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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
ISOMEDIX INC.
(NAME OF SUBJECT COMPANY [ISSUER])
STERIS ACQUISITION CORPORATION
STERIS CORPORATION
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
464890102
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
BILL R. SANFORD
STERIS ACQUISITION CORPORATION
C/O STERIS CORPORATION
5960 HEISLEY ROAD
MENTOR, OHIO 44060
TELEPHONE: (216) 354-2600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
COPY TO:
ROY L. TURNELL, ESQ.
THOMPSON HINE & FLORY, LLP
3900 KEY CENTER
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114-1216
TELEPHONE: (216) 566-5500
CALCULATION OF FILING FEE
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TRANSACTION AMOUNT OF
VALUATION* FILING FEE
- -------------------------------------------------------------------------------------------------
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$155,470,401.00 $31,094.08
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* For purposes of calculating fee only. This amount assumes the purchase at a
purchase price of $20.50 per share of an aggregate of 7,583,922 shares of common
stock. The amount of the filing fee, calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50th of
one percentum of the value of shares purchased.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(A)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
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Amount Previously Paid: NONE Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
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This Schedule 14D-1 Tender Offer Statement (this "Statement") relates to
the offer by STERIS Acquisition Corporation, a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of STERIS Corporation, an Ohio
corporation (the "Parent"), to purchase all of the outstanding shares of common
stock, par value $.01 per share, and the associated preferred stock purchase
rights (together with the rights, the "Shares") of Isomedix Inc., a Delaware
corporation (the "Company"), at a price of $20.50 per Share, net to the seller
in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated August 18,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer"). Copies of the
Offer to Purchase and the Letter of Transmittal are annexed hereto as Exhibits
(a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Isomedix Inc., a Delaware
corporation with its principal executive offices at 11 Apollo Drive, Whippany,
New Jersey 07981.
(b) The information set forth in the Introduction of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a-d, g) This Statement is being filed on behalf of the Parent and the
Purchaser for purposes of the Schedule 14D-1. The information set forth in the
Introduction, Section 9 and Schedule I of the Offer to Purchase is incorporated
herein by reference.
(e-f) During the last five years, neither the Parent nor the Purchaser,
nor, to the best knowledge of the Parent and the Purchaser, the persons listed
in Schedule I of the Offer to Purchase, has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree, or final order enjoining future violation of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a-b) The information set forth in the Introduction, Sections 8, 9 and 11
and Schedule I of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a-c) The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a-b) The information set forth in the Introduction, and Sections 11, 12
and 13 of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Sections 11, 12 and 13 of the Offer to
Purchase is incorporated herein by reference.
(d-e) The information set forth in Sections 6, 7, 12 and 13 of the Offer to
Purchase is incorporated herein by reference.
(f-g) The information set forth in Sections 7, 12 and 13 of the Offer to
Purchase is incorporated herein by reference.
2
<PAGE> 3
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction, Sections 8 and 9 and
Schedule I of the Offer to Purchase is incorporated herein by reference.
(b) None.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Sections 9, 11, 12 and 13
of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Sections 11 and 16 of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a shareholder of the Company whether to sell, tender or hold
Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Sections 8, 9, 11, 12 and 13 of the Offer
to Purchase is incorporated herein by reference.
(b-c, e) The information set forth in Sections 13, 14 and 15 of the Offer
to Purchase is incorporated herein by reference.
(d) The information set forth in Sections 7, 12 and 13 of the Offer to
Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, is incorporated herein by reference.
3
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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(a)(1) Press Release, dated August 12, 1997.
(a)(2) Offer to Purchase, dated August 18, 1997.
(a)(3) Letter of Transmittal.
(a)(4) Notice of Guaranteed Delivery.
(a)(5) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
(a)(8) Summary Advertisement, dated August 18, 1997.
(b)(1) Credit Agreement, dated May 13, 1996, among STERIS Corporation, various financial
institutions and KeyBank National Association, as Agent (incorporated by reference
to Exhibit 10.14 of STERIS Corporation's Annual Report on Form 10-K for the fiscal
year ending March 31, 1996).
(b)(2) First Amendment Agreement, dated November 22, 1996, to Credit Agreement, dated May
13, 1996, among STERIS Corporation, various financial institutions and KeyBank
National Association, as Agent.
(b)(3) Second Amendment Agreement, dated June 10, 1997, to Credit Agreement, dated May
13, 1996, among STERIS Corporation, various financial institutions and KeyBank
National Association, as Agent (incorporated by reference to Exhibit 10.1 of
STERIS Corporation's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1997).
(b)(4) Third Amendment Agreement, dated June 10, 1997, to Credit Agreement, dated May 13,
1996, among STERIS Corporation, various financial institutions and KeyBank
National Association, as Agent (incorporated by reference to Exhibit 10.2 of
STERIS Corporation's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1997).
(c)(1) The Agreement and Plan of Merger, dated August 12, 1997, by and among Isomedix
Inc., STERIS Corporation and STERIS Acquisition Corporation.
(c)(2) Employment Agreement, dated August 12, 1997, between STERIS Corporation and John
Masefield.
(c)(3) Letter, dated August 12, 1997, from Bill R. Sanford, Chairman of the Board,
President, and Chief Executive Officer of STERIS Corporation to Thomas J.
DeAngelo, Vice President -- Finance and Administration and Chief Financial Officer
of Isomedix Inc.
(d) None.
