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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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ISOMEDIX INC.
(Name of Subject Company)
ISOMEDIX INC.
(Name of Person Filing Statement)
COMMON STOCK, $.01 PAR VALUE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
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464890102
(CUSIP Number of Class of Securities)
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JOHN MASEFIELD
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ISOMEDIX INC.
11 APOLLO DRIVE
WHIPPANY, NEW JERSEY 07981
(201) 887-4700
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person Filing Statement)
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Copy to:
JOHN J. BUTLER, ESQ.
HAYTHE & CURLEY
237 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 880-6000
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Schedule 14D-9") relates to an offer by STERIS Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of STERIS Corporation, an
Ohio corporation, to purchase all of the Shares (as defined below) of Isomedix
Inc., a Delaware corporation.
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Isomedix Inc., a Delaware corporation
(the "Company"). The address of the principal executive office of the Company is
11 Apollo Drive, Whippany, New Jersey 07981. The title of the class of equity
securities to which this Schedule 14D-9 relates is the Common Stock, $.01 par
value, of the Company and the associated Preferred Stock Purchase Rights
(together with such Rights, the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule 14D-9 relates to the tender offer (the "Offer") disclosed in
the Schedule 14D-1 dated August 18, 1997 (as amended or supplemented, the
"Schedule 14D-1") filed with the Securities and Exchange Commission (the
"Commission") by STERIS Corporation, an Ohio corporation (the "Parent"), and
STERIS Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of the Parent (the "Purchaser"), relating to an offer by the
Purchaser to purchase all outstanding Shares at a price of $20.50 per Share, net
to the seller in cash, without interest (the "Offer Price"), upon the terms and
subject to the conditions set forth therein. The principal executive offices of
each of the Parent and the Purchaser are located at 5960 Heisley Road, Mentor,
Ohio 44060.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 12, 1997 (the "Merger Agreement"), by and among the Company, the
Parent and the Purchaser. A copy of the Merger Agreement is filed as Exhibit
(c)(1) to this Schedule 14D-9 and is incorporated herein by reference. The
Merger Agreement provides that, among other things, as soon as practicable after
the purchase of Shares pursuant to the Offer and the satisfaction or waiver of
the other conditions set forth in the Merger Agreement and in accordance with
the General Corporation Law of the State of Delaware (the "Delaware Law" or the
"DGCL"), the Purchaser will be merged with the Company (the "Merger"). Following
consummation of the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and will be a wholly owned subsidiary
of the Parent. At the effective time of the Merger (the "Effective Time"), each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares held by the Company as treasury shares, or owned by the Purchaser, by the
Parent, or any other subsidiary of the Parent or Shares held by shareholders who
shall have demanded and perfected appraisal rights, if any, under the Delaware
Law) will be canceled and converted automatically into the right to receive an
amount in cash equal to the price per Share paid pursuant to the Offer, without
interest (the "Merger Consideration"). The Merger Agreement is summarized in
Item 3 of this Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Schedule 14D-9, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements, and understandings known
to the Company between the Company or its affiliates and (i) certain of the
Company's executive officers, directors or affiliates or (ii) certain of the
Parent's executive officers, directors or affiliates are described in the
Information Statement of the Company attached to this Schedule 14D-9 as Annex A
(the "Information Statement"). Other such contracts, arrangements, and
understandings known to the Company are described below. The Information
Statement is being furnished to the Company's shareholders pursuant to Section
14(f) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 14f-1
under the Exchange Act in connection with the Purchaser's right (after
consummation of the Offer) to designate persons to be appointed as directors of
the Company otherwise than at a meeting of the shareholders of the Company,
which directors would constitute a
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majority of the Board of Directors of the Company. The Information Statement is
incorporated herein by reference.
INDEMNIFICATION AGREEMENTS AND DIRECTOR LIABILITY
Article Seventh of the Certificate of Incorporation of the Company (the
"Certificate") provides that the Company shall indemnify each person who is or
is threatened to be made a party to any action, suit or proceeding by reason of
the fact that he is or was a director, officer, employee, or agent of the
Company or because he was serving any other legal entity as a director, officer,
member, trustee, employee, or agent at the request of the Company; provided that
a determination is made in connection therewith that (a) such person acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Company and (b) with respect to any criminal
proceeding, such person was without reasonable cause to believe that his conduct
was unlawful. Expenses incurred by any such person in connection with a
proceeding may be paid by the Company in advance of the final disposition of the
proceeding upon receipt of an undertaking by or on behalf of such person to
repay the amounts advanced by the Company if it shall be ultimately determined
that he is not entitled to be indemnified by the Company. The Certificate
further provides that the indemnification and advancement of expenses provided
for therein shall not be deemed exclusive of any other rights to which those
entitled to indemnification or advancement of expenses may be entitled under any
bylaw, agreement, contract or vote of shareholders or disinterested directors or
pursuant to the direction (however embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
The Company has entered into indemnification agreements with all directors
and executive officers of the Company. These agreements provide that the
directors and executive officers will be indemnified to the fullest possible
extent permitted by the Delaware Law against all expenses (including attorneys'
fees), judgments, fines, penalties, taxes, and settlement amounts paid or
incurred by them in any action or proceeding, including any action by or in the
right of the Company or any of its subsidiaries or affiliates, on account of
their service as directors, officers, employees, fiduciaries, or agents of the
Company or any of its subsidiaries or affiliates, and their service at the
request of the Company or any of its subsidiaries or affiliates as directors,
officers, employees, fiduciaries, or agents of another corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise. The
indemnification agreements also provide that, if requested by a director or
executive officer, the Company will advance to or pay on behalf of such director
or executive officer any and all expenses relating to any such action or
proceeding, upon receipt of a written undertaking by such director or executive
officer to repay any such expenses in the event of a final nonappealable
determination, adjudication, or judgment that such director or executive officer
is not entitled to indemnification.
Article Nineteenth of the Certificate provides that a director of the
Company shall not be personally liable to the Company or to its shareholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for the unlawful
payment of dividends or unlawful stock purchases under Section 174 of the
Delaware Law, or (iv) for any transaction from which the director derived any
improper personal benefit. If the Delaware Law is amended to authorize a further
elimination or limitation of the personal liability of directors, then the
liability of a director of the Company shall be eliminated or limited to the
fullest extent permitted by the Delaware Law, as so amended.
The Company maintains liability insurance for its officers and directors,
insuring them against certain losses arising from claims or charges made against
them while acting in their capacities as officers or directors of the Company.
The Merger Agreement provides that, from and after the Effective Time, the
Parent and the Surviving Corporation will jointly and severally indemnify,
defend, and hold harmless the present and former directors and officers of the
Company and each of its subsidiaries against all losses, claims, damages, and
liabilities and
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amounts paid in settlement in connection with any claim, action, suit,
proceeding, or investigation, whether civil, criminal, administrative, or
investigative, to which any of them was or is a party or is threatened to be
made a party by reason of the fact that he or she was or is a director or
officer of the Company or any of its subsidiaries in respect of acts or
omissions occurring at or prior to the Effective Time to the fullest extent that
the Company or such subsidiary would have been permitted to indemnify such
person under applicable law and the certificate of incorporation and bylaws of
the Company or such subsidiary in effect on the date of the Merger Agreement.
The Parent has also agreed to use all reasonable efforts to, without any lapse
in coverage, either (i) for at least six years after the Effective Time, provide
directors' and officers' liability insurance ("D&O Insurance") in respect of
acts or omissions occurring at or prior to the Effective Time covering each
person currently covered by the Company's D&O Insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date of the Merger Agreement; provided that, the Parent will not
be required to pay per annum more than 150% of the last premium (annualized)
paid by the Company for such policy prior to the date of the Merger Agreement,
(ii) purchase tail insurance in respect of the Company's existing D&O Insurance
for six years for a premium not to exceed the amount of the customary premium
for such tail insurance, or (iii) if such D&O Insurance or tail insurance is
only available at premiums in excess of the premiums set forth in clauses (i) or
(ii), as applicable, then purchase the highest level of D&O Insurance or tail
insurance available at such applicable premium. The rights of such directors and
officers of the Company under the foregoing provision of the Merger Agreement
are in addition to any rights they may have under the certificate of
incorporation and bylaws of the Surviving Corporation or any of its subsidiaries
or under any indemnification agreements with the Company or any of its
subsidiaries.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement. The summary is
qualified in its entirety by reference to the Merger Agreement, which has been
filed as an exhibit to this Schedule 14D-9 and is incorporated herein by
reference.
The Tender Offer. Pursuant to the terms of the Merger Agreement, the
Purchaser has agreed to, and the Parent has agreed to cause the Purchaser to,
offer to purchase each outstanding Share tendered pursuant to the Offer at a
price of $20.50 per share, net to the seller in cash, and to cause the Offer to
remain open until September 16, 1997. At the Company's request, the Purchaser
will, and the Parent will cause the Purchaser to, extend the expiration date of
the Offer from time to time for up to an aggregate of ten business days
following the Expiration Date if the Minimum Condition (as defined under
"Certain Conditions to the Offer" below) is not fulfilled prior to 5:00 p.m. on
the Expiration Date. The Purchaser will not decrease the price payable in the
Offer, change the form of consideration payable in the Offer, reduce the number
of Shares subject to the Offer, change the conditions to the Offer (the "Offer
Conditions"), impose additional conditions to its obligation to consummate the
Offer and to accept for payment and purchase Shares tendered in the Offer, or
change any other terms of the Offer in a manner adverse to the shareholders of
the Company, except that the Purchaser may extend the Expiration Date to the
extent required by applicable law or if the Offer Conditions are not satisfied.
The Parent has further agreed that, in the event that it would otherwise be
entitled to terminate the Offer at any scheduled expiration thereof due to the
failure of certain Offer Conditions, not including the Minimum Condition, to be
satisfied or waived and it is reasonably likely that such failure can be cured
on or before October 14, 1997, it will give the Company notice thereof and, at
the request of the Company, extend the Offer until the earlier of (1) such time
as such condition is or conditions are satisfied or waived and (2) the date
chosen by the Company which shall not be later than the earlier of (x) October
14, 1997 or (y) the earliest date on which the Company reasonably believes such
condition or conditions will be satisfied; provided that, if such condition or
conditions are not satisfied by any date chosen by the Company pursuant to this
clause (y), the Company may request further extensions of the Offer not beyond
October 14, 1997.
The Company has agreed to include in this Schedule 14D-9 a recommendation
by the Company's Board of Directors that the Company's shareholders accept the
Offer and tender their Shares pursuant to the Offer. The Company's Board of
Directors has resolved to recommend that the Company's shareholders accept the
Offer and tender their Shares pursuant to the Offer and has received an opinion
from Donaldson, Lufkin &
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Jenrette Securities Corporation that, as of the date of such opinion, the
consideration to be received by the shareholders of the Company pursuant to the
Offer and the Merger is fair to such shareholders from a financial point of
view.
Board Designees. The Merger Agreement provides that promptly following the
purchase by the Purchaser pursuant to the Offer of that number of Shares which,
when aggregated with the Shares then owned by the Parent and any of its
affiliates, represents at least a majority of the Shares then outstanding on a
fully diluted basis, the Company will, if requested by the Purchaser or the
Parent, take all actions necessary to cause persons designated by the Purchaser
to become directors of the Company so that the total number of directors so
designated equals the product, rounded up to the next whole number, of (i) the
total number of directors of the Company multiplied by (ii) the ratio of the
number of Shares beneficially owned by the Purchaser or its affiliates at the
time of such purchase over the number of Shares then outstanding. In furtherance
thereof, the Company will take whatever action is necessary, including but not
limited to amending the Company's bylaws to increase the size of its Board of
Directors, or using reasonable efforts to secure the resignation of directors,
or both, as is necessary to permit that number of the Purchaser's designees to
be elected to the Company's Board of Directors; provided that, prior to the
Effective Time (as defined below), the Company's Board of Directors will always
have at least two members who are not officers, designees, shareholders, or
affiliates of the Purchaser (the "Independent Directors"). All of the
Independent Directors will be individuals who are currently directors of the
Company, except to the extent that no such individuals wish to be directors. The
Company's obligations to appoint designees to its Board of Directors will be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Parent and the Purchaser will supply to the Company and will be
solely responsible for any information with respect to either of them and their
nominees, officers, directors, and affiliates required by Section 14(f) and Rule
14f-1. The Company will promptly take all actions required pursuant to Section
14(f) and Rule 14f-1 in order to fulfill these obligations and (provided that
the Purchaser shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
the Purchaser's designees) will include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1. Following the election or appointment of the
Purchaser's designees, any amendment to the Merger Agreement, any termination of
the Merger Agreement by the Company, any extension by the Company of the time
for the performance of any of the obligations of the Purchaser or the Parent
under the Merger Agreement, any recommendation to shareholders or any
modification or withdrawal of any such recommendation, the retention of counsel
and other advisors in connection with the transactions contemplated hereby, or
any waiver of any of the Company's rights under the Merger Agreement will
require the concurrence of a majority of the Independent Directors, unless no
individuals who are currently directors of the Company wish to be directors.
The Merger. Pursuant to the terms of the Merger Agreement, the Purchaser
will be merged with and into the Company in accordance with the DGCL. As a
result, the separate existence of the Purchaser will cease and the Company will
be the surviving corporation (the "Surviving Corporation"). As soon as
practicable after satisfaction or waiver of all conditions to the Merger set
forth in the Merger Agreement, the parties will cause a certificate of merger to
be duly filed with the Delaware Secretary of State. The Merger will become
effective at the Effective Time.
By virtue of the Merger, at the Effective Time: (i) each share of common
stock of the Purchaser then issued and outstanding will be converted into one
Share of the Surviving Corporation; and (ii) each Share then issued and
outstanding, except for Shares held by the Company as treasury shares or owned
by the Parent or any subsidiary of the Parent (which Shares will be immediately
canceled and no payment will be made with respect thereto) will be converted
into the right to receive, without interest, an amount in cash equal to the
price per Share paid in the Offer (the "Merger Consideration"). Subject to the
right of shareholders to dissent from the Merger and require appraisal of their
Shares pursuant to the DGCL, from and after the Effective Time all Shares will
be canceled and retired and cease to exist and each holder of a certificate
representing any Shares immediately prior to the Effective Time will thereafter
cease to have any rights with respect to such Shares, except the right to
receive the Merger Consideration therefor.
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Until amended in accordance with applicable law, the certificate of
incorporation and bylaws of the Purchaser in effect immediately prior to the
Effective Time will be the certificate of incorporation and bylaws of the
Surviving Corporation after the consummation of the Merger. Until successors are
duly elected or appointed and qualified in accordance with applicable law, from
and after the Effective Time, the directors and officers of the Purchaser
immediately prior to the Effective Time will be the directors and officers of
the Surviving Corporation after the consummation of the Merger.
Stock Options. At the Effective Time, each outstanding option or warrant
(a "Company Option") to purchase Shares, whether or not exercisable, granted
under any employee stock option plan, warrant plan for directors, or incentive
plan of the Company will be canceled and converted into the right to receive,
without interest, an amount in cash (the "Cash Payment") equal to the product of
(i) the number of Shares subject to the Company Option and (ii) the excess of
(a) the Merger Consideration over (b) the exercise price per share of the
Company Option; provided that, with respect to any Person subject to Section 16
of the Exchange Act, any such amount shall be paid, without interest, as soon as
practicable after the first date payment can be made without liability of such
Person under Section 16(b) of the Exchange Act. Each holder of a Company Option,
whether or not exercisable, shall have the right, exercisable at any time prior
to the expiration of the Offer by written notice to the Company and the Parent,
to elect to receive from the Company the Cash Payment, without interest, in
exchange for cancellation of such Company Option effective upon the date the
Cash Payment is made, provided that no such holder shall be entitled to receive
the Cash Payment unless the Minimum Condition has been met and the Purchaser has
purchased Shares pursuant to the Offer. All Cash Payments shall be made within
two business days of the payment for Shares pursuant to the Offer.
Representations and Warranties of the Company. In the Merger Agreement,
the Company has made customary representations and warranties to the Purchaser
and the Parent, including, but not limited to, representations and warranties
relating to the following: the organization and qualifications of the Company
and its subsidiaries; the authority of the Company to enter into and perform its
obligations under the Merger Agreement and carry out the related transactions;
required consents and approvals; the capitalization of the Company and its
subsidiaries; filings made by the Company with the Commission; the accuracy of
the Company's consolidated financial statements; the absence of certain changes
or developments since March 31, 1997; litigation; necessary permits; product
warranties and liabilities; labor and employee benefit matters; taxes; FDA and
nuclear regulatory matters; intellectual property rights; environmental matters;
finders and investment bankers; insurance; indemnification; board approval and
recommendation; shareholder approval; opinion of a financial advisor; state
takeover statutes; documents supplied, filed or distributed by the Company
relating to the Offer; and real and personal property.
Representations and Warranties of the Parent and the Purchaser. The Parent
and the Purchaser have also made customary representations and warranties in the
Merger Agreement, including, but not limited to, representations and warranties
relating to the following: the organization of the Parent and the Purchaser; the
authority of each of the Parent and the Purchaser to enter into and perform its
obligations under the Merger Agreement and carry out the related transactions;
required consents and approvals; filings made by the Parent with the Commission;
the accuracy of the Parent's consolidated financial statements; litigation;
shareholder approval; availability of sufficient funds to consummate the Offer;
documents supplied, filed or distributed by the Parent or the Purchaser relating
to the Offer; finders and investment bankers; board approval; prior activities
of the Purchaser; and the absence of fraudulent conveyances.
Covenants of the Company. In the Merger Agreement, the Company has agreed
that, except as contemplated or permitted by the Merger Agreement or
specifically disclosed in the schedules thereto, or as otherwise approved in
writing by the Parent, from the date of the Merger Agreement until the time that
the designees of the Purchaser have been appointed to the Board of Directors of
the Company, the Company will, and will cause its subsidiaries to, conduct their
respective businesses in the ordinary course consistent with past practice.
Throughout this same period of time (i) the Company will not adopt or approve
any change or amendment in its certificate of incorporation or bylaws; (ii) the
Company will not, and will not permit any of its subsidiaries to, merge,
consolidate, or enter into a share exchange with any other individual,
corporation, partnership, association, trust or other entity or organization,
including a government or political subdivision or any agency or instrumentality
thereof (a "Person"), sell, lease, license, mortgage, pledge, or otherwise
dispose
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of any material assets, except (a) in the ordinary course consistent with past
practice or (b) transfers between the Company and/or its wholly owned
subsidiaries; (iii) the Company will not declare, set aside, or pay any
dividends or make any distributions in respect of the Shares; (iv) the Company
will not, and will not permit any of its subsidiaries to, (a) issue, deliver,
sell, encumber, or authorize or propose the issuance, delivery, sale, or
encumbrance of, any capital stock or other securities of the Company or any
capital stock or other securities of its subsidiaries ("Company Subsidiary
Securities"), other than pursuant to the Company's Rights Agreement, dated as of
June 10, 1988 and subsequently amended (including pursuant to the Merger
Agreement), between the Company and Midlantic National Bank, as Rights Agent
(the "Company Rights Agreement"), and the issuance of Shares pursuant to the
Company's employee stock purchase plan or upon the exercise of outstanding
Company Options granted prior to the date hereof, (b) split, combine, or
reclassify any Shares or Company Subsidiary Securities, (c) repurchase, redeem,
or otherwise acquire any capital stock or other voting securities of the Company
or any voting Company Subsidiary Securities, or (d) amend the terms of any
outstanding voting securities; (v) the Company will not, without the prior
written consent of the Parent, which consent shall not be unreasonably withheld
or delayed, make any commitment or enter into any contract or agreement that is
reasonably likely to be, individually or in the aggregate, material to the
Company and its subsidiaries taken as a whole except in the ordinary course of
business consistent with past practices; (vi) except to the extent required by
law or by existing written agreements or plans disclosed in Company reports to
the Commission or the Company disclosure schedule, neither the Company nor any
of its subsidiaries will increase in any manner the compensation or fringe
benefits of any of its directors or officers (other than increases in the
ordinary course of business in the compensation or fringe benefits of any
officers who are not executive officers), pay any pension or retirement
allowance to any such director or officer, become a party to, amend, or commit
itself to any pension, retirement, profit-sharing, welfare-benefit plan, or
employment agreement with or for the benefit of any such director or officer, or
grant any severance or termination pay or stay-in-place bonus to any such
director or officer, or increase the benefits payable under any existing
severance or termination pay or stay-in-place bonus policies; (vii) the Company
will not, and will not permit any of its subsidiaries to, make any material tax
election or settle or compromise any material federal, state, local or foreign
tax liability; and (viii) the Company will not agree to do any of the foregoing.
In the Merger Agreement, the Company has further agreed that, from the date
of the Merger Agreement until the Effective Time, it will not, and will use its
best efforts to cause its subsidiaries and the officers, directors, employees,
and agents of the Company and its subsidiaries not to, directly or indirectly,
(i) take any action to solicit, to initiate, or knowingly to encourage any good
faith offer or proposal for (x) a merger or other business combination involving
the Company or any of its subsidiaries and any Person (other than the Parent,
the Purchaser, or any subsidiary of either the Parent or the Purchaser), (y) an
acquisition by any Person (other than the Parent, the Purchaser, or any
subsidiary of either the Parent or the Purchaser) of assets or earning power of
the Company or any of its subsidiaries, in one or more transactions,
representing 25% or more of the consolidated assets or earning power of the
Company and its subsidiaries, or (z) an acquisition by any Person (other than
the Parent, the Purchaser, or any subsidiary of either the Parent or the
Purchaser) of securities representing 20% or more of the voting power of the
Company or any of its subsidiaries (any of the events in (x), (y) and (z) being
a "Company Acquisition Proposal"), (ii) take any action knowingly to facilitate
(including, without limitation, amending the Company Rights Agreement or
redeeming the rights issued thereunder) any Company Acquisition Proposal, (iii)
engage or participate in discussions or negotiations, or enter into agreements,
with any Person with respect to a Company Acquisition Proposal, or (iv) in
connection with a Company Acquisition Proposal, disclose any nonpublic
information relating to the Company or any of its subsidiaries or afford access
to the properties, books, or records of the Company or any of its subsidiaries
to any Person, except that the Company may take action described in clause (ii),
(iii), or (iv) if (A) such action is taken in connection with an unsolicited
Company Acquisition Proposal, (B) the failure to take such action would not be
consistent with the fiduciary duties of the Board of Directors under applicable
law (as advised by legal counsel to the Company), and (C) in the case of the
disclosure of nonpublic information relating to the Company or any of its
subsidiaries in connection with a Company Acquisition Proposal, such information
is covered by a confidentiality agreement that provides substantially the same
protection to the Company as is afforded by the confidentiality agreement, dated
June 6, 1997, between the
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Parent and the Company (the "Confidentiality Agreement"). The Company will
promptly notify the Parent orally and in writing of any Company Acquisition
Proposal or any inquiries with respect thereto.
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 the Parent, the approval or recommendation by such Board of Directors
or such committee of the Offer, the Merger, or the Merger Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any Company
Acquisition Proposal, or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
(each, an "Acquisition Agreement") related to any Company Acquisition Proposal,
except that, in any case set forth in clause (i), (ii), or (iii) above, prior to
the acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company may, in response to an unsolicited Company Acquisition
Proposal, (A) withdraw or modify its approval or recommendation of the Offer,
the Merger, or the Merger Agreement or (B) approve or recommend any such Company
Acquisition Proposal if, in the case of any action described in clause (A) or
(B), the failure to take such action would not be consistent with the fiduciary
duties of the Board of Directors under applicable law (as advised by legal
counsel to the Company) and, in the case of the actions described in clause (B),
concurrently with such approval or recommendation the Company terminates the
Merger Agreement and promptly thereafter enters into an Acquisition Agreement
with respect to a Company Acquisition Proposal.
Merger Meeting; Proxy Statement. The Merger will be consummated as soon as
practicable after the purchase of Shares pursuant to the Offer, and in no event
later than February 17, 1998. If Purchaser is able to do so under the DGCL, it
will consummate the Merger pursuant to the "short form" merger provisions of the
DGCL. The Parent will vote, or cause to be voted, all Shares beneficially owned
by it in favor of the Merger. If required by the DGCL in order to consummate the
Merger, as soon as practicable following the purchase of Shares pursuant to the
Offer, the Company will take all action necessary in accordance with the DGCL
and with the Company's certificate of incorporation and bylaws to convene a
meeting of its shareholders to approve the Merger and adopt the Merger Agreement
(the "Merger Meeting"). The Company's Board of Directors will recommend that the
Company's shareholders approve the Merger and adopt the Merger Agreement, and
will cause the Company to use all reasonable efforts to solicit from the
shareholders proxies to vote therefor, unless (i) such recommendation would not
be consistent with the fiduciary duties of the Board of Directors under
applicable law (as advised by legal counsel to the Company) or (ii) the Merger
Agreement is terminated in accordance with its terms. The Company will, if
required by law for the consummation of the Merger, prepare and file with the
Commission preliminary proxy materials relating to the approval of the Merger
and the adoption of the Merger Agreement by the Company's shareholders, and will
file with the Commission revised preliminary proxy materials, if appropriate,
and definitive proxy materials in a timely manner as required by the rules and
regulations of the Commission. Except as otherwise provided in clauses (i) and
(ii) of this paragraph, the proxy materials relating to the Merger Meeting will
include the recommendation of the Company's Board of Directors.
Employee Benefits. The Parent agrees in the Merger Agreement that, during
the period commencing at the Effective Time and ending on the second anniversary
thereof, the employees of the Company will be provided with benefits which, in
the aggregate, are substantially comparable to those then provided by the Parent
to other employees of the Parent or its subsidiaries in similar positions,
except that, through December 31, 1997, the employees of the Company will
participate in the Company's existing corporate incentive program instead of the
Parent's management incentive program. The Parent will cause each employee
benefit plan of the Parent in which employees of the Company are eligible to
participate to take into account for purposes of eligibility and vesting
thereunder the service of such employees with the Company as if such service
were with the Parent, to the same extent that such service was credited under a
comparable plan of the Company. The Parent will, and will cause the Surviving
Corporation to, honor in accordance with their terms (i) all employee benefit
obligations to current and former employees of the Company accrued and vested as
of the Effective Time and (ii) to the extent set forth in the Company disclosure
schedule all employee severance plans in existence on the date of the Merger
Agreement and all employment or severance agreements entered into prior to the
date hereof.
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Covenants of the Company, the Parent and the Purchaser. Subject to the
terms and conditions of the Merger Agreement, the Company, the Parent, and the
Purchaser agree to use their reasonable best efforts to take all actions and to
do all things necessary or advisable under applicable laws and regulations to
consummate the transactions contemplated by the Merger Agreement as promptly as
practicable. If any "fair price," "moratorium," or other similar statute or
regulation becomes applicable to the transactions contemplated by the Merger
Agreement, each of the parties and, subject to applicable fiduciary duties,
their respective Boards of Directors will use all reasonable efforts to grant
such approvals and take such actions as are necessary so that the transactions
contemplated by the Merger Agreement may be consummated as promptly as
practicable on the terms contemplated thereby and otherwise act to minimize the
effects of such statute or regulation on the transactions contemplated by the
Merger Agreement. See also "Indemnification Agreements and Director Liability."
Conditions to the Merger. The obligations of the Company, the Parent and
the Purchaser to consummate the Merger are subject to the satisfaction of the
following conditions: (i) if required by applicable law, the Merger has been
approved, and the Merger Agreement has been adopted, by the requisite vote of
the Company's shareholders; (ii) the Purchaser shall have purchased all validly
tendered and not properly withdrawn Shares in accordance with the Offer; and
(iii) no provision of any applicable domestic law or regulation, and no
judgment, injunction, order or decree of a court or governmental agency or
authority of competent jurisdiction is in effect that has the effect of making
the Offer or the Merger illegal or otherwise restrains or prohibits the purchase
of Shares pursuant to the Offer or the consummation of the Merger. The
obligations of the Parent and the Purchaser to consummate the Merger are subject
to satisfaction or waiver of the Offer Conditions and to compliance by the
Company with its obligation to cause persons designated by the Parent to become
directors of the Company in accordance with the Merger Agreement.
Termination. The Merger Agreement may be terminated and the Offer and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any prior approval of the Merger and adoption of the Merger Agreement by the
Company's shareholders, (i) by the mutual written consent of the Company, the
Parent, and the Purchaser; (ii) by the Company if the Purchaser has not
purchased Shares pursuant to the Offer by October 14, 1997, or by either the
Company or the Parent if the Merger has not been consummated by February 17,
1998, provided that such right of termination will not be available to any party
that, at the time of termination, is in material breach of any of its
obligations under the Merger Agreement; (iii) by either the Company or the
Parent if any applicable domestic law, rule, or regulation makes consummation of
the Merger illegal or if any judgment, injunction, order, or decree of a court
or governmental agency or authority of competent jurisdiction restrains or
prohibits the consummation of the Offer or Merger and such judgment, injunction,
order, or decree has become final and nonappealable; (iv) by either the Company
or the Parent if the requisite vote of the Company's shareholders approving the
Merger and adopting the Merger Agreement has not been obtained at the Merger
Meeting; provided that the right to so terminate the Merger Agreement will not
be available to the Parent if it has not voted, or caused to be voted, all
Shares beneficially owned by it in favor of the Merger; (v) by either the
Company or the Parent if the Offer terminates without the purchase of Shares
thereunder; provided that the right to so terminate the Merger Agreement shall
not be available to (i) the Parent, if the Purchaser shall have breached its
obligations to conduct the tender offer in accordance with the terms of the
Merger Agreement, or (ii) any party whose willful failure to perform any of its
obligations under the Merger Agreement results in the failure of any of the
Offer Conditions or if the failure of any such Offer Conditions results from
facts or circumstances that constitute a material breach of the representations
or warranties of such party under the Merger Agreement; (vi) prior to the
purchase of Shares by the Purchaser pursuant to the Offer, by the Parent if (a)
the Company violates its obligations under the terms of the Merger Agreement
regarding Company Acquisition Proposals in any material respects and thereafter
any Person publicly makes a Company Acquisition Proposal or (b) the Board of
Directors of the Company does not publicly recommend in the Schedule 14D-9 that
the Company's shareholders accept the Offer and tender their Shares pursuant to
the Offer and approve the Merger and adopt the Merger Agreement, or if the Board
of Directors of the Company withdraws, modifies, or changes such recommendation
in any manner materially adverse to the Parent; or (vii) by the Company if the
Company receives an unsolicited Company Acquisition Proposal that the Board of
Directors determines in good faith,
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after consultation with its legal and financial advisors, is likely to lead to a
merger, acquisition, consolidation, or similar transaction that is more
favorable to the shareholders of the Company than the transactions contemplated
by the Merger Agreement; provided that the Company has given the Parent at least
five business days notice of the material terms of such Company Acquisition
Proposal and such termination shall not be effective until the Company has paid
the Termination Fee (as defined below), if and to the extent required under the
terms of the Merger Agreement.
In the event of any such termination of the Merger Agreement and
abandonment of the Offer and the Merger, no party to the Merger Agreement (or
any of its directors, officers, employees, agents, or advisors) will have any
liability or further obligation to any other party to the Merger Agreement
except (i) for obligations of the Company to pay, under circumstances described
below, the Termination Fee and certain expenses of the Parent and the Purchaser,
(ii) for obligations under the Confidentiality Agreement, and (iii) for
liability for any breach of covenants or agreements of the Merger Agreement.
Fees and Expenses. The Merger Agreement provides that, except as set forth
below, all costs and expenses incurred in connection with the Merger Agreement
will be paid by the party incurring the costs and expenses.
Pursuant to the Merger Agreement, if (i) the Merger Agreement is terminated
by the Company because the Company receives an unsolicited Company Acquisition
Proposal that the Board of Directors of the Company determines in good faith,
after consultation with its legal and financial advisors, is likely to lead to a
merger, acquisition, consolidation, or similar transaction that is more
favorable to the shareholders of the Company than the Merger, (ii) any Person
publicly makes a Company Acquisition Proposal and thereafter the Merger
Agreement is terminated because an insufficient number of Shares are tendered in
the Offer, or (iii) any Person publicly makes a Company Acquisition Proposal and
thereafter the Merger Agreement is terminated, prior to the purchase of Shares
by the Purchaser pursuant to the Offer, by the Parent because (a) the Company
has violated its obligations under the terms of the Merger Agreement with
respect to Company Acquisition Proposals in any material respects and a Company
Acquisition Proposal was made by any Person after such violation or (b) the
Board of Directors of the Company did not publicly recommend in the Schedule
14D-9 that the Company's shareholders accept the Offer and tender their Shares
pursuant to the Offer and approve the Merger and adopt the Merger Agreement, or
the Board of Directors of the Company withdrew, modified, or changed such
recommendation in any manner materially adverse to the Parent, then the Company
will reimburse the Parent and the Purchaser for all of the reasonable documented
out-of-pocket expenses and fees actually incurred by the Parent and the
Purchaser in connection with the transactions contemplated by the Merger
Agreement prior to the termination of the Merger Agreement, including, without
limitation, all reasonable fees and expenses of counsel, financial advisors,
accountants, and environmental and other experts and consultants to the Parent
and the Purchaser ("Transaction Costs"); except that, the Company will not be
required to reimburse the Parent or the Purchaser for Transaction Costs in
excess of $600,000 in the aggregate.
If (x) the Merger Agreement is terminated by the Company as set forth in
clause (i) of the immediately preceding paragraph, (y) any Person publicly makes
a Company Acquisition Proposal, thereafter the Merger Agreement is terminated as
set forth in clause (ii) of the immediately preceding paragraph, and within 12
months after termination the Company agrees to or consummates any Company
Acquisition Proposal, or (z) any Person publicly makes a Company Acquisition
Proposal and thereafter the Merger Agreement is terminated as set forth in
clause (iii) of the immediately preceding paragraph, then, in addition to
reimbursing the Parent and the Purchaser for their Transaction Costs, the
Company has agreed to pay the Parent a fee of $5,000,000 (the "Termination
Fee"). If the Parent is required to file suit to seek the Termination Fee, and
it ultimately succeeds on the merits, it will be entitled to all expenses,
including reasonable attorneys' fees, that it has incurred in enforcing its
rights to collect the Termination Fee.
Waiver and Amendment. Subject to applicable law and the terms of the
Merger Agreement, any provision of the Merger Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver is in
writing and duly executed and delivered, in the case of an amendment, by each of
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the parties to the Merger Agreement or, in the case of a waiver, by the party
against whom the waiver is to be effective.
Required Vote. In general, under Delaware law and the Company's
certificate of incorporation, the Merger requires the approval of the Company's
Board of Directors and the approval by the holders of a majority of all
outstanding Shares. On August 12, 1997, the Company's Board of Directors
unanimously adopted a resolution approving the Merger.
