors, after consultation with
counsel, such failure to act would be inconsistent with its fiduciary duties to
the Company's stockholders under applicable law, the Company may, in response to
an unsolicited takeover proposal, and subject to compliance with Section
5.02(c), (A) furnish information with respect to the Company to any person
pursuant to a confidentiality agreement and (B) participate in negotiations
regarding such takeover proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any executive officer of the Company or any of its subsidiaries or
any investment banker, attorney or other advisor or representative of the
Company or any of its subsidiaries, whether or not such person is purporting to
act on behalf of the Company or any of its subsidiaries or otherwise, shall be
deemed to be a breach of this Section 5.02(a) by the Company. For purposes of
this Agreement, "takeover proposal" means any inquiry, proposal or offer from
any person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company or any of its subsidiaries (other
than investors in the ordinary course of business) or of over 20% of any class
of equity securities of the Company or any of its subsidiaries or any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of equity securities of the Company
or any of its subsidiaries, or any merger, consolidation, business combination,
sale of substantially all assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company or any of its subsidiaries other than
the transactions contemplated by this Agreement, or any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or the Merger or which would reasonably be
expected to dilute materially the benefits to Parent of the transactions
contemplated hereby.
(b) Except as set forth herein, neither the Board of Directors of the
Company nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Sub, the approval or
recommendation by such Board of Directors or any such committee of the Offer,
this Agreement or the Merger, (ii) approve or recommend, or propose to approve
or recommend, any takeover proposal or (iii) enter into any agreement with
respect to any takeover proposal. Notwithstanding the foregoing, in the event
prior to the time of acceptance for payment of shares of Company Common Stock in
the Offer if in the opinion of the Board of Directors, after consultation with
counsel, failure to do so would be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law, the Board of Directors may (subject
to the terms of this and the following sentences) withdraw or modify its
approval or recommendation of the Offer, this Agreement or the Merger, approve
or recommend a superior proposal, or enter into an agreement with respect to a
superior proposal, in each case at any time after the second business day
following Parent's receipt of written notice (a "Notice of Superior Proposal")
advising Parent that the Board of Directors has received a superior proposal,
specifying the material terms and conditions of such superior proposal and
identifying the person making such superior proposal; provided that the Company
shall not enter into an agreement with respect to a superior proposal unless the
Company shall have furnished Parent with written notice no later than 12:00 noon
one day in advance of any date that it intends to enter into such agreement. In
addition, if the Company proposes to enter into an agreement with respect to any
takeover proposal, it shall concurrently with entering into such agreement pay,
or cause to be paid, to Parent the Expenses (as defined in Section 6.07(b)) and
the Termination Fee (as defined in Section 6.07(b)). For purposes of this
Agreement, a "superior proposal" means any bona fide takeover proposal to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the shares of Company Common Stock then
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outstanding or all or substantially all the assets of the Company and otherwise
on terms which the Board of Directors of the Company determines in its good
faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders than
the Offer and the Merger.
(c) In addition to the obligations of the Company set forth in paragraph
(b), the Company shall immediately advise Parent orally and in writing of any
request for information or of any takeover proposal, or any inquiry with respect
to or which could lead to any takeover proposal, the material terms and
conditions of such request, takeover proposal or inquiry, and the identity of
the person making any such takeover proposal or inquiry. The Company will keep
Parent fully informed of the status and details (including amendments or
proposed amendments) of any such request, takeover proposal or inquiry.
(d) Nothing contained in this Section 5.02 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the opinion of the Board of Directors of the
Company, after consultation with counsel, failure to so disclose would be
inconsistent with its fiduciary duties to the Company's stockholders under
applicable law; provided that the Company does not, except as permitted by
Section 5.02(b) withdraw or modify, or propose to withdraw or modify, its
position with respect to the Offer or the Merger or approve or recommend, or
propose to approve or recommend, a takeover proposal.
ARTICLE VI
Additional Agreements
SECTION 6.01. Stockholder Meeting; Preparation of the Proxy Statement. (a)
The Company will, as soon as practicable following the acceptance for payment
of, and payment for, shares of Company Common Stock by Sub pursuant to the
Offer, duly call, give notice of, convene and hold a meeting of the holders of
the Company Common Stock (the "Stockholders Meeting") if such meeting is
required by applicable law for the purpose of approving this Agreement and the
transactions contemplated by this Agreement. At the Stockholders Meeting, Parent
shall cause all of the shares of Company Common Stock then actually or
beneficially owned by Parent, Sub or any of their subsidiaries to be voted in
favor of the Merger. Notwithstanding the foregoing, if Sub or any other
subsidiary of Parent shall acquire at least 90% of the outstanding shares of
Company Common Stock, 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) 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 such
an amendment or supplement. The Company will not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects.
SECTION 6.02. 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, and shall cause each of its subsidiaries to, furnish promptly to
Parent (a) a copy of each report, schedule, registration statement and other
document filed by it during such period
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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 confidential information in
accordance with the Confidentiality Agreement dated as of August 15, 1994,
between Parent and the Company (the "Confidentiality Agreement").
SECTION 6.03. 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, including (i)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
any of the transactions contemplated by this Agreement, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv) the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Agreement and the Stockholder
Agreement. In connection with and without limiting the foregoing, the Company
and its Board of Directors shall (i) take all action necessary 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 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 action necessary to ensure that the Offer,
the Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Offer, the Merger, this Agreement, the Stockholder Agreement and the other
transactions contemplated by this Agreement or the Stockholder Agreement.
Notwithstanding the foregoing, the Board of Directors of the Company shall not
be prohibited from taking any action permitted by the terms of this Agreement.