(e) Not applicable.
(f) None.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
Dated: August 18, 1997
STERIS ACQUISITION CORPORATION
By: /s/ BILL R. SANFORD
------------------------------------
Name: Bill R. Sanford
Title: Chairman, President, and
Chief Executive Officer
STERIS CORPORATION
By: /s/ BILL R. SANFORD
------------------------------------
Name: Bill R. Sanford
Title: Chairman, President, and
Chief Executive Officer
5
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EXHIBIT INDEX
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EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
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(a)(1) Press Release, dated August 12, 1997. ...................................
(a)(2) Offer to Purchase, dated August 18, 1997. ...............................
(a)(3) Letter of Transmittal. ..................................................
(a)(4) Notice of Guaranteed Delivery. ..........................................
(a)(5) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees. ...............................................................
(a)(6) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees. ...........................................
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9. ....................................................
(a)(8) Summary Advertisement, dated August 18, 1997. ...........................
(b)(1) Credit Agreement, dated May 13, 1996, among STERIS Corporation, various
financial institutions and KeyBank National Association, as Agent
(incorporated by reference to Exhibit 10.14 of STERIS Corporation's
Annual Report on Form 10-K for the fiscal year ended March 31, 1996). ...
(b)(2) First Amendment Agreement, dated November 22, 1996, to Credit Agreement,
dated May 13, 1996, among STERIS Corporation, various financial
institutions and KeyBank National Association, as Agent. ................
(b)(3) Second Amendment Agreement, dated June 10, 1997, to Credit Agreement,
dated May 13, 1996, among STERIS Corporation, various financial
institutions and KeyBank National Association, as Agent (incorporated by
reference to Exhibit 10.1 of STERIS Corporation's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1997). ................
(b)(4) Third Amendment Agreement, dated June 10, 1997, to Credit Agreement,
dated May 13, 1996, among STERIS Corporation, various financial
institutions and KeyBank National Association, as Agent (incorporated by
reference to Exhibit 10.2 of STERIS Corporation's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1997). ................
(c)(1) The Agreement and Plan of Merger, dated August 12, 1997, by and among
Isomedix Inc., STERIS Corporation and STERIS Acquisition Corporation. ...
(c)(2) Employment Agreement, dated August 12, 1997, between STERIS Corporation
and John Masefield.......................................................
(c)(3) Letter, dated August 12, 1997, from Bill R. Sanford, Chairman of the
Board, President, and Chief Executive Officer of STERIS Corporation to
Thomas J. DeAngelo, Vice President -- Finance and Administration and
Chief Financial Officer of Isomedix Inc..................................
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<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)
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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
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ISOMEDIX INC.
BY
STERIS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
STERIS CORPORATION
AT
$20.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN DAY-
LIGHT SAVING TIME, ON TUESDAY, SEPTEMBER 16, 1997, UNLESS THE OFFER IS
EXTENDED.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS, AND RECOMMENDS THAT THE
SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
The Offer is conditioned upon, among other things, there being validly
tendered a number of Shares which, when added to the Shares beneficially owned
by the Parent, would represent at least a majority of the Shares outstanding on
a fully diluted basis on the date of purchase. The Offer is not conditioned on
the receipt of financing.
---
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile) and any other required documents to the
Depositary and either deliver the certificates for such Shares to the Depositary
along with the Letter of Transmittal (or facsimile) or deliver such Shares
pursuant to the procedure for book-entry transfer set forth in Section 2 or (ii)
request such shareholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such shareholder. A shareholder
having Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if such shareholder desires to tender such
Shares.
If a shareholder desires to tender Shares and such shareholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such shareholder's tender may be effected by following the procedure for
guaranteed delivery set forth in Section 2.
Questions and requests for assistance may be directed to Smith Barney Inc.,
the Dealer Manager, or to Georgeson & Company Inc., the Information Agent, at
their respective addresses and telephone numbers set forth on the back cover of
this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter
of Transmittal, the Notice of Guaranteed Delivery and other related materials
may be obtained from the Information Agent or from brokers, dealers, commercial
banks and trust companies.
------------------------------------
The Dealer Manager for the Offer is:
Smith Barney Inc.
August 18, 1997
<PAGE> 2
TABLE OF CONTENTS
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Section 1. Terms of the Offer........................................................ 2
Section 2. Procedures for Tendering Shares........................................... 3
Section 3. Withdrawal Rights......................................................... 6
Section 4. Acceptance for Payment and Payment........................................ 7
Section 5. Certain Federal Income Tax Consequences................................... 8
Section 6. Price Range of Shares; Dividends on the Shares............................ 8
Section 7. Effect of the Offer on the Market for the Shares; Exchange Act
Registration; Margin Regulations.......................................... 9
Section 8. Certain Information Concerning the Company................................ 9
Section 9. Certain Information Concerning the Parent and the Purchaser............... 11
Section 10. Source and Amount of Funds................................................ 14
Section 11. Background of the Offer................................................... 14
Section 12. Purpose of the Offer; Plans for the Company............................... 17
Section 13. The Merger................................................................ 18
Section 14. Certain Conditions of the Offer........................................... 27
Section 15. Certain Legal Matters..................................................... 28
Section 16. Fees and Expenses......................................................... 30
Section 17. Miscellaneous............................................................. 31
SCHEDULE I
Directors and Executive Officers of the Parent and the Purchaser......................... 32
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i
<PAGE> 3
TO THE HOLDERS OF SHARES OF ISOMEDIX INC.:
STERIS Acquisition Corporation, a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of STERIS CORPORATION, an Ohio corporation (the
"Parent"), hereby offers to purchase all outstanding shares of common stock, par
value $.01 per share, and the associated preferred stock purchase rights
(together with the rights, the "Shares"), of Isomedix Inc., a Delaware
corporation (the "Company"), at a price of $20.50 per Share, net to the seller
in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. The Purchaser will pay all charges and expenses of Smith Barney Inc.