Accordingly, if the Purchaser acquires more than a majority of the
outstanding Shares pursuant to the Offer, the Purchaser would have the voting
power to approve the Merger without the vote of any other shareholders and could
effect the Merger by so voting and by action of the Board of Directors of the
Purchaser, the Company's Board of Directors having already approved the Merger
on August 12, 1997. This will be the case if the Minimum Condition is satisfied.
In the Merger Agreement, the Purchaser has agreed to vote in favor of the Merger
all of the Shares purchased in the Offer.
Further, Delaware law provides that, if a parent corporation owns 90% or
more of each class of outstanding shares of a subsidiary, the parent corporation
may merge the subsidiary into itself, or merge itself into the subsidiary, by
action of the board of directors of the parent corporation and without action or
vote by the shareholders of either corporation. Accordingly, if the Purchaser
owns 90% or more of the outstanding Shares after consummation of the Offer, a
"short form" merger could be effected by action of the Purchaser's Board of
Directors and without the approval of the Company's shareholders.
Dividends and Distributions. The Company has agreed that, from the date of
the Merger Agreement until the time that the designees of the Purchaser have
been appointed to the Board of Directors of the Company, the Company will not
declare, set aside, or pay any dividends or make any distributions on the
Shares.
Appraisal Rights. Shareholders do not have appraisal rights as a result of
the Offer. However, if the Merger is consummated, shareholders of the Company at
the time of the Merger who comply with all statutory requirements and do not
vote in favor of the Merger will have the right under the DGCL to demand an
appraisal of, and receive payment in cash of the fair value of, their Shares
outstanding immediately prior to the Effective Time in accordance with Section
262 of the DGCL.
Under the DGCL, shareholders who properly demand appraisal and otherwise
comply with the applicable statutory procedures will be entitled to receive a
judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of such Shares could be based upon
considerations other than or in addition to the price paid in the Offer and the
Merger and the market price of the Shares. In Weinberger v. UOP, Inc., the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. Shareholders should recognize that the value so determined
could be equal to, higher or lower than the price per Share paid pursuant to the
Offer or the consideration per Share to be paid in the Merger.
In addition, several decisions by Delaware courts have held that in certain
circumstances a controlling shareholder of a corporation involved in a merger
has a fiduciary duty to other shareholders that requires the merger to be fair
to the other shareholders. In determining whether a merger is fair to minority
shareholders, Delaware courts have considered, among other things, the type and
amount of the consideration to be received by the shareholders and whether there
was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Phillip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority shareholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief may
be available if a merger is found to be the product of unfairness, including
fraud, misrepresentation or other misconduct.
THE FOREGOING SUMMARY OF THE RIGHTS OF SHAREHOLDERS DOES NOT PURPORT TO BE
A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
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SHAREHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE
PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF DELAWARE LAW.
"Going Private" Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger. However, Rule
13e-3 would be inapplicable if (i) the Shares are deregistered under the
Exchange Act prior to the Merger or other business combination or (ii) the
Merger or other business combination is consummated within one year after the
purchase of the Shares pursuant to the Offer and the amount paid per Share in
the Merger or other business combination is at least equal to the amount paid
per Share in the Offer. If applicable, Rule 13e-3 requires, among other things,
that certain financial information concerning the fairness of the proposed
transaction and the consideration offered to minority shareholders in such
transaction be filed with the Commission and disclosed to shareholders prior to
the consummation of the transaction.
Certain Conditions of the Offer. Notwithstanding any other term or
provision of the Offer, 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 a bidder's obligation to pay
for or return tendered shares after the termination or withdrawal of the Offer),
to pay for any Shares not theretofore accepted for payment or paid for pursuant
to the Offer, if (1) there are not validly tendered and not properly withdrawn
prior to the expiration of the Offer that number of Shares which, when
aggregated with the Shares then owned by the Parent and any of its affiliates,
represents at least a majority of the Shares then outstanding on a fully diluted
basis (the "Minimum Condition") or (2) at any time on or after the date of the
Merger Agreement and at or before the time that any Shares are accepted for
payment any of the following conditions exist:
(a) any provision of any applicable domestic law or regulation, or any
judgment, injunction, order, or decree of a court or governmental agency or
authority of competent jurisdiction, is in effect that (i) makes the Offer
or the Merger illegal or otherwise, directly or indirectly, prohibits or
materially restrains the making of the Offer, the acceptance for payment
of, payment for, or ownership, directly or indirectly, of some or all of
the Shares by the Purchaser or the Parent, makes the foregoing
substantially more costly or materially delays the Merger, (ii) prohibits
or materially limits the ownership or operation by the Company or any of
its subsidiaries that owns a material portion of the business and assets of
the Company and its subsidiaries, taken as a whole, or by the Parent, the
Purchaser or any subsidiaries of the Parent of all or a material portion of
the business or assets of the Company and its subsidiaries, taken as a
whole, or of the Parent and its subsidiaries, taken as a whole, as a result
of the Offer, the Merger, or the other transactions contemplated by the
Merger Agreement, or (iii) imposes limitations on the ability of the
Purchaser, the Parent or any of subsidiaries of the Parent effectively to
acquire, hold or exercise full rights of ownership of the Shares,
including, but not limited to, the right to vote any Shares acquired or
owned by the Purchaser or the Parent on all matters properly presented to
the shareholders of the Company, including, but not limited to, the
approval of the Merger Agreement and adoption of the Merger and the right
to vote any shares of capital stock of any subsidiaries of the Company
(other than immaterial subsidiaries);
(b) any consents, authorizations, orders and approvals of, or filings
or registrations with, any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of the Merger Agreement has not been obtained or made, except
(i) the filing of appropriate certificates of merger in accordance with the
DGCL, (ii) compliance with applicable requirements of the HSR Act and the
Exchange Act, and (iii) where the failure to obtain or make any such
consent, authorization, order, approval, filing, or registration is not
reasonably likely to have, individually or in the aggregate, a material
adverse effect on the financial condition, results of operations, or
business of the Company and its Subsidiaries, taken as a whole (a "Company
Material Adverse Effect"), or on the financial condition, results of
operations, or business of the Parent and the Purchaser, taken as a whole
(a "the Parent Material Adverse Effect"), and would not render the Offer or
the Merger illegal or provide a reasonable basis to conclude that the
parties or their affiliates or any of their respective directors or
officers will be subject to the risk of criminal liability;
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(c) any third party consents have not been obtained except where the
failure to obtain any such consents is not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect;
(d) the Company has failed to perform the obligations to be performed
by it under the Merger Agreement at or prior to such time or any
representations and warranties of the Company contained in the Merger
Agreement are not true at such time as if made at and as of such time
(unless the representation or warranty is made as of a specified date, in
which case such representation or warranty will be true as of such date),
except to the extent that the failure to perform such obligations and the
untruth of such representations and warranties is not reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect
and the Parent has received a certificate signed by an executive officer
and by the chief financial officer of the Company to the foregoing effect;
for purposes of determining whether this condition has been satisfied, all
qualifications as to materiality included in the representations and
warranties will be disregarded, and all qualifications as to knowledge of
the Company will be based on the knowledge of the Company as of the time
such certificate is signed; or
(e) the Merger Agreement has been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of the Purchaser and the
Parent and may be waived by the Purchaser in whole or in part at any time and
from time to time in its sole discretion. The failure by the Purchaser at any
time to exercise any of the foregoing rights will not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
circumstances will not be deemed a waiver with respect to any other facts and
circumstances and each such right will be deemed an ongoing right that may be
asserted at any time and from time to time.
EMPLOYMENT MATTERS
Employment Agreement with John Masefield. Concurrently with the execution
and delivery of the Merger Agreement, the Parent and John Masefield, Chairman of
the Board, President, and Chief Executive Officer of the Company, entered into
an employment agreement (the "Employment Agreement") providing for his
employment from the Effective Time through December 31, 1999, and thereafter for
a consulting period ending not later than December 31, 2004. During the
employment period, Mr. Masefield will have overall direct executive
responsibility for the Contract Sterilization Business (as that term is defined
in the Employment Agreement), as well as any additional responsibilities
assigned by the chief executive officer of the Parent. During the employment
period, Mr. Masefield will receive a base salary of $260,000 per annum and will
be entitled to participate in the Parent's management incentive compensation
program with an annual target bonus opportunity of 75% of his base salary.
Assuming the continuation of Mr. Masefield's employment through December 31,
1997, Mr. Masefield will be entitled to a guaranteed bonus for the calendar year
1997 equal to $175,000, and assuming continuation through March 31, 1998, a
guaranteed bonus for the calendar quarter ending on March 31, 1998 equal to
$43,750. As of the Effective Time, Mr. Masefield will be granted options to
purchase 100,000 shares of common stock of the Parent, which options will become
exercisable as to 25,000 shares immediately and, as to the remaining 75,000
shares, on each anniversary of the Effective Time, in tranches of 25,000 shares
per year. During the consulting period, the Parent will pay to Mr. Masefield a
fee of $250,000 per annum. If Mr. Masefield's engagement is terminated (i) by
the Parent without "cause," (ii) by Mr. Masefield for "good reason," (iii) by
reason of Mr. Masefield's death, or (iv) by the Parent or Mr. Masefield on the
grounds of "disability," Mr. Masefield will be entitled to receive an amount
equal to all unpaid base salary and consulting fees and certain continued group
life and health insurance coverage.
Letter from the Parent to Thomas J. DeAngelo. In a letter dated August 12,
1997 from the Parent to Thomas J. DeAngelo, Vice President-Finance and
Administration and Chief Financial Officer of the Company, the Parent stated
that upon completion of the Merger, Mr. DeAngelo would become President of the
Company. Mr. DeAngelo would receive a base salary of $150,000 per annum and
would participate in the Parent's Management Incentive Compensation Plan
beginning on April 1, 1998, with an opportunity for a performance bonus in the
amount of up to 50% of Mr. DeAngelo's base salary. Until that time, Mr. DeAngelo
would be entitled to a guaranteed bonus for the calendar year 1997 equal to
$64,350 and a guaranteed bonus
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for the calendar quarter ending on March 31, 1998 equal to $16,088. Mr. DeAngelo
would also receive options to purchase 15,000 shares of the Parent's common
stock at an exercise price per share equal to the closing price for the Parent's
common stock on the date of the Merger. The stock options would vest at a rate
of 25% per year.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors
The Board of Directors of the Company (the "Board") has unanimously
approved the Merger Agreement and determined that the Offer and the Merger are
fair to, and in the best interests of, the shareholders of the Company and
resolved unanimously to recommend that the shareholders of the Company tender
their Shares to the Purchaser pursuant to the Offer.
As set forth in the Merger Agreement, the Purchaser will purchase Shares
tendered prior to the close of the Offer if the Offer Conditions have been
satisfied (or waived).
SHAREHOLDERS CONSIDERING NOT TENDERING THEIR SHARES IN ORDER TO WAIT FOR
THE MERGER SHOULD NOTE THAT (A) IF THE MINIMUM CONDITION IS NOT SATISFIED OR ANY
OF THE OTHER CONDITIONS TO THE OFFER ARE NOT SATISFIED, THE PURCHASER IS NOT
OBLIGATED TO PURCHASE ANY SHARES, AND CAN TERMINATE THE OFFER AND THE MERGER
AGREEMENT AND NOT PROCEED WITH THE MERGER AND (B) UNDER CERTAIN CIRCUMSTANCES,
SHARES MAY BE PURCHASED PURSUANT TO THE OFFER BUT THE MERGER MAY NOT BE
CONSUMMATED.
Under the Delaware Law, the approval of the Board and the affirmative vote
of the holders of a majority of the outstanding Shares (unless at least 90% of
the outstanding Shares are held by the Purchaser) are required to approve the
Merger. Accordingly, if the Offer Conditions are satisfied, the Purchaser will
have sufficient voting power to cause the approval of the Merger without the
affirmative vote of any other shareholder. The Parent has agreed to vote, or
cause to be voted, all Shares beneficially owned by it in favor of the Merger.
Under the Delaware Law, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, the Purchaser will be
able to approve and adopt the Merger Agreement and the Merger, without a vote of
the Company's shareholders. The Parent, the Purchaser and the Company have
agreed to use their reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary or advisable under
applicable laws and regulations to consummate the Offer, the Merger and the
other transactions contemplated by the Merger Agreement as promptly as
practicable. If the Purchaser does not acquire at least 90% of the then
outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's shareholders is required under the Delaware Law, a longer period of
time will be required to effect the Merger since the Delaware Law would require
a meeting of the Company's shareholders.
The Offer is scheduled to expire at 12:00 midnight, Eastern Daylight Time,
on September 16, 1997, unless the Purchaser extends the period of time for which
the Offer is open. A copy of the press release issued jointly by the Company and
the Parent on August 12, 1997 announcing the Merger and the Offer is filed as
Exhibit (a)(1) to this Schedule 14D-9 and is incorporated herein by reference in
its entirety.
(b) Background of the Offer; Reasons for the Recommendation.
Background of the Offer.
In May 1995, the Parent was contacted by the Company to determine if the
Parent might be interested in discussing a merger.
In June 1995, Mr. Masefield, Mr. Bill R. Sanford, Chairman of the Board,
President, and Chief Executive Officer of the Parent, and other representatives
of both companies met in Mentor, Ohio, and Whippany, New Jersey, to discuss the
merits of a transaction between the Parent and the Company. The Parent and the
Company entered into a Mutual Disclosure Agreement providing for the sharing of
non-public information about the Parent and the Company on a confidential basis.
The Company proposed a possible combination of the companies and a time-table
for negotiations.
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On July 5, 1995, Mr. Sanford wrote a letter to Mr. Masefield acknowledging
the time-table that had been proposed by the Company. The letter stated that a
business combination between the Parent and the Company had strategic merit. The
letter further stated that, although the Company was an attractive merger
candidate warranting a purchase price in excess of the market price of the
Shares (the closing price per Share on July 3, 1995 was $13.63), the Parent was
not contemplating a transaction at the valuation levels that the Company had
shared with the Parent to date. A preliminary information request list was
enclosed with the letter.
The possibility of an acquisition of the Company by the Parent was reported
to the Parent's Board of Directors at a meeting held on July 26, 1995. On July
27, 1995, the Company reported its second quarter results that showed decreases
in net sales, operating income, and net income.
On August 16, 1995, a meeting of representatives of the Parent and the
Company was held in Mentor, Ohio, to continue negotiations regarding a
combination of the Parent and the Company.
In a discussion by telephone on September 18, 1995, Mr. Masefield advised
Mr. Sanford that the Company was no longer interested in discussing a possible
transaction with the Parent. Diligence and negotiations then ceased.
In April 1997, Mr. Masefield and Mr. Sanford had telephone conversations
during which they agreed to have further discussions regarding a possible
transaction between the Parent and the Company.
Discussions between Mr. Masefield and Mr. Sanford continued during April
1997, including a meeting in Teterboro, New Jersey, on April 15, 1997. During a
telephone conference of the Company's directors on April 22, 1997, Mr. Masefield
discussed the Parent's interest in a possible transaction with the Company and
the directors expressed their view that Mr. Masefield should continue
discussions with Mr. Sanford. Mr. Sanford reviewed the possible transaction with
the Parent's Board of Directors on April 24, 1997. Further discussions between
representatives of the Company and the Parent ensued, leading to a letter sent
by Mr. Sanford to Mr. Masefield on May 7, 1997. The letter provided the
Company's Board of Directors with an overview of the Parent, outlined how the
Company and the Parent would fit together operationally, and presented the
Company with a proposal to acquire the Company through a cash tender offer at
$17.00 per Share. The proposal was subject to completion of due diligence,
negotiation of definitive documentation, and approval of the transaction by the
Parent's Board of Directors. The letter requested a response by May 9, 1997.
On May 9, 1997, Mr. Masefield telephoned Mr. Sanford and advised him that
the Company was not yet in a position to respond to Mr. Sanford's May 7 letter.
Following discussions with each of the Company's directors over the next several
days, Mr. Masefield informed Mr. Sanford that the proposed purchase price was
not acceptable to the Company.
A meeting of the Company's Board of Directors was held on May 20, 1997 at
the Company's executive offices in Whippany, New Jersey. Representatives of
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), the Company's
financial advisor, were present at the meeting. The Company's directors
discussed the proposal set forth in Mr. Sanford's May 7 letter and the strategic
benefits of a combination of the Company with the Parent. The representatives of
DLJ expressed their view that, based on their analysis of certain information
provided to DLJ by the Company and other information which was publicly
available, the proposed $17.00 per Share purchase price did not fully value the
Company and its prospects. Thereafter, the Board of Directors unanimously
approved Mr. Masefield's rejection of the May 7 proposal.
On June 4, 1997, Mr. Sanford and Mr. Masefield met for dinner in New York
City. They discussed developments in the Company's business.
On June 5, 1997, a meeting was held at the offices of DLJ in New York City.
Representing the Company at the meeting were Mr. Masefield, Mr. Thomas J.
DeAngelo, Vice President-Finance and Administration and Chief Financial Officer
of the Company, Mr. Thomas M. Haythe, a director of the Company and partner of
Haythe & Curley, legal counsel for the Company, and representatives of DLJ.
Representing the Parent were Mr. Sanford, Mr. David C. Dvorak, Vice President,
General Counsel, and Secretary of the Parent, a representative of Smith Barney
Inc., financial advisor to the Parent, and outside legal counsel for the Parent.
14
<PAGE> 16
At that meeting, Mr. Masefield and representatives of DLJ described developments
in the Company's business and prospects, including improved results from
operations, the prospects for a new electron beam facility, and the
sterilization of fruit and red meat, and urged the Parent to increase the amount
of the proposed purchase price it was willing to pay. The terms of a new
confidentiality agreement were also discussed.
On June 6, 1997, the Parent and the Company entered into a new
confidentiality agreement, which included agreements by the Parent not to
acquire any Shares for one year and not to solicit key employees of the Company
for 18 months. On June 9 and 10, 1997, further discussions took place by
telephone among Mr. Sanford, Mr. Masefield, and financial advisors to the Parent
and the Company regarding the assumptions underlying the purchase price proposed
by the Parent.
On June 12, 1997, Mr. Sanford sent another letter to Mr. Masefield. This
letter increased the purchase price proposed by the Parent from $17.00 per Share
to a range of $18.00 to $19.00 per Share. The letter also stated that achieving
the Company's growth expectations would require "substantial capital
expenditures, as well as the hiring of additional management personnel" and that
the Company had not made adequate provision for these capital expenditures and
additional personnel. The letter stated further that, "STERIS is willing to
proceed with an acquisition because it has the capital and management capability
needed to carry your business forward." The letter asked for a response by June
17, 1997.
On June 17, 1997, Mr. Masefield sent a letter to Mr. Sanford stating that
the purchase price proposed by the Parent did not "take into account [the
Company's] positive financial performance, or recent achievements in expanding
[its] market opportunities." In the letter, Mr. Masefield expressed a
willingness to proceed expeditiously with a transaction if the Parent was
willing to "reconsider its position."
In discussions between Mr. Masefield and Mr. Sanford by telephone on June
26, July 1, and July 3, 1997, Mr. Masefield suggested that a meeting be
scheduled to discuss the Company's recent financial performance and market
opportunities and urged the Parent to go forward with its due diligence.
On July 11, 1997, Messrs. Masefield and DeAngelo, Michael C. Nahl, a
director of the Company, Mr. Daniel T. Sheehan, Vice President of Business
Development of the Parent, and representatives of DLJ met at the offices of DLJ
in New York City. At that meeting, the participants further reviewed the
Company's historical and projected results of operations.
On July 17, 1997, a meeting was held at the offices of DLJ in New York
City. Representing the Parent were Messrs. Dvorak and Sheehan. A DLJ
representative attended the meeting on behalf of the Company. Messrs. Dvorak and
Sheehan reiterated the interest of the Parent in pursuing a transaction as
outlined in the June 12 letter from Mr. Sanford to Mr. Masefield. The DLJ
representative emphasized that recent performance and future prospects of the
Company justified a Company valuation in excess of the range proposed in the
June 12 letter.
On July 22, 1997, the directors of the Company, other than Mr. Campbell,
met at the offices of Haythe & Curley in New York City to discuss the status of
the discussions with the Parent. The directors discussed a suggested purchase
price in the range of $20 to $21 per Share. The directors present then expressed
their approval of continuing negotiations with the Parent.
On July 28, 1997, Mr. Sanford and Mr. Masefield met in New Jersey and
tentatively agreed upon a purchase price of $20.50, subject to approval by the
respective Boards of Directors of the Company and the Parent, and to the
completion of due diligence and agreement upon the terms of a definitive Merger
Agreement. The Parent conducted financial and legal due diligence at the
Company's offices in Whippany, New Jersey, at Haythe & Curley's offices in New
York City, and at eight of the Company's operating facilities.
Negotiations of the Merger Agreement commenced on August 6, 1997.
Throughout the negotiations, representatives of the Parent reiterated that the
Parent was not willing to participate in an auction of the Company and insisted
that, as a condition to entering into the Merger Agreement, the Company grant to
the Parent a "lock-up" option and agree to the payment of a termination fee if
certain events were to occur. After
15
<PAGE> 17
extensive negotiations, the Company agreed to a $5,000,000 termination fee, but
refused to grant the option. See "The Merger Agreement" above.
The terms of the transaction and form of the Merger Agreement were approved
by the Board of Directors of the Parent on August 11, 1997.
On the morning of August 12, 1997, the Board of Directors of the Company
held a special meeting at the executive offices of the Company in Whippany, New
Jersey, with all directors present. Representatives of DLJ also were present.
The directors were advised by Mr. Masefield that all of the open issues on the
Merger Agreement had been resolved to the satisfaction of the Company that
morning. The Board of Directors reviewed the terms of the Merger Agreement with
counsel to the Company. Mr. Haythe advised the directors of their fiduciary
duties in connection with their consideration of the Merger Agreement, the
Offer, and the Merger. After presenting their financial analyses of the fairness
of the consideration to be received in the Offer and the Merger, DLJ delivered
its written opinion that, as of the date of such opinion, and based on the
assumptions made, the matters considered, and the limits of review set forth in
such opinion, the consideration to be received by the holders of Shares in the
Offer and the Merger is fair to such holders from a financial point of view. The
Board of Directors then discussed the merits of the proposed Offer and Merger.
Following such discussion, the Board of Directors unanimously approved the
Merger Agreement, determined that the Offer and the Merger are fair to, and in
the best interests of, the shareholders of the Company, and resolved unanimously
to recommend that the shareholders of the Company tender their Shares to the
Purchaser pursuant to the Offer. The definitive Merger Agreement was executed
and delivered on August 12, 1997, following approval by the Company's Board of
Directors.
Reasons for the Recommendation.
In reaching its determination described in paragraph (a) above, the Board
considered a number of factors, including, without limitation, the following:
(i) historical information concerning the Company's business, prospects,
financial performance and condition, operations, technology, management, and
competitive position;
(ii) the financial condition, results of operations, business, and
strategic objectives of the Company as well as the risks involved in achieving
those objectives;
(iii) current financial market conditions and historical market prices,
volatility, and trading information with respect to the Shares;
(iv) the consideration to be received by the Company's shareholders in the
Offer and the Merger;
(v) the terms of the Merger Agreement, including the parties'
representations, warranties, and covenants, and the conditions to their
respective obligations;
(vi) the performance of the Company on a historical basis and the
prospects of the Company going forward as an independent company;
(vii) the potential for other third parties to acquire the Company;
(viii) a review of the possible alternatives to the Offer and the Merger
(including the possibility of continuing to operate the Company as an
independent entity), the range of possible benefits to the Company's
shareholders of such alternatives, and the timing and likelihood of actually
accomplishing any of such alternatives;
(ix) the presentations to the Board by DLJ at the May 20, 1997 and August
12, 1997 Board meetings;
(x) the written opinion of DLJ to the effect that, as of the date of such
opinion, and based on the assumptions made, the matters considered, and the
limits of review set forth in such opinion, the consideration to be received by
the holders of Shares in the Offer and the Merger is fair to such holders from a
financial point of view;
(xi) the fact that, pursuant to the Merger Agreement, the Company is not
prohibited from responding to any unsolicited Company Acquisition Proposal to
acquire the Company, and the Company may terminate the Merger Agreement and
accept such Company Acquisition Proposal subject to the Company's obligation
16
<PAGE> 18
to pay the Termination Fee and the Parent's expenses in the amount and in the
manner described in the Merger Agreement;
(xii) the relationship of the Offer price to historical market prices of
the Shares and to the Company's book value per Share;
(xiii) the likelihood that the proposed acquisition would be consummated,
including the experience, reputation, and financial condition of the Parent, and
the risks to the Company if the acquisition were not consummated, including a
potential negative effect on (a) the Company's sales and operating results, (b)
progress of certain development projects, and (c) the market price of the
Shares; and
(xiv) the availability of appraisal rights in the Merger under the
Delaware Law.
In view of the wide variety of factors considered in connection with its
evaluation of the Offer and the Merger, the Board did not find it practicable
to, and did not, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching its determinations.
THE FULL TEXT OF THE WRITTEN FAIRNESS OPINION OF DLJ (WHICH SETS FORTH THE
ASSUMPTIONS MADE, THE MATTERS CONSIDERED, AND CERTAIN LIMITATIONS ON THE SCOPE
OF REVIEW UNDERTAKEN BY DLJ) IS FILED AS EXHIBIT (a)(2) TO THIS SCHEDULE 14d-9
AND IS ALSO ATTACHED HERETO AS ANNEX B. SHAREHOLDERS ARE URGED TO, AND SHOULD,
READ SUCH OPINION IN ITS ENTIRETY. SUCH OPINION WAS PRESENTED FOR THE
INFORMATION OF THE BOARD IN CONNECTION WITH THEIR CONSIDERATION OF THE MERGER
AGREEMENT AND IS DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL POINT OF VIEW OF
THE CONSIDERATION TO BE RECEIVED BY HOLDERS OF SHARES PURSUANT TO THE OFFER AND
THE MERGER. SUCH OPINION DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER
AS TO WHETHER TO TENDER SHARES IN THE OFFER OR HOW TO VOTE WITH RESPECT TO THE
MERGER.
IN LIGHT OF ALL THE FACTORS SET FORTH ABOVE, THE BOARD RESOLVED UNANIMOUSLY
TO APPROVE THE MERGER AGREEMENT AND DETERMINED THAT THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY AND
RESOLVED UNANIMOUSLY TO RECOMMEND THAT THE SHAREHOLDERS OF THE COMPANY TENDER
THEIR SHARES TO THE PURCHASER PURSUANT TO THE OFFER.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company retained DLJ to provide financial advisory services in
connection with the evaluation of various alternatives available to the Company
to preserve or maximize shareholder value. Pursuant to a letter agreement dated
June 5, 1997 between the Company and DLJ, the Company has agreed to pay DLJ, as
compensation for such services, upon any "Transaction" (defined as one or a
series of related transactions, including, but not limited to, transactions of
the type contemplated by the Merger Agreement) a transaction fee equal to 0.9%
of the sum of (a) the aggregate consideration received by the shareholders of
the Company in the Offer and the Merger plus (b) the amount of any debt of the
Company remaining outstanding or retired in connection with the Transaction. The
Company has agreed to reimburse DLJ for its reasonable out-of-pocket expenses
incurred in connection with rendering financial advisory services, including
fees and disbursements of its legal counsel. The Company has also agreed to
indemnify DLJ and its directors, officers, agents, employees and controlling
persons for certain costs, expenses and liabilities, including certain
liabilities under the federal securities laws.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the shareholders of the Company on its
behalf with respect to the Offer, except that such solicitations or
recommendations may be made by directors, officers or employees of the Company,
for which services no additional compensation will be paid.
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<PAGE> 19
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) During the past 60 days, no transactions in Shares have been effected
by the Company or, to the Company's knowledge, by any of its executive officers,
directors, affiliates or subsidiaries, except that (i) the Company has granted
stock options to, and issued stock upon exercise of stock options held by,
employees and consultants under its stock plans, (ii) on June 26, 1997, George
R. Dietz, Senior Vice President of the Company sold 2,000 Shares at $17.00 per
Share, (iii) on July 15, 1997, Mr. Dietz sold 2,000 Shares at $18.00 per Share,
and (iv) on July 22, 1997, Mr. Dietz exercised warrants to purchase 30,000
Shares at an exercise price of $5.00 per Share.
(b) To the Company's knowledge, all of the Company's executive officers and
directors who own Shares currently intend to tender all of their Shares (other
than Shares, if any, held by any such person that, if tendered, could cause such
person to incur liability under the provisions of Section 16(b) of the Exchange
Act) pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer that relates to or would result
in (i) an extraordinary transaction, such as a merger or reorganization
involving the Company or any subsidiary thereof; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary
thereof; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth herein, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that relates
to or would result in one or more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Antitrust. Under the HSR Act, certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the Federal
Trade Commission (the "FTC") and certain waiting period requirements have been
satisfied. The Company and the Parent expect to file a Notification and Report
Form with respect to the Offer and the Merger on or about August 19, 1997.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares under the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by the Parent. Accordingly,
the waiting period with respect to the Offer will expire at 11:59 p.m., Eastern
Daylight Time, on September 3, 1997 unless the Company or the Parent receives a
request for additional information or material, or the Antitrust Division and
the FTC terminate the waiting period prior thereto. If, within such 15-day
period, either the Antitrust Division or the FTC requests additional information
or material from the Company or the Parent concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., Eastern Daylight Time,
on the tenth calendar day after the date of substantial compliance by the
Company or the 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 the Parent. The Purchaser will not accept for payment Shares
tendered pursuant to the Offer unless and until the waiting period requirements
imposed by the HSR Act with respect to the Offer have been satisfied. See
Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before or after the
Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares pursuant
to the Offer or otherwise or seeking divestiture of Shares acquired by the
Purchaser or divestiture of substantial assets of the Parent or its
subsidiaries. Private parties and state attorneys general may also bring action
under the antitrust laws under certain circumstances. Based upon an
18
<PAGE> 20
examination of publicly available information relating to the businesses in
which the Parent and the Company are engaged, the Parent and the Purchaser
believe that the acquisition of Shares by the Purchaser will not violate the
antitrust laws. Nevertheless, there can be no assurance that a challenge to the
Offer or other acquisition of Shares by the Purchaser on antitrust grounds will
not be made or, if such a challenge is made, of the result. See Section 14 for
certain conditions to the Offer, including conditions with respect to litigation
and certain governmental actions.
Certain State Laws; Certificate of Incorporation. Section 203 of the
Delaware General Corporation Law provides that, except in certain circumstances,
a Delaware corporation may not engage in a "business combination" with an
"interested" shareholder for three years following the date on which the
shareholder became an "interested" shareholder unless, among other things, prior
to such date the board of directors of the corporation approved either the
"business combination" or the transaction that resulted in the shareholder
becoming an "interested" shareholder. If the Minimum Condition is satisfied, the
Purchaser will become an "interested" shareholder of the Company when it
purchases Shares pursuant to the Offer, and the Merger will be a "business
combination." However, the Board of Directors of the Company has approved both
the Offer and the Merger, and, therefore, the Company will not need to wait for
three years before completing the Merger.
Similarly, Article Fourteenth of the Certificate provides that unless the
Board of Directors of the Company by a vote of not less than a majority of the
directors expressly approved either the acquisition of outstanding shares of
"voting stock" of the Company that resulted in any person becoming a "related
person" or the "business combination" prior to the "related person" involved in
the "business combination" having become a "related person," the affirmative
vote of the holders of not less than eighty percent of the outstanding shares of
"voting stock" of the Company shall be required for the authorization of any
"business combination." The Purchaser will become a "related person" if the
Minimum Condition is satisfied, and the Merger will be a "business combination."
However, since the Board of the Directors has approved both the Offer and the
Merger, the affirmative vote of the holders of eighty percent of the Company's
"voting stock" will not be necessary for the consummation of the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In 1982, in Edgar v. MITE Corp., the Supreme
Court of the United States invalidated on constitutional grounds the Illinois
Business Takeover Statute, which, as a matter of state securities law, made
takeovers of corporations meeting certain requirements more difficult. However,
in 1987 in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that
the Indiana Control Share Acquisition Act was constitutional. Such Act, by its
terms, is applicable only to corporations that have a substantial number of
shareholders in Indiana and are incorporated there. Subsequently, a number of
Federal courts ruled that various state takeover statutes were unconstitutional
insofar as they apply to corporations incorporated outside the state of
enactment.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer and has not complied with any such laws. Should
any person seek to apply any state takeover law, the Purchaser will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
and the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, the Purchaser might be required
to file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, the Purchaser might be unable to accept
for payment any Shares tendered pursuant to the Offer, or be delayed in
continuing or consummating the Offer. In such case, the Purchaser may not be
obligated to accept for payment any Shares tendered. See Section 14.
Foreign Approvals. The Company owns property in a number of other foreign
countries and jurisdictions. In connection with the acquisition of the Shares
pursuant to the Offer, the laws of certain of those foreign countries and
jurisdictions may require the filing of information with, or the obtaining of
the approval
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<PAGE> 21
of, governmental authorities in such countries and jurisdictions. The
governments in such countries and jurisdictions might attempt to impose
additional conditions on the Company's operations conducted in such countries
and jurisdictions as a result of the acquisition of the Shares pursuant to the
Offer or the Merger. There can be no assurance that the Purchaser will be able
to cause the Company or its subsidiaries to satisfy or comply with such laws or
that compliance or non-compliance will not have adverse consequences for the
Company or any subsidiary after purchase of the Shares pursuant to the Offer or
the Merger.
Preferred Stock Purchase Rights. On June 10, 1988, the Company entered
into a Rights Agreement and the Board of Directors of the Company declared a
dividend of one Preferred Stock Purchase Right for each outstanding share of
Common Stock. This action was intended to protect shareholders' value in the
Company in the event of a hostile takeover attempt. Each Right entitles the
holder to purchase from the Company one one-hundredth of a share of Series A
Preferred Stock at an exercise price of $20 per one one-hundredth of a preferred
share.
The Rights are not exercisable or transferable apart from the Common Stock
until the earlier to occur of (1) ten days following a public announcement that
a person or group of affiliated of associated persons has acquired beneficial
ownership of 20% or more of the outstanding Common Stock or (2) ten business
days following the commencement of, or announcement of, an intention to make a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of the outstanding
Common Stock. Upon the Rights becoming exercisable, each Right would entitle the
holder (other than the person or members of the group which caused the Rights to
become exercisable) upon exercise to receive a number of shares of Series A
Preferred Stock convertible into shares of Common Stock having a market value of
two times the exercise price of the Right. Furthermore, if the Company enters
into a consolidation, merger, combination or other transaction, where shares of
Common Stock are exchanged for cash, property, stock or securities of any other
entity, each Right would entitle the holder upon exercise to receive, in lieu of
Series A Preferred Stock, that number of shares of common stock of the acquiring
company having a market value of two times the exercise price of the Right. The
Rights contain antidilutive provisions, are redeemable at the Company's option
for $.01 per Right, and expire on June 10, 1998.