(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 6.04. Stock Option Plans. (a) As soon as practicable following the
date of this Agreement, the Board of Directors of the Company (or, if
appropriate, any committee administering the Stock Option Plans (as defined
below)) shall adopt such resolutions or take such other actions as are required
to provide that (i) each outstanding stock option to purchase shares of Company
Common Stock (a "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") outstanding immediately prior
to the consummation of the Offer, whether or not then exercisable, shall be
cancelled immediately prior to the consummation of the Offer in exchange for an
amount in cash, payable at the time of such cancellation, equal to the product
of (y) the number of shares of Company Common Stock subject to such Stock Option
immediately prior to the consummation of the Offer and (z) the excess of the
price per share to be paid in the Offer over the per share exercise price of
such Stock Option and (ii) each stock appreciation right ("SAR") granted under
the Stock Option Plans outstanding immediately prior to the consummation of the
Offer shall
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be cancelled immediately prior to the consummation of the Offer in exchange for
an amount of cash, payable at the time of such cancellation, equal to the
product of (y) the number of shares of Company Common Stock covered by such SAR
and (z) the excess of the price per share to be paid in the Offer over the
appreciation base per share of such SAR; provided, however, that no such cash
payment shall be made with respect to any SAR which is related to a Stock Option
with respect to which such a cash payment has been made. Any Stock Option or SAR
not cancelled in accordance with this paragraph (a) immediately prior to the
consummation of the Offer, shall be cancelled at the Effective Time in exchange
for an amount in cash, payable at the Effective Time, equal to the amount which
would have been paid had such Stock Option or SAR been cancelled immediately
prior to the consummation of the Offer.
(b) All Stock Option Plans shall terminate as of the Effective Time and the
provisions in any other Benefit Plan providing for the issuance, transfer or
grant of any capital stock of the Company or any interest in respect of any
capital stock of the Company shall be deleted as of the Effective Time, and the
Company shall ensure that following the Effective Time no holder of a Stock
Option or any participant in any Stock Option Plan shall have any right
thereunder to acquire any capital stock of the Company, Parent or the Surviving
Corporation, except as provided in Section 6.04(a).
SECTION 6.05. Indemnification and Insurance. (a) The indemnification
obligations set forth in the Company's certificate of incorporation and by-laws
on the date of this Agreement shall survive the Merger and shall not be amended,
repealed or otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who on or prior to the Effective Time were directors, officers,
employees or agents of the Company.
(b) For six years from the Effective Time, Parent shall, unless Parent
agrees in writing to guarantee the indemnification obligations set forth in
Section 6.05(a), maintain in effect the Company's current directors' and
officers' liability insurance covering those persons who are currently covered
by the Company's directors' and officers' liability insurance policy (a copy of
which has been heretofore delivered to Parent); provided, however, that in no
event shall Parent be required to expend in any one year an amount in excess of
150% of the annual premiums currently paid by the Company for such insurance
which the Company represents to be $160,000 for the fiscal year ending October
31, 1994; and, provided, further, that if the annual premiums of such insurance
coverage exceed such amount, Parent shall be obligated to obtain a policy with
the greatest coverage available for a cost not exceeding such amount.
(c) 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 assume the obligations set
forth in this Section 6.05. 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 6.05(a) 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.
(d) This Section 6.05 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
SECTION 6.06. Directors. Promptly upon the acceptance for payment of, and
payment for, any shares of Company Common Stock by Sub pursuant to the Offer,
the number of directors on the Board of Directors shall be reduced to five (5)
and Sub shall be entitled to designate three (3) of such number of directors on
the Board of Directors of the Company such that Sub, 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 Sub's designees to be appointed to the Company's Board of
Directors. Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such election, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company agrees to
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make such mailing with the mailing of the Schedule 14D-9 (provided that Sub
shall have provided to the Company on a timely basis all information required to
be included in the Information Statement with respect to Sub's designees).
SECTION 6.07. Fees and Expenses. (a) Except as provided below, all fees
and expenses incurred in connection with the Offer, the Merger, this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fees or expenses, whether or not the Offer or the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to Parent
the sum of (x) all of Parent's out-of-pocket expenses in an amount up to but not
to exceed $2,500,000 (the "Expenses") and (y) $25,000,000 (the "Termination
Fee") upon demand if (i) Parent or Sub terminates this Agreement under Section
8.01(d), (ii) the Company terminates this Agreement pursuant to Section 8.01(e)
or (iii) prior to the termination of this Agreement (other than by the Company
pursuant to Section 8.01(f)), a takeover proposal shall have been made and
within one year of such termination, the Company enters into an agreement with
respect to, approves or recommends or takes any action to facilitate (including
taking action with respect to the Rights Agreement), such takeover proposal. The
amount of Expenses so payable shall be the amount set forth in an estimate
delivered by Parent, subject to upward or downward adjustment (not to be in
excess of the amount set forth in clause (x) above) upon delivery of reasonable
documentation therefor.
SECTION 6.08. 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 the opportunity to review and comment upon, any press release
or other public statements with respect to the transactions contemplated by this
Agreement, including the Offer and the Merger, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with any national securities exchange or
national securities quotation system. 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 6.09. Rights Agreement. The Board of Directors of the Company
shall take all further action (in addition to that referred to in Section
3.01(r)) requested in writing by Parent in order to render the Rights
inapplicable to the Offer, the Merger, the Stockholder Agreement and the other
transactions contemplated by this Agreement and the Stockholder Agreement.
Except as requested in writing by Parent, during the term of this Agreement, the
Board of Directors of the Company shall not (i) amend the Rights Agreement or
(ii) take any action with respect to, or make any determination under, the
Rights Agreement (including a redemption of the Rights) including any action to
facilitate a takeover proposal; provided that any of such actions may be taken
simultaneously with entering into an agreement pursuant to Section 5.02(b).