("Smith Barney"), as Dealer Manager (in such capacity, the "Dealer Manager"),
Harris Trust Company of New York, as Depositary (the "Depositary"), and
Georgeson & Company Inc., as Information Agent (the "Information Agent"),
incurred in connection with the Offer. See Section 16.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 12, 1997 (the "Merger Agreement"), among the Purchaser, the Parent
and the Company. The Merger Agreement provides, among other things, for the
merger of the Purchaser with and into the Company (the "Merger") following the
purchase of Shares pursuant to the Offer. In the Merger, each outstanding Share
(other than Shares owned by the Parent or any subsidiary of the Parent, Shares
held as treasury shares by the Company, and Shares owned by shareholders who
perfect appraisal rights under Delaware law) will be converted into the right to
receive $20.50 per Share net in cash. See Section 13.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS, AND RECOMMENDS THAT THE
SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
The Offer is subject to the fulfillment of a number of conditions (the
"Offer Conditions"), including, among other things, there being validly tendered
a number of Shares which, when added to the Shares beneficially owned by the
Parent, constitutes at least a majority of the Shares outstanding on a fully
diluted basis on the date of purchase (the "Minimum Condition"). For purposes of
this Offer, "on a fully diluted basis" means, as of any date, the number of
Shares outstanding, together with Shares that the Company is then required to
issue pursuant to obligations outstanding at that date under the Company's
employee stock option plans, warrant plan for directors, employee stock purchase
plan or otherwise (assuming all such options and warrants are then exercisable).
As of the date of the Offer, the Parent beneficially owns no Shares.
According to representations made by the Company in the Merger Agreement,
as of March 21, 1997, (i) 6,430,298 Shares were issued and outstanding, (ii)
1,044,200 Shares were reserved for future issuance upon exercise of outstanding
employee stock options and director warrants, and (iii) 71,022 Shares were
reserved for future issuance under the employee stock purchase plan. According
to the Company's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1997 (the "Company 10-Q"), there were 710,770 Shares held by the
Company in treasury, at cost, as of June 30, 1997.
Certain other Offer Conditions are described in Section 14. The Purchaser
expressly reserves the right, in its sole discretion, to waive any one or more
of the Offer Conditions. See Sections 14 and 15. The Offer is not conditioned on
the receipt of financing.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1
<PAGE> 4
SECTION 1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date. The term "Expiration Date" means 12:00
midnight, Eastern Daylight Saving Time, on Tuesday, September 16, 1997, unless
the Purchaser extends the period of time during which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by the Purchaser, will expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF THE
MINIMUM CONDITION, THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED
BY THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER (THE "HSR ACT") AND THE SATISFACTION OF THE OTHER OFFER
CONDITIONS SET FORTH IN SECTION 14. THE OFFER IS NOT CONDITIONED ON THE RECEIPT
OF FINANCING.
The Merger Agreement provides that, at the Company's request, the Purchaser
will extend the Expiration Date from time to time for up to an aggregate of ten
business days following the Expiration Date if the Minimum Condition is not
fulfilled prior to 5:00 p.m. on the Expiration Date. The Merger Agreement also
provides that, in the event that the Parent would be entitled to terminate the
Offer due to the failure of certain Offer Conditions, not including the Minimum
Condition, and it is reasonably likely that such failure can be cured on or
before October 14, 1997, the Parent 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. In addition, the Merger Agreement provides that the Purchaser
may, in its discretion, extend the Expiration Date to the extent required by
applicable law or if the Minimum Condition or other Offer Conditions are not
satisfied. Extension of the Expiration Date would delay the acceptance for
payment of and the payment for any Shares. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering shareholder to withdraw such shareholder's
Shares. See Section 3. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS
RIGHT TO EXTEND THE OFFER.
If, by the Expiration Date (including any extension required by the Merger
Agreement), any or all of the Offer Conditions have not been satisfied or
waived, the Purchaser reserves the right (but will not be obligated), subject to
the applicable rules and regulations of the Securities and Exchange Commission
(the "Commission"), to (a) terminate the Offer and not accept for payment or pay
for any Shares and return all tendered Shares to tendering shareholders, (b)
waive all the unsatisfied Offer Conditions and accept for payment and pay for
all Shares validly tendered prior to the Expiration Date (except that the
Purchaser may not, without the consent of the Company, accept for payment any
Shares so tendered unless the Minimum Condition has been satisfied), (c) extend
the Offer and, subject to the right of shareholders to withdraw Shares until the
Expiration Date, retain the Shares that have been tendered during the period or
periods for which the Offer is extended, or (d) amend the Offer. The Merger
Agreement provides that the Purchaser may not decrease the price payable in the
Offer, change the form of consideration payable in the Offer, change the Offer
Conditions, impose additional conditions, or change any other terms of the Offer
in a manner adverse to the holders of the Shares, 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 rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights pursuant to Section 14. There can be no
assurance that the Purchaser will exercise its right to extend the Offer beyond
the period required by the Merger Agreement. Any extension, amendment or
termination will be followed as promptly as practicable by public announcement.