As a result of the Rights distribution, the Board of Directors authorized
the issuance of 55,000 shares of a new series of preferred stock designated as
Series A Preferred Stock, $1.00 par value. Holders of the Series A Preferred
Stock will be entitled to a cumulative quarterly dividend of the greater of
$1.00 per share or 100 times the per share dividend declared on Common Stock.
The shares have a liquidation preference equal to the greater of $100,000 per
share or 100 times the aggregate amount per share distributed to the holders of
Common Stock. Each share will have 100 votes and will vote together with the
Common Stock.
On August 12, 1997, the Company amended the Rights Agreement so that the
Rights will not become exercisable or transferable as a result of the Offer, the
Offer will not trigger the "flip-in" provision, and the Merger will not trigger
the "flip-over" provision.
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<PAGE> 22
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<S> <C>
(a)(1) Press release issued by the Company and the Parent on August 12, 1997.
(a)(2) Opinion of Donaldson, Lufkin & Jenrette Securities Corporation dated August 12,
1997.* (Attached hereto as Annex B)
(a)(3) Letter to Shareholders, dated August 18, 1997, from John Masefield, Chairman and
Chief Executive Officer of the Company.*
(c)(1) Agreement and Plan of Merger, dated as of August 12, 1997, by and among the
Parent, the Purchaser and the Company.
(c)(2) The Company's Information Statement pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder.* (Attached hereto as Annex A)
(c)(3) Amendment No. 3, dated as of August 12, 1997, by the Company to the Rights
Agreement, dated as of June 10, 1988, as amended, between the Company and PNC
Bank, N.A.
(c)(4) Form of Indemnification Agreement.
(c)(5) Certificate of Incorporation of the Company, as amended to date (incorporated by
reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994).
(c)(6) Bylaws of the Company (incorporated by reference to Exhibit 3(b) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994).
(c)(7) Employment Agreement, dated as of August 12, 1997, by and between the Parent and
John Masefield.
(c)(8) Letter, dated August 12, 1997, from the Parent to Thomas J. DeAngelo.
(c)(9) Special Bonus Plan for Directors and Senior Officers (incorporated by reference to
Exhibit 10(ww) to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993).
</TABLE>
* Included in copies of this Schedule 14D-9 mailed to shareholders.
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<PAGE> 23
SIGNATURE
After reasonable 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.
ISOMEDIX INC.
By: /s/ JOHN MASEFIELD
-----------------------
John Masefield
Chairman, President,
and
Chief Executive Officer
Dated: August 18, 1997
22
<PAGE> 24
ANNEX A
[ISOMEDIX LOGO]
INFORMATION STATEMENT PURSUANT TO SECTION 14(f) OF
THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about August 18, 1997 as a
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Isomedix Inc. (the "Company") to the holders of record of
shares of Common Stock, $.01 par value, of the Company and the associated
Preferred Stock Purchase Rights (together with such Rights, the "Shares") at the
close of business on or about August 14, 1997. You are receiving this
Information Statement in connection with the possible appointment of persons
designated by the Purchaser (as defined below) to a majority of the seats on the
Board of Directors of the Company.
On August 12, 1997, the Company, STERIS Corporation, an Ohio corporation
(the "Parent"), and STERIS Acquisition Corporation, a Delaware corporation and
wholly owned subsidiary of the Parent (the "Purchaser"), entered into an
Agreement and Plan of Merger (the "Merger Agreement") in accordance with the
terms and subject to the conditions of which (i) Parent will cause the Purchaser
to commence a tender offer (the "Offer") for all outstanding Shares at a price
of $20.50 per Share, net to the seller in cash and without interest thereon, and
(ii) the Purchaser will be merged with and into the Company (the "Merger"). As a
result of the Offer and the Merger, the Company will become a wholly owned
subsidiary of the Parent.
The Merger Agreement requires the Company to cause the persons designated
by the Parent to be elected to the Board of Directors of the Company under the
circumstances described therein. See "Right to Designate Directors; The Parent
Designees."
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. You are urged to read this Information Statement carefully. You are
not, however, required to take any action at this time. Capitalized terms used
herein and not otherwise defined herein shall have the meaning set forth in the
Schedule 14D-9.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on
August 18, 1997. The Offer is scheduled to expire at 12:00 midnight, Eastern
Daylight Time, on September 16, 1997, unless the Offer is extended.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
OF THE COMPANY
The Board of Directors of the Company currently consists of six members and
has no vacancies. The Certificate of Incorporation of the Company provides for
the division of the Board of Directors into three classes. Members of each class
are elected to a term of three years and continue in office until the director's
successor is elected and qualified or until the director's earlier resignation
or removal. Each class currently consists of two directors. The terms of office
for the Class C directors, Class A directors and Class B directors expire at the
Annual Meetings of Shareholders of the Company in 1998, 1999, and 2000,
respectively.
RIGHT TO DESIGNATE DIRECTORS; THE PARENT DESIGNEES
The Merger Agreement provides that promptly following the purchase by the
Purchaser pursuant to the Offer of that number of Shares which, when aggregated
with the Shares then owned by the Parent and any of its affiliates, represents
at least a majority of the Shares then outstanding on a fully diluted basis, the
Company will, if requested by the Purchaser or the Parent, take all actions
necessary to cause persons designated by the
A-1
<PAGE> 25
Purchaser (the "Parent Designees") to become directors of the Company so that
the total number of directors so designated equals the product, rounded up to
the next whole number, of (i) the total number of directors of the Company
multiplied by (ii) the ratio of the number of Shares beneficially owned by the
Purchaser or its affiliates at the time of such purchase over the number of
Shares then outstanding. In furtherance thereof, the Company will take whatever
action is necessary, including but not limited to amending the Company's bylaws
to increase the size of its Board of Directors, or using reasonable efforts to
secure the resignation of current directors, or both, as is necessary to permit
that number of the Purchaser's designees to be elected to the Company's Board of
Directors; provided that, prior to the Effective Time (as defined below), the
Company's Board of Directors will always have at least two members who are not
officers, designees, shareholders, or affiliates of the Purchaser (the
"Independent Directors"). All of the Independent Directors will be individuals
who are currently directors of the Company, except to the extent that such
individuals do not wish to be directors. The Company's obligations to appoint
designees to its Board of Directors will be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. Following the election or
appointment of the Purchaser's designees, any amendment to the Merger Agreement,
any termination of the Merger Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations of the
Purchaser or the Parent under the Merger Agreement, any recommendation to
shareholders or any modification or withdrawal of any such recommendation, the
retention of counsel and other advisors in connection with the transactions
contemplated hereby, or any waiver of any of the Company's rights under the
Merger Agreement will require the concurrence of a majority of the Independent
Directors, unless no individuals who are currently directors of the Company wish
to be directors.
The Parent has informed the Company that it will choose the Parent
Designees from persons listed below. The Parent has informed the Company that
each of the Parent Designees has consented to act as a director, if so
designated. Biographical information concerning each of the Parent Designees is
presented below. The biographical information provided herein regarding the
Parent, the Purchaser, and the Parent Designees has been furnished by the
Parent, and the Company assumes no responsibility for the accuracy or
completeness of such information.
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME 5-YEAR EMPLOYMENT HISTORY
- ------------------------------ -------------------------------------------------------------
<S> <C>
Bill R. Sanford............... Mr. Sanford serves as Chairman of the Board of Directors,
President, and Chief Executive Officer of the Parent. He
joined the Parent April 1, 1987.
J. Lloyd Breedlove............ Mr. Breedlove serves as a Senior Vice President of the Parent
and Group President of the Parent's Customer Support Group.
He joined the Parent as Executive Vice President in August
1991.
Michael A. Keresman, III...... Mr. Keresman serves as a Senior Vice President and Chief
Financial Officer of the Parent. He joined the Parent in
January 1988 as Director of Finance and has held positions as
Vice President of Finance, Vice President of Finance and
Administration, Vice President of Finance and Operations,
Secretary, and Vice President of Business Development.
David C. Dvorak............... Mr. Dvorak serves as Vice President, General Counsel, and
Secretary of the Parent. He joined the Parent in June 1996.
Prior to joining the Parent, Mr. Dvorak practiced law with
Thompson Hine & Flory LLP from 1994 to 1996, and with Jones,
Day, Reavis & Pogue from 1991 to 1994.
Paul A. Zamecnik.............. Mr. Zamecnik serves as a Vice President with responsibility
for Regulatory Affairs and Quality Systems and as Group
President of the Capital Systems Group. He joined the Parent
in July 1992 as Director of Marketing and was appointed Vice
President with responsibility for Regulatory Affairs and
Quality Systems in November 1993. He became Group President
of the Capital Systems Group in March 1997.
</TABLE>
A-2
<PAGE> 26
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME 5-YEAR EMPLOYMENT HISTORY
- ------------------------------ -------------------------------------------------------------
<S> <C>
Pamela S. Sedmak.............. Ms. Sedmak serves as Vice President and as Group President of
the Consumables Systems Group. She joined the Parent in
October 1996 as Vice President with responsibility for
Strategic Planning. She became Group President of the
Consumables Systems Group in March 1997. Prior to joining the
Parent, Ms. Sedmak had been with General Electric Company for
twelve years, most recently as General Manager of Marketing
with GE Medical Systems.
Gerard J. Reis................ Mr. Reis serves as Vice President of Business and
Professional Relations. He joined the Parent in 1994 as a
Vice President with responsibility for Administration and
Human Resources. He became Vice President of Business and
Professional Relations in March 1997. Prior to joining the
Parent, Mr. Reis served as Vice President for Student
Services/College Development at Lakeland Community College
from 1989 to 1994.
</TABLE>
None of the Parent Designees (i) is currently a director of, or holds any
position with, the Company, (ii) has a familial relationship with any of the
directors or executive officers of the Company or (iii) to the Parent's
knowledge, beneficially owns any securities (or rights to acquire any
securities) of the Company. The Company has been advised by the Parent that, to
the Parent's knowledge, none of the Parent Designees has been involved in any
transaction with the Company or any of its directors, executive officers or
affiliates which is required to be disclosed pursuant to the rules and
regulations of the Commission, except as may be disclosed herein or in the
Schedule 14D-9.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Biographical information concerning each of the Company's current directors
and executive officers as of August 18, 1997 is presented below:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- --------------------------------- ---- -------------------------------------------------
<S> <C> <C>
John Masefield................... 64 Chairman, President, Chief Executive Officer and
Director (Class C)
Thomas J. DeAngelo............... 42 Vice President-Finance and Administration, Chief
Financial Officer and Director (Class A)
H. Stuart Campbell............... 67 Director (Class B)
Thomas M. Haythe................. 57 Director (Class A)
David M. Lank.................... 59 Director (Class C)
Michael C. Nahl.................. 54 Director (Class B)
George R. Dietz.................. 66 Senior Vice President
Charles P. Truby................. 60 Vice President-Quality Assurance and Regulatory
Affairs
</TABLE>
John Masefield has been Chairman of the Company since its inception in 1972
and President and Chief Executive Officer of the Company from its inception in
1972 until August 1995 and from February 1997 until the present. Between 1960
and 1964, Mr. Masefield was the head of irradiator design for Atomic Energy of
Canada Limited. In that capacity, he was responsible for the design and
development of the first commercial gamma irradiation sterilization facility in
North America for the gamma radiation sterilization of medical devices. He was
also responsible for the design, development and operation of the first
commercial food gamma irradiation facility in North America. Mr. Masefield has
been a lecturer on industrial uses of ionizing radiation at McGill University in
Montreal, Canada and Carleton University in Ottawa, Canada, has authored or
co-authored numerous articles and studies on the subject, has been invited by
the International Atomic Energy Agency to lecture on radiation processing in the
Far East for the past several years, was the Convener
A-3
<PAGE> 27
of the Working Group on Radiation Sterilization to the International Standards
Organization on Radiation Sterilization, was the leader of the U.S. Delegation
to the International Standards Organization's Technical Committee on
Sterilization Standards, was the Co-Chairman of the Radiation Sterilization
Committee of the Association for the Advancement of Medical Instrumentation
(AAMI) and has served on the Board of Directors of AAMI and has participated on
various other United States and Canadian committees that promulgate
recommendations and procedures for the commercial uses of ionizing radiation.
Thomas J. DeAngelo joined the Company in 1982 and has been an officer of
the Company since April 1983. He is currently Vice President-Finance and
Administration, Treasurer and Secretary of the Company. He has been the Chief
Financial Officer of the Company since 1993. Mr. DeAngelo served as Controller
of the Company from April 1983 through April 1987 and as Chief Operating Officer
of the Company from September 1993 to February 1994. Mr. DeAngelo is a Certified
Public Accountant.
H. Stuart Campbell has been a director of the Company since 1984. Since
1983, Mr. Campbell has been Vice President and Owner of Highland Packaging Labs,
Inc., a contract packaging company. Prior to 1982, Mr. Campbell was Group
Chairman of Johnson & Johnson Company, a health care products company. Mr.
Campbell is also a director of Mesa Laboratories, Inc., a designer and
manufacturer of pharmaceutical and medical instruments and systems; Biomatrix,
Inc., a manufacturer of specialty healthcare products based on biological
material; and Atrix Laboratories, Inc., a company engaged in research and
development activities relating to new therapeutic products and drug delivery.
Thomas M. Haythe has been a director of the Company since 1983. Since
February 1982, Mr. Haythe has been a partner in the law firm of Haythe & Curley.
Mr. Haythe is also a director of Novametrix Medical Systems Inc., a manufacturer
of electronic medical instruments; Guest Supply, Inc., a distributor of hotel
guest room amenities and accessories; Westerbeke Corporation, a manufacturer of
marine engine products; and Ramsay Health Care, Inc., a provider of behavioral
healthcare services. Mr. Haythe was Assistant Secretary of the Company from 1983
to 1995.
David M. Lank has been a director of the Company since 1972. Since prior to
1981, Mr. Lank has been a partner of Dorchester Investment Management,
investment counselors.
Michael C. Nahl has been a director of the Company since 1997. Since 1983,
Mr. Nahl has been Senior Vice President and Chief Financial Officer of Albany
International Corp., a manufacturer of paper machine clothing and other
engineered fabrics. From 1981 to 1983, Mr. Nahl was Group Vice President,
Corporate of Albany International Corp. Mr. Nahl is a member of the Chase
Manhattan Bank Regional Advisory Board.
George R. Dietz has been an executive officer of the Company since 1972 and
a Vice President of the Company since 1983. He is currently Senior Vice
President of the Company. Mr. Dietz served as a director of the Company from
1972 to 1996. Mr. Dietz also served as Secretary of the Company from April 1983
through April 1987. Between 1960 and 1969 Mr. Dietz served as project manager
for the United States Atomic Energy Commission's food irradiation programs, as
the United States Army liaison officer to the United States Atomic Energy
Commission, and as project manager for the design, construction and operation of
the first large scale pilot food gamma irradiation facility in North America.
Between 1967 and 1969 he directed the food irradiation engineering activities at
Brookhaven National Laboratories. Mr. Dietz has also authored and co-authored
numerous articles and studies on commercial uses of ionizing radiation and has
participated on various United States committees that promulgate recommendations
and procedures for the commercial uses of ionizing radiation and irradiator
operational safety.
Charles P. Truby has been Vice President-Quality Assurance and Regulatory
Affairs since May 1997. From March 1995 to May 1997, he was Executive Vice
President and Chief Operating Officer of the Company. Dr. Truby joined the
Company from Sherwood Medical Company where he was Vice President of Quality
Management for four years. Prior to that, he was employed by Becton Dickinson
for 14 years in a number of quality management positions.
Elmer A. Sticco resigned as a director of the Company on February 28, 1997.
The term of Peter Mayer, formerly President and Chief Executive Officer of the
Company, as a director expired at the Company's Annual Meeting of Shareholders
on May 20, 1997.
A-4
<PAGE> 28
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has a Compensation and Stock Option
Committee whose members are Messrs. Campbell, Haythe and Lank, an Audit
Committee whose members are Messrs. Campbell, Lank and Nahl, a Nominating
Committee whose members are Messrs. Haythe, Lank and Masefield, and an
Acquisition Committee whose members are Messrs. DeAngelo, Haythe, Masefield and
Nahl. Mr. Sticco was a member of the Compensation and Stock Option Committee
until February 28, 1997 and Mr. Haythe became a member of such committee on May
20, 1997.
The Compensation and Stock Option Committee determines the compensation
arrangements for executive officers of the Company. The Compensation and Stock
Option Committee also administers the Company's 1982 Stock Option Plan, 1992
Stock Option Plan, 1992 Supplemental Stock Option Plan and 1996 Long Term
Incentive Plan and determines the persons who are eligible to receive options
and other awards thereunder, the number of shares to be subject to each option
or award and the other terms and conditions upon which options or awards under
such plans are granted and made exercisable. The Compensation and Stock Option
Committee also administers the Company's 1993 Employee Stock Purchase Plan, and
reviews and approves employee benefit plans in which officers and employees are
eligible to participate.
The Audit Committee is authorized to recommend to the Board of Directors
the engaging and discharging of the Company's independent accountants, and to
review with the independent accountants the plans for and the results of the
auditing engagement, the scope and results of the Company's procedures for
internal auditing, the independence of the accountants and the adequacy of the
Company's system of internal accounting controls.
The Nominating Committee is authorized to review, approve and recommend
persons for election as directors and to fill management positions with the
Company.
The Acquisition Committee is authorized to identify and recommend possible
acquisition candidates for the Company.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met nine times during the fiscal year ended December
31, 1996. Each of the Audit Committee and the Nominating Committee met one time
during the fiscal year ended December 31, 1996. The Acquisition Committee met
five times during the fiscal year ended December 31, 1996. The Compensation and
Stock Option Committee met three times during the fiscal year ended December 31,
1996. Each of the persons named above attended at least 75% of the meetings of
the Board of Directors and meetings of any Committees of the Board on which such
person served which were held during the time that such person served.
A-5
<PAGE> 29
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information for the fiscal years ended
December 31, 1996, 1995 and 1994 concerning the compensation of the Chief
Executive Officer of the Company, and the four other most highly compensated
executive officers of the Company whose total annual salary and bonus exceeded
$100,000 during the fiscal year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- ------------ ALL OTHER
FISCAL SALARY BONUS OPTIONS COMPENSATION(1)
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- --------------------------------- ------ -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
John Masefield................... 1996 $247,860 $ 33,000 0 $ 1,243
Chairman (2) 1995 219,855 110,100 365,000(5) 1,279
1994 213,451 150,000 0 1,478
Charles P. Truby................. 1996 144,200 69,000 0 2,385
Executive Vice President 1995 105,788 46,000 50,000 0
and Chief Operating 1994 -- -- -- --
Officer (3)
George R. Dietz.................. 1996 95,000 19,000 0 1,107
Senior Vice President 1995 128,660 25,760 31,000(5) 1,456
1994 120,000 48,000 0 2,073
Thomas J. DeAngelo............... 1996 138,750 49,000 0 1,390
Vice President-Finance 1995 130,515 42,320 30,000(5) 1,358
and Administration, 1994 130,731 52,000 0 2,299
Secretary and Treasurer
Peter Mayer...................... 1996 206,000 112,000 0 0
President and Chief 1995 69,780 13,800 100,000 0
Executive Officer (4) 1994 -- -- -- --
</TABLE>
- ---------------
(1) Includes contributions made by the Company on behalf of the executive
officers to the Company's 401(k) Plan.
(2) Mr. Masefield served as Chairman, President and Chief Executive Officer of
the Company from prior to 1994 until August 1995, and as Chairman from
August 1995 until February 1997, and has served as Chairman, President and
Chief Executive Officer of the Company since February 1997.
(3) Mr. Truby served as Executive Vice President and Chief Operating Officer of
the Company from March 1995 until May 1997, and has served as Vice
President-Quality Assurance and Regulatory Affairs since May 1997.
(4) Mr. Mayer served as President and Chief Executive Officer of the Company
from August 1995 until February 1997.
(5) These options were granted in years prior to 1995 but were repriced in 1995.
The following table sets forth the number and value of options and warrants
held by the executive officers of the Company named in the Summary Compensation
Table at December 31, 1996. None of such executive officers exercised options or
warrants during the fiscal year ended December 31, 1996.
A-6
<PAGE> 30
FISCAL YEAR END OPTION AND WARRANT VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AND WARRANTS OPTIONS AND WARRANTS
AT 1996 FISCAL YEAR END (#) AT 1996 FISCAL YEAR END ($)(1)
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John Masefield....................... 234,900 150,000 $ 124,823 $37,500
Charles P. Truby..................... 10,000 40,000 0 0
George R. Dietz...................... 126,000 0 482,400 0
Thomas J. DeAngelo................... 49,200 0 72,894 0
Peter Mayer.......................... 20,000 80,000 0 0
</TABLE>
- ---------------
(1) In-the-money options and warrants are those where the fair market value of
the underlying Common Stock exceeds the exercise price of the option or
warrant. The value of in-the-money options and warrants is determined in
accordance with regulations of the Securities and Exchange Commission by
subtracting the aggregate exercise price of the option or warrant from the
aggregate year-end value of the underlying Common Stock.
The Company maintains a Retirement Plan (the "Retirement Plan") which
covers its salaried and hourly employees who have completed one year of service
and attained the age of 21. The Retirement Plan is a defined benefit plan
qualified under the Internal Revenue Code of 1986, as amended (the "Code").
The Retirement Plan provides an employee retiring at age 65 with 25 years
of plan participation with a pension beginning at age 65 in an annual amount
equal to 50% of his average compensation during the five consecutive plan years
in which he received the highest average compensation (the "Average Plan
Compensation"). A participant retiring with less than 25 years of service will
receive a reduced pension. An employee's interest in his retirement benefit
under the Retirement Plan vests over a period of years. An employee's annual
retirement benefit under the Retirement Plan is offset by 50% of his estimated
Social Security benefits.
Compensation taken into account in determining benefits under the
Retirement Plan includes salary, bonuses, overtime, commissions and salary
deferrals under the Company's Savings and Protection (401(k)) Plan. In the case
of executive officers of the Company named in the Summary Compensation Table,
compensation covered by the Retirement Plan includes the salary and bonus
reflected in the Summary Compensation Table, but not more than $150,000 for
1996, 1995 and 1994. At December 31, 1996, for purposes of determining benefits
under the Retirement Plan, each of Messrs. Masefield, Dietz, and DeAngelo had
fifteen years of plan participation and each of Messrs. Truby and Mayer had one
year of plan participation.
The following table shows the estimated annual retirement benefit in the
form of a life annuity under the Retirement Plan for employees (including
officers and directors) retiring at age 65 whose Average Plan Compensation and
years of participation would be in the categories shown. The amounts shown in
the table do not reflect the amount of offset for Social Security benefits,
which cannot be ascertained at this time.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
REMUNERATION 11 15 20 25
- ------------ ------- ------- ------- --------
<S> <C> <C> <C> <C>
$ 25,000 $ 5,500 $ 7,500 $10,000 $ 12,500
50,000 11,000 15,000 20,000 25,000
100,000 22,000 30,000 40,000 50,000
150,000 33,000 45,000 60,000 75,000
200,000 44,000 60,000 80,000 100,000
</TABLE>
A-7
<PAGE> 31
COMPENSATION OF DIRECTORS
The Company pays its non-employee directors an annual fee of $10,000, a fee
of $500 for attending each meeting of the Board of Directors and a fee of $300
for attending each Committee meeting. Directors of the Company are eligible to
receive stock options under the Company's Stock Option Plans.
On August 12, 1997, the Board of Directors adopted a severance plan for
directors of the Company. Under the plan, nonemployee directors are entitled to
receive a severance payment upon termination of service with the Company in an
amount equal to $5,000 for each year of service (or portion thereof) as a
director, up to a maximum amount of $70,000 for fourteen or more years of
service. Under the plan, each of Messrs. Campbell, Haythe and Lank would be
entitled to severance in the amount of $70,000 and Mr. Nahl would be entitled to
severance in the amount of $5,000.
The Company has a consulting agreement with Elmer A. Sticco, a former
director of the Company, under which Mr. Sticco provides certain financial and
management advisory services to the Company for an annual consulting fee of
$16,000. The agreement expires on December 31, 1999.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with John Masefield,
Chairman, President, and Chief Executive Officer of the Company. The agreement
is for a term of seven years commencing as of April 1, 1996. Under the
agreement, Mr. Masefield will perform executive, administrative and consultative
services for the Company for not less than fifteen business days per quarter.
The agreement provides for an annual salary of $250,000 and for bonus payments
for exceptional contributions to the Company as determined by the Board of
Directors. The agreement provides for payment of the aggregate salary payable
through the expiration of the term of the agreement upon termination by the
Company of Mr. Masefield's employment for reasons other than for cause or upon
Mr. Masefield's voluntary termination within one year following certain change
of control events involving the Company, and provides for continued payment of
salary through the expiration of the term, but not more than three years, to Mr.
Masefield's beneficiaries in the event of his death prior to the expiration of
the term.
The Company and Mr. Masefield have entered into a supplement dated as of
February 14, 1997 to Mr. Masefield's employment agreement. The supplement
provides for Mr. Masefield to serve as President and Chief Executive Officer of
the Company during the period from February 1997 to February 2001. The
supplement provides for an annual salary of $250,000 subject to cost of living
increases and other increases at the discretion of the Board of Directors, for
participation in the executive bonus program of the Company, and the grant of
options to purchase 100,000 shares of Common Stock at an exercise price equal to
the fair market value thereof on the date of grant. The options are exercisable
in full beginning at any time following one year after the date of grant if at
the time of exercise the closing price for the Common Stock as quoted on the New
York Stock Exchange shall have equalled or exceeded $20.00 per share on at least
twenty trading days, which need not be consecutive, subsequent to the date of
grant. The supplement also provides for extensions of the term of the employment
agreement by one year for each year of service under the supplement.
In connection with the Merger, Mr. Masefield and the Parent have entered
into an employment agreement which will supersede his current employment
agreement and supplement as of the Effective Time. See Item 3 of the Schedule
14D-9.
The Company has entered into an employment agreement effective as of March
27, 1995 with Charles P. Truby, the Executive Vice President and Chief Operating
Officer of the Company, with a 1996 annual salary of $144,200, subject to
increases at the discretion of the Board of Directors. The agreement provides
for an initial term of one year, with automatic one-year extensions (subject to
two months' notice of non-extension). The agreement provides Mr. Truby with an
annual bonus opportunity of up to 60% of his annual salary. The agreement also
provides for payment of 12 months' salary upon the termination by the Company of
Mr. Truby's employment for reasons other than for cause and for payment of two
years' salary upon Mr. Truby's voluntary termination within one year following
certain change of control events involving the Company.
A-8
<PAGE> 32
The Company has entered into employment agreements effective as of February
1, 1988, with each of George R. Dietz -- Senior Vice President and Thomas J.
DeAngelo -- Vice President-Finance and Administration, at current annual
salaries of $95,000 and $138,750, respectively, subject to increases at the
discretion of the Board of Directors. These agreements provide for an initial
term of three years, with automatic one-year extensions (subject to two months'
notice of non-extension). These agreements were automatically extended for one
year on February 1, 1997. Each of these agreements also provides for payment of
three years' annual salary upon termination by the Company of the employee's
employment for reasons other than for cause or upon the employee's voluntary
termination within one year following certain change of control events involving
the Company.
In connection with the Merger, the Parent has agreed that Mr. DeAngelo will
be the President of the Company following the Merger and has agreed to certain
compensation arrangements described in Item 3 of the Schedule 14D-9.
Directors and executive officers of the Company participate in the special
bonus plan for directors and senior officers of the Company. The purpose of the
plan is to compensate participants for a portion of the additional income tax,
attributable to Federal income tax rate increases enacted in 1993, payable by
participants with respect to long-term compensation awards, such as stock
options and warrants for Common Stock of the Company. No bonuses were paid under
the special bonus plan during the fiscal year ended December 31, 1996. On August
12, 1997, bonuses were awarded under the special bonus plan to various directors
and executive officers, including $434,320 to Mr. Masefield and $99,308 to Mr.
Dietz. Such bonuses will be payable in connection with the cancellation and
conversion of Company options and warrants pursuant to the Offer and the Merger.
COMPENSATION AND STOCK OPTION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee of the Board of Directors
consists of H. Stuart Campbell, David M. Lank and, until his resignation from
the Board of Directors on February 28, 1997, Elmer A. Sticco, all of whom are
independent directors of the Company. Thomas M. Haythe was appointed as a member
of the Compensation and Stock Option Committee on May 20, 1997.
SECTION 16(a) REPORTING REQUIREMENTS
Under Section 16(a) of the Securities Exchange Act of 1934, directors and
executive officers of the Company, and persons who own more than ten percent of
the Common Stock, are required to file reports concerning their beneficial
ownership of securities of the Company with the Securities and Exchange
Commission. Directors, executive officers and greater than ten percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) reports they file.
To the Company's knowledge, based solely on a review of copies of such
reports furnished to the Company and confirmations that no other reports were
required during the fiscal year ended December 31, 1996, its directors,
executive officers and greater than ten percent shareholders complied with all
Section 16(a) filing requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Thomas M. Haythe, a Class A director of the Company, is a partner in the
New York law firm of Haythe & Curley, which firm has acted as legal counsel to
the Company for many years.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The shareholders (including any "group," as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) who, to the knowledge of the
Board of Directors of the Company, owned beneficially more than five percent of
any class of the outstanding voting securities of the Company as of August 1,
1997, and their respective shareholdings as of such date (according to
information furnished by them to the
A-9
<PAGE> 33
Company), are set forth in the following table. Except as indicated in the
footnotes to the table, all of such shares are owned with sole voting and
investment power.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT
NAME AND ADDRESS OWNED BENEFICIALLY OF CLASS
- --------------------------------------------------------------- ---------------------- ----------
<S> <C> <C>
The Bass Management Trust
Lee M. Bass
Sid R. Bass Management Trust................................... 641,000(1) 9.92%
201 Main Street, Suite 3200
Fort Worth, Texas 76102
The Kaufmann Fund, Inc......................................... 1,000,000(2) 15.48%
140 East 45th Street, 43rd Floor
New York, New York 10017
Dimensional Fund Advisors Inc.................................. 377,300(3) 5.84%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- ---------------
(1) This information is based upon a Report on Schedule 13D filed by these
shareholders with the Securities and Exchange Commission. Such Schedule 13D
indicates that each of The Bass Management Trust ("BMT"), Lee M. Bass, and
the Sid R. Bass Management Trust ("SRBMT") has sole voting power and sole
dispositive power with respect to 213,700 shares apiece. Such Schedule 13D
also indicates that Perry R. Bass, as Trustee and Trustor of BMT, and Nancy
L. Bass, as Trustor of BMT, may be deemed to beneficially own the shares
owned by BMT and that Sid R. Bass, as Trustee of SRBMT, may be deemed to
beneficially own the shares owned by SRBMT.
(2) This information is based upon a Report on Schedule 13G filed by The
Kaufmann Fund, Inc. with the Securities and Exchange Commission. Such
Schedule 13G indicates that such entity has sole voting power and sole
dispositive power with respect to 1,000,000 shares.
(3) This information is based upon a Report on Schedule 13G filed by Dimensional
Fund Advisors Inc. with the Securities and Exchange Commission. Such
Schedule 13G indicates that such entity has sole voting power with respect
to 262,900 shares and sole dispositive power with respect to 377,300 shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of August 1, 1997, the number of shares
of Common Stock of the Company beneficially owned by each of the Company's
directors and nominees for directors, each executive
A-10
<PAGE> 34
officer named in the Summary Compensation Table, and all directors and executive
officers as a group, based upon information obtained from such persons.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT
NAME OWNED BENEFICIALLY OF CLASS
------------------------------------------------------ ---------------------- --------
<S> <C> <C>
John Masefield........................................ 352,000(1) 5.22%
Thomas J. DeAngelo.................................... 49,200(2) (8)
H. Stuart Campbell.................................... 36,633(3) (8)
Thomas M. Haythe...................................... 27,500(4) (8)
David M. Lank......................................... 113,700(5) 1.75%
Michael C. Nahl....................................... 0 (8)
George R. Dietz....................................... 121,200(6) 1.86%
Charles P. Truby...................................... 20,000(7) (8)
All Directors and Executive Officers as a Group (eight
persons)............................................ 660,233(1)(2)(3) 9.45%
(4)(5)(6)
(7)
</TABLE>
- ---------------
(1) Includes 12,000 shares issuable upon exercise of currently exercisable
warrants held by Mr. Masefield, Chairman of the Board of Directors,
President, Chief Executive Officer, and a Class C director of the Company,
and 272,900 shares issuable upon exercise of currently exercisable stock
options held by Mr. Masefield. Also includes 60,000 shares with respect to
which Mr. Masefield holds irrevocable proxies.
(2) Includes 49,200 shares issuable upon exercise of currently exercisable stock
options held by Mr. DeAngelo, Vice President-Finance and Administration,
Secretary, Treasurer, and a Class A director of the Company.
(3) Includes 14,000 shares issuable upon exercise of currently exercisable
warrants held by Mr. Campbell, a Class B director of the Company, and 22,500
shares issuable upon exercise of currently exercisable stock options.
(4) Includes 27,500 shares issuable upon exercise of currently exercisable stock
options held by Mr. Haythe, a Class A director of the Company.
(5) Includes 30,000 shares issuable upon exercise of currently exercisable
warrants held by Mr. Lank, a Class C director of the Company, and 22,500
shares issuable upon exercise of currently exercisable stock options.
Includes 60,000 shares owned by Nanticoke Limited, of which Mr. Lank is the
President. Mr. Masefield has been granted an irrevocable proxy with respect
to the 60,000 shares owned by Nanticoke Limited.
(6) Includes 57,500 shares issuable upon exercise of currently exercisable
warrants held by Mr. Dietz, Senior Vice President of the Company, and 31,000
shares issuable upon exercise of currently exercisable stock options.
(7) Includes 20,000 shares issuable upon exercise of currently exercisable stock
options held by Mr. Truby, Vice President-Quality Assurance and Regulatory
Affairs of the Company.
(8) Less than one percent.
As of August 11, 1997, the last full trading day prior to date of the
public announcement of the Offer, the per share market value of the Common Stock
was $19.38, based on the closing price for the Common Stock on that date on the
New York Stock Exchange.
A-11
<PAGE> 35
CERTAIN TRANSACTIONS
Reference is made to the matters set forth in Item 3 of the Schedule 14D-9,
which is incorporated herein by reference, and under the headings "Employment
Agreements" and "Director Compensation" in this Information Statement.