SECTION 6.10. Benefit Plans. (a) Parent shall cause the Surviving
Corporation to take such actions as are necessary so that, for a period of not
less than one year after the Effective Time, nonunion employees of the Company
and its subsidiaries who continue their employment after the Effective Time will
be provided employee benefits which in the aggregate are at least generally
comparable to those provided to such employees as of the date hereof; provided,
that it is understood that after the Effective Time (x) neither Parent nor the
Surviving Corporation will have any obligation to issue or adopt any plans or
arrangements to provide 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 plan or program, (y) nothing herein shall
require the Surviving Corporation to maintain any particular plan or arrangement
and (z) nothing herein shall prevent or preclude the Surviving Corporation from
continuing any requirements for employee contributions under any employee
benefit plans in the same proportions as the employee-paid portion under such
plans constituted prior to the Effective Time.
(b) It is Parent's current intention that, following the first anniversary
of the Effective Time, Parent will provide employee benefit plans, programs,
arrangements and policies for the benefit of employees of the Company and its
subsidiaries which are at least generally comparable in the aggregate to the
employee benefit plans, programs, arrangements and policies for the benefit of
other employees of Parent and its subsidiaries. In connection therewith, all
service credited to each employee by the Company through the Effective Time (and
by the Surviving Corporation thereafter) would be recognized by Parent for all
purposes, including for
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purposes of eligibility, vesting and benefit accruals under any employee benefit
plan provided by Parent for the benefit of the employees; provided, however,
such service need not be credited to the extent it would result in a duplication
of benefits, including, without limitation, benefit accrual service under
defined benefit plans.
(c) Parent hereby agrees to cause the Surviving Corporation to honor
(without modification) and assume the employment agreements and individual
benefit arrangements listed on Schedule 4.01(i).
SECTION 6.11. Stop Transfer. The Company agrees with, and covenants to
Parent that the Company shall not register the transfer of any certificate
representing any Stockholder's Shares (as defined in the Stockholder Agreement),
unless such transfer is made to Parent or Sub or otherwise in compliance with
the terms of this Agreement and the Stockholder Agreement. The Company hereby
agrees to inscribe upon any and all certificates representing Stockholder's
Shares subject to the Stockholder Agreement and delivered to Parent for
inscription pursuant thereto, the following legend:
"The shares of Common Stock, $.001 par value, of Neutrogena
Corporation represented by this certificate are subject to a Stockholder
Agreement dated as of August 22, 1994, 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 Neutrogena Corporation."
SECTION 6.12. Excess Parachute Payments. Promptly after the date of this
Agreement, the Company will (i) determine the estimated amounts or entitlements
that any person may receive from the Company, the Surviving Corporation or any
of their respective subsidiaries (including cash or property or the vesting of
property) as a result of the transactions contemplated by this Agreement
(including pursuant to any Stock Option or SAR and using assumptions selected in
consultation with Parent), (ii) determine whether and to what extent any such
amounts or entitlements may constitute Excess Parachute Payments and (iii)
provide Parent with the determinations described in clauses (i) and (ii) and the
calculations relating to such determinations, including the "base rate" (as such
term is defined in Section 280G(b) of the Code) of any person described in
clause (i) and the estimated amount of any Excess Parachute Payment to be
received by any person.
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock in accordance with applicable
law and the Company's Certificate of Incorporation; provided that Parent
and Sub shall vote all their shares of Company Common Stock in favor of the
Merger.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect; provided, however, that
each of the parties shall have used reasonable efforts to prevent the entry
of any such injunction or other order and to appeal as promptly as possible
any injunction or other order that may be entered.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
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(b) by either Parent or the Company:
(i) if (x) as a result of the failure, occurrence or existence of
any of the conditions set forth in Exhibit A to this Agreement the Offer
shall have terminated or expired in accordance with its terms without
Sub having accepted for payment any shares of Company Common Stock
pursuant to the Offer or (y) Sub shall not have accepted for payment any
shares of Company Common Stock pursuant to the Offer by December 31,
1994; provided, however, that the right to terminate this Agreement
pursuant to this Section 8.01(b)(i) shall not be available to any party
whose failure to perform any of its obligations under this Agreement
results in the failure, occurrence or existence of any such condition;
(ii) if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action permanently enjoining, restraining
or otherwise prohibiting the acceptance for payment of, or payment for,
shares of Company Common Stock pursuant to the Offer or the Merger and
such order, decree or ruling or other action shall have become final and
nonappealable;
(c) by Parent or Sub prior to the purchase of shares of Company Common
Stock 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 (A) would give rise to the failure of a condition set forth
in paragraph (e) or (f) of Exhibit A and (B) cannot be or has not been
cured within 30 days after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(d) of Exhibit A to this Agreement;
(e) by the Company in connection with entering into a definitive
agreement in accordance with Section 5.02(b), provided it has complied with
all provisions thereof, including the notice provisions therein, and that
it makes simultaneous payment of the Expenses and the Termination Fee; or
(f) by the Company, if Sub or Parent shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which failure to
perform is incapable of being cured or has not been cured within 30 days
after the giving of written notice to Parent or Sub, as applicable, except,
in any case, such failures which are not reasonably likely to affect
adversely Parent's or Sub's ability to complete the Offer or the Merger.