In the case of an extension, Rule 14e-l(d) under
2
<PAGE> 5
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires
that the announcement be issued no later than 9:00 a.m., Eastern time, on the
next business day after the previously scheduled Expiration Date, or the first
opening of the New York Stock Exchange (the "NYSE") on the next business day
after the previously scheduled Expiration Date, in accordance with the public
announcement requirements of Rule 14d-4(c) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to shareholders in connection with the Offer be promptly disseminated to
shareholders in a manner reasonably designed to inform shareholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance for
payment of Shares) for Shares or it is unable to pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser,
and such Shares may not be withdrawn except to the extent tendering shareholders
are entitled to withdrawal rights as described in Section 3. However, the
ability of the Purchaser to delay the payment for Shares that the Purchaser has
accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which
requires that a bidder pay the consideration offered or return the securities
tendered by or on behalf of holders of securities promptly after the termination
or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to shareholders and investor response.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares, and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the shareholder
lists, or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
SECTION 2. PROCEDURES FOR TENDERING SHARES
Valid Tender. For a shareholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message (as defined below), and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares ("Share
Certificates") must be received by the Depositary at one of such addresses or
such Shares must be delivered pursuant to the procedures for book-entry transfer
set forth below (and a Book-Entry Confirmation (as defined below) received by
the Depositary), in each case prior to the Expiration Date, or (b) the tendering
shareholder must comply with the guaranteed delivery procedures set forth below.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at The Depository Trust Co. and Philadelphia Depository Trust Co.
(the "Book-Entry Transfer Facilities") for purposes of the Offer within two
business days after the date of this Offer to Purchase. Any financial
3
<PAGE> 6
institution that is a participant in any of the Book-Entry Transfer Facilities'
systems may make book-entry delivery of Shares by causing a Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with such Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined below), and
any other required documents, must, in any case, be transmitted to, and received
by, the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase prior to the Expiration Date, or the tendering shareholder
must comply with the guaranteed delivery procedures described below. The
confirmation of a book-entry transfer of Shares into the Depositary's account at
a Book-Entry Transfer Facility as described above is referred to herein as a
"Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARE
CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS WILL BE
DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in any of
the Book-Entry Transfer Facilities' systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (b) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If Share Certificates are registered in the
name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made or Share Certificates for Shares not tendered or not
accepted for payment are to be returned to a person other than the registered
holder of the Share Certificates surrendered, the tendered Share Certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders appear on the
Share Certificates, with the signatures on the Share Certificates or stock
powers guaranteed as described above. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
(i) the tender is made by or through an Eligible Institution;
4
<PAGE> 7
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the Share Certificates, representing all tendered Shares, in
proper form for transfer (or a Book-Entry Confirmation with respect to all
such Shares), together with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the NYSE is open for
business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) Share Certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when Share Certificates or Book-Entry Confirmations with respect to Shares
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Purchaser's acceptance for payment of Shares validly tendered pursuant
to the Offer will constitute a binding agreement between the tendering
shareholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of the Purchaser
as such shareholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after August 15, 1997. All such proxies will be irrevocable
and considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts such
Shares for payment pursuant to the Offer. Upon such acceptance for payment, all
prior powers of attorney, proxies and consents given by such shareholder with
respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney, proxies, consents or
revocations may be given (and, if given, will not be deemed effective). The
designees of the Purchaser will thereby be empowered to exercise all voting and
other rights with respect to such Shares and other securities or rights in
respect of any annual, special, adjourned or postponed meeting of the Company's
shareholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares and other securities or rights, including voting at any
meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding on all parties. The Purchaser reserves
the absolute right to reject any or all tenders determined by it not to be in
proper form or the acceptance for payment of or payment for which may, in the
opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the
absolute right to waive any defect or irregularity in the tender of any Shares
of any particular shareholder whether or
5
<PAGE> 8
not similar defects or irregularities are waived in the case of other
shareholders. No tender of Shares will be deemed to have been validly made until
all defects or irregularities relating thereto have been cured or waived. None
of the Purchaser, the Parent, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification. The Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding on all parties.
Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such shareholder is not subject to backup withholding. If a
shareholder does not provide such shareholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such shareholder and the payment of cash to such shareholder
pursuant to the Offer may be subject to backup withholding of 31% of the amount
of such payment. All shareholders surrendering Shares pursuant to the Offer
should complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and the
Depositary). Noncorporate foreign shareholders should complete and sign the main
signature form and a Form W-8, Certificate of Foreign Status, a copy of which
may be obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
SECTION 3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after October 16, 1997.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase and must
specify the name of the person having tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of the
Shares to be withdrawn, if different from the name of the person who tendered
the Shares. If Share Certificates have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such Share Certificates,
the serial numbers shown on such Share Certificates must be submitted to the
Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by again following one
of the procedures described in Section 2 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of the Purchaser, the Parent, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification.