OTHER INFORMATION
At the close of business on March 27, 1997, the Company had issued and
outstanding 6,430,298 shares of Common Stock, each of which is entitled to one
vote with respect to each matter to be voted on by shareholders of the Company.
The Company has no class or series of stock outstanding other than the Common
Stock.
A-12
<PAGE> 36
ANNEX B
[DONALDSON, LUFKIN & JENRETTE LOGO]
AUGUST 12, 1997
BOARD OF DIRECTORS
ISOMEDIX INC.
11 APOLLO DRIVE
WHIPPANY, NJ 07981
DEAR SIRS:
You have requested our opinion as to the fairness from a financial point of
view to the stockholders of Isomedix Inc., a Delaware corporation ("Isomedix" or
the "Company"), of the consideration to be received by such stockholders
pursuant to the terms of the Agreement and Plan of Merger, dated as of August
12, 1997 (the "Agreement"), by and among STERIS Corporation, an Ohio corporation
("STERIS"), STERIS Acquisition Corporation, a Delaware corporation ("Acquisition
Sub") and a wholly owned subsidiary of STERIS, and the Company pursuant to which
Acquisition Sub will be merged (the "Merger") with and into Isomedix.
Pursuant to the Agreement, Acquisition Sub will commence a tender offer
(the "Tender Offer") to purchase any and all outstanding shares of common stock,
par value $0.01 per share, of the Company ("Company Common Stock") at a price of
$20.50 per share in cash. The Tender Offer is to be followed by the Merger in
which each share of Company Common Stock not tendered will be converted into the
right to receive $20.50 per share in cash.
In arriving at our opinion, we have reviewed the Agreement and schedules
thereto, as well as the Employment Agreement, dated as of August 12, 1997, by
and between STERIS and John Masefield. We also have reviewed financial and other
information that was publicly available or furnished to us by the Company
including information provided during discussions with management. Included in
the information provided during discussions with management were certain
financial forecasts for the Company for its fiscal years ending December 31,
1997 through December 31, 2006 prepared by the management of the Company. In
addition, we have compared certain financial and securities data of the Company
with various other companies whose securities are traded in public markets,
reviewed the historical stock prices and trading volumes of the Company Common
Stock, reviewed premiums paid in certain other business combinations and
conducted such other financial studies, analyses and investigations as we deemed
appropriate for purposes of this opinion. We were not requested to, nor did we,
solicit the interest of any other party in acquiring the Company.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company or its
representatives, or that was otherwise reviewed by us. With respect to the
financial forecast for the Company supplied to us, we have assumed that it has
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of the Company as to the future
operating and financial performance of the Company. We have not assumed any
responsibility for making an independent evaluation of the Company's assets or
liabilities or for making any independent verification of any of the information
reviewed by us. We have relied as to certain legal matters on advice of counsel
to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not address the relative
merits of the Tender Offer and the Merger and the other business strategies
being considered by the Company's Board of Directors, nor does it address the
Board's decision to proceed with the Tender Offer and the Merger. Our opinion
does not constitute a recommendation to any member of the Company's Board of
Directors as to how such member should vote on
B-1
<PAGE> 37
the proposed transaction. Our opinion does not constitute a recommendation to
any stockholder as to whether such stockholder should tender any shares of the
Company Common Stock into the Tender Offer or how such stockholder should vote
at any stockholder meeting held to vote on the Merger.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. In the ordinary course of
our business, DLJ actively trades the equity securities of Isomedix and STERIS
for its own account and for the accounts of its customers and accordingly may at
any time hold a long or short position in such securities.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be received by the stockholders of the
Company pursuant to the Tender Offer and the Merger as contemplated by the
Agreement is fair to such stockholders from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ MICHAEL J. MCCARTNEY
------------------------------------
MICHAEL J. MCCARTNEY
VICE PRESIDENT
B-2
<PAGE> 1
Exhibit (a)(1)
PRESS ANNOUNCEMENT
FOR IMMEDIATE RELEASE [STERIS LOGO]
Contacts: Michael A. Keresman, III, Senior Vice President and CFO
Gerard J. Reis, Vice President Business and Professional Relations
(216) 354-2600
STERIS TO ACQUIRE ISOMEDIX
Mentor, Ohio (August 12, 1997) - STERIS Corporation (NASDAQ:STRL) and
Isomedix Inc. (NYSE:ISO) today jointly announced an agreement by STERIS to
acquire Isomedix, the leading North American provider of contract sterilization
and microbial reduction services for manufacturers and producers of medical and
non-medical products. The two companies have signed a definitive merger
agreement under which STERIS Acquisition Corporation, a STERIS subsidiary, will
commence a cash tender offer to acquire all of the outstanding shares of
Isomedix for $20.50 per share. The merger agreement has been unanimously
approved by the Board of Directors of each company.
STERIS Corporation, founded in 1987, has rapidly grown to become a world
leader in infection prevention, contamination prevention, and surgical support
systems, products, services, and technologies. Founded in 1972, Isomedix is the
only company in North America providing both gamma radiation and ethylene oxide
contract sterilization and microbial reduction modalities with ISO 9001
registration. Additionally, Isomedix is currently expanding its services to
include electron-beam processing.
STERIS's acquisition of Isomedix is consistent with its overall business
strategy for internal and external growth to become the premier global company
in infection prevention, contamination prevention, and other microbial reduction
and process control products, services, and technologies. The addition of
Isomedix will enable STERIS to provide the broadest capabilities to help
Customers assure that surfaces are free of potentially dangerous microbial
(more)
<PAGE> 2
PRESS ANNOUNCEMENT
AUGUST 12, 1997
PAGE 2
contamination and safe for contact by humans. The acquisition of Isomedix
fulfills a STERIS objective of being able to participate economically in all
surgical procedures, regardless of the type of procedure or location of
performance of the surgery. Upon completion of the acquisition, STERIS products,
processes, and services will provide Customers with the ability to safely and
effectively sterilize all types of surgical devices - reusable, reposable, and
disposable - regardless of whether the devices are processed on-site or off-site
in a centralized or decentralized manner. By using STERIS products and services,
Customers can assure that all surgical devices have been properly sterilized and
transported to the surgical site.
The transaction is expected to add approximately $25 million to STERIS's
March ending fiscal year 1998 revenues with minimal earnings impact in the
current fiscal year as business integration occurs. STERIS expects the
acquisition to be accretive to earnings in subsequent years before the impact of
anticipated sales and expense avoidance synergies. The Company sees significant
upside opportunities through the bundling of products and services in current
markets and the development of new initiatives, such as food processing,
hospital outsourcing, electron-beam industrial applications, and international
market expansion. During the next few years STERIS believes the growth of the
contract sterilization and microbial reduction business will be consistent with
its stated overall growth objectives of 15% to 20% in annual revenues and 20% to
25% in earnings.
The combination of STERIS and Isomedix brings together industry leaders
with significant technological expertise, processes, methodologies, and
services. Consolidation within the healthcare industry in both the patient care
and supplier market segments has created the need for companies with broader
overall product lines and service capabilities. Customers are increasingly
concerned about patient and worker safety while improving clinical and economic
outcomes. The expanded capabilities of STERIS further enable Customers to
optimize their costs and outcomes within the critical infection prevention and
surgical support areas.
(more)
<PAGE> 3
PRESS ANNOUNCEMENT
AUGUST 12, 1997
PAGE 3
STERIS plans to use Isomedix as a base for expansion into other domestic
market segments and the fragmented international contract sterilization and
microbial reduction markets. Many of the current common Customers of STERIS and
Isomedix are large, multinational medical products companies that can benefit
from supplier consolidation of high quality, complementary products and
services.
Bill R. Sanford, STERIS's Chairman, President, and Chief Executive
Officer stated, "This transaction expands our ability to serve our current
Customers while significantly enhancing STERIS's access to the scientific and
industrial contract sterilization and microbial reduction markets. The purchase
is consistent with the recent acceleration of our penetration of our target
markets through internal growth and the acquisitions of Amsco, Surgicot, Calgon
Vestal, and Joslyn. In addition, this transaction further increases the
percentage of STERIS's revenues generated by sales of consumables and services.
Our stated objective is to have such revenues account for at least 50% of total
revenues. STERIS will now have capabilities in infection prevention,
contamination prevention, and other microbial reduction applications beyond any
other company in the world. We are experts in what we do and are well-positioned
to take advantage of attractive growth opportunities. We believe the application
of STERIS's considerable marketing, financial, technical, and educational
resources to the Isomedix target Customer base will enhance Isomedix's North
American leadership position and ability to capture a large part of the growth
of the contract sterilization business."
Mr. Sanford continued, "We are extremely pleased to welcome John
Masefield as a valuable addition to the STERIS team. Isomedix will be a wholly
owned subsidiary of STERIS, and John will continue as Chairman and CEO of
Isomedix. John is a pioneer and visionary of the contract sterilization
industry, having founded Isomedix almost 25 years ago. He will provide valuable
guidance as STERIS enters this market in a significant way."
(more)
<PAGE> 4
PRESS ANNOUNCEMENT
AUGUST 12, 1997
PAGE 4
Mr. Masefield stated, "We at Isomedix are excited about the potential of
the combination with STERIS to further enhance our leadership position in
contract sterilization. This year Isomedix is celebrating our 25th Anniversary.
For a quarter century we have been building and expanding upon Isomedix's
reputation as the number one company for providing the highest quality contract
sterilization and microbial reduction services to industry. The application of
STERIS's resources and market position to our business should enable Isomedix to
accelerate our growth in our core medical market while capitalizing on the
extraordinary opportunities in the food, cosmetics, and other markets where
significant concerns exist regarding microbial contamination."
The tender offer of $20.50 in cash for each Isomedix share represents a
total transaction value of approximately $142 million. The offer price is a
premium of more than 30% above the last 90 days average trading price and
provides immediate liquidity to Isomedix stockholders. The objective of both
STERIS and Isomedix is to complete the transaction before the end of September.
The tender offer is subject to satisfaction of customary closing conditions,
including STERIS's acquisition of a majority of the outstanding Isomedix stock.
The tender offer is not conditioned upon financing.
STERIS reported revenues of $155.1 million for its first three months of
fiscal 1998, ended June 30, 1997. Net income for the quarter increased 21% to
$11.7 million, compared to $9.7 million in fiscal 1997 first quarter, adjusted
for non-recurring and restructuring charges. During the same quarter, Isomedix
reported revenues of $13.6 million and income from continuing operations of $2.3
million.
(more)
<PAGE> 5
PRESS ANNOUNCEMENT
AUGUST 12, 1997
PAGE 5
STERIS Corporation is a leading provider of infection prevention,
contamination prevention, and surgical support systems, products, services, and
technologies to healthcare, scientific, research, and industrial Customers
throughout the world. The Company has approximately 4,000 Associates (employees)
worldwide, including more than 1,200 direct sales, service, and field support
personnel. Customer Support facilities are located in major global market
centers with manufacturing operations in the United States, Canada, Germany, and
Finland.
*****
This press release contains statements concerning certain trends and
other forward-looking information affecting or relating to the Company and its
industry that are intended to qualify for the protections afforded
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. There are many important factors that could cause actual results to
differ materially from those in the forward-looking statements. Many of these
important factors are outside STERIS's control. Changes in market conditions,
including competitive factors and changes in government regulations, could cause
actual results to differ materially from the Company's expectations. No
assurance can be provided as to any future financial results. Other potentially
negative factors that could cause actual results to differ materially from those
in the forward-looking statements include (a) the possibility that the
continuing integration of acquired businesses will take longer than anticipated,
(b) the potential for increased pressure on pricing that leads to erosion in
profit margins, and (c) the possibility of reduced demand, or reductions in the
rate of growth in demand, for the Company's products.
(end)
<PAGE> 1
EXHIBIT (a)(3)
[ISOMEDIX LOGO]
August 18, 1997
TO THE SHAREHOLDERS OF ISOMEDIX INC.
Dear Shareholder:
I am pleased to report that on August 12, 1997, Isomedix Inc., a Delaware
corporation ("Isomedix"), entered into an agreement and plan of merger (the
"Merger Agreement") with STERIS Corporation, an Ohio corporation, and its wholly
owned subsidiary, STERIS Acquisition Corporation, a Delaware corporation (the
"Merger Sub"), that provides for the acquisition of all outstanding shares of
Common Stock, $.01 par value, together with the associated Preferred Stock
Purchase Rights (the "Shares"), of Isomedix by the Merger Sub at a price of
$20.50 per Share in cash, net to the seller, without interest. Under the terms
of the proposed transaction, the Merger Sub has commenced a tender offer (the
"Tender Offer") for all outstanding Shares at $20.50 per Share. The Tender Offer
is currently scheduled to expire at 12:00 midnight, Eastern Daylight Time, on
Tuesday, September 16, 1997.
Following a successful completion of the Tender Offer, upon approval by
shareholder vote, if required, the Merger Sub will be merged with and into
Isomedix (the "Merger"), and all Shares not purchased in the Tender Offer will
be converted into the right to receive $20.50 per Share in cash, net to the
seller, without interest (subject to appraisal rights of dissenting
shareholders, if any, under applicable law).
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
DETERMINED THAT THE TENDER OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE ISOMEDIX SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT ALL ISOMEDIX SHAREHOLDERS TENDER THEIR SHARES
PURSUANT TO THE TENDER OFFER.
The recommendation of the Board of Directors is described in the
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
filed by Isomedix with the Securities and Exchange Commission and enclosed with
this letter. In arriving at its recommendation, the Board of Directors gave
careful consideration to a number of factors. These factors included the opinion
of Donaldson, Lufkin & Jenrette Securities Corporation, financial advisor to
Isomedix, a copy of which is attached as an annex to the Schedule 14D-9. We urge
you to read carefully the Schedule 14D-9 in its entirety so that you will be
more informed as to the Board's recommendation.
Also accompanying this letter is a copy of the Offer to Purchase and
related materials, including a Letter of Transmittal for use in tendering
Shares. These documents set forth the terms and conditions of the Offer and
provide instructions as to how to tender your Shares. We urge you to read these
materials carefully as well.
The management and directors of Isomedix thank you for the support you have
given Isomedix.
On behalf of the Board of Directors,
Sincerely,
John Masefield Signature
John Masefield
Chairman, President, and Chief
Executive Officer
<PAGE> 1
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
DATED AS OF
AUGUST 12, 1997
AMONG
STERIS CORPORATION,
STERIS ACQUISITION CORPORATION,
AND
ISOMEDIX INC.
8/12/97
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
<S> <C> <C>
THE TENDER OFFER AND MERGER.......................................1
SECTION 1.01. Tender Offer......................................................................1
SECTION 1.02. The Merger........................................................................4
SECTION 1.03. Conversion of Shares..............................................................5
SECTION 1.04. Surrender and Payment.............................................................6
SECTION 1.05. Company Options...................................................................7
SECTION 1.06. Shares of Dissenting Stockholders.................................................8
ARTICLE II
THE SURVIVING CORPORATION; THE PARENT DIRECTORS.............................9
SECTION 2.01. Certificate of Incorporation......................................................9
SECTION 2.02. Bylaws............................................................................9
SECTION 2.03. Directors and Officers............................................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................9
SECTION 3.01. Corporate Existence and Power.....................................................9
SECTION 3.02. Corporate Authorization..........................................................10
SECTION 3.03. Governmental Authorization.......................................................10
SECTION 3.04. Certificate of Incorporation and Bylaws..........................................10
SECTION 3.05. Non-Contravention................................................................10
SECTION 3.06. Capitalization...................................................................11
SECTION 3.07. Subsidiaries.....................................................................12
SECTION 3.08. Company SEC Reports..............................................................13
SECTION 3.09. Financial Statements; No Undisclosed Liabilities.................................13
SECTION 3.10. Material Contracts...............................................................14
SECTION 3.11. Absence of Certain Changes.......................................................14
SECTION 3.12. Litigation.......................................................................15
SECTION 3.13. Permits; Compliance..............................................................15
SECTION 3.14. Product Warranties and Liabilities...............................................16
SECTION 3.15. ERISA............................................................................16
SECTION 3.16. Labor............................................................................19
SECTION 3.17. Taxes............................................................................19
SECTION 3.18. FDA and Related Matters..........................................................20
SECTION 3.19. Nuclear Regulatory and Related Matters...........................................22
SECTION 3.20. Intellectual Property Rights.....................................................23
SECTION 3.21. Environmental Protection.........................................................24
SECTION 3.22. Finders and Investment Bankers...................................................26
SECTION 3.23. Insurance........................................................................26
</TABLE>
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i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 3.24. Indemnification..................................................................27
SECTION 3.25. Board Approval and Recommendation................................................27
SECTION 3.26. Vote Required....................................................................28
SECTION 3.27. Opinion of Financial Advisor.....................................................28
SECTION 3.28. Company Rights Agreement.........................................................28
SECTION 3.29. Takeover Statutes................................................................28
SECTION 3.30. Information Supplied.............................................................29
SECTION 3.31. Real and Personal Property.......................................................29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND MERGER SUB....................................................30
SECTION 4.01. Corporate Existence..............................................................30
SECTION 4.02. Corporate Authorization..........................................................30
SECTION 4.03. Governmental Authorization.......................................................31
SECTION 4.04. Non-Contravention................................................................31
SECTION 4.05. Parent SEC Reports...............................................................32
SECTION 4.06. Financial Statements; No Undisclosed Liabilities.................................32
SECTION 4.07. Litigation.......................................................................32
SECTION 4.08. Vote Required....................................................................33
SECTION 4.09. Availability of Funds............................................................33
SECTION 4.10. Information Supplied.............................................................33
SECTION 4.11. Certificate of Incorporation and Bylaws..........................................33
SECTION 4.12. Finders and Investment Bankers...................................................34
SECTION 4.13. Board Approval...................................................................34
SECTION 4.14. No Prior Activities..............................................................34
SECTION 4.15. Fraudulent Conveyance............................................................34
ARTICLE V
COVENANTS OF THE COMPANY....................................................35
SECTION 5.01. Conduct of the Company...........................................................35
SECTION 5.02. Access to Information............................................................36
SECTION 5.03. Other Offers.....................................................................37
SECTION 5.04. Notices of Certain Events........................................................38
SECTION 5.05. Merger Meeting; Proxy Statement..................................................39
ARTICLE VI
COVENANTS OF THE PARENT AND MERGER SUB...............................................40
SECTION 6.01. Director and Officer Liability...................................................40
SECTION 6.02. Employment Agreement.............................................................42
SECTION 6.03. Employee Benefits................................................................42
SECTION 6.04. Merger Meeting...................................................................42
</TABLE>
8/12/97
ii
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE VII
<S> <C> <C>
COVENANTS OF THE PARENT, MERGER SUB, AND THE COMPANY....................................42
SECTION 7.01. Reasonable Efforts...............................................................43
SECTION 7.02. Certain Filings and Consents.....................................................43
SECTION 7.03. Public Announcements.............................................................43
SECTION 7.04. State Takeover Laws..............................................................43
ARTICLE VIII
CONDITIONS TO THE MERGER.......................................................44
SECTION 8.01. Conditions to the Obligations of Each Party......................................44
SECTION 8.02. Conditions to the Obligations of the Parent and Merger Sub.......................44
ARTICLE IX
TERMINATION............................................................44
SECTION 9.01. Termination......................................................................44
SECTION 9.02. Effect of Termination............................................................46
ARTICLE X
MISCELLANEOUS...........................................................46
SECTION 10.01. Notices..........................................................................46
SECTION 10.02. Survival.........................................................................47
SECTION 10.03. Amendments; No Waivers...........................................................47
SECTION 10.04. Fees and Expenses................................................................47
SECTION 10.05. Successors and Assigns...........................................................49
SECTION 10.06. Governing Law....................................................................49
SECTION 10.07. Counterparts; Effectiveness......................................................49
SECTION 10.08. Entire Agreement.................................................................49
SECTION 10.09. Headings.........................................................................49
SECTION 10.10. Severability.....................................................................49
SECTION 10.11. Specific Performance.............................................................50
SECTION 10.12. "Knowledge" of the Company.......................................................50
INDEX OF DEFINED TERMS .................................................................................52
LIST OF SCHEDULES .................................................................................54
</TABLE>
8/12/97
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of August
12, 1997 (this "Agreement"), is made by and among STERIS CORPORATION, an Ohio
corporation (the "Parent"), STERIS ACQUISITION CORPORATION, a Delaware
corporation and wholly owned subsidiary of the Parent ("Merger Sub"), and
ISOMEDIX INC., a Delaware corporation (the "Company").
In consideration of the respective representations,
warranties, and agreements set forth herein, the parties agree as follows:
ARTICLE I
THE TENDER OFFER AND MERGER
SECTION 1.01. Tender Offer
(a) As promptly as practicable, but in no event later
than five business days after the public announcement of the execution of this
Agreement, Merger Sub will, and the Parent will cause Merger Sub to, offer to
purchase ( the "Offer") each outstanding share of Common Stock, $0.01 par value
(the "Common Stock"), of the Company, including the associated Company Right (as
defined in Section 3.06) (together with the Company Right, "Company Stock"),
tendered pursuant to the Offer at a price of $20.50 per share, net to the seller
in cash, and to cause the Offer to remain open until September 16, 1997 (the
"Expiration Date"). The obligations of Merger Sub and the Parent to consummate
the Offer and to accept for payment and purchase the Company Stock tendered in
the Offer will be subject only to the conditions set forth in Schedule 1.01(a)
(Offer Conditions) (the "Offer Conditions"). At the Company's request, Merger
Sub will, and the Parent will cause Merger Sub to, extend the expiration date of
the Offer from time to time for up to an aggregate of ten business days
following the Expiration Date if the condition set forth in clause (1) of the
first paragraph of the Offer Conditions is not fulfilled prior to 5:00 p.m. on
the Expiration Date. The Parent further agrees that, in the event that it would
otherwise be entitled to terminate the Offer at any scheduled expiration thereof
due to the failure of one or more of the conditions set forth in paragraphs (a),
(b), or (c) of clause (2) of the Offer Conditions to be satisfied or waived and
it is reasonably likely that such failure can be cured on or before October 14,
1997, it shall give the Company notice thereof and, at the request of the
Company, extend the Offer until the earlier of (1) such time as such condition
is or conditions are satisfied or waived and (2) the date chosen by the Company
which shall not be later than the earlier of (x) October 14, 1997 or (y) the
earliest date on which the Company reasonably believes such condition or
conditions will be satisfied; provided that, if such condition or conditions are
not satisfied by any date chosen by the Company pursuant to this clause (y), the
Company may request further extensions of the Offer not beyond October 14, 1997.
Merger Sub will not, and the Parent
8/12/97
1
<PAGE> 6
will cause Merger Sub not to, decrease the price payable in the Offer, change
the form of consideration payable in the Offer, reduce the number of shares of
Company Stock subject to the Offer, change the Offer Conditions, impose
additional conditions to its obligation to consummate the Offer and to accept
for payment and purchase shares of Company Stock tendered in the Offer, or
change any other terms of the Offer in a manner adverse to the holders of the
Company Stock, except that Merger Sub may extend the Expiration Date to the
extent required by applicable law or if the Offer Conditions are not satisfied.
Subject to the terms and conditions of the Offer and this Agreement, Merger Sub
shall, and the Parent shall cause Merger Sub to, accept for payment, and pay
for, all shares of Company Stock validly tendered and not withdrawn pursuant to
the Offer that Merger Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer as promptly as practicable after the expiration of the
Offer; except that, without the prior written consent of the Company, Merger Sub
shall not, and the Parent shall cause Merger Sub not to, accept for payment, or
pay for, any shares of Company Stock so tendered unless the Minimum Condition
(as defined in the Offer Conditions) shall have been satisfied.
(b) On the date of the commencement of the Offer,
Merger Sub and the Parent will file with the Securities and Exchange Commission
(the "SEC") their Tender Offer Statement on Schedule 14D-1 (together with all
supplements or amendments thereto, and including all exhibits, the "Offer
Documents"). Merger Sub and the Parent will give the Company and its counsel a
reasonable opportunity to review and comment upon the Offer Documents prior to
their being filed with the SEC or disseminated to the Company's stockholders.
The Parent and Merger 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 or
warranty is made by the Parent or Merger Sub with respect to information
supplied by the Company or any of its stockholders in writing specifically for
inclusion or incorporation by reference in the Offer Documents. Each of the
Parent, Merger 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
the Parent and Merger Sub further agree to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to the Company's stockholders, in
each case as and to the extent required by applicable federal securities laws.
The Parent and Merger Sub agree to provide the Company and its counsel any
comments the Parent, Merger 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.
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(c) As promptly as practicable, but in no event later
than the date on which the Parent shall have notified the Company that the Offer
Documents initially are to be filed with the SEC, the Company will file its
Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (together with all supplements or amendments thereto, and
including all exhibits, "Schedule 14D-9"), which shall include a recommendation
by the Company's Board of Directors that the Company's stockholders accept the
Offer and tender their Company Stock pursuant to the Offer. 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 or warranty is made by the Company with respect to information
supplied by the Parent or Merger Sub in writing specifically for inclusion in
the Schedule 14D-9. Each of the Company, the Parent, and Merger Sub agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that such information shall have become false or misleading
in any material respect, and the Company further agrees to take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable federal securities laws. The Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide the Parent and its counsel any comments the Company or
its counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments. The Company's Board of
Directors has resolved to recommend that the Company's stockholders accept the
Offer and tender their Company Stock pursuant to the Offer and has received an
opinion from Donaldson Lufkin & Jenrette Securities Corporation ("DLJ") that, as
of the date of such opinion, the consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is fair to such
stockholders from a financial point of view.
(d) If requested by the Parent or Merger Sub, the
Company will, promptly following the purchase by Merger Sub pursuant to the
Offer of that number of shares of Company Stock which, when aggregated with the
shares of Company Stock then owned by the Parent and any of its affiliates,
represents at least a majority of the shares of Company Stock then outstanding
on a fully diluted basis, take all actions necessary to cause persons designated
by Merger Sub to become directors of the Company so that the total number of
directors so designated equals the product, rounded up to the next whole number,
of (i) the total number of directors of the Company multiplied by (ii) the ratio
of the number of shares of Company Stock beneficially owned by Merger Sub or its
affiliates
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at the time of such purchase over the number of shares of Company Stock then
outstanding. In furtherance thereof, the Company will take whatever action is
necessary, including but not limited to amending the Company's bylaws, to
increase the size of its Board of Directors, or use reasonable efforts to secure
the resignation of directors, or both, as is necessary to permit that number of
Merger Sub's designees to be elected to the Company's Board of Directors;
provided that, prior to the Effective Time, the Company's Board of Directors
will always have at least two members who are not officers, designees,
stockholders, or affiliates of Merger Sub ("Independent Directors"). All of the
Independent Directors will be individuals who are currently directors of the
Company, except to the extent that no such individuals wish to be directors. The
Company's obligations to appoint designees to its Board of Directors will be
subject to Section 14(f) of the Exchange Act, and Rule 14f-1 promulgated
thereunder. The Parent and Merger Sub will supply to the Company and will be
solely responsible for any information with respect to either of them and their
nominees, officers, directors, and affiliates required by Section 14(f) and Rule
14f-1. The Company will promptly take all actions required pursuant to Section
14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.01
and (provided that Merger Sub shall have provided to the Company on a timely
basis all information required to be included in the Information Statement with
respect to Merger Sub's designees) will include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1.
(e) Following the election or appointment of Merger
Sub's designees pursuant to Section 1.01(d), any amendment to this Agreement,
any termination of this Agreement by the Company, any extension by the Company
of the time for the performance of any of the obligations of Merger Sub or the
Parent under this Agreement, any recommendation to stockholders or any
modification or withdrawal of any such recommendation, the retention of counsel
and other advisors in connection with the transactions contemplated hereby, or
any waiver of any of the Company's rights under this Agreement will require the
concurrence of a majority of the Independent Directors, unless no individuals
who are currently directors of the Company wish to be directors. In addition,
the Independent Directors shall have the right to retain, at the expense of the
Company, one separate firm of counsel to represent them in connection with the
transactions contemplated hereby.
(f) The parties will cooperate with each other,
including by furnishing any necessary information and making any filings
required by applicable law, to ensure that the matters contemplated by this
Section 1.01 are consummated as promptly as practicable.
SECTION 1.02. The Merger.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time (as defined in Section 1.02(b)),
Merger Sub will be
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merged with and into the Company in accordance with the Delaware General
Corporation Law ("Delaware Law"). As a result of this merger (the "Merger"), the
separate existence of Merger Sub will cease and the Company will be the
surviving corporation (the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to
the extent permitted hereunder, waiver of all conditions to the Merger set forth
in Article VIII, the parties will cause a certificate of merger in such form as
is required by, and executed in accordance with, Delaware Law to be duly filed
with the Secretary of State of the State of Delaware. The Merger will become
effective when the certificate of merger is so filed (the "Effective Time").
(c) From and after the Effective Time, the Merger
will have the effects specified in Delaware Law.
(d) The closing of the Merger (the "Closing") will
take place (i) at the offices of Thompson Hine & Flory LLP, 3900 Key Center, 127
Public Square, Cleveland, Ohio 44114-1216, at 10:00 a.m. on the first business
day following the date on which the last to be fulfilled or waived of the
conditions set forth in Article VIII (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions at the Closing) have been satisfied or waived in
accordance with this Agreement or (ii) at such other place and time as the
parties may agree.
SECTION 1.03. Conversion of Shares.
At the Effective Time:
(a) Each share of Common Stock of Merger Sub (a share
of "Merger Sub Common Stock") issued and outstanding immediately prior to the
Effective Time will be converted into one share of Common Stock of the Surviving
Corporation.
(b) Each share of Company Stock issued and
outstanding immediately prior to the Effective Time will, except as otherwise
provided in Section 1.03(c), be converted, by virtue of the Merger and without
any action on the part of the holder thereof, into the right to receive, without
interest, an amount in cash equal to the price per share paid in the Offer (the
"Merger Consideration"). Subject to Section 1.06, from and after the Effective
Time, all shares of Company Stock, by virtue of the Merger and without any
action on the part of the holders thereof, will be canceled and retired and
cease to exist, and each holder of a certificate representing any shares of
Company Stock immediately prior to the Effective Time (a "Stock Certificate")
will thereafter cease to have any rights with respect to such shares of Company
Stock, except the right to receive the
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Merger Consideration therefor upon the surrender of the Stock Certificate in
accordance with Section 1.04.
(c) Each outstanding share of Company Stock held by
the Company as a treasury share or owned by the Parent, Merger Sub, or any other
Subsidiary of the Parent immediately prior to the Effective Time will be
canceled, and no payment will be made with respect thereto.
SECTION 1.04. Surrender and Payment.
(a) Prior to the Effective Time, the Parent will
appoint a bank or trust company reasonably acceptable to the Company (the
"Exchange Agent") for the purpose of exchanging Stock Certificates. The Parent
will make available to the Exchange Agent funds in amounts and at the times
necessary for the payment of the Merger Consideration in accordance with this
Section 1.04 (such cash is referred to as the "Exchange Fund").
(b) Promptly, but in no event more than five business
days, after the Effective Time, the Parent will send, or will cause the Exchange
Agent to send, to each holder of a Stock Certificate a letter of transmittal and
instructions for use in surrendering the Stock Certificates for payment in
accordance with this Section 1.04. The agreement with the Exchange Agent will
provide that, upon surrender to the Exchange Agent of such Stock Certificates,
together with the letter of transmittal, duly executed and completed in
accordance with the instructions thereto and such other documents as may be
reasonably required by the Exchange Agent, the Exchange Agent shall promptly pay
to the persons entitled thereto, out of the Exchange Fund, a check in the amount
to which such persons are entitled pursuant to Section 1.03(b), after giving
effect to any required tax withholdings, and such Stock Certificate shall
forthwith be canceled.
(c) After the Effective Time, Stock Certificates will
represent the right, upon surrender thereof to the Exchange Agent, together with
a duly executed and properly completed letter of transmittal relating thereto,
to receive (i) cash in the amount to which such holder is entitled under Section
1.03 after giving effect to any required tax withholding or (ii) payment from
the Surviving Corporation of the "fair value" of such shares of Company Stock as
determined under Section 262 of the Delaware Law, subject to the conditions set
forth therein and in accordance with Section 1.06 of this Agreement. No interest
will be paid or will accrue on such amount.
(d) If any cash is to be paid to a Person other than
the registered holder of the Stock Certificates surrendered in exchange
therefor, it will be a condition to such payment that the Stock Certificates so
surrendered be properly endorsed or otherwise in proper form for transfer and
that the Person requesting such payment pay to the Exchange Agent any transfer
or other taxes required as a result of such issuance or
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establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not applicable. For purposes of this Agreement, "Person" means an
individual, a corporation, a partnership, a limited liability company, an
association, a trust, or any other entity or organization, including a
government or political subdivision or any agency or instrumentality thereof.
(e) At and after the Effective Time, the stock
transfer books of the Company will be closed, and there will be no further
registration of transfers of shares of Company Stock outstanding prior to the
Effective Time. If, at or after the Effective Time, Stock Certificates are
presented to the Surviving Corporation, they will be canceled and exchanged in
accordance with this Article I.
(f) Any cash in the Exchange Fund that remains
unclaimed by the holders of shares of Company Stock six months after the
Effective Time will be returned to the Parent, upon demand, and any such holder
who has not surrendered his shares of Company Stock in accordance with this
Section 1.04 prior to that time will thereafter look only to the Parent, as a
general creditor thereof, to pay the Merger Consideration to which such holder
is entitled. Notwithstanding the foregoing, the Parent will not be liable to any
holder of shares of Company Stock for any amount paid to a public official
pursuant to applicable abandoned property, escheat, or similar laws.
(g) If any Stock Certificate is lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Stock Certificate to be lost, stolen, or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Parent may direct as indemnity against any claim that may be made
against it with respect to such Stock Certificate, the Exchange Agent will pay
the Merger Consideration payable in respect of such Stock Certificate pursuant
to this Agreement.
SECTION 1.05. Company Options.
(a) At the Effective Time, each outstanding option or
warrant (a "Company Option") to purchase shares of Company Stock, whether or not
exercisable, granted under any employee stock option plan, warrant plan for
directors, or incentive plan of the Company (the "Company Option Plans") will be
canceled, and in consideration of such cancellation, will be converted into the
right to receive, without interest, an amount in cash (the "Cash Payment") equal
to the product of (i) the number of shares of Company Stock subject to the
Company Option and (ii) the excess of (A) the Merger Consideration over (B) the
exercise price per share of the Company Option; provided that, with respect to
any Person subject to Section 16 of the Exchange Act, any such amount shall be
paid, without interest, as soon as practicable after the first date payment can
be made without liability of such Person under Section 16(b) of the Exchange
Act. The Parent shall be
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entitled to cause the Surviving Corporation to withhold from amounts otherwise
payable pursuant to this Section 1.05 any amount required to be withheld under
applicable tax laws.