SECTION 8.02. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of Section 4.01(o), Section 4.02(d), the last sentence of Section
6.02, Section 6.07, this Section 8.02 and Article IX and except to the extent
that such termination results from the wilful and material breach by a party of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the parties at
any time before or after any required approval of matters presented in
connection with the Merger by the stockholders of the Company; provided,
however, that after any such approval, there shall not be made any amendment
that by law requires further approval by such stockholders without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 8.04. Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
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SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 8.01, an amendment of this
Agreement pursuant to Section 8.03 or an extension or waiver pursuant to Section
8.04 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 6.06, after the acceptance for payment of shares of Company Common Stock
pursuant to 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 By-laws.
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time or, in the case of
the Company, shall survive the acceptance for payment of, and payment for,
shares of Company Common Stock by Sub pursuant to the Offer. This Section 9.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time of the Merger.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Facsimile: (908) 524-0400
Attention: James R. Utaski
Vice President, Business Development
with copies to:
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Facsimile: (908) 524-2788
Attention: James R. Hilton, Esq.
and
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700
Attention: Robert A. Kindler, Esq.
22
<PAGE> 26
(b) if to the Company, to
Neutrogena Corporation
5760 West 96th Street
Los Angeles, CA 90045
Facsimile: (310) 641-9280
Attention: Lloyd E. Cotsen
Chairman and Chief Executive Officer
with copies to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Facsimile: (212) 735-3638
Attention: James C. Freund, Esq.
and
Blum, Propper & Hardacre
12100 Wilshire Boulevard, Suite 905
Los Angeles, CA 90025
Facsimile: (310) 826-1480
Attention: David W. Hardacre
SECTION 9.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "material adverse change" or "material adverse effect" means, when
used in connection with the Company or Parent, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that is materially adverse to the business,
financial condition or results of operations of such party and its
subsidiaries taken as a whole;
(c) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(d) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board
of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person;
(e) "superior proposal" has the meaning assigned thereto in Section
5.02(b); and
(f) "takeover proposal" has the meaning assigned thereto in Section
5.02(a).
SECTION 9.04. Interpretation. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 9.05. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
23
<PAGE> 27
SECTION 9.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the Confidentiality Agreement constitute the entire agreements,
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter of these agreements and
except for the provisions of Article III and Sections 6.04 and 6.05, are not
intended to confer upon any person other than the parties any rights or remedies
hereunder.
SECTION 9.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
SECTION 9.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations under
this Agreement. 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 9.09. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any 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 by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Federal or state court sitting in the
State of Delaware.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
JOHNSON & JOHNSON,
by /s/ RALPH S. LARSEN
------------------------------------
Name: Ralph S. Larsen
Title: Chairman and Chief Executive
Officer
JNJ ACQUISITION CORP.,
by /s/ RALPH S. LARSEN
------------------------------------
Name: Ralph S. Larsen
Title: Chairman and Chief Executive
Officer
NEUTROGENA CORPORATION,
by /s/ LLOYD E. COTSEN
------------------------------------
Name: Lloyd E. Cotsen
Title: Chairman and Chief Executive
Officer
24
<PAGE> 28
EXHIBIT A
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement,
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange
Act (relating to Sub's obligation to pay for or return tendered shares of
Company Common Stock after the termination or withdrawal of the Offer), to pay
for any shares of Company Common Stock tendered pursuant to the Offer unless,
(i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer such number of shares of Company Common Stock which
(together with shares subject to the Stockholder Agreement that shall not have
been so tendered) would constitute a majority of the outstanding shares of
Company Common Stock (the "Minimum Condition") and (ii) any waiting period
under the HSR Act applicable to the purchase of shares of Company Common Stock
pursuant to the Offer shall have expired or been terminated (the "HSR
Condition"). Furthermore, notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Company Common Stock 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
(other than as a result of any action or inaction of Parent or any of its
subsidiaries which constitutes a breach of this Agreement):
(a) there shall be threatened or pending by any Governmental
Entity any suit, action or proceeding, (i) challenging the acquisition
by Parent or Sub of any shares of Company Common Stock 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 (including the voting
provisions thereunder), or seeking to obtain from the Company, Parent
or Sub any damages that are material in relation to the Company and
its subsidiaries taken as whole, (ii) seeking to prohibit or 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, taken as a whole, or
Parent and its subsidiaries, taken
<PAGE> 29
2
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, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as a result of the Offer or any of the
other transactions contemplated by this 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 of
Company Common Stock accepted for payment pursuant to the Offer or
purchased under the Stockholder Agreement including, without
limitation, the right to vote such Company Common Stock on all matters
properly presented to the stockholders of the Company, (iv) seeking to
prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the
Company and its subsidiaries, taken as a whole, or (v) which otherwise
is reasonably likely to have a material adverse effect on the
business, financial condition or results of 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 applicable waiting periods under the HSR
Act, that is reasonably likely to result, directly or indirectly, in
any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above;
(c) there shall have occurred any material adverse change (or
any development that, insofar as reasonably can be foreseen, is
reasonably likely to result in any material adverse change) in the
business, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Sub its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any takeover proposal or (ii)
the Company shall have entered into
<PAGE> 30
3
any agreement with respect to any superior proposal in accordance with
Section 5.02(b) of this Agreement;
(e) any of the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality shall
not be true and correct and any such representations and warranties
that are not so qualified shall not be true and correct in any
material respect, in each case as of the date of this Agreement and as
of the scheduled expiration of the Offer;
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or covenant of the Company to be performed
or complied with by it under this Agreement;
(g) the Agreement shall have been terminated in accordance
with its terms.
Notwithstanding anything contained herein, no condition
involving (i) performance of agreements by the Company or (ii) the accuracy of
representations and warranties made by the Company (without giving effect to
any "materiality" limitation set forth therein), shall be deemed not fulfilled,
and Parent and Sub shall not be entitled to fail to accept shares of Company
Common Stock for payment or terminate the Offer on such basis, if the respects
in which such agreements have not been performed or the representations and
warranties are inaccurate, in the aggregate, are not materially adverse to the
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
The foregoing conditions are for the sole benefit of Sub and
Parent and may, subject to the terms of the 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.