6
<PAGE> 9
SECTION 4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered promptly after the Expiration Date. All questions as to the
satisfaction of such terms and conditions will be determined by the Purchaser,
in its sole discretion, whose determination will be final and binding on all
parties. See Sections 1 and 14. The Purchaser expressly reserves the right, in
its sole discretion, to delay acceptance for payment of or payment for Shares in
order to comply in whole or in part with any applicable law, including, without
limitation, the HSR Act. See Section 15. Any such delays will be effected in
compliance with Rule 14e-l(c) under the Exchange Act (relating to a bidder's
obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) Share
Certificates for (or a timely Book-Entry Confirmation with respect to) such
Shares, (b) a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and (c) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any shareholder
pursuant to the Offer will be the highest per Share consideration paid to any
other shareholder of the same class pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser as,
if and when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance for payment of such Shares. Payment for Shares accepted
for payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for validly tendering
shareholders for the purpose of receiving payment from the Purchaser and
transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering shareholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering shareholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. The Purchaser will pay
any stock transfer taxes with respect to the transfer and sale to it or its
order pursuant to the Offer, except as otherwise provided in Instruction 6 of
the Letter of Transmittal, as well as any charges and expenses of the Depositary
and the Information Agent.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act),
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to exercise, and duly exercise, withdrawal rights as
described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, Share Certificates for any such unpurchased Shares will be returned,
without expense to the tendering shareholder (or, in the case of Shares
delivered by book-entry transfer of such Shares into the Depositary's account at
a Book-Entry Transfer Facility pursuant to the procedure set forth in Section 2,
such Shares will be credited to an account maintained at the appropriate
Book-Entry Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to the Parent, or to one or more direct or indirect wholly
owned subsidiaries of the Parent, the right to purchase Shares tendered pursuant
to the Offer, but any such transfer or assignment will not relieve the Purchaser
of its obligations under the Offer and will in no way prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
7
<PAGE> 10
SECTION 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
federal income tax purposes, a tendering shareholder will recognize gain or loss
equal to the difference between the amount of cash received by the shareholder
pursuant to the Offer or the Merger and the aggregate tax basis in the Shares
tendered by the shareholder and purchased pursuant to the Offer or converted in
the Merger, as the case may be. Gain or loss will be calculated separately for
each block of Shares tendered and purchased pursuant to the Offer or converted
in the Merger, as the case may be.
If Shares are held by a shareholder as capital assets, gain or loss
recognized by the shareholder will be capital gain or loss, which will be
long-term capital gain or loss if the shareholder's holding period for the
Shares exceeds one year. In addition, any gain on the sale of Shares by an
individual may be taxed at the maximum rate of 20%, if, as of the date of sale,
the Shares were held by such individual for more than 18 months.
THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY
NOT BE APPLICABLE WITH RESPECT TO SHARES RECEIVED AS COMPENSATION OR WITH
RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE
CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF
SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. SHAREHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM
(INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND
OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
SECTION 6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES
The Shares are listed on the NYSE under the symbol ISO. The following table
sets forth the high and low closing sales prices per Share as reported on the
NYSE Composite tape, together with the per Share dividends paid by the Company
as reported in publicly available sources.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------ ------ ---------
<S> <C> <C> <C>
1995: First quarter............................... $17.50 $12.88 $0.00
Second quarter.................................. 15.75 13.50 0.00
Third quarter................................... 14.88 12.75 0.00
Fourth quarter.................................. 15.38 13.13 0.00
1996: First quarter............................... $16.13 $14.00 $0.00
Second quarter.................................. 16.00 13.88 0.00
Third quarter................................... 15.13 13.38 0.00
Fourth quarter.................................. 14.63 12.63 0.00
1997: First quarter............................... $14.63 $12.13 $0.00
Second quarter.................................. 17.20 12.50 0.00
</TABLE>
On August 11, 1997, the last full trading day prior to the public
announcement of the execution of the Merger Agreement and the Purchaser's
intention to commence the Offer, the closing sale price for the Shares was
$19.38 per Share. On August 15, 1997, the last full trading day before
commencement of the Offer, the closing sale price for the Shares was $20.25 per
Share. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
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<PAGE> 11
SECTION 7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Depending on the number of Shares purchased in the Offer, the Shares may no
longer meet the requirements of the NYSE for continued listing. According to the
NYSE's published guidelines, the NYSE would consider delisting the Shares if,
among other things, (i) the number of persons holding of record or in street
name of at least 100 shares should fall below 1,200, (ii) the number of publicly
held Shares (exclusive of holdings of officers, directors, members of their
immediate families and other concentrated holdings of 10% or more) should fall
below 600,000, or (iii) the aggregate market value of publicly held Shares
should fall below $5,000,000. According to the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (the "Company 10-K") there were
approximately 476 holders of record of Shares as of December 31, 1996. If the
NYSE were to delist the Shares, it is possible that the Shares would trade on
another securities exchange or in the over-the-counter market and that price
quotations for the Shares would be reported by such exchange or through NASDAQ
or other sources. The extent of the public market for the Shares and
availability of such quotations would, however, depend upon such factors as the
number of holders, the aggregate market value of the publicly held Shares at
such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its shareholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with shareholders' meetings and the related
requirement of furnishing an annual report to shareholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Shares
under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers.
SECTION 8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal offices at 11
Apollo Drive, Whippany, New Jersey 07981. The Company's principal line of
business is providing contract sterilization services to manufacturers of
pre-packaged products, such as healthcare and certain consumer products.
9
<PAGE> 12
The Company has a network of eleven gamma facilities, five ethylene oxide
facilities (four of which are combined gamma/ethylene oxide facilities), and one
electron beam facility in the United States, Canada and Puerto Rico.