(b) The Company will take such actions as may be
necessary so that each employee participating in the Company's employee stock
purchase plan (the "ESPP") immediately prior to the Effective Time shall only be
entitled to receive an amount in cash equal to the result of multiplying (i) the
Merger Consideration by (ii) a fraction, the numerator of which is the
accumulated payroll deductions in the employee's account under the ESPP at the
Effective Time, and the denominator of which is the purchase price for the
"Offering" or the "Purchase Period" (as such terms are defined in the ESPP) in
effect immediately prior to the Effective Time.
(c) Each holder of a Company Option, whether or not
exercisable, shall have the right, exercisable at any time prior to the
expiration of the Offer by written notice to the Company and the Parent, to
elect to receive from the Company the Cash Payment, without interest, in
exchange for cancellation of such Company Option effective upon the date the
Cash Payment is made, provided that, no such holder shall be entitled to receive
the Cash Payment pursuant to this Section 1.05(c) unless the Minimum Condition
has been met and Merger Sub has purchased shares of Company Stock pursuant to
the Offer. Any Cash Payments made pursuant to this Section 1.05(c) shall be made
within two business days of the payment for shares of Company Stock pursuant to
the Offer.
SECTION 1.06. Shares of Dissenting Stockholders.
Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of Company 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 shares of Company
Stock to dissent from the Merger and require appraisal of their shares shall not
be converted as described in Section 1.03(b), but shall be converted into the
right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to Delaware Law. If, after the Effective Time,
such Dissenting Stockholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right to appraisal, in any case pursuant to
Delaware Law, his shares of Company Stock shall be deemed to be converted as of
the Effective Time into the right to receive the Merger Consideration. The
Company shall give the Parent (i) prompt notice of any demands for appraisal of
shares of Company Stock received by the Company and (ii) the opportunity to
participate in all negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior written consent of the Parent,
make any payment with respect to, or settle, offer to settle, or otherwise
negotiate, any such demands.
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ARTICLE II
THE SURVIVING CORPORATION; THE PARENT DIRECTORS
SECTION 2.01. Certificate of Incorporation.
Subject to Section 6.01(a), the certificate of
incorporation of Merger Sub in effect immediately prior to the Effective Time
will be the certificate of incorporation of the Surviving Corporation after the
consummation of the Merger until amended in accordance with applicable law.
SECTION 2.02. Bylaws.
Subject to Section 6.01(a), the bylaws of Merger Sub
in effect immediately prior to the Effective Time will be the bylaws of the
Surviving Corporation after the consummation of the Merger until amended in
accordance with applicable law.
SECTION 2.03. Directors and Officers.
From and after the Effective Time, until successors
are duly elected or appointed and qualified in accordance with applicable law,
the directors and officers of Merger Sub immediately prior to the Effective Time
will be the directors and officers of the Surviving Corporation after the
consummation of the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent
that:
SECTION 3.01. Corporate Existence and Power.
The Company is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of Delaware
and, in all material respects, has all requisite corporate power and authority
to own, lease, and operate its properties and to carry on its business as now
conducted. For purposes of this Agreement, "Subsidiary" of any Person means (i)
any corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are, directly or indirectly, owned by
such Person, and (ii) any partnership of which such Person is a general partner.
The Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where it is required to be so qualified by
reason of the character of the property owned or leased by it or the nature of
its activities, except where the failure to be qualified or in good
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standing is not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect (as defined in the Offer Conditions).
SECTION 3.02. Corporate Authorization.
The execution, delivery, and performance by the
Company of this Agreement and the consummation by the Company of the Merger and
the other transactions contemplated by this Agreement are within the Company's
corporate power and authority and, except for any required approval by the
Company's stockholders in connection with the consummation of the Merger, have
been duly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the Company and,
assuming the due authorization, execution, and delivery hereof by the Parent and
Merger Sub, constitutes a legal, valid, and binding agreement of the Company.
SECTION 3.03. Governmental Authorization.
The execution, delivery, and performance by the
Company of this Agreement and the consummation by the Company of the Merger and
the other transactions contemplated by this Agreement do not require any
consent, approval, authorization, or permit of, other action by, or filing with,
any governmental body, agency, official, or authority other than (i) as set
forth on Section 3.03 of the Disclosure Schedule delivered by the Company to
Parent concurrently with the execution and delivery of this Agreement (the
"Company Disclosure Schedule"), (ii) the filing of appropriate certificates of
merger in accordance with Delaware Law, (iii) the filing and delivery of the
Schedule 14D-9, (iv) compliance with applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the Exchange Act, and (v) any such other action or filing where the
failure to take the action or to make the filing is not reasonably likely (A) to
prevent or materially to delay the consummation of the Offer or the Merger or
(B) to have, individually or in the aggregate, a Company Material Adverse
Effect.
SECTION 3.04. Certificate of Incorporation and Bylaws.
The Company has heretofore furnished to the Parent
and Merger Sub complete and correct copies of the certificate of incorporation
and the bylaws or the equivalent organizational documents, in each case as
amended or restated as of the date hereof, of the Company and each of its
Subsidiaries.
SECTION 3.05. Non-Contravention.
The execution, delivery, and performance by the
Company of this Agreement, the purchase of shares of Company Stock by Merger Sub
pursuant to the Offer,
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and the consummation by the Company of the Merger and the other transactions
contemplated by this Agreement do not and will not (i) contravene or conflict
with the certificate of incorporation or bylaws of the Company, (ii) assuming
compliance with the matters referred to in Section 3.03, contravene, conflict
with, or constitute a violation of any provision of any law, rule, regulation,
judgment, injunction, order, or decree binding upon or applicable to the Company
or any of its Subsidiaries, (iii) constitute a default, give rise to a right of
termination, cancellation, or acceleration of any right or obligation of the
Company or any of its Subsidiaries, or give rise to a loss of any benefit to
which the Company or any of its Subsidiaries is entitled, under any provision of
any agreement or other instrument binding upon the Company or any of its
Subsidiaries or under any license, franchise, permit, or other similar
authorization held by the Company or any of its Subsidiaries, or (iv) result in
the creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries, except as set forth in Section 3.05 of the Company Disclosure
Schedule and except for any occurrences or results referred to in clauses (ii),
(iii), and (iv) that would not be reasonably likely to prevent or delay
consummation of the Offer or the Merger or, individually or in the aggregate, to
have a Company Material Adverse Effect. For purposes of this Agreement, "Lien"
means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest, encumbrance, or other right or interest of another to or in, or
adverse claim of any kind in respect of, such asset.
SECTION 3.06. Capitalization.
(a) The Company has 16,000,000 authorized shares,
consisting of 15,000,000 shares of Common Stock and 1,000,000 shares of
Preferred Stock, $1.00 par value, of the Company ("Company Preferred Stock"). As
of March 21, 1997, (i) 6,430,298 shares of Company Stock were issued and
outstanding, (ii) 1,044,200 shares of Company Stock were reserved for future
issuance upon exercise of outstanding Company Options granted pursuant to the
Company Option Plans, (iii) 71,022 shares of Company Stock were reserved for
future issuance under the ESPP, and (iv) 55,000 shares of Company Preferred
Stock were reserved for issuance upon exercise of the rights (the "Company
Rights" or, individually, a "Company Right") distributed in connection with the
Rights Agreement, dated as of June 10, 1988 and subsequently amended, between
the Company and Midlantic National Bank, as Rights Agent (as amended, the
"Company Rights Agreement"). As of March 21, 1997, no shares of Company
Preferred Stock were issued and outstanding. Except as described in this Section
3.06 or in Section 3.06 of the Company Disclosure Schedule, as of the date of
this Agreement, no shares of capital stock of the Company are reserved for
issuance for any other purpose. Each of the issued and outstanding shares of
Common Stock is duly authorized, validly issued, and fully paid and
nonassessable and has not been issued in violation of (nor are any of the
authorized shares of Common Stock subject to) any preemptive or similar rights
created by statute, the certificate of incorporation or the bylaws of the
Company, or any agreement to which the Company is a party or is bound. Each of
the issued and outstanding Company Rights is duly authorized and validly issued.
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(b) Except as set forth in paragraph (a) of this
Section 3.06 or as set forth on Section 3.06 of the Company Disclosure Schedule,
there are no options, warrants, or other rights (including registration rights
and conversion rights), agreements, arrangements, or commitments to which the
Company is a party relating to the issued or unissued capital stock of the
Company or obligating the Company to grant, issue, or sell any shares of the
capital stock of the Company or other security of the Company. Except as set
forth in Section 3.06 of the Company Disclosure Schedule, there are no
obligations, contingent or otherwise, of the Company to (i) purchase, redeem, or
otherwise acquire any shares of Company Stock, other capital stock of the
Company, or capital stock or other equity interests of any Subsidiary of the
Company; or (ii) (other than advances to Subsidiaries, and prepayments to other
Persons for goods or services, in the ordinary course of business) provide a
material amount of funds to, or make any material investment in, or provide any
guarantee with respect to the obligations of, any Subsidiary of the Company or
any other Person.
(c) Section 3.06 of the Company Disclosure Schedule
lists, as of the date indicated, the number of shares of Company Stock subject
to outstanding Company Options and the exercise price of each outstanding
Company Option. The Company has made available to the Parent and Merger Sub
complete and correct copies of the Company Option Plans and all forms of Company
Options.
SECTION 3.07. Subsidiaries.
(a) Section 3.07 of the Company Disclosure Schedule
sets forth a complete and accurate list of the Subsidiaries of the Company and
indicates for each such Subsidiary the jurisdiction of incorporation or
organization. Each Subsidiary of the Company is a corporation duly incorporated,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation or is a partnership duly constituted under its governing law, in
all material respects has the requisite corporate or partnership power and
authority to own, lease, and operate its properties and to carry on its business
substantially as now conducted, and is duly qualified to do business as a
foreign corporation or partnership and is in good standing in each jurisdiction
where it is required to be so qualified by reason of the character of the
property owned or leased by it or the nature of its activities, except where the
failure to be qualified or in good standing is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
(b) Except as set forth on Section 3.07 of the
Company Disclosure Schedule, all of the outstanding capital stock or other
ownership interests in each Subsidiary of the Company is owned by the Company,
directly or indirectly, free and clear of any Lien and free and clear of any
other limitation or restriction (including any restriction on the right to vote,
sell, or otherwise dispose of such capital stock or other ownership interests).
Except as set forth on Section 3.07 of the Company Disclosure Schedule, there
are no outstanding (i) securities of the Company or any of its Subsidiaries
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convertible into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any such Subsidiary of the Company or (ii)
options or other rights to acquire from the Company or any of its Subsidiaries,
and no other obligation of the Company or any of its Subsidiaries to issue, any
capital stock, voting securities, or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities, or ownership interests in, any such Subsidiary of the Company (the
items in clauses (i) and (ii), including capital stock, are collectively
referred to as the "Company Subsidiary Securities"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem, or
otherwise acquire any outstanding Company Subsidiary Securities.
SECTION 3.08. Company SEC Reports.
Since January 1, 1993, the Company has in all
material respects filed all forms, reports, statements, and other documents
required to be filed by it with the SEC, including without limitation (i) all
Annual Reports on Form 10-K, (ii) all Quarterly Reports on Form 10-Q, (iii) all
proxy statements relating to meetings of stockholders (whether annual or
special), (iv) all Current Reports on Form 8-K, and (v) all other reports,
schedules, registration statements, or other documents required to be filed with
the SEC. (All of the documents filed by the Company with the SEC during such
period, including all exhibits contained or incorporated by reference in such
documents, are collectively referred to as the "Company SEC Reports"). The
Company SEC Reports, as amended to date, (x) were prepared in all material
respects in accordance with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and (y)
did not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
SECTION 3.09. Financial Statements; No Undisclosed Liabilities.
The audited consolidated financial statements and
unaudited consolidated interim financial statements (including the related notes
and schedules) of the Company and its consolidated Subsidiaries included or
incorporated by reference in the Company SEC Reports (the "Company Financial
Statements") were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods reflected therein
(except as may be indicated in the notes thereto and except that such unaudited
interim financial statements do not contain full footnote disclosure) and fairly
present the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended, subject, in the case of
any unaudited interim financial statements, to normal year-end adjustments, none
of which would be reasonably likely to be, individually or in the aggregate,
material in amount. Neither the Company nor its
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Subsidiaries have any liabilities, whether accrued, contingent, or otherwise,
required by generally accepted accounting principles to be disclosed by the
Company in the Company Financial Statements other than (i) liabilities disclosed
in the Company Financial Statements, the Company Disclosure Schedule, or the
Company SEC Reports, (ii) liabilities for which the Company has made adequate
reserves as reflected in the Company Financial Statements, and (iii) liabilities
in an aggregate amount that is not material to the Company and its Subsidiaries,
taken as a whole.
SECTION 3.10. Material Contracts.
Except as set forth in Section 3.10 of the Company
Disclosure Schedule or as disclosed in the Company SEC Reports, neither the
Company nor any of its Subsidiaries is a party to, or is bound by (a) any
material agreement, indenture, or other instrument relating to the borrowing of
money by the Company or any of its Subsidiaries or the guarantee by the Company
or any of its Subsidiaries of any such obligation (other than trade payables) or
(b) any other contract or agreement or amendment thereto that (i) should be or
should have been filed as an exhibit to a Form 10-K filed or to be filed by the
Company with the SEC or (ii) places any material restrictions on the right of
the Company or any of its Subsidiaries to engage in any material business
activity currently conducted (collectively, the "Company Contracts"). Neither
the Company nor any of its Subsidiaries is in material default under any Company
Contract, and there has not occurred any event that with the lapse of time or
the giving of notice or both would constitute such a material default.
SECTION 3.11. Absence of Certain Changes.
Except as disclosed in Section 3.11 of the Company
Disclosure Schedule, since March 31, 1997, (a) the Company and its Subsidiaries
have conducted their business in all material respects in the ordinary course
consistent with past practices, (b) there has not been any change or
development, or combination of changes or developments, in the business,
operations, or financial condition of the Company or any of its Subsidiaries
which are reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect, (c) there has not been any declaration, setting aside,
or payment of any dividend or other distribution with respect to any shares of
capital stock of the Company, or any repurchase, redemption, or other
acquisition by the Company or any of its Subsidiaries of any outstanding shares
of capital stock or other securities of, or other ownership interests in, the
Company or any of its Subsidiaries, (d) there has not been any amendment of any
term of any outstanding security of the Company or any of its Subsidiaries, (e)
there has not been any incurrence, assumption, or guarantee by the Company or
any of its Subsidiaries of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices, (f) there has not been any creation or assumption by the Company or
any of its Subsidiaries of any Lien on a material amount of assets (including
the sale, pledge, or assignment of a
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material amount of receivables) other than in the ordinary course of business
consistent with past practices, and (g) there has not been any change in any
method of accounting or accounting practice by the Company or any of its
Subsidiaries, except for any such change required by reason of a concurrent
change in generally accepted accounting principles or to conform a Subsidiary's
accounting policies and practices to those of the Company. Furthermore, except
as disclosed in Section 3.11 of the Company Disclosure Schedule, or pursuant to
agreements, plans, or arrangements disclosed in the Company SEC Reports, or
pursuant to immaterial arrangements with one or more employees or groups of
employees, since March 31, 1997, there has not been any (i) grant of any
severance or termination pay or stay-in-place bonus to any director or officer
of the Company or any of its Subsidiaries, (ii) entering into of any employment,
deferred compensation, or other similar agreement (or any amendment to any such
existing agreement) with any director or officer of the Company or any of its
Subsidiaries, (iii) increase in benefits payable under any existing severance or
termination pay or stay-in-place bonus policies or agreements with any director
or officer of the Company or any of its Subsidiaries, or (iv) increase in
compensation, bonus, or other benefits payable to directors or executive
officers of the Company or any of its Subsidiaries.
SECTION 3.12. Litigation.
Except as disclosed in Section 3.12 of the Company
Disclosure Schedule, (i) there are no material actions, suits, or proceedings
pending before, and, to the knowledge of the Company, there is no material
pending investigation by, any court or arbitrator or any governmental body,
agency, official, or authority against the Company, any of its Subsidiaries, or
any of their respective properties, (ii) to the actual knowledge of the
Company's corporate management group, there is no material threat of any such
action, suit, or proceeding, and (iii) no material judgment, decree, injunction,
rule, order, or similar action of any court or arbitrator or any governmental
body, agency, official or authority, domestic or foreign, is outstanding against
the Company or any of its Subsidiaries.
SECTION 3.13. Permits; Compliance.
Except as is disclosed in Section 3.13 of the Company
Disclosure Schedule, the Company and its Subsidiaries are in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals, and orders necessary to own,
lease, and operate their properties and to carry on their businesses as they are
now being conducted, other than (i) those issued by or otherwise obtained from
governmental authorities pursuant to or in connection with any Environmental Law
(as hereinafter defined), or any law which is the subject of Section 3.18 or
Section 3.19 and (ii) those of which the failure of the Company or the relevant
Subsidiary to be in possession is not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect (collectively, the
"Company Permits"). Except as set forth in Section 3.13 of the Company
Disclosure Schedule, neither the Company nor
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any of its Subsidiaries is in conflict with, or in default or violation of, (a)
any federal, state, or foreign law applicable to the Company or such Subsidiary
or by which any of its properties are bound or subject (other than any
Environmental Law or any law which is the subject of Section 3.18 or Section
3.19) or (b) any of the Company Permits, other than conflicts, defaults, or
violations which are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect. Except as set forth in Section 3.13 of
the Company Disclosure Schedule, since January 1, 1993, the Company has not
received any notification with respect to possible material conflicts, defaults,
or violations of any federal, state, or foreign law applicable to the Company or
any of its Subsidiaries or by which any of its or their properties are bound or
subject (other than any Environmental Law or any law which is the subject of
Section 3.18 or Section 3.19) which have not been cured without any further
material liability or obligation.
SECTION 3.14. Product Warranties and Liabilities.
Except as set forth in Section 3.14 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries knows or
has any reason to believe there is any basis for alleging any claim, liability,
damage, loss, cost, or expense as a result of any defect or other deficiency
(whether of design, materials, workmanship, labeling instructions, or otherwise)
("Product Liability") with respect to any product sold or services rendered by
or on behalf of the Company or any of its Subsidiaries prior to the date hereof,
whether such Product Liability is incurred by reason of any express warranty
(including, without limitation, any warranty of merchantability or fitness), any
doctrine of common law (tort, contract or other), any statutory provision, or
otherwise and irrespective of whether such Product Liability is covered by
insurance, other than Product Liabilities which are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
SECTION 3.15. ERISA.
(a) As used in this Section 3.15, each of the
following terms has the indicated meaning:
(i) "Affiliate" of any Person means any other Person
that, together with such Person, would be treated as a single employer
under Section 414 of the Internal Revenue Code of 1986, as amended
(the "Code").
(ii) "Company Employee Plans" means each "employee
benefit plan," as defined in Section 3(3) of ERISA that (A) is subject
to any provision of ERISA and (B) is maintained, administered, or
contributed to by the Company or any Affiliate (while it is an
Affiliate of the Company) and covers any employee or former employee
of the Company or any such
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Affiliate or under which the Company or any such Affiliate has any
liability.
(iii) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
(iv) "Company Benefit Arrangement" means each
employment, severance, welfare, or other similar contract,
arrangement, or policy and each plan or arrangement (written or oral)
providing for compensation, benefit, bonus, profit-sharing, stock
option, or other stock related rights or other forms of incentive or
deferred compensation, that (A) is not a Company Employee Plan, (B) is
entered into, maintained, or contributed to, as the case may be, by
the Company or any of its Affiliates (while it is an Affiliate of the
Company), and (C) covers any employee or former employee or director
or former director of the Company or any such Affiliate.
(b) The Company has heretofore made available to the
Parent, and agrees that it will as soon as practicable after the date of this
Agreement furnish the Parent upon the Parent's request with, copies of all
Company Employee Plans (and, if applicable, related trust agreements) and all
amendments thereto and the most recent Forms 5500 required to be filed with
respect thereto, Internal Revenue Service determination letters, and actuarial
reports, in each case to the extent applicable.
(c) Section 3.15 of the Company Disclosure Schedule
identifies each Company Employee Plan that constitutes a "defined benefit plan"
as defined in Section 3(35) of ERISA. Except as set forth on Section 3.15 of the
Company Disclosure Schedule, no Company Employee Plan constitutes a
"multiemployer plan," as defined in Section 3(37) of ERISA, and no Company
Employee Plan is maintained in connection with any trust described in Section
501(c)(9) of the Code. Except as set forth on Section 3.15 of the Company
Disclosure Schedule, no Company Employee Plan provides retiree medical or life
insurance benefits or is subject to Title IV of ERISA. Neither the Company nor
any of its affiliates has incurred any material liability under Title IV of
ERISA, including, without limitation, arising in connection with the termination
of, or complete or partial withdrawal from, any plan currently or previously
covered by Title IV of ERISA, and the Pension Benefit Guarantee Corporation has
not instituted proceedings to terminate any such plan nor, to the knowledge of
the Company, do any conditions exist that present a material risk of such
occurrence. Nothing done or omitted to be done by the Company or any of its
Subsidiaries or, to the knowledge of the Company, by any other Person, and no
transaction or holding of any asset under or in connection with any Company
Employee Plan by the Company or any of its Subsidiaries or, to the knowledge of
the Company, by any other Person, has or will make the Company or any of its
Subsidiaries or any officer or director of the Company or any of its
Subsidiaries subject to any material liability under Title I of
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ERISA or for any material tax pursuant to Section 4975 of the Code. With respect
to each Company Employee Plan subject to Title IV of ERISA, the Company has made
available to the Parent the most recent actuarial report showing the present
value of accrued benefits under such plan, based upon the actuarial assumptions
used for funding purposes with respect to such plan. No Company Employee Plan or
any trust established thereunder has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, as of the last day of the most recent fiscal year of each
such plan ended prior to the date hereof; and all contributions required to be
made with respect thereto (whether pursuant to the terms of any Company Employee
Plan or otherwise) on or prior to the date hereof have been timely made.
(d) Each Company Employee Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and has been so
qualified during the period from its adoption to date, and each trust forming a
part thereof is exempt from tax pursuant to Section 501(a) of the Code, and each
Company Employee Plan has been maintained in compliance with its terms and with
the requirements of all applicable statutes, orders, final rules, and final
regulations, except where the failure to be qualified or to comply is not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect.
(e) Section 3.15 of the Company Disclosure Schedule
lists each material Company Benefit Arrangement currently in effect provided to
any director, executive officer, or employee of the Company or any former
director, executive officer, or employee of the Company and sets forth each
Company Benefit Arrangement with respect to which benefits will be accelerated
or paid as a result of the transactions contemplated by this Agreement. Copies
of all written Company Benefit Arrangements and all amendments thereto have
heretofore been made available to the Parent, and will promptly be furnished to
the Parent upon the Parent's request after the date of this Agreement. Each
Company Benefit Arrangement has been maintained in compliance with its terms and
with the requirements prescribed by any and all statutes, orders, rules, and
regulations that are applicable to such Company Benefit Arrangement, except
where the failure to comply is not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect.
(f) There are no material pending, or, to the
knowledge of the Company, material threats of claims by or on behalf of any
Company Employee Plan or Company Benefit Arrangement, by any employee or
beneficiary covered under any such plan or arrangement, or otherwise involving
any such plan or arrangement other than claims for benefits in the ordinary
course.
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SECTION 3.16. Labor.
Except as set forth on Section 3.16 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to or bound by any collective bargaining agreement respecting its employees, nor
is there existing, or to the knowledge of the Company any material threat of,
any strike, organized walkout, or other organized work stoppage or labor
organizational effort by any employees of the Company or of any of its
Subsidiaries.
SECTION 3.17. Taxes.
Except as set forth in Section 3.17 of the Company
Disclosure Schedule or in the Company SEC Reports:
(a) The Company and its Subsidiaries have, in all
material respects, timely filed all Tax Returns required to be filed by them
with any taxing authority with respect to Taxes for all periods heretofore
ended, taking into account any extension of time to file granted to or obtained
on behalf of the Company and its Subsidiaries;
(b) all Taxes required to be paid prior to the
Effective Time have, in all material respects, been duly and timely paid or will
be duly and timely paid by the Effective Time;
(c) no material deficiency for any amount of Tax has
been asserted or assessed by a taxing authority against the Company or any of
its Subsidiaries, except for amounts for which the Company has made an adequate
reserve as reflected in the Company Financial Statements;
(d) all liability for Taxes of the Company or any of
its Subsidiaries that are or will become due or payable with respect to periods
covered by the Company Financial Statements have, in all material respects, been
paid or adequately reserved for in the Company Financial Statements to the
extent required by generally accepted accounting principles, and all prepaid
Taxes and other Tax assets reflected in the Company Financial Statements
represent valid accounts determined in accordance with generally accepted
accounting principles;
(e) neither the Company nor any of its Subsidiaries
is liable for any material amount of Taxes arising out of membership or
participation in any consolidated, affiliated, combined, or unitary group in
which they were at any time members, other than the group of which the Company
is the common parent;
(f) there are no material Liens for Taxes upon the
assets of the Company or of any of its Subsidiaries other than for Taxes not yet
due and payable;
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(g) there are no outstanding waivers or comparable
consents extending the statute of limitations with respect to any Taxes or Tax
Returns of the Company or any of its Subsidiaries;
(h) there are no material audits, claims, actions,
suits, or proceedings now pending, nor, to the knowledge of the Company, is
there a material threat of any such audits, claims, actions, suits, or
proceedings, nor, to the knowledge of the Company, is there any material pending
investigation, against or with respect to the Company or any of its Subsidiaries
in respect of any Taxes;
(i) neither the Company nor any of its Subsidiaries
is a party to any material agreement providing for the allocation or sharing of
Taxes; and
(j) there has been no change in the method of
accounting utilized by the Company or any of its Subsidiaries that would require
a material adjustment to taxable income under Section 481 of the Code.
For purposes of this Agreement, "Taxes" or "Tax"
means all federal, state, local, and foreign taxes, levies, and other
assessments, including without limitation, all income, excise, property, sales,
use, value added, transfer, franchise, profits, withholding, payroll, social
security, medicare, or other taxes including any interest, additions to tax, and
penalties applicable thereto; and "Tax Return" means any return, declaration,
statement, report, schedule, information return, and other document (including
any related or supporting information) with respect to Taxes.
SECTION 3.18. FDA and Related Matters.
(a) Section 3.18 of the Company Disclosure Schedule
sets forth a complete and accurate list, referencing relevant records and
documents, since January 1, 1993, of (i) all Regulatory or Warning Letters,
Notices of Adverse Findings, and Section 305 Notices and similar letters or
notices issued by the Food and Drug Administration (the "FDA") or any other
federal, state, local, or foreign governmental entity that is concerned with the
safety, efficacy, reliability, or manufacturing of medical products, including
drugs and devices, relating to the conduct of the business of the Company and
its Subsidiaries, (ii) all United States Pharmacopoeia product problem reporting
program complaints or reports, MedWatch FDA Forms 3500, and device experience
network complaints received by the Company or any of its Subsidiaries and all
Drug and Medical Device Reports, adverse drug experience reports, and
therapeutic failure reports filed by the Company or any of its Subsidiaries,
which complaints or reports (A) pertain to any incident involving death, serious
injury, or a serious adverse drug experience, and for which incident there has
been any (1) notice or follow up inquiry to the Company or any of its
Subsidiaries by the FDA, (2) litigation or arbitration claim or cause of action
commenced, or (3) notice to any insurance carrier of the Company or any of its
Subsidiaries tendering the defense or giving
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notice of a possible or actual claim against the Company or any of its
Subsidiaries, and (B) are in the aggregate material to the conduct of the
business of the Company and its Subsidiaries, (iii) all product recalls and
safety alerts conducted by or issued to the Company or any of its Subsidiaries
and any requests from the FDA or any other drug and medical device regulatory
agency requesting the Company or any of its Subsidiaries to cease to
investigate, test, or market any product, which recalls, safety alerts, or
requests are in the aggregate material to the conduct of the business of the
Company and its Subsidiaries, (iv) any civil penalty actions begun by the FDA or
any other drug and medical device regulatory agency against the Company or any
of its Subsidiaries and all consent decrees issued with respect to the Company
or any of its Subsidiaries, and (v) any other written communications between the
FDA or any other drug and medical device regulatory agency, on the one hand, and
the Company or any of its Subsidiaries, on the other hand, which communications
are in the aggregate material to the conduct of the business of the Company and
its Subsidiaries. The Company has delivered to the Parent copies of all
documents referred to in Section 3.18 of the Company Disclosure Schedule, as
well as copies of all complaints and other information required to be maintained
by the Company pursuant to Section 820 of Title 21 of the Code of Federal
Regulations ("CFR") or 21 CFR Section 211, to the extent that such complaints or
other information relate to events that are, in the aggregate, material to the
conduct of the business of the Company and its Subsidiaries.
(b) The Company and its Subsidiaries have obtained
all material consents, approvals, certifications, authorizations, and permits
of, and have made all filings with, or notifications to, the FDA and all other
drug and medical device regulatory agencies pursuant to applicable requirements
of all FDA laws, rules, and regulations, and all corresponding state and foreign
laws, rules, and regulations applicable to the Company and its Subsidiaries. All
representations made by the Company or any of its Subsidiaries in connection
with any such consents, approvals, certifications, authorizations, permits,
filings, and notifications were true and correct in all material respects at the
time such representations were made, and the products of the Company and its
Subsidiaries comply with, and perform in accordance with the specifications
described in, such representations. The Company and its Subsidiaries are in all
material respects in compliance with all applicable FDA laws, rules, and
regulations, and all corresponding applicable state and foreign laws, rules, and
regulations (including Good Manufacturing Practices, as defined in 21 CFR Parts
210, 211, and 820, Medical Device Reporting requirements, and Adverse Experience
Reporting) applicable to the business of the Company. The Company has not
received any notice that any of the consents, approvals, certifications,
authorizations, registrations, permits, filings, or notifications that it has
received or made to operate its business have been or are being revoked or
challenged. Except as set forth on Section 3.18 of the Company Disclosure
Schedule, to the knowledge of the Company, there are no investigations or
inquiries pending, and there is no material threat of any investigation or
inquiry, by the FDA or any other drug and medical device regulatory agency
relating to the operation of the business of the Company and its Subsidiaries or
its compliance with FDA
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laws, rules, and regulations, and corresponding state and foreign laws, rules,
and regulations, applicable to the business of the Company and its Subsidiaries.
None of the matters set forth on Section 3.18 of the Company Disclosure Schedule
is reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect.
SECTION 3.19. Nuclear Regulatory and Related Matters.
(a) The Company has in all material respects complied
with Nuclear Regulatory Commission ("NRC") regulations set forth in Title 10 of
CFR and NRC-issued guidance documents, the authority of "Agreement States"
pursuant to 10 CFR Part 150, and applicable state laws and regulations, as well
as applicable Department of Labor and Department of Transportation regulations
(collectively, "Nuclear Regulations and Laws") in the licensing and operation of
each of its facilities. Except as set forth in Section 3.19 of the Company
Disclosure Schedule, operation of the facilities now owned or operated by the
Company or any of its Subsidiaries is and for as long as such facilities have
been owned or operated by the Company or any of its Subsidiaries has been
conducted, and the operation of the facilities heretofore owned or operated by
the Company or any of its Subsidiaries for as long as such facilities were owned
or operated by the Company or any of its Subsidiaries was conducted, in material
compliance with applicable health, safety, regulatory, and other legal
requirements, including Nuclear Regulations and Laws. Except as set forth in
Section 3.19 of the Company Disclosure Schedule:
(i) All facilities now owned or operated by the
Company or any of its Subsidiaries are and for as long as such
facilities have been owned or operated by the Company or any of its
Subsidiaries have been, and all facilities heretofore owned or operated
by the Company or any of its Subsidiaries for as long as such
facilities were owned or operated by the Company or any of its
Subsidiaries were, in material compliance with all applicable Nuclear
Regulations and Laws, and the Company and its Subsidiaries operate all
such facilities now owned or operated by the Company or any of its
Subsidiaries in material compliance with all Nuclear Regulations and
Laws.
(ii) The Company has no knowledge of a material
violation of or material liability under, nor has it received, any
written notices, demand letters, or written requests for information
from any governmental entity, including the NRC, state regulatory
agencies, or any credible third party indicating that the Company or
any of its Subsidiaries is in material violation of or has a material
liability under, any Nuclear Regulations and Laws.
(iii) There are no material civil, criminal, or
administrative actions, suits, demands, claims, hearings, or
proceedings
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pending, nor, to the knowledge of the Company, is there a material
threat of any such actions, suits, demands, claims, hearings, or
proceedings, nor, to the knowledge of the Company, are there any
investigations or inspections pending, against the Company or any of
its Subsidiaries with respect to any violation or alleged violation of,
or liability or alleged liability for, any Nuclear Regulations and
Laws.
(iv) All required reports have been filed by the
Company and its Subsidiaries with each applicable government agency
under the requirements of any Nuclear Regulations and Laws, and all
such reports are in all material respects true, accurate, and complete
and comply in all material respects with the requirements of Nuclear
Regulations and Laws.
(v) Neither the Company nor any of its Subsidiaries
has incurred any material liabilities (fixed or contingent) relating to
any suit, settlement, court order, administrative order, judgment, or
claim asserted or arising under any Nuclear Regulations and Laws.
(vi) To the knowledge of the Company, neither the
Company nor any of its Subsidiaries has violated any Nuclear
Regulations and Laws with respect to contamination of property and
environs above background radiation levels, except for contamination
which has been cured and for which neither the Company nor any of its
Subsidiaries has any further material liability or obligation, or with
respect to permissible levels of radiation exposure of workers and
other personnel.
(vii) The Company has documented and is aware of the
location of all disposals pursuant to 10 CFR Part 20.
(b) All permits, registrations, notifications, and
licenses required under any Nuclear Regulations and Laws for the Company and its
Subsidiaries and their facilities are held by the Company and its Subsidiaries
and are in full force and effect, and the Company and its Subsidiaries are in
compliance therewith in all material respects.
SECTION 3.20. Intellectual Property Rights.
(a) Section 3.20 of the Company Disclosure Schedule
lists each of the following items that are, individually or in the aggregate,
material to the business of the Company and its Subsidiaries: (i) patents and
applications therefor, registrations of trademarks (including service marks) and
applications therefor, and registrations of copyrights and applications therefor
that are owned by the Company or any of its Subsidiaries, (ii) unexpired
licenses relating to Intellectual Property Rights (as defined in paragraph (d)
of this Section 3.20) that have been granted to or by the Company or any of
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its Subsidiaries, and (iii) other agreements relating to Intellectual Property
Rights (as defined below).