<PAGE> 1
CONFORMED COPY
STOCKHOLDER AGREEMENT dated as of August 22, 1994, among JOHNSON &
JOHNSON, a New Jersey corporation ("Parent") and the other parties
signatory hereto (each a "Stockholder").
WHEREAS, each Stockholder desires that Neutrogena Corporation, a Delaware
corporation (the "Company"), Parent and JNJ Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Parent ("Sub"), enter into an
Agreement and Plan of Merger dated the date hereof (as the same may be amended
or supplemented, the "Merger Agreement") with respect to the merger of Sub with
and into the Company (the "Merger"); and
WHEREAS, each Stockholder is executing this Agreement as an inducement to
Parent to enter into and execute, and to cause Sub to enter into and execute,
the Merger Agreement;
NOW, THEREFORE, in consideration of the execution and delivery by Parent
and Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
SECTION 1. Representations and Warranties. Each Stockholder severally
represents and warrants to Parent as follows:
(a) Such Stockholder is the record and beneficial owner of, or is
trustee of a trust that is the record holder of, and whose beneficiaries
are the beneficial owners of, the number of shares of Common Stock, par
value $.001 per share, of the Company (the "Company Common Stock") set
forth opposite such Stockholder's name in Schedule A hereto (such
Stockholder's "Shares"). Except for such Stockholder's Shares and any other
shares of Company Common Stock subject hereto, such Stockholder is not the
record or beneficial owner of any shares of Company Common Stock.
(b) This Agreement has been duly authorized, executed and delivered by
such Stockholder and constitutes the legal, valid and binding obligation of
such Stockholder, enforceable against such Stockholder in accordance with
its terms. Neither the execution and delivery of this Agreement nor the
consummation by such Stockholder of the transactions contemplated hereby
will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which such Stockholder is a party or bound or to
which such Stockholder's Shares are subject. No trust of which such
Stockholder is a trustee requires the consent of any beneficiary to the
execution and delivery of this Agreement or to the consummation of the
transactions contemplated hereby. If such Stockholder is married and such
Stockholder's Shares constitute community property, this Agreement has been
duly authorized, executed and delivered by, and constitutes a valid and
binding agreement of, such Stockholder's spouse, enforceable against such
person in accordance with its terms. Consummation by such Stockholder of
the transactions contemplated hereby will not violate, or require any
consent, approval, or notice under, any provision of any judgment, order,
decree, statute, law, rule or regulation applicable to such Stockholder or
such Stockholder's Shares, except for any necessary filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976.
(c) Such Stockholder's Shares and the certificates representing such
Shares are now and at all times during the term hereof will be held by such
Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any such encumbrances or proxies
arising hereunder or under the existing terms of a trust of which such
Stockholder is the trustee.
(d) No broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar
fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of such Stockholder.
<PAGE> 2
(e) Such Stockholder understands and acknowledges that Parent is
entering into, and causing Sub to enter into, the Merger Agreement in
reliance upon such Stockholder's execution and delivery of this Agreement.
Such Stockholder acknowledges that the irrevocable proxy set forth in
Section 4 is granted in consideration for the execution and delivery of the
Merger Agreement by Parent and Sub.
SECTION 2. Purchase and Sale of Shares. Each Stockholder hereby severally
agrees to sell to Sub, and Sub hereby agrees to purchase, all Shares set forth
opposite such Stockholder's name on Schedule A hereto, at a price per share
equal to the price paid in the Offer; provided that such obligation to sell and
such obligation to purchase is subject to Sub having accepted Shares for payment
under the Offer and the Minimum Condition having been satisfied. Such
Stockholder may tender such Shares into the Offer and Sub may direct that such
Stockholder tender such Shares. Any Shares not purchased in the Offer will be
purchased at the same time as payment is made under the Offer.
SECTION 3. Covenants. Each Stockholder severally agrees with, and
covenants to, Parent and, with respect to paragraph (c) below, each beneficiary
of any revocable trust for which any Stockholder serves as trustee, agrees with
and covenants to Parent, as follows:
(a) Such Stockholder shall not, except as contemplated by the terms of
this Agreement, (i) transfer (which term shall include, without limitation,
for the purposes of this Agreement, any sale, gift, pledge or other
disposition), or consent to any transfer of, any or all of such
Stockholder's Shares or any interest therein, (ii) enter into any contract,
option or other agreement of understanding with respect to any transfer of
any or all of such Shares or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
(iv) deposit such Shares into a voting trust or enter into a voting
agreement or arrangement with respect to such Shares or (v) take any other
action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated
hereby.
(b) Subject to Section 8, such Stockholder shall not, nor shall it
permit any investment banker, attorney or other adviser or representative
of such Stockholder to, directly or indirectly, (i) solicit, initiate or
encourage the submission of, any takeover proposal or (ii) participate in
any discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any takeover proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by an investment banker, attorney or other
adviser or representative of such Stockholder, whether or not such person
is purporting to act on behalf of such Stockholder or otherwise, shall be
deemed to be a violation of this Section 3(b) by such Stockholder.
(c) Such Stockholder, and any beneficiary of a revocable trust for
which such Stockholder serves as trustee, shall not take any action to
revoke or terminate such trust or take any other action which would
restrict, limit or frustrate in any way the transactions contemplated by
this Agreement. Each such beneficiary hereby acknowledges and agrees to be
bound by the terms of this Agreement applicable to it.