Although gamma radiation is the preferred method of sterilization of
healthcare and certain consumer products, there is a continuing demand for
contract ethylene oxide sterilization of those products which cannot tolerate
exposure to radiation. In recognition of a market opportunity for
technologically advanced ethylene oxide sterilization services, the Company
commenced the development of an ethylene oxide sterilization program in 1988 and
by February 1990 had two state-of-the-art ethylene oxide sterilization
facilities operational. In January 1993, another ethylene oxide facility
commenced operations at the Company's gamma radiation facility in Northborough,
Massachusetts. In December 1995, the Company purchased an existing ethylene
oxide sterilization facility in Temecula, California, from an unrelated party.
The addition of an ethylene oxide sterilization program has enabled the Company
to offer many customers a single source for most or all of their sterilization
requirements. The Company believes that its ethylene oxide technology offers
technical, environmental and worker safety advantages which are currently
unavailable at many existing ethylene oxide sterilization facilities in the
United States.
On May 29, 1997, the Company announced that the State of Hawaii had made a
commitment to spend $2 million to support a new gamma irradiation facility to be
built by the Company for the purpose of sterilizing exotic fruit to be exported
by the State.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Company 10-K and the Company 10-Q. More comprehensive financial
information is included in the Company 10-K, the Company 10-Q and other
documents filed by the Company with the Commission, and the following summary is
qualified in its entirety by reference to such information. The Company 10-K,
the Company 10-Q and such other documents should be available for inspection and
copies thereof should be obtainable in the manner set forth below under
"Available Information."
ISOMEDIX INC.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, DECEMBER 31,
-------------------- --------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................................. $25,588 $22,355 $45,233 $42,122 $43,065
Income before extraordinary items..... 4,237 3,259 4,318 7,300 8,817
Net income............................ 4,237 3,259 4,318 7,300 8,817
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital....................... 15,707 28,068 27,225 27,945 23,844
Total assets.......................... 113,703 113,669 115,620 112,024 106,590
Total assets less deferred research
and development charges and excess
cost of assets acquired over book
value.............................. 113,703 112,957 115,620 111,298 105,836
Long-term debt........................ 7,900 8,500 8,000 8,600 9,100
Shareholders' equity.................. 92,893 93,506 94,360 92,173 85,740
PER SHARE:
Income per common share before
extraordinary items................ 0.63 0.45 0.60 1.01 1.20
Net income per common share (and
common share equivalent)........... 0.63 0.45 0.60 1.01 1.20
Net income per share on fully diluted
basis.............................. 0.63 0.45 0.60 1.01 1.20
</TABLE>
10
<PAGE> 13
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's shareholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, DC 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, NY 10048
and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, IL 60661.
Copies of such information should be obtainable, by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal office
at 450 Fifth Street, N.W., Washington, DC 20549. Such material should also be
available for inspection at the offices of NYSE, 20 Broad Street, New York, New
York 10005. Such material should also be available on-line through EDGAR.
Company Information. The information concerning the Company contained in
this Offer to Purchase has been supplied by the Company for inclusion herein or
has been taken from or based upon publicly available documents on file with the
Commission and other publicly available information. Although the Parent and the
Purchaser do not have any knowledge that any such information is untrue, neither
the Purchaser nor the Parent takes any responsibility for the accuracy or
completeness of such information or for any failure by the Company to disclose
events that may have occurred and may affect the significance or accuracy of any
such information.
SECTION 9. CERTAIN INFORMATION CONCERNING THE PARENT AND THE PURCHASER
The Purchaser is a newly incorporated Delaware corporation and a wholly
owned subsidiary of the Parent which to date has not conducted any business
other than in connection with the Offer and the Merger. The Parent is an Ohio
corporation. The principal executive offices of the Parent and the Purchaser are
located at 5960 Heisley Road, Mentor, Ohio 44060.
Description of Business. The Parent develops, manufactures, markets, and
services infection prevention, contamination prevention, and surgical support
systems, products and technologies for healthcare, scientific, research, and
industrial Customers throughout the world. The Parent is focused on helping
Customers address today's trends in the healthcare and scientific industries.
The healthcare industry is changing rapidly due to the explosive growth of
minimally invasive surgical and diagnostic procedures; heightened public and
professional awareness and concern for the increasing number of transmittable
and antibiotic-resistant infectious diseases; the shifting of patient care from
acute care hospital settings to alternative care facilities; and the overall
need to reduce the cost of healthcare delivery. These trends have expanded the
demand for rapid, safe, and efficient infection prevention systems for critical
tasks such as the sterile processing of devices and the handling,
decontamination, destruction, and disposal of potentially infectious
biohazardous waste. In the scientific industry, the market is expanding as
pharmaceutical, biotech, and other FDA-regulated manufacturers are under
increasing pressure to adhere to stricter guidelines for the validation and
control of their antimicrobial processes, as well as the trend towards global
standardization of protocols.
The Parent has approximately 4,000 Associates (employees) worldwide,
including 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.
Principal Products and Services. Through a consistent strategic plan, a
focused research and development effort, and several business acquisitions, the
Parent has emerged as a market leader in low temperature sterilization, high
temperature sterilization, washing and decontamination systems, surgical tables,
surgical lights, and consumables. The Parent has expanded from its original
narrow product line to become a multi-faceted global organization that serves
healthcare, scientific, research, and industrial markets.