(b) Except as set forth in Section 3.20 of the
Company Disclosure Schedule, the Company and its Subsidiaries collectively own
or have the right to use all of the Intellectual Property Rights that are,
individually or in the aggregate, material to the conduct of the business of the
Company and its Subsidiaries. Except as set forth in Section 3.20 of the Company
Disclosure Schedule, such ownership and right to use are free and clear of all
Liens, claims, and rights to use of third parties that are reasonably likely to
be, individually or in the aggregate, material to the business of the Company
and its Subsidiaries. The Company and its Subsidiaries have the right to license
to others all Intellectual Property Rights owned by them.
(c) The Company has no knowledge of any material
allegations or claims that any product or process manufactured, used, sold, or
under development by or for the Company or its Subsidiaries infringes on the
Intellectual Property Rights of any third party. Neither the Company nor any of
its Subsidiaries has knowledge of any material challenge to the validity,
ownership, or right to use or license by the Company of any of the Intellectual
Property Rights owned, used, or licensed by the Company.
(d) As used in this Agreement, the term "Intellectual
Property Rights" includes patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, copyrights, copyright
applications, and proprietary trade names, publication rights, computer programs
(including source codes and object codes), inventions, know how, trade secrets,
technology, processes, and formulae.
SECTION 3.21. Environmental Protection.
(a) As used in this Agreement, each of the following
terms has the indicated meaning:
(i) "Company Real Property" means the real property
now or formerly owned or leased by the Company or any of its
Subsidiaries, except as otherwise expressly limited where the term is
used.
(ii) "Environmental Law" means federal, state, local,
or foreign laws, statutes, rules, regulations, and ordinances relating
to the protection of the environment.
(iii) "Hazardous Material" means any hazardous,
toxic, or dangerous substance defined as such in (or for purposes of)
the Comprehensive Environmental Response, Compensation and Liability
Act, as amended ("CERCLA"), or any other Environmental Law.
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(b) Except as set forth on Section 3.21 of the
Company Disclosure Schedule:
(i) The Company and each of its Subsidiaries is and
has been in material compliance with all applicable Environmental Laws,
except for any such non-compliance which has been cured and for which
neither the Company nor any of its Subsidiaries has any further
material liability or obligation.
(ii) The Company has not treated, stored, disposed
of, or released any Hazardous Material on Company Real Property in
material violation of any applicable Environmental Laws, and, to the
knowledge of the Company, none of the conditions at the Company Real
Property is reasonably likely to give rise to any material remedial
obligation of the Company or any of its Subsidiaries under any
Environmental Laws.
(iii) Neither the Company nor any of its Subsidiaries
has received any written notices, demand letters, or written requests
for information from any governmental body, agency, official, or
authority or from any third party indicating that the Company or any of
its Subsidiaries is in material violation of, or liable in a material
amount to any Person under, any Environmental Law, except for any such
violation which has been cured and for which neither the Company nor
any of its Subsidiaries has any further material liability or
obligation.
(iv) There are no actions, suits, or proceedings
pending, and, to the knowledge of the Company, there is no material
threat of any actions, suits, or proceedings, and, to the knowledge of
the Company, there are no investigations pending, against the Company
or any of its Subsidiaries or involving any of the presently owned or
leased Company Real Property before any court or arbitrator or any
governmental body, agency, official, or authority relating to any
material violation, or alleged material violation, by the Company or
any of its Subsidiaries of any Environmental Law or relating to the
contamination of any such Company Real Property.
(v) There are no underground storage tanks on any
presently owned or leased Company Real Property, and no underground
storage tanks have been closed or removed from any Company Real
Property while the Company Real Property was owned or leased by the
Company or any of its Subsidiaries, the closure or removal of which is
reasonably likely to give rise to a material liability of the Company
or any of its Subsidiaries under any Environmental Law.
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(vi) None of the Company, any of its Subsidiaries, or
any of the presently owned or leased Company Real Property is currently
subject to, any material liabilities, fixed or contingent, relating to
any suit, settlement, court order, administrative order, judgment, or
claim asserted under any Environmental Law.
(vii) The Company and its Subsidiaries have made
available to the Parent (A) all studies, reports, and similar documents
that have been generated by third-party consultants, internal
compliance reports of the Company or any of its Subsidiaries, and
material documents filed by the Company or any of its Subsidiaries with
any governmental agency, relating to environmental matters at any
Company Real Property, and (B) all other material documents relating to
any actual or potential material contamination of Company Real
Property. The Company has furnished the Parent with copies of any such
studies, reports, and documents indicating that the conditions at any
of the Company Real Property are reasonably likely to give rise to a
material remedial obligation or other material liability of the Company
or any of its Subsidiaries under any Environmental Laws.
(viii) The Company and its Subsidiaries have all
material permits required by applicable Environmental Laws and are in
all material respects in compliance with the provisions of all such
permits.
(ix) Neither the Company nor any of its Subsidiaries
has any material obligation to any third party with respect to any
previously owned, or presently or previously leased, Company Real
Property relating to the remediation of any contamination under any
Environmental Laws.
(c) Neither the Company nor any of its Subsidiaries
has received written notice from any Person that any part of the Company Real
Property has been or is listed as a site containing Hazardous Material requiring
remediation under CERCLA or any other Environmental Law.
SECTION 3.22. Finders and Investment Bankers.
Except as set forth in Section 3.22 of the Company
Disclosure Schedule, no investment banker, broker, finder, or other similar
intermediary has been retained by or is authorized to act on behalf of the
Company or any of its Subsidiaries who might be entitled to any fee or
commission in connection with the transactions contemplated by this Agreement.
The Company has provided the Parent with a copy of the engagement letter, as
amended to date, with DLJ. DLJ's fees will be paid by the Company.
SECTION 3.23. Insurance.
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Section 3.23 of the Company Disclosure Schedule
lists, and the Company has made available to the Parent or its representatives
for review current and complete copies of, all insurance policies, binders, and
surety and fidelity bonds relating to the Company and its Subsidiaries
(including, without limitation, all policies or binders of casualty, general
liability, and workers' compensation, but excluding the owner's and lessee's
policies of title insurance referred to in Section 3.31(h)), all of which are
currently in force and effect. All premiums and other amounts due and payable
under each such policy, binder, and bond have been paid. Neither the Company nor
any of its Subsidiaries is in default with respect to any material provision
contained in any such policy, binder, or bond and has not failed to give any
notice of or present any material claim thereunder as required under the terms
of the policy. Except for claims set forth on Section 3.23 of the Company
Disclosure Schedule, there are no outstanding unpaid claims under any such
policy, binder, or bond, and neither the Company nor any of its Subsidiaries has
received any written notice of cancellation or non-renewal of any such policy,
binder, or bond. Except as set forth on Section 3.23 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has received any
written notice from any of its insurance carriers that any insurance premiums
paid by it will be materially increased in the future as a result of the claims
experience of the Company or such Subsidiary.
SECTION 3.24. Indemnification.
Except as set forth in the certificate of
incorporation and bylaws of the Company or its Subsidiaries or as disclosed in
the Company SEC Reports or on Section 3.24 of the Company Disclosure Schedule,
(a) neither the Company nor any of its Subsidiaries is a party to any
indemnification agreement with any of its present or former directors, officers,
employees, agents, or other persons who serve in any similar capacity with any
other enterprise at the request of the Company or of any of its Subsidiaries,
and (b) to the knowledge of the Company, there are no material pending claims or
material threats of claims for which any such person would be entitled to
indemnification under Section 6.01 if such provisions were deemed to be in
effect.
SECTION 3.25. Board Approval and Recommendation.
Prior to the execution of this Agreement, the Board
of Directors of the Company, at a meeting duly called and held, unanimously (a)
determined that this Agreement and the transactions contemplated hereby,
including the Merger and the Offer, are fair to the stockholders of the Company,
(b) approved this Agreement and the transactions contemplated hereby, including
the Merger and the Offer, and (c) recommended that the Company's stockholders
tender their shares of Company Stock pursuant to the Offer and, if applicable,
approve this Agreement and the transactions contemplated herein, including the
Merger.
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SECTION 3.26. Vote Required.
The only vote of the holders of any class or series
of capital stock of the Company necessary to approve the Merger is the
affirmative vote of the holders of a majority of the outstanding shares of
Company Stock. No such vote by the holders of any class or series of capital
stock of the Company will be necessary if at the Effective Time Merger Sub owns
at least 90% of the shares of Company Stock outstanding at the Effective Time.
There is no vote of the holders of any class or series of capital stock of the
Company necessary in order for Merger Sub to commence and consummate the Offer.
SECTION 3.27. Opinion of Financial Advisor.
The Company has received the opinion of DLJ to the
effect that, as of the date of such opinion, the consideration to be received by
the stockholders of the Company pursuant to the Offer and the Merger is fair to
such stockholders from a financial point of view.
SECTION 3.28. Company Rights Agreement.
Neither the Parent nor any of its Affiliates or
associates is an "Acquiring Person" (as defined in the Company Rights Agreement)
and there has not been a "Shares Acquisition Date" or a "Distribution Date" (as
defined in the Company Rights Agreement) under the Company Rights Agreement. The
Company has amended the Company Rights Agreement to provide that (i) the
execution, delivery, and performance of this Agreement, the purchase of shares
of Company Stock pursuant to the Offer, and the consummation of the Merger and
the other transactions contemplated by this Agreement will not (A) cause the
Parent or any of its Affiliates or associates to become an "Acquiring Person"
(as defined in the Company Rights Agreement) or (B) otherwise cause a "Shares
Acquisition Date" or "Distribution Date" (as defined in the Company Rights
Agreement) to occur and (ii) upon purchase of shares of Company Stock pursuant
to the Offer, the Rights (as defined in the Company Rights Agreement) will no
longer be exercisable, and the former holders of the Rights will not have any
claims or rights thereunder. The Company has filed with the SEC and made
available to the Parent a true and correct copy of the Company Rights Agreement,
as amended through the date hereof.
SECTION 3.29. Takeover Statutes.
The Board of Directors of the Company has expressly
approved the acquisition of shares of Company Stock by Merger Sub pursuant to
the Offer and the Merger for purposes of Section 203 of the Delaware Law and
Article Fourteenth of the Company's certificate of incorporation. Except for
Section 203 and Article Fourteenth, no "fair price," "moratorium," or other
similar antitakeover statute or provision enacted under
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Delaware Law is applicable to the Offer, the Merger, or the other transactions
contemplated hereby.
SECTION 3.30. Information Supplied.
None of the information that is included in the Offer
Documents in reliance upon and in conformity with written information furnished
to the Parent by the Company specifically for use in the Offer Documents will,
at the time such information is furnished to the Parent, contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Schedule 14D-9, at
the time the Schedule 14D-9 or any amendment thereto is filed with the SEC, will
not contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; except
that, the foregoing does not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was or is made by the
Company in reliance upon and in conformity with written information furnished to
the Company by Merger Sub or the Parent specifically for use in the Schedule
14D-9.
SECTION 3.31. Real and Personal Property
(a) For purposes of this Section 3.31, "Permitted
Lien" means any (A) Lien that does not materially interfere with the use of, or
materially diminish the value of, the property subject thereto and (B) capital
lease obligation entered into in the ordinary course of business.
(b) Section 3.31 of the Company Disclosure Schedule
lists all of the real property owned (the "Owned Real Property") or leased (the
"Leased Real Property") by the Company or any of its Subsidiaries.
(c) Except as set forth in Section 3.31 of the
Company Disclosure Schedule, the Company has (i) good and valid fee simple title
to the Owned Real Property, (ii) good and valid title to all of the tangible
personal property recorded as an asset in the Company Financial Statements as of
March 31, 1997, and not disposed of since that date in the ordinary course of
business, and (iii) a valid and subsisting leasehold interest in the Leased Real
Property, that, in the case of each of clauses (i), (ii), and (iii) above, is
free and clear of any Lien other than Permitted Liens
(d) The buildings and other improvements comprising
the gamma, ethylene oxide, and electron beam facilities of the Company and its
Subsidiaries, and, to the knowledge of the Company, all other facilities owned
or leased by the Company or any of its Subsidiaries, are in reasonably good
condition, normal wear and tear excepted,
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and are suitable for their present purposes. To the knowledge of the Company,
none of the buildings or improvements owned or leased by the Company or any of
its Subsidiaries is subject to any material structural defect.
(e) The primary business operations currently
conducted on the Owned Real Property and the Leased Real Property are not in
violation of applicable zoning laws and regulations, except for violations that
are not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect.
(f) The buildings and other structures located on the
Owned Real Property do not encroach on real property of another Person, and no
building or structure of any other Person encroaches on any of the Owned Real
Property, except for encroachments that are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
(g) The buildings and structures on the Owned Real
Property have direct vehicular access (or indirect vehicular access through
valid and enforceable easements) to public roads and all appropriate utilities
necessary for the conduct of the business thereon as it is presently conducted.
(h) The Company has made available to the Parent all
owner's policies of title insurance as to Owned Real Property, lessee's policies
of title insurance as to Leased Real Property (if any), and related surveys that
are in its possession.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND MERGER SUB
The Parent and Merger Sub jointly and severally
represent and warrant to the Company that:
SECTION 4.01. Corporate Existence.
The Parent and Merger Sub are corporations duly
incorporated, validly existing, and in good standing under the laws of the State
of Ohio and Delaware, respectively.
SECTION 4.02. Corporate Authorization.
The execution, delivery, and performance by the
Parent and Merger Sub of this Agreement, the purchase by Merger Sub of shares of
Company Stock pursuant to the Offer, and the consummation of the Merger and the
other transactions contemplated
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hereby by the Parent and Merger Sub are within their respective corporate power
and authority and have been duly authorized by all necessary corporate action on
the part of the Parent and Merger Sub, respectively. This Agreement has been
duly executed and delivered by the Parent and Merger Sub and, assuming the due
authorization, execution, and delivery hereof by the Company, constitutes a
legal, valid, and binding agreement of the Parent and Merger Sub.
SECTION 4.03. Governmental Authorization.
The execution, delivery, and performance by the
Parent and Merger Sub of this Agreement, the purchase of shares of Company Stock
by Merger Sub pursuant to the Offer, and the consummation of the Merger and the
other transactions contemplated hereby by the Parent and Merger Sub do not
require any material consent, approval, authorization, or permit of, other
action by, or filing with, any governmental body, agency, official, or authority
other than (i) as set forth on Section 4.03 of the Disclosure Schedule delivered
by the Parent to the Company concurrently with the execution and delivery of
this Agreement (the "Parent Disclosure Schedule"), (ii) the filing of
appropriate certificates of merger in accordance with Delaware Law, (iii) the
filing and delivery of the Offer Documents, and (iv) compliance with applicable
requirements of the HSR Act and the Exchange Act, except where the failure of
any such action to be taken or filing to be made is not reasonably likely to
prevent or delay consummation of the Offer or the Merger.
SECTION 4.04. Non-Contravention.
The execution, delivery, and performance by the
Parent and Merger Sub of this Agreement, the purchase by Merger Sub of the
shares of Company Stock pursuant to the Offer, and the consummation of the
Merger and the other transactions contemplated hereby by the Parent and Merger
Sub do not and will not (i) contravene or conflict with the articles of
incorporation or code of regulations of the Parent or the certificate of
incorporation or bylaws of Merger Sub, (ii) assuming compliance with the matters
referred to in Section 4.03, materially contravene, conflict with, or constitute
a violation of any provision of any law, rule, regulation, judgment, injunction,
order, or decree binding upon or applicable to the Parent, Merger Sub, or any of
their Subsidiaries, (iii) constitute a material default, give rise to a right of
termination, cancellation, or acceleration of any material right or obligation
of the Parent, Merger Sub, or any of their Subsidiaries, or give rise to a loss
of any material benefit to which the Parent, Merger Sub, or any of their
Subsidiaries is entitled, under any provision of any agreement or other
instrument binding upon the Parent, Merger Sub, or any of their Subsidiaries or
any license, franchise, permit, or other similar authorization held by the
Parent, Merger Sub, or any of their Subsidiaries, or (iv) result in the creation
or imposition of any material Lien on any asset of the Parent, Merger Sub, or
any of their Subsidiaries.
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SECTION 4.05. Parent SEC Reports.
Since January 1, 1993, the Parent has, in all
material respects, filed all forms, reports, statements, and other documents
required to be filed by it with the SEC, including without limitation (1) all
Annual Reports on Form 10-K, (2) all Quarterly Reports on Form 10-Q, (3) all
proxy statements relating to meetings of stockholders (whether annual or
special), (4) all Current Reports on Form 8-K, and (5) all other reports,
schedules, registration statements, or other documents required to be filed with
the SEC. (All of the documents filed by the Parent with the SEC during such
period, including all exhibits contained or incorporated by reference in such
documents, are collectively referred to as the "Parent SEC Reports"). The Parent
SEC Reports (x) were prepared in all material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(y) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 4.06. Financial Statements; No Undisclosed Liabilities.
The audited consolidated financial statements and
unaudited consolidated interim financial statements (including the related notes
and schedules) of the Parent and its consolidated Subsidiaries included or
incorporated by reference in the Parent SEC Reports (the "Parent Financial
Statements") were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods reflected therein
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of the Parent and its consolidated Subsidiaries
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended, subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments, none of which is,
individually or in the aggregate, reasonably likely to have a material adverse
effect. Neither the Parent, Merger Sub, nor any of their Subsidiaries has any
liabilities, whether accrued, contingent, or otherwise, required by generally
accepted accounting principles to be disclosed by the Parent in the Parent
Financial Statements other than (i) liabilities disclosed in the Parent
Financial Statements, the Parent Disclosure Schedule, or the Parent SEC Reports,
(ii) liabilities for which the Parent has made adequate reserves as reflected in
the Parent Financial Statements, and (iii) liabilities in an aggregate amount
that is not material to the Parent, Merger Sub, and their Subsidiaries, taken as
a whole.
SECTION 4.07. Litigation.
There are no material actions, suits, or proceedings
pending before, or, to the knowledge of the Parent, any pending investigation
by, any court or arbitrator or any governmental body, agency, official, or
authority against the Company, any of its
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Subsidiaries, or any of their respective properties that seek to restrain or
prohibit the consummation of the Offer or the Merger. To the knowledge of the
Parent, there is no material threat of any such action, suit, or proceeding.
SECTION 4.08. Vote Required.
No vote of the holders of any class or series of
capital stock of the Parent is necessary to approve the purchase of shares of
Company Stock pursuant to the Offer or the Merger. The Merger has been approved
by the affirmative vote of the holder of all of the outstanding shares of Merger
Sub Common Stock, and no other vote of the holders of any class or series of
capital stock of Merger Sub is necessary in order for Merger Sub to consummate
the Merger and to commence and consummate the Offer.
SECTION 4.09. Availability of Funds.
The Parent and Merger Sub have available to them, and
shall maintain the availability of, sufficient funds to enable them to
consummate the transactions contemplated by this Agreement.
SECTION 4.10. Information Supplied.
None of the information that is included in the
Schedule 14D-9 in reliance upon and in conformity with written information
furnished to the Company by the Parent or Merger Sub specifically for use in the
Offer Documents will, at the time such information is furnished to the Company,
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
Offer Documents, at the time they or any amendments thereto are filed with the
SEC or on the date first published, sent, or given to the Company's
stockholders, will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; except that, the foregoing does not apply to the extent that any
such untrue statement of a material fact or omission to state a material fact
was or is made by the Parent or Merger Sub in reliance upon and in conformity
with written information furnished to the Parent or Merger Sub by the Company
specifically for use in the Offer Documents.
SECTION 4.11. Certificate of Incorporation and Bylaws.
The Parent and Merger Sub have heretofore furnished
to the Company complete and correct copies of the Articles of Incorporation and
Code of Regulations of the Parent and the certificate of incorporation and
bylaws of Merger Sub, in each case as amended or restated as of the date hereof.
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SECTION 4.12. Finders and Investment Bankers.
Except as set forth in Section 4.12 of the Parent
Disclosure Schedule, no investment banker, broker, finder, or other similar
intermediary has been retained by or is authorized to act on behalf of the
Parent, Merger Sub, or any of their Subsidiaries who might be entitled to any
fee or commission in connection with the transactions contemplated by this
Agreement. The Parent has provided the Company with a copy of the engagement
letter, as amended to date, with Smith Barney Inc. Smith Barney Inc.'s fees will
be paid by the Parent.
SECTION 4.13. Board Approval.
Prior to the execution of this Agreement, each of the
Boards of Directors of the Parent and Merger Sub has approved this Agreement and
the transactions contemplated hereby, including the Merger and the Offer.
SECTION 4.14. No Prior Activities.
Merger Sub has not incurred nor will it incur,
directly or indirectly, any liabilities or obligations, except those incurred in
connection with its incorporation or with the negotiation of this Agreement and
the consummation of the transactions contemplated hereby. Merger Sub has not
engaged, directly or indirectly, in any business or activity of any type or
kind, or entered into any agreement or arrangement with any Person, and is not
subject to or bound by any obligation or undertaking, that is not contemplated
by or in connection with this Agreement and the transactions contemplated
hereby.
SECTION 4.15. Fraudulent Conveyance.
Assuming the accuracy of the representations and
warranties of the Company in this Agreement, the Parent has no reason to believe
that the financing to be provided to the Parent to effect the Offer and the
Merger will cause (i) the fair salable value of the Surviving Corporation's
assets to be less than the total amount of its existing liabilities, (ii) the
fair salable value of the assets of the Surviving Corporation to be less than
the amount that will be required to pay its probable liabilities on its existing
debts as they mature, (iii) the Surviving Corporation not to be able to pay its
existing debts as they mature, or (iv) the Surviving Corporation to have an
unreasonably small capital with which to engage in its business.
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ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 5.01. Conduct of the Company.
Except as contemplated or permitted by this Agreement
or as disclosed on Schedule 5.01 (Company Conduct), or as otherwise approved in
writing by the Parent, from the date of this Agreement until the time that the
designees of Merger Sub have been appointed to the Board of Directors of the
Company in accordance with Section 1.01(d) hereof, the Company will, and will
cause its Subsidiaries to, conduct their respective businesses in the ordinary
course consistent with past practice. Subject to the foregoing exceptions, from
the date hereof until the time that the designees of Merger Sub have been
appointed to the Board of Directors of the Company in accordance with Section
1.01(d) hereof:
(a) the Company will not adopt or approve any change
or amendment in its certificate of incorporation or bylaws;
(b) the Company will not, and will not permit any of
its Subsidiaries to, merge, consolidate, or enter into a share exchange with any
other Person, acquire any material stock or any material amount of assets of any
other Person, sell, lease, license, mortgage, pledge, or otherwise dispose of
any material assets, except (i) in the ordinary course consistent with past
practice or (ii) transfers between the Company and/or its wholly owned
Subsidiaries;
(c) the Company will not declare, set aside, or pay
any dividends or make any distributions in respect of shares of Company Stock;
(d) the Company will not, and will not permit any of
its Subsidiaries to, (i) issue, deliver, sell, encumber, or authorize or propose
the issuance, delivery, sale, or encumbrance of, any capital stock or other
securities of the Company or any Company Subsidiary Securities, other than (A)
pursuant to the Company Rights Agreement (as amended pursuant to Section 3.28)
and (B) the issuance of shares of Company Stock pursuant to the ESPP or upon the
exercise of Company Options granted prior to the date hereof, (ii) split,
combine, or reclassify any shares of Company Stock or Company Subsidiary
Securities, (iii) repurchase, redeem, or otherwise acquire any capital stock or
other voting securities of the Company or any voting Company Subsidiary
Securities, or (iv) amend the terms of any outstanding voting securities;
(e) the Company will not, without the prior written
consent of the Parent, which consent shall not be unreasonably withheld or
delayed, make any
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commitment or enter into any contract or agreement that, individually or in the
aggregate, is reasonably likely to be material to the Company and its
Subsidiaries taken as a whole except in the ordinary course of business
consistent with past practices;
(f) except to the extent required by law or by
existing written agreements or plans disclosed in the Company SEC Reports or in
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
will increase in any manner the compensation or fringe benefits of any of its
directors or officers (other than increases in the ordinary course of business
in the compensation or fringe benefits of any officers who are not executive
officers), pay any pension or retirement allowance to any such directors or
officers, become a party to, amend, or commit itself to any pension, retirement,
profit-sharing, welfare benefit plan, or employment agreement with or for the
benefit of any such director or officer, grant any severance or termination pay
or stay-in-place bonus to any such director or officer, or increase the benefits
payable under any existing severance or termination pay or stay-in-place bonus
policies;
(g) the Company will not, and will not permit any of
its Subsidiaries to, make any material Tax election or settle or compromise any
material federal, state, local, or foreign Tax liability; and
(h) the Company will not agree to do any of the
foregoing.
SECTION 5.02. Access to Information.
From the date hereof until the Effective Time or
earlier termination of this Agreement, the Company will, upon reasonable notice,
give the Parent, its counsel, financial advisors, auditors, and other authorized
representatives reasonable access during regular business hours to the offices,
properties, books, and records of the Company and its Subsidiaries, and will
furnish to the Parent, its counsel, financial advisors, auditors, and other
authorized representatives such financial and operating data and other
information as such Persons may reasonably request, for the purpose of
evaluating changes in the financial condition, results of operations, or
business of the Company and its Subsidiaries after the date of this Agreement,
and will instruct the Company's employees, counsel, and financial advisors to
cooperate with the Parent in its evaluation. If, after the date of this
Agreement, (i) the Parent becomes aware of information not disclosed to, or
otherwise in the possession of, the Parent or its representatives prior to the
execution and delivery of this Agreement, and (ii) on the basis of such
information, the Parent reasonably concludes that conditions at any of the
Company Real Property currently owned or leased by the Company or any of its
Subsidiaries might give rise to a material remedial obligation or other material
liability of the Company or any of its Subsidiaries under any Environmental
Laws, the Company will also, upon reasonable notice, give the Parent and its
authorized representatives reasonable access during regular business hours to
such Company Real Property for the purpose of taking surface wipes, making
measurements, or conducting other non-invasive
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measurement procedures to determine whether any such conditions or liability
exists and, if so, to determine the extent thereof. All information provided to,
or obtained by, the Parent or Merger Sub in connection with the transactions
contemplated hereby will be "Evaluation Material" for purposes of the
confidentiality agreement, dated June 6, 1997, between the Parent and the
Company (the "Confidentiality Agreement").
SECTION 5.03. Other Offers.
(a) From the date hereof until the Effective Time or
the earlier termination of this Agreement, the Company will not, and will use
its best efforts to cause its Subsidiaries and the officers, directors,
employees, and agents of the Company and its Subsidiaries not to, directly or
indirectly, (i) take any action to solicit, to initiate, or knowingly to
encourage any Company Acquisition Proposal (as defined below), (ii) take any
action knowingly to facilitate (including, without limitation, amending the
Company Rights Agreement or redeeming the rights issued thereunder) any Company
Acquisition Proposal, (iii) engage or participate in discussions or
negotiations, or enter into agreements, with any Person with respect to a
Company Acquisition Proposal, or (iv) in connection with a Company Acquisition
Proposal, disclose any nonpublic information relating to the Company or any of
its Subsidiaries or afford access to the properties, books, or records of the
Company or any of its Subsidiaries to any Person, except that the Company may
take action described in clause (ii), (iii), or (iv) if (A) such action is taken
in connection with an unsolicited Company Acquisition Proposal, (B) the failure
to take such action would not be consistent with the fiduciary duties of the
Board of Directors under applicable law (as advised by legal counsel to the
Company), and (C) in the case of the disclosure of nonpublic information
relating to the Company or any of its Subsidiaries in connection with a Company
Acquisition Proposal, such information is covered by a confidentiality agreement
that provides substantially the same protection to the Company as is afforded by
the Confidentiality Agreement. The Company will promptly notify the Parent
orally and in writing of any Company Acquisition Proposal or any inquiries with
respect thereto. Any such written notification will include the identity of the
Person making such inquiry or Company Acquisition Proposal and a description of
the material terms of such Company Acquisition Proposal (or the nature of the
inquiry) and will indicate whether the Company is providing or intends to
provide the person making the Company Acquisition Proposal with access to
nonpublic information relating to the Company or any of its Subsidiaries. For
purposes of this Agreement, "Company Acquisition Proposal" means any good faith
offer or proposal for (x) a merger or other business combination involving the
Company or any of its Subsidiaries and any Person (other than the Parent, Merger
Sub, or any other Subsidiary of either the Parent or Merger Sub), (y) an
acquisition by any Person (other than the Parent, Merger Sub, or any other
Subsidiary of either the Parent or Merger Sub) of assets or earning power of the
Company or any of its Subsidiaries, in one or more transactions, representing
25% or more of the consolidated assets or earning power of the Company and its
Subsidiaries, or (z) an acquisition by any Person (other than the Parent,
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<PAGE> 42
Merger Sub, or any other Subsidiary of either the Parent or Merger Sub) of
securities representing 20% or more of the voting power of the Company or any of
its Subsidiaries.
(b) Except as set forth in this Section 5.03, 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 the
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger, or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Company Acquisition
Proposal, or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
an "Acquisition Agreement") related to any Company Acquisition Proposal, except
that, in any case set forth in clause (i), (ii), or (iii) above, prior to the
acceptance for payment of shares of Company Stock pursuant to the Offer, the
Board of Directors of the Company may, in response to an unsolicited Company
Acquisition Proposal, (A) withdraw or modify its approval or recommendation of
the Offer, the Merger, or this Agreement or (B) approve or recommend any such
Company Acquisition Proposal if, in the case of any action described in clause
(A) or (B), the failure to take such action would not be consistent with the
fiduciary duties of the Board of Directors under applicable law (as advised by
legal counsel to the Company) and, in the case of the actions described in
clause (B), concurrently with such approval or recommendation the Company
terminates this Agreement and promptly thereafter enters into an Acquisition
Agreement with respect to a Company Acquisition Proposal.
(c) Nothing contained in this Agreement shall
prohibit the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act
or from making any disclosure to the Company's stockholders if, in the good
faith judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would be inconsistent with applicable
law; provided that, neither the Company nor its Board of Directors nor any
committee thereof shall, except as permitted by Section 5.03(b), withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Offer, the Merger, or this Agreement or approve or recommend, or propose to
approve or recommend, a Company Acquisition Proposal.
SECTION 5.04. Notices of Certain Events.
The Company will promptly notify the Parent of:
(i) any notice or other communication from any Person
alleging that the consent of any third party (other than consents listed in
Section 3.03 or 3.05 of the Company Disclosure Schedule) is or may be required
in connection with the transactions contemplated by this Agreement;
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(ii) any material notice or other communication from
any governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement;
(iii) any actions, suits, claims, or proceedings
commenced against, or, to the knowledge of the Company, any material threat of
an action, suit, claim, or proceeding made against, or any pending investigation
of, the Company or any of its Subsidiaries that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
3.12 or that relate to the consummation of the transactions contemplated by this
Agreement; and
(iv) the receipt by the Company or any of its
Subsidiaries subsequent to the date of this Agreement of any notice of, or other
communication relating to, a material default, or an event that with notice or
lapse of time or both would become a material default, under any Company
Contract.
SECTION 5.05. Merger Meeting; Proxy Statement.
(a) If required by Delaware Law in order to
consummate the Merger, as soon as practicable following the purchase of shares
of Company Stock pursuant to the Offer, the Company will take all action
necessary in accordance with Delaware Law and with the Company's certificate of
incorporation and bylaws to convene a meeting of its stockholders to approve the
Merger and adopt this Agreement (the "Merger Meeting"). The Company's Board of
Directors will recommend that the Company's stockholders approve the Merger and
adopt this Agreement, and will cause the Company to use all reasonable efforts
to solicit from the stockholders proxies to vote therefor, unless (i) such
recommendation would not be consistent with the fiduciary duties of the Board of
Directors under applicable law (as advised by legal counsel to the Company) or
(ii) this Agreement is terminated in accordance with Article IX.
(b) The Company will, if required by law for the
consummation of the Merger, prepare and file with the SEC preliminary proxy
materials relating to the approval of the Merger and the adoption of this
Agreement by the Company's stockholders, and will file with the SEC revised
preliminary proxy materials, if appropriate, and definitive proxy materials in a
timely manner as required by the rules and regulations of the SEC. Subject to
the last sentence of Section 5.05(a), the proxy materials relating to the Merger
Meeting will include the recommendation of the Company's Board of Directors.
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ARTICLE VI
COVENANTS OF THE PARENT AND MERGER SUB
The Parent and Merger Sub agree that:
SECTION 6.01. Director and Officer Liability.
(a) The certificate of incorporation and the bylaws
of the Surviving Corporation will contain the provisions with respect to
exculpation from liability and indemnification set forth in the certificate of
incorporation and bylaws of the Company as of the date hereof, which provisions
(along with all provisions regarding indemnification or exculpation from
liability contained in the governing documents of any of the Company's
Subsidiaries or in any agreements or commitments of the Company or any of its
Subsidiaries) shall not be amended, repealed, or otherwise modified in any
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were present or former directors, officers, employees, or
agents of the Company, unless such modification is required by law.
(b) From and after the Effective Time, the Parent and
the Surviving Corporation will, jointly and severally, indemnify, defend, and
hold harmless the present and former directors and officers of the Company and
each of its Subsidiaries against all losses, claims, damages, and liabilities
and amounts paid in settlement in connection with any claim, action, suit,
proceeding, or investigation, whether civil, criminal, administrative, or
investigative, to which any of them was or is a party or is threatened to be
made a party by reason of the fact that he or she was or is a director or
officer of the Company or any of its Subsidiaries in respect of acts or
omissions occurring at or prior to the Effective Time to the fullest extent that
the Company or such Subsidiary would have been permitted to indemnify such
Person under applicable law and the certificate of incorporation and bylaws of
the Company or such Subsidiary in effect on the date hereof. The Parent will use
all reasonable efforts to, without any lapse in coverage, either (i) for at
least six years after the Effective Time, provide officers' and directors'
liability insurance ("D&O Insurance") in respect of acts or omissions occurring
at or prior to the Effective Time covering each such Person currently covered by
the Company's D&O Insurance policy on terms with respect to coverage and amount
no less favorable than those of such policy in effect on the date hereof;
provided that, in no event will the Parent be required to pay per annum more
than 150% of the last premium (annualized) paid by the Company for such policy
prior to the date hereof, (ii) purchase tail insurance in respect of the
Company's existing D&O Insurance for six years for a premium not to exceed the
amount of the customary premium for such tail insurance, or (iii) if such D&O
Insurance or tail insurance is only available at premiums in excess of the
premiums set forth in clauses (i) or (ii), as applicable, then purchase the
highest level of D&O Insurance or tail insurance available at such applicable
premium.