(d) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, such Stockholder shall vote (or cause
to be voted) such Stockholder's Shares against (i) any merger agreement or
merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, joint venture,
recapitalization, dissolution, liquidation or winding up of or by the
Company and (ii) any amendment of the Company's Certificate of
Incorporation or By-laws or other proposal or transaction involving the
Company or any of its subsidiaries which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify, or
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under or with respect to, the Offer,
the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement (each of the foregoing in clause (i)
or (ii) above, a "Competing Transaction").
SECTION 4. Grant of Irrevocable Proxy; Appointment of Proxy. (a) Each
Stockholder hereby irrevocably grants to, and appoints, Parent and James R.
Utaski, James R. Hilton and Peter S. Galloway, in
2
<PAGE> 3
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 Shares, or grant a consent or approval in respect of such Shares
against any Competing Transaction.
(b) Such Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) Such Stockholder hereby affirms that the irrevocable proxy set forth in
this Section 4 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Stockholder under this Agreement. Such Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. Such Stockholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 212(e) of the Delaware General
Corporation Law (the "DGCL").
SECTION 5. Certain Events. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation such Stockholder's heirs, guardians, administrators or successors. In
the event of any stock split, stock dividend, merger, reorganization,
recapitalization or other change in the capital structure of the Company
affecting the 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 Shares listed in Schedule A beside the name of such
Stockholder shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Company Common
Stock or other voting securities of the Company issued to or acquired by such
Stockholder.
SECTION 6. Legend. Each Stockholder agrees that such Stockholder will
deliver to the Company, within 5 business days after the date hereof, any and
all certificates representing such Stockholder's Shares in order that the
Company may inscribe upon such certificates the following legend: "The shares of
Common Stock, $.001 par value, of Neutrogena Corporation represented by this
certificate are subject to a Stockholder Agreement dated as of August 22, 1994,
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
Neutrogena Corporation."
SECTION 7. Voidability. If prior to the execution hereof, the Board of
Directors of the Company shall not have duly and validly authorized and approved
by all necessary corporate action, this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby, so that by the execution and
delivery hereof (a) Parent or Sub would become, or could reasonably be expected
to become an "interested stockholder" with whom the Company would be prevented
for any period pursuant to Section 203 of the DGCL or the Certificate of
Incorporation of the Company from engaging in any "business combination" (as
such terms are defined in Section 203 of the DGCL) or (b) the issuance of Rights
(as defined in the Rights Agreement) in accordance with the Rights Agreement
would be triggered, then this Agreement shall be void and unenforceable until
such time as such authorization and approval shall have been duly and validly
obtained.
SECTION 8. Stockholder Capacity. No person executing this Agreement who is
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each Stockholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, such Stockholder's Shares and nothing herein shall
limit or affect any actions taken by a Stockholder in its capacity as an officer
or director of the Company to the extent specifically permitted by the Merger
Agreement.
SECTION 9. Further Assurances. Each Stockholder shall, upon request of
Parent, execute and deliver any additional documents and take such further
actions as may reasonably be deemed by Parent to be
3
<PAGE> 4
necessary or desirable to carry out the provisions hereof and to vest the power
to vote such Stockholder's Shares as contemplated by Section 4 in Parent and the
other irrevocable proxies described therein.
SECTION 10. Termination. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the first to occur of (i) the
Effective Time of the Merger or (ii) the date upon which the Merger Agreement is
terminated in accordance with its terms.
SECTION 11. Miscellaneous. (a) Capitalized terms used and not otherwise
defined in this Agreement shall have the respective meanings assigned such terms
in the Merger Agreement.
(b) All notices, request, claims, demands and other communications under
this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice): (i) if to Parent, to the address set forth
in Section 9.02 of the Merger Agreement; and (ii) if to a Stockholder, to the
address set forth in Schedule A hereto, or such other address as may be
specified in writing by such Stockholder.
(c) 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.
(d) This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
as to any Stockholder when one or more counterparts have been signed by each of
Parent and such Stockholder and delivered to Parent and such Stockholder.
(e) This Agreement (including the documents and instruments referred to
herein) 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.
(f) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation of law
or otherwise, by any of the parties without the prior written consent of the
other parties, except by laws of descent.
(h) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
(i) Each Stockholder agrees that irreparable damage would occur and that
Parent would not have any adequate remedy at law 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 Parent
shall be entitled to an injunction or injunctions to prevent breaches by any
Stockholder 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 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 and (iii) agrees that such party will not
bring any action relating to this Agreement of 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.
(j) No amendment, modification or waiver in respect of this Agreement shall
be effective against any party unless it shall be in writing and signed by such
party.
4
<PAGE> 5
IN WITNESS WHEREOF, Parent and the Stockholders have caused this Agreement
to be duly executed and delivered as of the date first written above.