11
<PAGE> 14
INFECTION PREVENTION. Infection Prevention products are used by Customers
to significantly reduce or eliminate microbial contamination of surfaces with
which human contact might occur. The Parent provides complete infection
prevention material processing systems, including products used for cleaning,
decontaminating, disinfecting, sterilizing, drying, and aerating medical
instruments, devices, chemicals, and packaging. The Parent's infection
prevention systems support cost containment, productivity increases, and risk
reduction in a wide variety of healthcare, scientific, industrial, and research
settings through process standardization, automatic monitoring and
documentation, processing site flexibility, and reduction in processing time.
SURGICAL SUPPORT. The Parent's Surgical Support product line includes
general and specialty surgical tables, surgical and examination lights,
operating room (OR) storage cabinets, fluid waste management systems, warming
cabinets, scrub sinks, and other complementary products and accessories for
hospital and non-hospital ORs. Surgical tables, lights, and stainless steel OR
products are used in both hospital and non-hospital settings.
SCIENTIFIC AND INDUSTRIAL. Scientific and Industrial contamination
prevention and control products and services are used in the pharmaceutical,
biotechnology, medical device, research, and industrial markets worldwide. These
products and services assist Customers in assuring sterility and other microbial
reduction processes while meeting regulatory and validation requirements. The
Parent provides complete contamination prevention systems including high
temperature and low temperature sterilizers, high purity water systems and
lyophilizers (freeze drying systems), high level disinfection and surface
decontamination systems, and process monitoring products.
MANAGEMENT SERVICES. The Parent provides after-sale field service for a
wide variety of clinical and scientific equipment. The Parent's service
technicians focus on the management and servicing of sophisticated clinical
equipment, including surgical, laboratory, and diagnostic imaging equipment sold
by third-party manufacturers.
Set forth below is a summary of certain consolidated financial information
with respect to the Parent and its subsidiaries excerpted or derived from the
information contained in the Parent's Annual Report on Form 10-K for the year
ended March 31, 1997 (the "Parent 10-K"), and the Parent's Quarterly Reports on
Form 10-Q for the quarters ended June 30, 1996 and 1997 (the "Parent 10-Qs").
More comprehensive financial information is included in the complete financial
statements of the Parent contained in the Parent 10-K and the Parent 10-Qs on
file with the Commission, and such financial statements are incorporated herein
by reference.
12
<PAGE> 15
STERIS CORPORATION
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, MARCH 31,
--------------------- ----------------------------------
1997 1996 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues...................... $155,134 $127,868 $587,852 $534,612 $545,752
Income (loss) from continuing
operations..................... 11,747 (71,595) (30,606) 40,790 15,736
Net income (loss)................. 11,747 (71,595) (30,606) 40,790 (37,577)
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital................... 148,822 122,839 141,354 231,996 177,470
Total assets...................... 538,989 557,611 539,455 592,697 535,454
Total assets less excess cost of
assets acquired over book
value.......................... 433,419 505,678 433,877 511,170 448,828
Long-term debt.................... 35,854 2,499 35,879 102,631 103,585
Shareholders' equity.............. 306,000 237,384 294,716 304,059 237,809
PER SHARE:
Income (loss) per common share
from continuing operations..... 0.34 (2.16) (0.91) 1.17 0.47
Income (loss) per common share
(and common share
equivalent).................... 0.34 (2.16) (0.91) 1.17 (1.12)
Net income (loss) per share on
fully diluted basis............ 0.34 (2.16) (0.91) 1.17 (1.12)
</TABLE>
Available Information. The Parent is subject to the informational
requirements of the Exchange Act and, in accordance therewith, files reports
relating to its business, financial condition and other matters. Information, as
of particular dates, concerning the Parent's directors and officers, their
remuneration, stock options and other matters, the principal holders of the
Parent's securities and any material interest of such persons in transactions
with the Parent is required to be disclosed in proxy statements distributed to
the Parent's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
Commission, and copies thereof should be obtainable from the Commission in the
same manner as is set forth with respect to the Company in Section 8. Such
material should also be available on-line through EDGAR.
Beneficial Ownership of Company Securities, Contacts with the Company,
etc. Except as set forth in this Offer to Purchase, neither the Purchaser, the
Parent, nor, to the best knowledge of the Purchaser or the Parent, any of the
persons listed in Schedule I hereto, or any associate or majority owned
subsidiary of such persons, beneficially owns any equity security of the
Company, and neither the Purchaser, the Parent, nor, to the best knowledge of
the Purchaser or the Parent, any of the persons listed in Schedule I hereto, any
associate or majority owned subsidiary of such persons, or any of their
respective directors, executive officers or subsidiaries, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as set forth in this Offer to Purchase, neither the Purchaser, the
Parent, nor, to the best knowledge of the Purchaser or the Parent, any of the
persons listed in Schedule I hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, neither
the Purchaser, the Parent, nor, to the best knowledge of the Purchaser or the
Parent, any of the persons listed in Schedule I hereto, has had any transactions
with the Company or any of its executive officers, directors or affiliates that
would require reporting under the rules of the Commission.
13
<PAGE> 16
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between the Purchaser, the Parent, or, to the best
knowledge of the Purchaser or the Parent, any of the persons listed in Schedule
I hereto or any subsidiary of such persons, on the one hand, and the Company or
its executive officers, directors or affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors, or a sale or other transfer of a material
amount of assets that would require reporting under the rules of the Commission.