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(c) Any Person who is entitled to indemnification
under Section 6.01(b) (an "Indemnified Party") wishing to claim such
indemnification, upon learning of any such claim, action, suit, proceeding, or
investigation, shall promptly notify the Parent thereof, but failure to so
notify will not relieve the Parent of liability except to the extent the Parent
is materially adversely affected thereby. In the event of any such claim,
action, suit, proceeding, or investigation (whether arising before or after the
Effective Time), (i) the Parent or the Surviving Corporation shall have the
right to assume the defense thereof, and the Parent shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Parent or the Surviving Corporation
elects not to assume such defense or counsel for the Indemnified Parties advises
that, in such counsel's reasonable judgment, there are issues that constitute
conflicts of interest between the Parent or the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and the Parent or the Surviving Corporation shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided that, the Parent shall be obligated pursuant to
this paragraph (c) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the
defense of any such matter, and (iii) the Parent shall not be liable for any
settlement effected without its prior written consent; and provided further
that, the Parent shall not have any obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. The rights of the Indemnified Parties under this
Section 6.01 are in addition to any rights they may have under the certificate
of incorporation and bylaws of the Surviving Corporation or any Subsidiary of
the Surviving Corporation or under any indemnification agreement with the
Company or any Subsidiary of the Company.
(d) If the Surviving Corporation or any of its
successors or assigns (i) shall consolidate with or merge into any other Person
and shall not be the continuing or surviving Person of such consolidation or
merger or (ii) shall transfer 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 the Surviving Corporation shall
assume all of the obligations set forth in this Article VI.
(e) The provisions of this Article VI are intended to
be for the benefit of, and shall be enforceable by, each of the present and
former directors, officers, employees, and agents, their heirs and their
representatives.
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SECTION 6.02. Employment Agreement.
Concurrently with the execution and delivery of this
Agreement, the Parent and John Masefield, Chairman of the Board of the Company,
are entering into an Employment Agreement in the form of Schedule 6.02
(Masefield Employment Agreement).
SECTION 6.03. Employee Benefits.
The Parent agrees that, during the period commencing
at the Effective Time and ending on the second anniversary thereof, the
employees of the Company will be provided with benefits which, in the aggregate,
are substantially comparable to those then provided by the Parent to other
employees of the Parent or its Subsidiaries in similar positions, except that,
through December 31, 1997, the employees of the Company will participate in the
Company's existing corporate incentive program instead of the Parent's
management incentive program. The Parent will cause each employee benefit plan
of the Parent in which employees of the Company are eligible to participate to
take into account for purposes of eligibility and vesting thereunder the service
of such employees with the Company as if such service were with the Parent, to
the same extent that such service was credited under a comparable plan of the
Company. The Parent will, and will cause the Surviving Corporation to, honor in
accordance with their terms, (i) all employee benefit obligations to current and
former employees of the Company accrued and vested as of the Effective Time and
(ii) to the extent set forth in Section 3.15 of the Disclosure Schedule, all
employee severance plans in existence on the date hereof and all employment or
severance agreements entered into prior to the date hereof.
SECTION 6.04. Merger Meeting.
The Merger will be consummated as soon as practicable
(and in no event later than four months) after the purchase of shares of Company
Stock pursuant to the Offer. If Merger Sub is able to do so under Delaware Law,
it will consummate the Merger pursuant to the "short form" merger provisions of
Delaware Law. The Parent will vote, or cause to be voted, all shares of Company
Stock beneficially owned by it in favor of the Merger.
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ARTICLE VII
COVENANTS OF THE PARENT, MERGER SUB, AND THE COMPANY
The Parent, Merger Sub, and the Company agree that:
SECTION 7.01. Reasonable Efforts.
Subject to the terms and conditions of this
Agreement, each party will use its reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary or
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement as promptly as practicable.
SECTION 7.02. Certain Filings and Consents.
The Company and the Parent will cooperate with one
another (a) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official, or authority is required, or any
actions, consents, approvals, or waivers are required to be obtained from
parties to any Company Contracts ("Third Party Consents") in connection with the
transactions contemplated by this Agreement and (b) in attempting to take all
such actions, to obtain all such consents, approvals, and waivers, and to make
all such filings. The Company and the Parent will each promptly file
Notification and Report Forms under the HSR Act and respond as promptly as
practicable to all requests for additional information or documentation received
from the Antitrust Division of the United States Department of Justice or the
Federal Trade Commission.
SECTION 7.03. Public Announcements.
The Parent and the Company will consult with each
other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby and, except
as may be required by applicable law or any listing agreement with the New York
Stock Exchange, Inc. or The Nasdaq Stock Market, Inc., will not issue any such
press release or make any such public statement prior to such consultation.
SECTION 7.04. State Takeover Laws.
If any "fair price," "moratorium," or other similar
statute or regulation becomes applicable to the transactions contemplated by
this Agreement, the Company, the Parent, and Merger Sub and, subject to
applicable fiduciary duties, their respective Boards of Directors will use all
reasonable efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated hereby and
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otherwise act to minimize the effects of such statute or regulation on the
transactions contemplated hereby.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party.
The obligations of the Company, the Parent, and
Merger Sub to consummate the Merger are subject to the satisfaction of the
following conditions:
(a) if required by applicable law, the Merger has
been approved, and this Agreement has been adopted, by the requisite vote of the
Company's stockholders;
(b) Merger Sub shall have purchased all validly
tendered and not properly withdrawn shares of Company Stock in accordance with
the Offer; and
(c) no provision of any applicable domestic law or
regulation, and no judgment, injunction, order, or decree of a court or
governmental agency or authority of competent jurisdiction, that has the effect
of making the Offer or the Merger illegal or otherwise restrains or prohibits
the purchase of shares of Company Stock pursuant to the Offer or the
consummation of the Merger is in effect.
SECTION 8.02. Conditions to the Obligations of the Parent and
Merger Sub.
The obligations of the Parent and Merger Sub to
consummate the Merger are subject to the satisfaction or waiver of the Offer
Conditions and to compliance by the Company with its obligations under Section
1.01(d).
ARTICLE IX
TERMINATION
SECTION 9.01. Termination.
This Agreement may be terminated and the Offer and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of the Merger and adoption of this Agreement by
the Company's stockholders):
(a) by mutual written consent of the Company, the
Parent, and Merger Sub;
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(b) by the Company if Merger Sub has not purchased
shares of Company Stock pursuant to the Offer by October 14, 1997, or by either
the Company or the Parent if the Merger has not been consummated by February 17,
1998, provided that the right to terminate this Agreement under this clause (b)
will not be available to any party that, at the time of termination, is in
material breach of any of its obligations under this Agreement;
(c) by either the Company or the Parent if any
applicable domestic law, rule, or regulation makes consummation of the Offer or
the Merger illegal or if any judgment, injunction, order, or decree of a court
or governmental agency or authority of competent jurisdiction restrains or
prohibits the consummation of the Offer or the Merger, and such judgment,
injunction, order, or decree has become final and nonappealable;
(d) by either the Company or the Parent if the
stockholder approval referred to in Section 8.01(a) has not been obtained at the
Merger Meeting; provided that, the right to terminate this Agreement pursuant to
this Section 9.01(e) shall not be available to the Parent if it has not
performed its obligations under the last sentence of Section 6.04;
(e) by either the Company or the Parent if the Offer
terminates without the purchase of shares of Company Stock thereunder; provided
that, the right to terminate this Agreement pursuant to this Section 9.01(e)
shall not be available to (i) the Parent, if Merger Sub shall have breached its
obligations under Section 1.01(a), or (ii) any party whose willful failure to
perform any of its obligations under this Agreement results in the failure of
any of the Offer Conditions or if the failure of any such Offer Conditions
results from facts or circumstances that constitute a material breach of the
representations or warranties of such party under this Agreement;
(f) prior to the purchase of shares of Company Stock
by Merger Sub pursuant to the Offer, by the Parent if (i) the Company violates
its obligations under Section 5.03 in any material respects and thereafter any
Person publicly makes a Company Acquisition Proposal or (ii) the Board of
Directors of the Company does not publicly recommend in the Schedule 14D-9 that
the Company's stockholders accept the Offer and tender their shares of Company
Stock pursuant to the Offer and approve the Merger and adopt the Agreement, or
if the Board of Directors of the Company withdraws, modifies, or changes such
recommendation in any manner materially adverse to the Parent; or
(g) by the Company if the Company receives an
unsolicited Company Acquisition Proposal that the Board of Directors of the
Company determines in good faith, after consultation with its legal and
financial advisors, is likely to lead to a merger, acquisition, consolidation,
or similar transaction that is more favorable to the stockholders of the Company
than the transactions contemplated by this Agreement;
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provided that the Company has given the Parent at least five business days
notice of the material terms of such Company Acquisition Proposal and such
termination shall not be effective until the Company has paid the Termination
Fee, if and to the extent required under Section 10.04(b), to the Parent either
by delivery of a certified or bank check payable to the Parent or by wire
transfer to an account designated in writing by the Parent, at the Company's
option.
SECTION 9.02. Effect of Termination.
If this Agreement is terminated and the Offer and the
Merger are abandoned pursuant to Section 9.01, no party to this Agreement (or
any of its directors, officers, employees, agents, or advisors) will have any
liability or further obligation to any other party except (a) as provided in
Section 10.04, (b) that the agreements contained in Section 10.04, in the last
sentence of Section 5.02, and in the Confidentiality Agreement will survive the
termination hereof, and (c) that nothing herein will relieve any party from
liability for any breach of its covenants or agreements under this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices.
All notices, requests, and other communications to
any party hereunder will be in writing (including telecopy) and will be given,
if to the Parent or Merger Sub, to:
STERIS Corporation
5960 Heisley Road
Mentor, OH 44060
Attention: David C. Dvorak, Esq.
Fax: (216) 639-4457
with a copy to:
Thompson Hine & Flory LLP
3900 Key Center
127 Public Square
Cleveland, OH 44114
Attention: Roy L. Turnell, Esq.
Fax: (216) 566-5800
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if to the Company, to:
Isomedix, Inc.
11 Apollo Drive
Whippany, NJ 07981
Attention: Mr. John Masefield
with a copy to:
Haythe & Curley
237 Park Avenue
New York, NY 10017-3142
Attention: John J. Butler, Esq.
or to such other address or telecopy number as such party may hereafter specify
for the purpose by notice to the other parties. Each such notice, request, or
other communication will be effective upon receipt.
SECTION 10.02. Survival.
None of the representations and warranties,
agreements, and other provisions contained in this Agreement or in any
certificate or other writing delivered pursuant to this Agreement, other than
Articles I and VI, will survive the Effective Time.
SECTION 10.03. Amendments; No Waivers.
(a) Subject to the applicable provisions of Delaware
Law and Section 1.01(e) of this Agreement, any provision of this Agreement may
be amended or waived prior to the Effective Time if, and only if, such amendment
or waiver is in writing and duly executed and delivered, in the case of an
amendment, by the Company, the Parent, and Merger Sub or, in the case of a
waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising
any right, power, or privilege hereunder will operate as a waiver thereof, nor
will any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege.
SECTION 10.04. Fees and Expenses.
(a) Subject to paragraph (b) of this Section, all
costs and expenses incurred in connection with this Agreement will be paid by
the party incurring the costs and expenses.
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(b) If (i) this Agreement is terminated by the
Company pursuant to Section 9.01(g), (ii) any Person publicly makes a Company
Acquisition Proposal and thereafter this Agreement is terminated pursuant to
Section 9.01(e) because an insufficient number of shares of Company Stock are
tendered in the Offer, or (iii) any Person publicly makes a Company Acquisition
Proposal and thereafter this Agreement is terminated pursuant to Section
9.01(f), then the Company will reimburse the Parent and Merger Sub for all of
their reasonable documented out-of-pocket expenses and fees actually incurred by
the Parent in connection with the transactions contemplated by this Agreement
prior to the termination of this Agreement, including, without limitation, all
reasonable fees and expenses of counsel, financial advisors, accountants, and
environmental and other experts and consultants to the Parent and Merger Sub
("Transaction Costs"); except that, the Company will not be required to
reimburse the Parent or Merger Sub for Transaction Costs in excess of $600,000
in the aggregate.
Notwithstanding the preceding paragraph, if (i) this
Agreement is terminated by the Company pursuant to Section 9.01(g), (ii) any
Person publicly makes a Company Acquisition Proposal, thereafter this Agreement
is terminated pursuant to Section 9.01(e) because an insufficient number of
shares of Company Stock are tendered in the Offer and within 12 months after
termination the Company agrees to or consummates any Company Acquisition
Proposal, or (iii) any Person publicly makes a Company Acquisition Proposal and
thereafter this Agreement is terminated pursuant to Section 9.01(f), then, in
addition to reimbursing the Parent and Merger Sub for their Transaction Costs,
the Company will pay to the Parent a fee of $5,000,000 ("Termination Fee"). The
Termination Fee will be payable by delivery of immediately available funds at
the time of termination, in the case of termination under clause (i) or (iii) of
the preceding sentence, or immediately prior to the earlier of the agreement
with respect to, or the consummation of, the Company Acquisition Proposal, in
the case of termination under clause (ii). If the Parent is required to file
suit to seek the Termination Fee, and it ultimately succeeds on the merits, it
will be entitled to all expenses, including reasonable attorneys' fees, that it
has incurred in enforcing its rights under this Section 10.04.
(c) If the Parent receives a Termination Fee under
circumstances in which a Termination Fee is payable, neither the Parent, Merger
Sub, nor any of their affiliates will assert or pursue in any manner, directly
or indirectly, any claim or cause of action against the Company or any of its
directors, officers, employees, agents, or representatives based in whole or in
part upon its or their receipt, consideration, recommendation, or approval of a
Company Acquisition Proposal, including the Company's exercise of its right of
termination of this Agreement under Section 9.01(g).
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SECTION 10.05. Successors and Assigns.
The provisions of this Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided that no party may assign, delegate, or otherwise transfer
any of its rights or obligations under this Agreement without the consent of the
other parties.
SECTION 10.06. Governing Law.
The interpretation, validity, and enforceability of
this Agreement will be governed by the law of the State of Delaware without
regard to principles of conflict of laws that would apply the laws of any other
jurisdiction.
SECTION 10.07. Counterparts; Effectiveness.
This Agreement may be signed in any number of
counterparts, each of which will be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement will
become effective when each party has received counterparts hereof signed by all
of the other parties.
SECTION 10.08. Entire Agreement.
This Agreement, the Company Disclosure Schedule, the
Parent Disclosure Schedule, the Employment Agreement, and the Confidentiality
Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements, both written and oral,
among the parties with respect to the subject matter of this Agreement. No
representation, warranty, or inducement not set forth herein has been made or
relied upon by any party. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties any rights or
remedies, except that the provisions of Article I are intended for the benefit
of the Company's stockholders and holders of Company Options, and the provisions
of Article VI are intended for the benefit of present and former directors,
officers, employees, and agents of the Company, including John Masefield.
SECTION 10.09. Headings.
The headings contained in this Agreement are for
reference purposes only and will not in any way affect the meaning or
interpretation of this Agreement.
SECTION 10.10. Severability.
If any term or other provision of this Agreement is
invalid, illegal, or unenforceable, all other provisions of this Agreement will
remain in full force and effect so
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long as the economic and legal substance of the transactions contemplated hereby
is not affected.
SECTION 10.11. Specific Performance.
Except as set forth in Section 10.04(c), the parties
agree that irreparable damage would occur if any of the provisions of this
Agreement is not performed in accordance with the terms hereof and that the
parties will be entitled to specific performance of the terms hereof in addition
to any other remedies at law or in equity.
SECTION 10.12. "Knowledge" of the Company.
For purposes of this Agreement, unless otherwise
expressly provided where the term is used, "knowledge" of the Company will be
deemed to mean (i) the actual knowledge of any director or executive officer of
the Company and (ii) the knowledge that any such director or executive officer
would have had if he or she, in connection with the confirmation of the accuracy
of the representations and warranties of the Company in this Agreement, had made
due inquiry of the officers, employees, advisors, and agents of the Company who
are primarily responsible for the subject matter of such representations and
warranties.
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IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
STERIS CORPORATION
By:
-----------------------------------
Name: Bill R. Sanford
Title: Chairman, President, and
Chief Executive Officer
STERIS ACQUISITION CORPORATION
By:
-----------------------------------
Name: Bill R. Sanford
Title: Chairman, President, and
Chief Executive Officer
ISOMEDIX INC.
By:
-----------------------------------
Name:
Title:
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INDEX OF DEFINED TERMS
Page No.
--------
Affiliate .................................................................16
Agreement ..................................................................1
Cash Payment ...............................................................7
CERCLA ....................................................................24
CFR .......................................................................21
Closing ....................................................................5
Code ......................................................................16
Common Stock ...............................................................1
Company ....................................................................1
Company Acquisition Proposal...............................................37
Company Benefit Arrangement................................................17
Company Contracts .........................................................14
Company Disclosure Schedule................................................10
Company Employee Plans.....................................................16
Company Financial Statements...............................................13
Company Material Adverse Effect............................................56
Company Option .............................................................7
Company Option Plans........................................................7
Company Permits ...........................................................15
Company Preferred Stock....................................................11
Company Real Property......................................................24
Company Right .............................................................11
Company Rights Agreement...................................................11
Company SEC Reports........................................................13
Company Stock .........................................................1
Company Subsidiary Securities..............................................13
Confidentiality Agreement..................................................37
D&O Insurance .............................................................40
Delaware Law ...............................................................5
Dissenting Stockholder......................................................8
DLJ ........................................................................3
Effective Time .............................................................5
Environmental Law .........................................................24
ERISA .....................................................................17
ESPP .......................................................................8
Exchange Act ...............................................................2
Exchange Agent .............................................................6
Exchange Fund ..............................................................6
Expiration Date ............................................................1
FDA .......................................................................20
8/12/97
52
<PAGE> 57
Hazardous Material ........................................................24
HSR Act ...................................................................10
Indemnified Party .........................................................41
Independent Directors.......................................................4
Intellectual Property Rights...............................................24
Leased Real Property.......................................................29
Lien ......................................................................11
Merger .....................................................................5
Merger Consideration........................................................5
Merger Meeting ............................................................39
Merger Sub .................................................................1
Merger Sub Common Stock.....................................................5
Minimum Condition .........................................................55
NRC .......................................................................22
Nuclear Regulations and Laws...............................................22
Offer ......................................................................1
Offer Conditions ...........................................................1
Offer Documents ............................................................2
Owned Real Property........................................................29
Parent .....................................................................1
Parent Disclosure Schedule.................................................31
Parent Financial Statements................................................32
Parent Material Adverse Effect.............................................56
Parent SEC Reports ........................................................32
Permitted Lien ............................................................29
Person .....................................................................7
Product Liability .........................................................16
Schedule 14D-9 .............................................................3
SEC ........................................................................2
Securities Act ............................................................13
Stock Certificate ..........................................................5
Subsidiary .................................................................9
Surviving Corporation.......................................................5
Tax .......................................................................20
Tax Return ................................................................20
Termination Fee ...........................................................48
Third Party Consents.......................................................43
Transaction Costs .........................................................48
8/12/97
53
<PAGE> 58
LIST OF SCHEDULES
Schedule Designation
- -------- -----------
1.01(a) Offer Conditions
5.01 Company Conduct
6.02 Masefield Employment Agreement
8/12/97
54
<PAGE> 59
SCHEDULE 1.01(a)
OFFER CONDITIONS
Merger Sub will not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including, without
limitation, Rule 14e-1(c) under the Exchange Act (relating to Merger Sub's
obligation to pay for or return tendered shares after the termination or
withdrawal of the Offer), to pay for any shares of Company Stock not theretofore
accepted for payment or paid for pursuant to the Offer, if (1) there are not
validly tendered and not properly withdrawn prior to the expiration of the Offer
that number of shares of Company Stock which, when aggregated with the shares of
Company Stock then owned by the Parent and any of its affiliates, represents at
least a majority of the shares of Company Stock then outstanding on a fully
diluted basis (the "Minimum Condition") or (2) at any time on or after the date
of the Agreement and at or before the time that any shares of Company Stock are
accepted for payment any of the following conditions exist:
(a) Any provision of any applicable domestic law or
regulation, or any judgment, injunction, order, or decree of a court or
governmental agency or authority of competent jurisdiction, is in effect that
(i) makes the Offer or the Merger illegal or otherwise, directly or indirectly,
prohibits or materially restrains the making of the Offer, the acceptance for
payment of, payment for, or ownership, directly or indirectly, of some or all of
the shares of Company Stock by Merger Sub or the Parent, makes the foregoing
substantially more costly, or materially delays the Merger; (ii) prohibits or
materially limits the ownership or operation by the Company or any of its
Subsidiaries that owns a material portion of the business and assets of the
Company and its Subsidiaries, taken as a whole, or by the Parent, Merger Sub, or
any Subsidiaries of the Parent of all or a material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of the Parent
and its Subsidiaries, taken as a whole, as a result of the Offer, the Merger, or
the other transactions contemplated by the Agreement, or (iii) imposes material
limitations on the ability of Merger Sub or the Parent to acquire, hold, or
exercise full rights of ownership of the shares of Company Stock, including but
not limited to the right to vote any shares of Company Stock acquired or owned
by Merger Sub or the Parent on all matters properly presented to the
stockholders of the Company, including but not limited to the approval of the
Agreement and adoption of the Merger and the right to vote any shares of capital
stock of any Subsidiaries of the Company (other than immaterial Subsidiaries).
(b) Any consents, authorizations, orders, and approvals of,
or filings or registrations with, any governmental commission, board, or other
regulatory body required in connection with the execution, delivery, and
performance of the Agreement has not been obtained or made, except (i) the
filing of appropriate certificates of merger in accordance with Delaware Law,
(ii) compliance with applicable requirements of the HSR Act, and the Exchange
Act, and (iii) where the failure to obtain or make any such consent,
8/12/97
55
<PAGE> 60
authorization, order, approval, filing, or registration is not reasonably likely
to have, individually or in the aggregate, a material adverse effect on the
financial condition, results of operations, or business of the Company and its
Subsidiaries, taken as a whole (a "Company Material Adverse Effect"), or on the
financial condition, results of operations, or business of the Parent and Merger
Sub, taken as a whole (a "Parent Material Adverse Effect"), and would not render
the Offer or the Merger illegal or provide a reasonable basis to conclude that
the parties or their affiliates or any of their respective directors or officers
will be subject to the risk of criminal liability.
(c) Any Third Party Consents have not been obtained except
where the failure to obtain any Third Party Consents is not reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect.
(d) The Company has failed to perform the obligations to be
performed by it under the Agreement at or prior to such time or any
representations and warranties of the Company contained in the Agreement are not
true at such time as if made at and as of such time (unless the representation
or warranty is made as of a specified date, in which case such representation or
warranty will be true as of such date), except to the extent that the failure to
perform such obligations and the untruth of such representations and warranties
is not reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect and the Parent has received a certificate signed by an
executive officer and by the chief financial officer of the Company to the
foregoing effect. For purposes of determining whether this condition has been
satisfied, all qualifications in the representations and warranties as to
materiality will be disregarded, and all qualifications as to the knowledge of
the Company will be deemed to mean the knowledge of the Company at the time such
certificate is signed.
(e) The Agreement has been terminated in accordance with its
terms.
8/12/97
56
<PAGE> 1
Exhibit (c)(3)
AMENDMENT NO. 3 TO RIGHTS AGREEMENT
-----------------------------------
AMENDMENT No. 3 dated as of August 12, 1997 (this "Amendment")
made by Isomedix Inc., a Delaware corporation (the "Company"), to that certain
Rights Agreement dated as of June 10, 1988, as amended (as so amended, the
"Agreement"), between the Company and PNC Bank, N.A. (the "Rights Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, simultaneously with the execution of this Amendment,
the Company is entering into an Agreement and Plan of Merger with Steris
Corporation, an Ohio corporation ("Steris"), and Steris Acquisition Corporation,
a Delaware corporation and wholly owned subsidiary of Steris; and
WHEREAS, the Company desires to exclude transactions provided
for in the Merger Agreement from the events which would result in Steris
becoming an Acquiring Person (as defined in the Agreement) or the triggering of
the so-called "flip-in" or "flip-over" provisions of the Agreement; and
WHEREAS, in order to effect the foregoing, the Company has
determined to amend the Agreement pursuant to Section 27 of the Agreement as set
forth below.
NOW, THEREFORE, effective as of the date hereof, the Agreement
is hereby amended pursuant to Section 27 thereof as follows:
1. Section 1(a) of the Agreement is hereby amended by adding the
following at the end thereof:
"Notwithstanding the foregoing, neither Steris Corporation, an
Ohio corporation ("Steris"), nor any of its Affiliates or
Associates shall become an Acquiring Person by reason of the
acquisition by Steris or any of its wholly owned subsidiaries
after August 12, 1997 of Common Shares pursuant to, and in
accordance with the terms of, that certain Agreement and Plan
of Merger dated as of August 12, 1997, as the same may be
amended from time to time in accordance with the terms thereof
(as so amended, the "Merger Agreement") among Steris, Steris
Acquisition Corporation, a Delaware
<PAGE> 2
2
corporation ("Merger Sub"), and the Company; provided that
upon the earlier to occur of the expiration of the Offer (as
defined in the Merger Agreement) or the termination of the
Merger Agreement, in each case prior to the purchase by Merger
Sub of Common Shares pursuant to, and in accordance with the
terms of, the Merger Agreement, this sentence shall be of no
further force and effect."
2. Clause (ii) of Section 3(a) of the Agreement is hereby amended by
adding the following after the word "tender" therein:
"offer (other than the Offer (as defined in the Merger
Agreement); provided that the Offer is made pursuant to, and
in accordance with the terms of, the Merger Agreement; and
provided further that upon the earlier to occur of the
expiration of the Offer (as defined in the Merger Agreement)
or the termination of the Merger Agreement, in each case prior
to the purchase by Merger Sub of Common Shares pursuant to,
and in accordance with the terms of, the Merger Agreement,
this parenthetical shall be of no further force and effect)".
3. The first sentence of Section 13 of the Agreement is hereby amended
by adding the following after the phrase "and in each such case" therein:
"(other than in the case of the Merger (as defined in the
Merger Agreement); provided that the Merger is consummated
pursuant to, and in accordance with the terms of, the Merger
Agreement; and provided further that upon the earlier to occur
of the expiration of the Offer (as defined in the Merger
Agreement) or the termination of the Merger Agreement, in each
case prior to the purchase by Merger Sub of Common Shares
pursuant to, and in accordance with the terms of, the Merger
Agreement, this parenthetical shall be of no further force and
effect)".
4. This Amendment shall be deemed to be a contract made under the laws
of the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts made and to be
performed entirely within such State, without regard to any conflict of laws
principles which would apply the laws of any other jurisdiction.
<PAGE> 3
3
5. The Agreement, as amended hereby, is hereby ratified, confirmed and
continued in full force and effect.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed as of the date first above written.
ISOMEDIX INC.
By /s/ John Masefield
------------------
Title: Chairman
<PAGE> 1
EXHIBIT (c)(4)
FORM OF INDEMNIFICATION AGREEMENT
---------------------------------
AGREEMENT dated as of the ____ day of __________, 199_ between
ISOMEDIX INC., a Delaware corporation (the "Indemnitor"), and the individual
whose name appears on the signature page hereof as Indemnitee (the
"Indemnitee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, in recognition of the Indemnitee's need for
substantial protection against personal liability arising out of his service to
the Indemnitor and/or its subsidiaries and affiliates, and to induce the
Indemnitee to continue to serve as a director, officer, employee, agent or
fiduciary of the Indemnitor and/or various of its subsidiaries and affiliates,
the Indemnitor wishes to provide in this Agreement for the indemnification of
and the advancing of expenses to the Indemnitee as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual benefits to be derived from this Agreement, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. INDEMNIFICATION.
(a) The Indemnitor hereby agrees to indemnify the
Indemnitee in the event the Indemnitee is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or witness or other
participant in, any action, suit or proceeding (including any appeal), whether
civil, criminal, administrative, investigative or other, relating to any
occurrence or event before or after the date hereof, by reason of the fact that
the Indemnitee is or was a director, officer, employee, fiduciary or agent of
the Indemnitor or any of its subsidiaries or affiliates, or is or was serving at
the request of the Indemnitor or any of its subsidiaries or affiliates as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
including but not limited to any such action, suit or proceeding (including any
appeal), whether civil, criminal, administrative, investigative or other by any
third party or by or in the right of the Indemnitor or any of its subsidiaries
or affiliates or any such other corporation, partnership, joint venture, trust,
employee benefit plan or enterprise (hereinafter called a "Claim"), for and
against
<PAGE> 2
2
expenses, including attorneys' fees, and all other costs, charges and expenses
paid, incurred by or assessable against the Indemnitee in connection with
investigating, defending, being a witness in or participating in, or preparing
to defend, be a witness in or participate in, any Claim (collectively,
"Expenses") and judgments, fines, penalties, taxes (including excise taxes), and
amounts paid or to be paid in settlement (including all interest, assessments
and other charges paid or payable in respect of the foregoing) incurred by the
Indemnitee in connection with any Claim (collectively, "Damages").
(b) If requested by the Indemnitee, the Indemnitor
shall, upon presentation of bills, statements of account or invoices for
Expenses relating to a Claim, advance to or pay on behalf of the Indemnitee,
within 30 days of such request, any and all Expenses shown on such bills,
statements or invoices relating to such Claim (an "Expense Advance"), upon
receipt of a written undertaking by or on behalf of the Indemnitee to repay such
Expense Advance in the event of a final determination, adjudication or judgment
(as to which all rights of appeal have been exhausted or have lapsed) that the
Indemnitee is not entitled to indemnification pursuant to this Agreement.
(c) In the event that the Indemnitee demands
indemnification hereunder as a result of any Claim, the Indemnitee shall, in a
timely manner, provide the Indemnitor with notice of such Claim and shall make
available to the Indemnitor all information in the Indemnitee's possession that
relates to such Claim. The Indemnitor shall have the right, but not the
obligation, to control the defense of the Indemnitee from such Claim at the
Indemnitor's sole cost and expense and by counsel mutually acceptable to the
Indemnitor and the Indemnitee. In the event that the Indemnitor shall elect to
exercise such right to control such defense, the Indemnitee shall have the right
to participate in such defense at its sole expense and through counsel of its
choice. No Claim shall be settled or compromised without the consent of the
Indemnitor, which shall not be unreasonably withheld, unless the Indemnitor
shall have failed, after the lapse of a reasonable time, but in no event more
than 30 days after notice to the Indemnitor of such proposed settlement or
compromise, to notify the Indemnitee of the Indemnitor's reasonable objection
thereto. The Indemnitee's failure to give timely notice or to provide copies of
documents or to furnish information in connection with any Claim shall not
constitute a defense to any claim for indemnification by the Indemnitee
hereunder except, and only to the extent, that the Indemnitor is materially
prejudiced thereby.
<PAGE> 3
3
2. INTERPRETATION OF INDEMNITY. It is agreed between the
parties that, although the indemnities and other protections given by the
Indemnitor to the Indemnitee are considered necessary, fair and reasonable, if
it should be found that any of the provisions are void as going beyond that
which is permitted by law and if by deleting part of the wording or by
substituting a more restricted indemnity or protection than that set out in
Section 1 such provision would be valid and enforceable, there shall be
substituted such more restricted indemnity or other provision or such deletions
shall be made as shall render Section 1 or such part thereof valid and
enforceable; provided, however, that the terms of such substituted indemnity or
other provision or such deletions shall be consistent with the provisions of
Section 14.
3. PARTIAL INDEMNITY; SUCCESSFUL DEFENSE; BURDEN OF PROOF. If
the Indemnitee is entitled under any provisions of this Agreement to
indemnification by the Indemnitor for some or a portion of the Expenses and
Damages but not, however, for all of the total amount thereof, the Indemnitor
shall nevertheless indemnify the Indemnitee for the portion thereof to which the
Indemnitee is entitled. Moreover, notwithstanding any other provision of this
Agreement, to the extent that the Indemnitee has been successful on the merits
or otherwise in defense of any or all Claims or in defense of any issue or
matter therein, the Indemnitee shall be indemnified against any and all Expenses
and Damages. In connection with any determination by action of the Board of
Directors of Indemnitor, arbitration agency or court of competent jurisdiction
regarding whether the Indemnitee is or is not entitled to be indemnified
hereunder, the burden of proof shall be on the Indemnitor to establish that the
Indemnitee is not so entitled.
4. NO PRESUMPTION. For purposes of this Agreement, the
termination of any Claim by judgment, order or settlement (whether with or
without court approval), conviction or upon a plea of nolo contendere or its
equivalent, shall not create a presumption that the Indemnitee did not meet any
particular standard of conduct or had any particular belief or that a court has
determined that indemnification is not permitted by this Agreement or applicable
law.
5. CONTRIBUTION. In the event that the indemnification
provided for in this Agreement is unavailable to the Indemnitee for any reason
whatsoever, the Indemnitor, in lieu of indemnifying the Indemnitee, shall
contribute to the Expenses and Damages, in such proportion as is deemed fair and
reasonable in light of all
<PAGE> 4
4
of the circumstances of the related Claim by the Board of Directors of the
Indemnitor or by the arbitrator, agency or court before which such Claim was
brought in order to reflect (i) the relative benefits received by the
Indemnitor, or any subsidiary or affiliate of the Indemnitor, and the Indemnitee
as a result of the events and/or transactions giving rise to such Claim; and/or
(ii) the relative fault of the Indemnitor or any subsidiary or affiliate of the
Indemnitor (and its directors, officers, employees and agents) and the
Indemnitee in connection with such events and/or transactions.
6. NOTICE TO THE INDEMNITOR BY THE INDEMNITEE. The Indemnitee
agrees to notify the Indemnitor promptly in writing upon being served with or
having actual knowledge of any citation, summons, complaint, indictment or any
other similar document relating to any action which may result in a claim for
indemnification or contribution hereunder.
7. ARBITRATION. Any controversy or claim arising out of a
denial or threatened denial of indemnification to the Indemnitee under this
Agreement shall be settled by arbitration in accordance with the rules of the
American Arbitration Association then in effect and judgment upon such award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in New York, New York or in such other
location mutually agreed to by the parties hereto. The arbitration award shall
include attorneys' fees and costs to the prevailing party.
8. SEGREGATION OF FUNDS. In the event of any Claim, the
Indemnitor shall, promptly upon written request by the Indemnitee from time to
time following a Change in Control (as defined in Section 9), set aside in a
separate fund an amount, as set forth in such request, sufficient to satisfy any
and all Expenses reasonably anticipated at the time of each such request to be
incurred in connection with investigating, preparing for and defending any
Claim, and any and all Damages from time to time actually paid or claimed,
reasonably anticipated or proposed to be paid.