<TABLE>
<S> <C>
JOHNSON & JOHNSON,
by /s/ RALPH S. LARSEN
--------------------------------------------
Name: Ralph S. Larsen
Title: Chairman and Chief Executive Officer
LLOYD E. COTSEN, TRUSTEE OF THE COTSEN 1985
TRUST,
by /s/ LLOYD E. COTSEN
--------------------------------------------
Name: Lloyd E. Cotsen
Title: Trustee
LLOYD E. COTSEN, TRUSTEE OF THE FIRST COTSEN
CHARITABLE UNITRUST,
by /s/ DASHA LEWIN
--------------------------------------------
Name: Dasha Lewin
Title: Special Trustee
LLOYD E. COTSEN, TRUSTEE OF THE SECOND COTSEN
CHARITABLE UNITRUST,
by /s/ DASHA LEWIN
--------------------------------------------
Name: Dasha Lewin
Title: Special Trustee
LLOYD E. COTSEN, TRUSTEE OF THE THIRD COTSEN
CHARITABLE UNITRUST,
by /s/ DASHA LEWIN
--------------------------------------------
Name: Dasha Lewin
Title: Special Trustee
LLOYD E. COTSEN, TRUSTEE OF THE FOURTH COTSEN
CHARITABLE UNITRUST,
by /s/ DASHA LEWIN
--------------------------------------------
Name: Dasha Lewin
Title: Special Trustee
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C>
LLOYD E. COTSEN, TRUSTEE OF THE REMAINDER TRUST
(TRUST B) UNDER THE WILL OF JOANNE COTSEN,
DECEASED,
by /s/ LLOYD E. COTSEN
--------------------------------------------
Name: Lloyd E. Cotsen
Title: Trustee
COTSEN FAMILY FOUNDATION, A CALIFORNIA
NON-PROFIT PUBLIC BENEFIT CORP.,
by /s/ DASHA LEWIN
--------------------------------------------
Name: Dasha Lewin
Title: Chief Financial Officer and Secretary
</TABLE>
6
<PAGE> 7
FORM OF SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF SHARES
STOCKHOLDER NATURE OF OWNERSHIP SHARES OWNED OUTSTANDING
----------- ------------------- ------------ --------------------
<S> <C> <C> <C>
Lloyd E. Cotsen, Record & Beneficial 2,509,850 9.8%
Trustee of the Cotsen 1985 Trust
*Lloyd E. Cotsen, Record & Beneficial 148,000 .58%
Trustee of The First Cotsen
Charitable Unitrust
*Lloyd E. Cotsen, Record & Beneficial 148,000 .58%
Trustee of The Second Cotsen
Charitable Unitrust
*Lloyd E. Cotsen, Record & Beneficial 148,000 .58%
Trustee of The Third Cotsen
Charitable Unitrust
*Lloyd E. Cotsen, Record & Beneficial 1,436,733 5.6%
Trustee of The Fourth Cotsen
Charitable Unitrust
Lloyd E. Cotsen, Record & Beneficial 3,808,413 14.8%
Trustee of the Remainder Trust
(Trust B) under The Will of
JoAnne Cotsen, Deceased
Cotsen Family Foundation, Record 1,670,000 6.5%
a California Non-Profit
Public Benefit Corp.
</TABLE>
- ---------------
* Executed by Dasha Lewin, Special Trustee.
7
<PAGE> 1
NEUTROGENA CORP.
5760 W. 96TH STREET
LOS ANGELES, CALIFORNIA 90045
Dated as of August 15, 1994
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Ladies and Gentlemen:
In connection with your consideration of a possible business combination
transaction with Neutrogena Corp. ("the Company"), you have requested
information concerning the Company. As a condition to your being furnished such
information, you agree to treat any information which is furnished to you by or
on behalf of the Company, whether furnished before or after the date of this
letter agreement (herein collectively referred to as the "Evaluation Material")
in accordance with the provisions of this agreement. The term "Evaluation
Material" does not include information which (i) becomes generally available to
the public other than as a result of disclosure by you or your directors,
officers, employees, advisors, agents, subsidiaries, affiliates or
representatives (who are collectively referred to herein as your
"Representatives") or (ii) becomes available to you on a nonconfidential basis
from a source other than the Company or its advisors, provided that such source
is not, to your knowledge, bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of secrecy to the Company or another
party. The fact that information included in the Evaluation Material is or
becomes otherwise available to you and your Representatives pursuant to clauses
(i) or (ii) above shall not relieve you or your Representatives of the
prohibitions of paragraph 4 below or, with respect to the balance of the
Evaluation Material, the other provisions of this letter agreement.
1. You agree that for a period of three years from the date hereof the
Evaluation Material will be used solely for the purpose of evaluating a possible
transaction between the Company and you and not for any other purpose
whatsoever. You also agree that you and your Representatives will keep
confidential and not disclose any of the Evaluation Material, except that any
such information may be disclosed to your Representatives specifically involved
in evaluating and planning the possible transaction with the Company who need to
know such information for the sole purpose of evaluating a possible transaction
with the Company and who agree to keep such information confidential as provided
in this letter agreement. You agree to be responsible for any breach of this
letter agreement by your Representatives.
2. In the event that you or any of your Representatives become legally
compelled (by oral question or request for information or documents in a legal
proceeding, deposition, interrogatory, subpoena, civil investigative demand or
similar process) to disclose any Evaluation Material, you shall provide the
Company with prompt prior written notice of such request or requirement so that
the Company may seek a protective order or other appropriate remedy and/or waive
compliance with the terms of this letter agreement. In the event that such
protective order or other remedy is not obtained, or that the Company waives
compliance with the provisions hereof, you agree to furnish only that portion of
the information and/or Evaluation Material which you are advised by written
opinion of counsel is legally required and to use reasonable efforts to obtain
assurance that confidential treatment will be accorded such information and/or
Evaluation Material.
3. You understand and agree that none of the Company or its directors,
officers, partners, stockholders, employees, advisors or agents is making any
representation as to the accuracy or completeness of the Evaluation Material,
and none of the Company or its directors, officers, partners, stockholders,
employees, advisors or agents shall have any liability to you, your
Representatives or any affiliate of such persons resulting from the use of the
Evaluation Material by you or such persons. Only those representations or
warranties that are made to a purchaser in a definitive agreement providing for
a transaction with the Company as contemplated by this letter agreement (a
"Definitive Agreement") when, as and if it is executed, and subject
<PAGE> 2
to such limitations and restrictions as may be specified in such Definitive
Agreement, will have any legal effect.