9. ESTABLISHMENT OF TRUST. Immediately prior to or upon a
Change in Control (as defined below), the Indemnitor shall, upon written request
by the Indemnitee, promptly create a trust (the "Trust") for the benefit of the
Indemnitee and from time to time, upon written request of the Indemnitee to the
Indemnitor, shall fund the Trust in an amount, as set forth in such request,
sufficient to satisfy any and all Expenses reasonably anticipated at the time of
each such request to be incurred in connection with
<PAGE> 5
5
investigating, preparing for and defending any Claim, and any and all judgments,
fines, penalties and settlement amounts of any and all Claims from time to time
actually paid or claimed, reasonably anticipated or proposed to be paid. The
terms of the Trust shall provide that (i) the Trust shall not be revoked or the
principal thereof invaded, without the written consent of the Indemnitee; (ii)
the trustee of the Trust (the "Trustee") shall advance, within 30 business days
of a request by the Indemnitee, any and all Expenses to the Indemnitee, not
advanced directly by the Indemnitor to the Indemnitee (and the Indemnitee hereby
agrees to reimburse the Trust under the circumstances under which the Indemnitee
would be required to reimburse the Indemnitor under Section 1(b)); (iii) the
Trust shall continue to be funded by the Indemnitor in accordance with the
funding obligation set forth above; (iv) the Trustee shall promptly pay to the
Indemnitee all amounts for which the Indemnitee shall be entitled to
indemnification pursuant to this Agreement or otherwise; and (v) all unexpended
funds in the Trust shall revert to the Indemnitor upon a final determination by
arbitration or court of competent jurisdiction, as the case may be, that the
Indemnitee has been fully indemnified under the terms of this Agreement. The
Trustee shall be chosen by the Indemnitee. For purposes of this Agreement, a
Change in Control of the Indemnitor shall be deemed to have occurred if:
(A) a "person" (meaning an individual, a
partnership, or other group or association as defined in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, other than the Indemnitee or a
group including the Indemnitee), acquires fifty percent (50%) or more of the
combined voting power of the outstanding securities of the Indemnitor having a
right to vote in elections of directors and such acquisition shall not have been
approved in advance of such acquisition by a majority of the Continuing
Directors (as hereinafter defined) then in office; or
(B) the Indemnitor is a party to a merger or
consolidation in which the Indemnitor is not the surviving corporation and such
merger or consolidation shall not have been approved in advance by a majority of
the Continuing Directors then in office; or
(C) all or substantially all of the assets
of the Indemnitor are sold or otherwise disposed of and such sale or disposition
shall not have been approved in advance by a majority of the Continuing
Directors then in office.
<PAGE> 6
6
For purposes of this Agreement, the term "Continuing Director"
shall mean a member of the Board of Directors of the Indemnitor who either was a
member of the Board of Directors on the date hereof or who subsequently became a
Director and whose election, or nomination for election, was approved by a vote
of at least two-thirds of the Continuing Directors then in office.
10. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Indemnitor
shall indemnify the Indemnitee against any and all Expenses and, if requested by
the Indemnitee, shall, upon presentation of bills, statements of account or
invoices for Expenses, within 30 business days of such request advance such
Expenses shown on such bills, statements or invoices to the Indemnitee, which
are incurred by the Indemnitee in connection with any claim asserted by or
action brought by the Indemnitee for (i) indemnification or advance payment of
Expenses by the Indemnitor under this Agreement, any other agreement to which
the Indemnitor and Indemnitee are parties, or any provision of the Indemnitor's
certificate of incorporation or by-laws now or hereafter in effect relating to
Claims and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Indemnitor relating to Claims, upon receipt
of a written undertaking by or on behalf of the Indemnitee to repay such
Expenses in the event of a final determination, adjudication or judgment (as to
which all rights of appeal have been exhausted or have lapsed) that the
Indemnitee is not entitled to indemnification.
11. NON-EXCLUSIVITY. The rights of the Indemnitee hereunder
shall be in addition to any other rights the Indemnitee may have under the
certificate of incorporation or by-laws of the Indemnitor or of any subsidiary
or affiliate of the Indemnitor, or under applicable law, including without
limitation the General Corporation Law of the State of Delaware, or otherwise,
and nothing herein shall be deemed to diminish or otherwise restrict the
Indemnitee's other such rights to indemnification. The Indemnitor may satisfy
any of its obligations to the Indemnitee hereunder by causing any subsidiary or
affiliate of the Indemnitor to satisfy such obligation on behalf of the
Indemnitor.
12. AMENDMENTS, ETC. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by all of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
<PAGE> 7
7
13. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of and be enforceable against the parties hereto and, in
the case of the Indemnitor, its successors and assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Indemnitor) or, in the
case of the Indemnitee, his or her heirs and legal representative. This
Agreement shall continue in effect regardless of whether the Indemnitee
continues to serve as a director, officer, employee, agent or fiduciary of the
Indemnitor, or any subsidiary or affiliate of the Indemnitor, or any other
enterprise at the Indemnitor's request.
14. SEVERABILITY. Subject to Section 2, if a court of
competent jurisdiction shall determine that any provision of this Agreement is
void and of no effect, the provisions of this Agreement shall be deemed amended
to delete or modify, as necessary, the offending provision, and this Agreement
as so amended or modified shall not be rendered unenforceable or impaired but
shall remain in force to the fullest extent possible in keeping with the
intention of the parties hereto.
15. GOVERNING LAW. The validity, interpretation and
performance of this Agreement shall be governed by the laws of the State of
Delaware applicable to agreements made and to be performed entirely within such
State.
16. LIABILITY INSURANCE. To the extent the Indemnitor
maintains at any time an insurance policy or policies providing directors' and
officers' liability insurance, the Indemnitee shall be covered by such policy or
policies, in accordance with the terms of such policy or policies, to the
maximum extent of the coverage available for any other director or officer of
the Indemnitor under such insurance policy. The purchase and maintenance of such
insurance shall not in any way limit or affect the rights and obligations of the
parties hereto, and the execution and delivery of this Agreement shall not in
any way be construed to limit or affect the rights and obligations of the
Indemnitor and/or of the other parties under any such insurance policy.
17. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand or seven business days
after mailing by certified or registered mail, return receipt requested, with
postage prepaid:
<PAGE> 8
8
(a) If to the Indemnitee:
at the address of the Indemnitee shown
on the records of the Indemnitor
(b) If to the Indemnitor:
11 Apollo Drive
Whippany, New Jersey 07981
Attention: John Masefield, President
or to such other address as the Indemnitee or Indemnitor shall designate in
writing pursuant to the above.
* * *
<PAGE> 9
9
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date first written above.
Indemnitor:
ISOMEDIX INC.
By
-------------------------------
Indemnitee:
---------------------------------
<PAGE> 1
Exhibit (c)(2)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of the 12th day of August,
1997 by and between STERIS CORPORATION, an Ohio corporation ("STERIS"), and JOHN
MASEFIELD, an individual ("Masefield"). STERIS has entered into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement") with a wholly
owned subsidiary of STERIS ("Merger Sub") and Isomedix Inc., a Delaware
corporation ("Isomedix"), pursuant to which it is anticipated Isomedix will
become a wholly owned subsidiary of STERIS following a tender offer and related
merger (the "Merger"). Masefield has served Isomedix for many years and, in the
course of that service, has developed special knowledge and experience about
Isomedix and the conduct of its business (the "Contract Sterilization
Business"). STERIS desires to engage Masefield initially as a full time employee
and thereafter as a consultant and Masefield desires to enter into the service
of STERIS, all on the terms and subject to the conditions set forth in this
Agreement. (References in this Agreement to STERIS shall be deemed to include
references to any affiliate of STERIS through which STERIS may engage in the
Contract Sterilization Business or any related business.)
Subject to the consummation of the Merger and in consideration of
the mutual covenants and agreements set forth herein STERIS and Masefield hereby
agree as follows:
1. Employment, Employment Period. During the period specified in this
Section 1, STERIS shall employ Masefield, and Masefield shall serve STERIS, with
the duties and responsibilities set forth in Section 2 and otherwise on the
terms and subject to the conditions set forth herein. The term of Masefield's
employment hereunder shall commence at the Effective Time, and, subject to prior
termination as provided in Section 8 or Section 9 hereof, shall continue through
December 31, 1999. The term of Masefield's employment under this Agreement is
sometimes hereinafter referred to as the "Employment Period."
2. Duties and Responsibilities during the Employment Period. During the
Employment Period:
(a) Masefield shall have overall direct executive responsibility
for the Contract Sterilization Business and shall have such additional
responsibilities consistent with his position and title as an internal
scientific and technical expert and adviser at STERIS and as an external
representative of STERIS on various business development, technology
promotion, government affairs, professional relations, and similar
important initiatives as may be assigned to him by the Chief Executive
Officer of STERIS (the "CEO"). Masefield shall have the title of "Chairman
and Chief Executive Officer" of Isomedix, a wholly owned subsidiary of
STERIS.
(b) Masefield shall be responsible for the training and development
of an individual designated by the CEO to assume the day-to-day
operational responsibilities of managing the Contract Sterilization
Business. This individual shall report directly to Masefield.
(c) Masefield shall be a member of STERIS's Executive Committee.
<PAGE> 2
(d) Masefield shall devote his entire business time, energy, and
talent to the business of and to the furtherance of the purposes and
objectives of STERIS consistent with his prior practice as Chairman,
President, and Chief Executive Officer of Isomedix before the Effective
Time. During the Employment Period, Masefield's office and primary place
of employment shall be located at the Whippany, New Jersey office of
Isomedix or at a comparable substitute facility in Whippany as the parties
may mutually agree, consistent with prior practice.
3. Compensation during the Employment Period . During the Employment
Period, STERIS shall pay to Masefield base salary as provided in (a) below and
Masefield shall be entitled to incentive compensation and to participation in
the STERIS Management Incentive Compensation Plan (the "MICP") as provided in
(b) below. In addition, as of the Effective Time, STERIS shall grant to
Masefield stock options as provided in (c) below.
(a) Base Salary. STERIS shall pay Masefield base salary (the "Base
Salary") during the Employment Period at the rate of $260,000 per annum
payable in accordance with STERIS's standard payroll practices. In
addition, Masefield shall be entitled to such increases in Base Salary
during the term hereof, if any, as may be determined by the Board of
Directors of STERIS in its sole discretion.
(b) Incentive Compensation, MICP.
(i) Assuming the Employment Period continues through
December 31, 1997, Masefield shall be entitled to a guaranteed
bonus for all of calendar year 1997 (whether paid pursuant to this
Agreement or otherwise) equal to $175,000.
(ii) Assuming the Employment Period continues through March
31, 1998 (the end of STERIS's 1998 fiscal year), Masefield shall be
entitled to a guaranteed bonus for the calendar quarter ending on
March 31, 1998, equal to $43,750.
(iii) During the remainder of the Employment Period (after
March 31, 1998), Masefield shall be entitled to participate in the
STERIS MICP as from time to time in effect with a target bonus
opportunity equal to 75% of his Base Salary. The extent, if any, to
which Masefield earns the target bonus shall be based 75% upon the
performance of the Contract Sterilization Business and 25% upon
STERIS's overall corporate performance, in each case for the MICP
quarter and year at issue.
(iv) Bonuses earned as provided in (i) and (ii) above shall
be paid to Masefield within 30 days of the end of the calendar year
1997 and the March 31, 1998 calendar quarter, respectively.
(c) Stock Options. Effective as of the Effective Time, STERIS shall
grant to Masefield options to acquire 100,000 STERIS Common Shares
("Shares") at an exercise price per Share equal to the fair market value
of one Share as of the Effective Time (the "Options"). The Options shall
be granted pursuant to a written agreement (the "Option Agreement"), shall
have a term of ten years, shall be immediately exercisable as to 25,000
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Shares, and shall become exercisable as to an additional 25,000 Shares on
each of the first three anniversaries of the Effective Time, assuming
Masefield remains in the service of Isomedix through each such date,
respectively. For purposes of Masefield's rights under the Options,
continuing service by Masefield for STERIS, whether as a full time
employee or as a consultant, shall be treated as continuation in the
employ of STERIS. In case of a termination by STERIS "Without Cause" or by
Masefield for "Good Reason," the Options (i) shall become fully
exercisable immediately upon termination and (ii) shall remain exercisable
for the balance of the ten year term. Subject to the foregoing, the
Options shall have such other terms and be subject to such other
conditions as are consistent with the terms of other nonqualified stock
options heretofore granted by STERIS to its senior executive officers.
4. Consulting, Consulting Period. Provided that Masefield has remained in
the employ of STERIS pursuant to Section 1 through the first to occur of (a)
December 31, 1999, or (b) the Section 8 Employment Period Termination Date, if
any (as defined in Section 8), during the period specified in this Section 4,
STERIS shall engage the services of Masefield, and Masefield shall serve STERIS,
in a consulting capacity as provided in Section 5 and otherwise on the terms and
subject to the conditions set forth herein. The term of Masefield's consulting
hereunder shall commence immediately upon expiration of the Employment Period
and, subject to prior termination as provided in Section 9 hereof, shall
continue through the first to occur of (x) December 31, 2004, or (y) the sixth
anniversary of the Section 8 Employment Period Termination Date, if any. The
term of Masefield's consulting under this Agreement is sometimes hereinafter
referred to as the "Consulting Period." The period of time beginning at the
commencement of the Employment Period and ending on the last day that is
included in either the Employment Period or the Consulting Period is sometimes
hereinafter referred to as the "Contract Period."
5. Duties and Responsibilities during the Consulting Period. During the
Consulting Period Masefield shall perform, faithfully and diligently, services
of an executive, administrative, and consultative nature relating to the
Contract Sterilization Business and related businesses, appropriate to a former
Chief Executive Officer of Isomedix, pertaining to top-level business and
financial affairs of the Contract Sterilization Business and related businesses
as may reasonably requested by the CEO from time to time. Masefield shall report
directly to the CEO. During the Consulting Period, Masefield may perform his
duties and responsibilities hereunder from his home or such other locations as
he shall deem sufficient and appropriate, subject to reasonable requirements for
travel for attendance at meetings. Masefield shall devote his best energy,
ability, and time to his duties under this Section 5 as may be reasonably
requested by the CEO but nothing in this Agreement shall be construed as
requiring Masefield to spend more than an aggregate of 15 business days per
calendar quarter in discharging his duties hereunder during the Consulting
Period. Masefield shall be furnished, at no cost to him, during the Consulting
Period, with office space either at Isomedix's Whippany offices or at a mutually
agreeable alternate location in Whippany or elsewhere. If Masefield desires to
substitute such office space with an office at his residence during the
Consulting Period, Isomedix shall reimburse Masefield for expenses incurred in
connection with such office at his residence.
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<PAGE> 4
6. Compensation during the Consulting Period . During the Consulting
Period, as full consideration for the services to be rendered by Masefield
during that period, STERIS shall pay compensation to Masefield at the rate of
$250,000 per annum payable in accordance with STERIS's standard payroll
practices. Masefield will not be a participant in the MICP during the Consulting
Period.
7. Employee Benefits. During the Contract Period, Masefield shall be
entitled to employee benefits, including health care, vacation, 401(k) benefits,
and reimbursement of expenses that are the same as the employee benefits
received by other senior executives of STERIS from time to time, subject to the
provisions of such plans and programs as in effect from time to time. In
connection with determining the eligibility of Masefield for any particular
employee benefits, Masefield shall receive credit for all past service performed
by Masefield at Isomedix.
8. Potential Early Termination of Employment Period. Although the parties
contemplate that Masefield will be retained and will serve as a full time
employee of STERIS through December 31, 1999 (the initially scheduled end of the
Employment Period), they also intend that if either party determines that the
mutual benefits anticipated at the execution of this Agreement are not being
realized, the party making that determination may give the other notice as
provided in this Section 8 (a "Section 8 Notice") and, unless the Employment
Period is earlier terminated pursuant to any provision of Section 9, the
Employment Period will thereafter terminate on the date (the "Section 8
Employment Period Termination Date") specified by the party giving such notice
and the Consulting Period will begin immediately after that termination.
Masefield may give a Section 8 Notice upon (i) six months advance notice from
Masefield to the CEO if the notice is given before the first anniversary of the
Effective Time, or (ii) 90 days advance notice from Masefield to the CEO if the
notice is given on or after the first anniversary of the Effective Time. STERIS
may give a Section 8 Notice upon (i) six months advance notice to Masefield if
the notice is given before the first anniversary of the Effective Time, or (ii)
90 days advance notice to Masefield if the notice is given on or after the first
anniversary of the Effective Time.
9. Termination. As used in this Agreement, the term "engagement" means and
includes both employment and engagement as a consultant and a "termination of
Masefield's engagement" means a termination of either such status with the
result that immediately after the termination, Masefield is neither employed by
STERIS nor engaged by it as a consultant.
(a) At Expiration of Term. If not earlier terminated pursuant to
another paragraph of this Section 9, Masefield's employment under this
Agreement shall terminate at the close of business on December 31, 1999,
or, if earlier, on the Section 8 Employment Period Termination Date, if
any. If not earlier terminated pursuant to another paragraph of this
Section 9, Masefield's consulting arrangement under this Agreement shall
terminate at the close of business on the earlier of (i) December 31,
2004, or (ii) the date on which falls the sixth anniversary of the Section
8 Employment Period Termination Date, if any.
(b) Death or Disability. Masefield's engagement under this Agreement
will terminate immediately upon Masefield's death. Either STERIS or
Masefield may terminate Masefield's engagement hereunder immediately upon
giving notice of termination if
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<PAGE> 5
Masefield is disabled, by reason of physical or mental impairment, to such
an extent that he is unable to substantially perform his duties under this
Agreement as determined (i) in the case of a termination by STERIS, in
STERIS's reasonable discretion, or (ii) in the case of a termination by
Masefield, in the written opinion of a licensed physician selected by
Masefield and reasonably acceptable to STERIS.
(c) For "Cause." STERIS may terminate Masefield's engagement under
this Agreement for "Cause" if:
(i) Masefield is guilty of willful, gross neglect or
willful, gross misconduct in the discharge of his duties and
responsibilities under this Agreement, whether as an employee or as
a consultant;
(ii) Masefield commits a felony or any crime involving moral
turpitude;
(iii) Masefield willfully engages in acts in violation of
Sections 11, 12, or 13 hereof that are substantial and adverse to
the best interests of STERIS or an affiliated entity; or
(iv) Masefield willfully commits an act or series of acts
of dishonesty in the course of his engagement that are substantial
and adverse to the best interests of STERIS or an affiliated
entity.
Any termination of Masefield's engagement for Cause shall be effective
immediately upon STERIS giving notice of termination of engagement to
Masefield. However, if any failure on Masefield's part referred to in
clause (i) of this Section 9(c) is curable, STERIS shall not give
Masefield notice of termination for Cause based upon that failure unless
the CEO has first given Masefield written notice of that failure (the date
of such notice being the "Notice Date") and Masefield has failed to effect
a cure within 30 days of the Notice Date.
(d) Without Cause. STERIS may terminate Masefield's engagement
under this Agreement at any time without Cause.
(e) By Masefield for Good Reason. Masefield may terminate his
engagement hereunder for "Good Reason" at any time if, during the
Employment Period, STERIS demotes Masefield from the positions described
in Section 2 or if STERIS alters the nature and character of Masefield's
duties hereunder without his consent to his detriment and to such an
extent so as to substantially decrease his duties and responsibilities
below those described in Section 2 and fails to cure such alteration and
decrease within 30 days of the date on which Masefield has first given the
CEO written notice of that alteration and decrease.
(f) By Masefield Voluntarily. Masefield may terminate his
engagement hereunder at any time without Good Reason upon (i) six months
advance notice from Masefield to the CEO if the notice is given before
the first anniversary of the Effective Time, or (ii) 90 days
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<PAGE> 6
advance notice from Masefield to the CEO if the notice is given on or
after the first anniversary of the Effective Time.
10. Payments Upon Termination.
(a) For Cause. If STERIS terminates Masefield's engagement for
Cause, STERIS shall pay to Masefield any Base Salary and/or any consulting
compensation earned by Masefield through the date of termination of his
engagement (the "Termination Date"), and any incentive compensation earned
before the Termination Date under this Agreement or under the MICP, as
applicable, not previously paid and STERIS shall have no further
obligation to pay any Base Salary, incentive compensation, or consulting
compensation to Masefield. Masefield's rights and benefits with respect to
the Options shall be as set forth in the Option Agreement and his rights
and benefits under any benefit plans and programs of STERIS shall be as
provided in the particular plan or program. After the satisfaction of any
claim of STERIS against Masefield for the Cause leading to his
termination, neither Masefield nor STERIS shall have any further rights or
obligations under this Agreement except as provided in Sections 11, 12,
13, and 15.
(b) Without Cause. If STERIS terminates Masefield's engagement
without "Cause," STERIS shall pay to Masefield, in a single lump sum
payment to be made within 30 days of the Termination Date, the "Buyout
Amount" (as defined below) and shall continue to provide group life and
health insurance coverage to Masefield (to the same extent as if he had
continued in STERIS's engagement) (the "Buyout Benefits") though the end
of the "Buyout Benefit Period" (as defined below). Masefield will have no
obligation to mitigate either or both of the Buyout Amount or the Buyout
Benefits by seeking subsequent employment or otherwise and no subsequent
earnings by Masefield shall be used to offset either or both of the Buyout
Amount or the Buyout Benefits. Masefield's rights and benefits with
respect to the Options shall be as set forth in the Option Agreement and
his rights and benefits under any other benefit plans and programs of
STERIS shall be as provided in the particular plan or program. Neither
Masefield nor STERIS shall have any further rights or obligations under
this Agreement except as provided in Sections 11, 12, 13, and 15.
(i) If the termination of Masefield's engagement without
Cause occurs before the beginning of the Consulting Period, the
Buyout Amount will be equal to the aggregate amount of consulting
compensation that would have been payable to Masefield pursuant to
Section 6 during the Consulting Period if the Consulting Period had
begun immediately after the Termination Date and had continued
through to the earlier of (A) December 31, 2004, or (B) the sixth
anniversary of the Termination Date, except that if the termination
of Masefield's engagement without Cause occurs not only before the
beginning of the Consulting Period but also before January 1, 1999,
the Buyout Amount shall be the amount specified above in this (i)
plus the aggregate amount of any Base Salary that would have been
earned by Masefield under this Agreement if his employment had
continued through December 31, 1998 and has not otherwise been paid
to Masefield by STERIS.
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(ii) If the termination of Masefield's engagement without
Cause occurs after the beginning of the Consulting Period, the
Buyout Amount will be equal to the aggregate amount of consulting
compensation that has not been paid but would have been payable to
Masefield pursuant to Section 6 during the remainder of the
Consulting Period if the Consulting Period had continued through to
the earlier of (A) December 31, 2004, or (B) the sixth anniversary
of the beginning of the Consulting Period.
(iii) The "Buyout Benefit Period" will be that period
beginning on the Termination Date and ending on the earlier of (A)
December 31, 2004, or (B) the third anniversary of the Termination
Date.
(c) Death. If Masefield's engagement is terminated by his death,
STERIS shall pay the Buyout Amount to Masefield's beneficiaries (as
defined in Section 12) in equal monthly installments over the period
commencing on the Termination Date and ending on the first to occur of (i)
December 31, 2004, or (b) the third anniversary of the Termination Date.
The rights and benefits of Masefield's estate and beneficiaries with
respect to the Options shall be as set forth in the Option Agreement and
with respect to any rights and benefits under any benefit plans and
programs of STERIS shall be as provided in the particular plan or program.
Neither Masefield's estate or beneficiaries nor STERIS will have any
further rights or obligations under this Agreement.
(d) Disability. If STERIS or Masefield terminates Masefield's
engagement on the grounds of disability, the termination shall be treated,
for purposes of determining the continuing rights and obligations of
Masefield and STERIS, as a termination by STERIS without Cause and the
provisions of Section 10(b) shall apply.
(e) Good Reason. If Masefield terminates his engagement for Good
Reason, the termination shall be treated, for purposes of determining the
continuing rights and obligations of Masefield and STERIS, as a
termination by STERIS without Cause and the provisions of Section 10(b)
shall apply.
(f) Voluntary Termination. If Masefield voluntarily terminates his
engagement other than for Good Reason, STERIS shall pay to Masefield any
Base Salary earned by Masefield through the Termination Date and any
incentive compensation earned before the Termination Date under this
Agreement or under the MICP, as applicable, not previously paid and STERIS
shall have no further obligation to pay any Base Salary or incentive
compensation to Masefield. Masefield's rights and benefits with respect to
the Options shall be as set forth in the Option Agreement and his rights
and benefits under any benefit plans and programs of STERIS shall be as
provided in the particular plan or program. Neither Masefield nor STERIS
shall have any further rights or obligations under this Agreement except
as provided in Sections 11, 12, 13, and 15.
11. Confidentiality, Noncompetition, Nonsolicitation. Masefield
acknowledges that the business in which STERIS is engaged is intensely
competitive and that his employment with
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<PAGE> 8
Isomedix and with STERIS and his anticipated consulting arrangement with STERIS
has required and will require that he have access to and knowledge of customer
and supplier information and other confidential and proprietary information
pertaining to Isomedix and STERIS and its business, suppliers, customers,
technologies, processes, systems, and related matters that is of vital
importance to the success of STERIS's business; that the direct or indirect
disclosure of any such confidential information to existing or potential
competitors of STERIS would place STERIS at a competitive disadvantage and would
do material damage, financial and otherwise, to STERIS's business; that by
virtue of Masefield's experience and expertise, some of his services to Isomedix
and STERIS have been and will continue to be special and unique; and that STERIS
and Masefield are entering into this Agreement with the intention of preserving
the goodwill of the business of Isomedix and of thereby inducing STERIS to enter
into and consummate the Merger Agreement which will benefit Masefield both as an
employee and consultant and as a shareholder of Isomedix.
(a) Masefield shall not, during the term of his engagement
hereunder or at any time thereafter, except in connection with the
performance of services hereunder or in furtherance of the business of
STERIS, communicate, divulge, or disclose to any other person not a
director, officer, employee, or affiliate of, or not engaged to render
services to or for, STERIS or use for his own benefit or purposes any
confidential information of or relating to Isomedix or STERIS that he has
obtained from Isomedix or STERIS (whether obtained by Masefield before,
during, or after the term of his engagement under this Agreement and
including any such information developed by Masefield while engaged by
Isomedix and/or STERIS); except that this provision shall not preclude
Masefield from (i) communication or use of information made known
generally to the public by Isomedix before the Effective Time or STERIS,
or (ii) from making any disclosure required by applicable law, rules,
regulations, or court or governmental or regulatory authority order or
decree provided that, if practicable, Masefield shall not make any such
disclosure without first giving STERIS notice of intention to make that
disclosure and an opportunity to interpose an objection to the disclosure.
Upon termination of his engagement hereunder, Masefield shall return to
STERIS all such confidential information (and all other property belonging
to STERIS) then in his possession, including, without limitation, any
notes or records relating to any such confidential information in whatever
media.
(b) During his engagement with STERIS, whether under this Agreement
or otherwise, Masefield shall not, directly or indirectly, own, manage,
operate, control, invest in (other than as owner of not more than 2% of
the voting securities of a public corporation), be employed by,
participate in, or be connected in any manner with the operation,
ownership, management, or control of any enterprise engaged in contract
sterilization or any other business engaged in by STERIS.
(c) After termination of his engagement with STERIS (whether that
termination occurs before or after the sixth anniversary of the Effective
Time, and whether or not immediately before the termination Masefield was
employed by STERIS under this Agreement, as an employee at will, or
otherwise), Masefield shall not at any time on or before the fifth
anniversary of such termination directly or indirectly, own, manage,
operate,
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<PAGE> 9
control, invest in (other than as owner of not more than 2% of the voting
securities of a public corporation), be employed by, participate in, or be
connected in any manner with the operation, ownership, management, or
control of any enterprise engaged in any business that is competitive with
the contract sterilization business as conducted before the Effective Time
by Isomedix or after the Effective Time by STERIS (whether directly or
through Isomedix).
(d) During the period commencing on the Effective Time and
extending through the date on which Masefield is not subject to any
restriction under either of paragraphs (b) or (c) of this Section 11,
Masefield shall not, except in connection with his duties hereunder or
otherwise for the sole account and benefit of STERIS, directly or
indirectly, induce or solicit any employee of STERIS to leave its employ.
12. Intellectual Property. Any and all inventions made, developed, or
created by Masefield (whether at the request or suggestion of Isomedix or STERIS
or otherwise, whether alone or in conjunction with others, and whether during
regular hours of work or otherwise) (a) during the period of Masefield's
engagement with Isomedix before the Effective Time or with STERIS after the
Effective Time, or (b) within a period of one year after the Termination Date,
that may be directly or indirectly useful in, or relate to, the business of or
tests being carried out by STERIS, shall be STERIS's exclusive property as
against Masefield. At such time or times as the CEO may reasonably direct,
Masefield shall promptly deliver to an appropriate representative of STERIS as
designated by the CEO all papers, drawings, models, data, and other material
relating to any invention made, developed, or created by him as aforesaid.
Masefield shall, at the request of STERIS and without any payment therefor,
execute any documents necessary or advisable in the opinion of STERIS's counsel
to direct issuance of patents or copyrights to STERIS with respect to such
inventions as are to be STERIS's exclusive property as against Masefield or to
vest in STERIS title to such inventions as against Masefield. The expense of
securing any such patent or copyright shall be borne by STERIS. With respect to
any invention made, developed or created in whole or in part after the date of
this Agreement, such inventions shall be promptly and fully disclosed by
Masefield to the CEO.
13. Relationship With Others. The parties agree that the profitability and
goodwill of STERIS depends on continued amicable relations with its suppliers
and customers and Masefield agrees that he will not at any time in breach of his
duty of loyalty to STERIS, directly or indirectly, cause, request, or advise any
suppliers or customers of STERIS to curtail or cancel their business with
STERIS.
14. Common Law of Torts or Trade Secrets. The parties agree that nothing
in this Employment Agreement shall be construed to limit or negate the common
law of torts or trade secrets where it provides STERIS with broader protection
than that provided herein.
15. Remedies. In addition to other remedies provided by law or equity,
upon a breach by Masefield of any of the covenants contained in Sections 11, 12
or 13 herein, STERIS shall be entitled to have a court of competent jurisdiction
enter an injunction against Masefield prohibiting any further breach of the
covenants contained herein.
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16. Assignment and Binding Effect. The obligations of the parties
hereunder may not be assigned or transferred, except upon the written consent of
the other party hereto except that (a) STERIS may assign the benefit of this
Agreement to one of its affiliates provided that STERIS remains primarily
obligated to pay and provide to Masefield the payments and benefits provided for
herein and provided that such assignment does not result in a breach by STERIS
of Section 2 hereof, and (b) nothing herein shall preclude one or more
beneficiaries of Masefield from receiving any amount that may be payable
following the occurrence of his legal incompetency or his death or preclude the
legal representative of his estate from receiving such amount or from assigning
any right hereunder to the person or persons entitled thereto under his will or,
in the case of intestacy, to the person or persons entitled thereto under the
laws of intestacy applicable to his estate. The term "beneficiaries", as used in
this Agreement, shall mean a beneficiary or beneficiaries so designated to
receive any such amount or, if no beneficiary has been so designated,
Masefield's legal representative (in the event of his incompetency) or his
estate. This Agreement shall be binding upon and inure to the benefit of
Masefield and STERIS.
17. Entire Agreement. This Agreement, when effective, will supersede both
the Employment Agreement dated as of May 16, 1995 and the Supplement to
Employment Agreement dated as of February 14, 1997, both between Masefield and
Isomedix (the "Prior Agreements"), and embodies the entire agreement and
understanding between the parties hereto and, in addition, will supersede all
prior understandings, whether written or oral, with respect to the engagement of
Masefield by STERIS. From and after the Effective Time, neither the Prior
Agreements nor any other agreement between Masefield and Isomedix with respect
to his engagement will be of any further force or effect. The Indemnification
Agreement between Masefield and Isomedix, dated as of February 18, 1994, shall
remain in full force and effect with respect to actions and failures to act by
Masefield occurring before the Effective Time.
18. Notices. Any notice, request, or instruction to be given hereunder by
any party to the other parties will be deemed to have been given (i) when it is
delivered, (ii) the day after it is sent by overnight courier, or (iii) when it
is sent by facsimile, with confirmation of receipt, addressed, as follows:
If to STERIS:
STERIS Corporation
5960 Heisley Road
Mentor, OH 44060
Attention: David C. Dvorak
Fax No.: 216-639-4457
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with a copy to:
Roy L. Turnell
Thompson Hine & Flory LLP
3900 Key Tower
127 Public Square
Cleveland, Ohio 44114-1216
Fax No.: 216-566-5800
If to Masefield:
John Masefield
76-B Roxiticus Road
Far Hills, New Jersey 07931
Fax No.: 908-781-5673
or to such other addresses as may be designated by written notice to the other
parties.
19. Severability. Any provision of this Agreement that is prohibited or
unenforceable shall be ineffective to the extent, but only to the extent, of
such prohibition or unenforceability without invalidating the remaining portions
hereof and such remaining portions of this Agreement shall continue to be in
full force and effect. Without limiting the generality of the immediately
preceding sentence, it is the specific intent of the parties that all provisions
of Section 11 hereof be enforced to the maximum extent permitted by applicable
law and that, if and to the extent any provision of Section 11 is not
enforceable, that provision shall be reformed so as to be enforced to the
maximum extent permitted.
20. Governing Law. The provisions of this Agreement shall be governed
by and construed in accordance with the laws of the State of Ohio applicable to
contracts made in and to be performed exclusively within that State.
21. Withholding. Anything to the contrary notwithstanding, all payments
required to be made by STERIS hereunder to Masefield or his beneficiaries,
including his estate, shall be subject to withholding of such amounts relating
to taxes as STERIS may reasonably determine it should withhold pursuant to any
applicable law or regulation. In lieu of withholding such amounts, in whole or
in part, STERIS, may, in its sole discretion accept other provision for payment
of taxes as permitted by law, provided it is satisfied in its sole discretion
that all requirements of law affecting its responsibilities to withhold such
taxes have been satisfied.
22. Key Man Insurance. If STERIS determines to apply for a policy of life
insurance on Masefield's life, the proceeds of which would be payable to STERIS
as key man insurance, Masefield shall cooperate with STERIS as reasonably
necessary in connection with the application for that policy.
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23. Attorneys' Fees. If a court of competent jurisdiction renders a
judgment with respect to any dispute arising under this Agreement, the court
may, in addition to any other remedies it might otherwise order, order that the
attorneys' fees of the prevailing party be paid by the other party if and to the
extent the positions taken by the other party in the dispute are unreasonable.
24. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
STERIS CORPORATION JOHN MASEFIELD
By: /s/ Bill R. Sanford /s/ John Masefield
------------------------------------------- --------------------------
Bill R. Sanford, Chairman, President,
and Chief Executive Officer
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