4. You hereby acknowledge that the Evaluation Material is being furnished
to you in consideration of your agreement that you (including any person or
entity directly or indirectly, through one or more intermediaries, controlling
you or controlled by you or under common control with you), acting alone or as
part of any group, will not for a period of eighteen (18) months from the date
of this letter agreement, without the prior written consent of the Company: (i)
in any manner acquire, agree to acquire or make any proposal to acquire,
directly or indirectly, any securities of the Company or any of its
subsidiaries, (ii) propose to enter into, directly or indirectly, any tender or
exchange offer, merger or business combination involving the Company or any of
its subsidiaries or to purchase, directly or indirectly, a material portion of
the assets of the Company or any of its subsidiaries, (iii) propose to effect
any recapitalization, restructuring, liquidation, dissolution or other similar
transaction with respect to the Company or its subsidiaries, (iv) make, or in
any way participate, directly or indirectly, in any "solicitation" of "proxies"
(as such terms are used under the proxy rules of the Securities and Exchange
Commission) to vote, or seek to advise or influence any person with respect to
the voting of, any securities of the Company or any of its subsidiaries, (v)
form, join or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) with respect to any
securities of the Company or any of its subsidiaries, (vi) otherwise act, alone
or in concert with others, to seek to control or influence the management, Board
of Directors or policies of the Company, (vii) disclose any intention, plan or
arrangement inconsistent with the foregoing or (viii) advise, assist or
encourage any other persons in connection with any of the foregoing. You also
agree during such period not to (i) request the Company (or its directors,
officers, employees or agents), directly or indirectly, to amend or waive any
provision of this paragraph 4 (including without limitation this sentence) or
(ii) take any action which might require the Company to make a public
announcement regarding the possibility of a business combination or similar
transaction. This paragraph 4 shall terminate the earlier of (x) the Company
entering into of a Definitive Agreement with you and (y) such time as the
Company shall have entered into an agreement in principle or Definitive
Agreement with respect to, or shall otherwise have recommended or approved, any
transaction referred to in clauses (ii) and (iii) above.
5. Without the prior written consent of the Company, neither you nor your
Representatives will, and you will direct your Representatives not to, disclose
to any person either the fact that any investigations, discussions or
negotiations are taking place concerning a possible transaction between the
Company and you, or that you have requested or received Evaluation Material, or
any of the terms, conditions or other facts with respect to any such possible
transaction, including without limitation the status thereof. The term "person"
as used in this letter agreement will be interpreted broadly to include without
limitation any corporation, company, partnership or individual.
6. At any time upon the Company's request, you will promptly deliver to the
Company or destroy all written Evaluation Material and any other written
material containing or reflecting any information in the Evaluation Material
(whether prepared by the Company, its advisors or otherwise) and will not retain
any copies, extracts or other reproductions in whole or in part of such written
material. All documents, memoranda, notes and other writings whatsoever prepared
by you or your Representatives based on the information in the Evaluation
Material shall be destroyed, and such destruction shall be certified in writing
to the Company by an authorized officer supervising such destruction.
7. You recognize and acknowledge the competitive and confidential nature of
the Evaluation Material and that irreparable damage will result to the Company
if information contained therein or derived therefrom is disclosed to any third
party except as herein provided. You and your Representatives agree that money
damages would not be a sufficient remedy for any breach of this agreement by you
or your Representatives and that, without limiting any other available remedies,
the Company shall be entitled to an injunction and other equitable relief in the
event of any failure to comply with the provisions of this letter agreement.
8. Under no circumstances shall any officer, director or employee of the
company be contacted directly. All contact with the company shall be made
through David W. Hardacre, Esq., Blum, Propper & Hardacre, 12100 Wilshire
Boulevard, Suite 950, Los Angeles, California 90025, telephone (310) 826-7900.
2
<PAGE> 3
9. You agree that except as otherwise provided in a Definitive Agreement,
neither the Company nor you will be under any legal obligation of any kind
whatsoever with respect to any possible transaction referred to in the first
paragraph of this letter agreement by virtue of this or any written or oral
expression with respect to such transaction by the Company or any of its
directors, officers, employees, advisors or agents or any other representatives
of such persons except, in the case of this letter agreement, for the matters
specifically agreed to herein. You further understand that you shall not have
any claims whatsoever against the Company or any of its directors, officers,
partners, stockholders, employees, advisors or agents arising out of or relating
to such transaction (other than those as against the parties to a Definitive
Agreement with you in accordance with the terms thereof).
10. It is understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise of any right, power or privilege. The agreements set forth
herein may only be waived or modified by an agreement in writing signed on
behalf of the parties hereto. This letter agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
11. The Company agrees that should it enter into a confidentiality or
similar agreement with provisions that are less restrictive than those set forth
in this letter agreement, it shall give notice thereof to you and a copy of such
less restrictive provisions, and this letter agreement will be deemed to be
amended so that you have the benefit of such less restrictive provisions.
12. This letter agreement is for the benefit of the Company and shall be
governed by the laws of the State of Delaware without regard to principles of
conflicts of law thereof.
Please acknowledge your agreement to the foregoing by countersigning this
letter in the space provided below, whereupon this letter agreement will
constitute our entire agreement with respect to the subject matter hereof.
Yours very truly,
NEUTROGENA CORP.
By /s/ LLOYD E. COTSEN
------------------------------------
Name: Lloyd E. Cotsen
Title: Chairman and Chief Executive
Officer
RECEIVED AND AGREED TO:
JOHNSON & JOHNSON
By /s/ JAMES R. UTASKI
-------------------------------------------------------
Name: James R. Utaski
Title: V.P. Corp. Development
3