SECTION 10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of the
Shares pursuant to the Offer and to pay fees and expenses related to the Offer
and the Merger is estimated to be approximately $144 million. The Purchaser
plans to obtain all funds needed for the Offer and the Merger through a capital
contribution from the Parent.
Parent plans to obtain funds for such capital contribution through its
existing Credit Agreement, dated May 13, 1996, as amended, among Parent, various
financial institutions and KeyBank National Association, as Agent (the "Credit
Facility"). The Credit Facility provides for revolving credit of up to $215
million for general corporate purposes through September 30, 2001. At present,
there is $35 million of outstanding indebtedness under the Credit Facility.
Loans under the Credit Facility bear interest, at STERIS's option, at either
KeyBank National Association's prime rate or LIBOR rates plus 0.25 percent to
0.35 percent. The Credit Facility contains customary covenants which include
maintenance of certain financial ratios. The various financial institutions
providing the Credit Facility are Bank One, Columbus, National Association, NBD
Bank, PNC Bank, National Association, and ABN AMRO Bank N.V., Pittsburgh Branch.
Although no definitive plan or arrangement for repayment of borrowings
under the Credit Facility has been made, Parent anticipates such borrowings will
be repaid with internally generated funds (including, if the Merger is
accomplished, those of the Company) and from other sources which may include the
proceeds of future refinancings. No decision has been made concerning the method
Parent will use to repay the borrowings under the Credit Facility. Such decision
will be made based on Parent's review from time to time of the advisability of
particular actions, as well as prevailing interest rates, financial and other
economic conditions and such other factors as Parent may deem appropriate.
SECTION 11. 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. Sanford and Mr. John Masefield, Chairman of the Board of
the Company, 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.
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.
14
<PAGE> 17
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. Due 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.
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.
15
<PAGE> 18
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 extensive negotiations, the Company agreed
to a $5,000,000 termination fee, but refused to grant the "lock-up" option. See
Section 13.
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
16
<PAGE> 19
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, the consideration of $20.50 per Share net in cash
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.
SECTION 12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
Purpose. The purpose of the Offer and the Merger is to enable the Parent
to acquire control of, and the entire equity interest in, the Company. The
Offer, as the first step in the acquisition of the Company, is intended to
facilitate the acquisition of all the Shares. The purpose of the Merger is to
acquire all Shares not purchased pursuant to the Offer or otherwise. Pursuant to
the Merger, each then outstanding Share (other than Shares owned by the Parent
or any of its subsidiaries) will be converted into the right to receive an
amount in cash equal to the price per Share paid by the Purchaser pursuant to
the Offer. Although it is the Purchaser's intention to consummate the Merger as
promptly as practicable, there can be no assurance that the Merger will be
consummated or, if consummated, of the timing thereof. In addition to approval
by the Company's Board of Directors, which occurred on August 12, 1997,
consummation of the Merger will require the affirmative vote of the holders of a
majority of the Shares. Alternatively, if the Purchaser purchases 90% or more of
the Shares, the Merger could be consummated without the approval of the
shareholders through a "short form" merger (described below in Section 13).
Plans for the Company. In connection with the Offer and the Merger, the
Parent and the Purchaser have reviewed, and will continue to analyze, on the
basis of available information, various possible business strategies that they
might pursue in the event that the Purchaser acquires the Company pursuant to
this Offer and the Merger.
At present, the Parent has no plans to close any of the Company's
facilities or substantially to reduce the workforce at any of those facilities.
The Parent expects to provide employee benefits to employees of the Company that
are comparable to those provided by the Parent to its own employees, except to
the extent that different employee benefits are required under the terms of
existing collective bargaining agreements. See Section 13. Following completion
of the Merger, the Parent may also change the dividend policy of the Company in
order to meet the cash requirements of the Parent and its subsidiaries, as well
as those of the Company.
Except as described in this Offer to Purchase, the Parent and the Purchaser
have no present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, consolidation, reorganization,
liquidation or sale or transfer of a material amount of assets, involving the
Company or any of its subsidiaries, or any material changes in the Company's
present capitalization, dividend policy, employee benefit plans, corporate
structure or business or any material changes or reductions in the composition
of its management or personnel. Except as so described, the Parent and the
Purchaser have no present plans or proposals to establish, terminate, convert or
amend employee benefit plans, close any plant or facility of the Company or any
of its subsidiaries or affiliates, change or reduce the workforce of the Company
or any of its subsidiaries or affiliates or make any other major changes in its
business or policies of employment.
Employment Matters. The Parent, concurrently with the execution and
delivery of the Merger Agreement, entered into an employment agreement with John
Masefield, Chairman of the Board, President, and Chief Executive Officer of the
Company, 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. The terms of Mr. Masefield's employment agreement are described more
fully in Section 13 below. Separately, in
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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 for the calendar
quarter ending on March 31, 1998 equal to $16,087.50. Mr. DeAngelo would also
receive options to purchase 15,000 common shares of the Parent at an exercise
price per share equal to the closing price for the Parent's common shares on the
date of the Merger. The stock options would vest at a rate of 25% per year.
SECTION 13. THE MERGER
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 the Schedule 14D-1 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 of the Company 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 is not fulfilled prior to 5:00 p.m. on the Expiration
Date. The Parent has further agreed that, in the event that it would 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 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 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 Company has agreed to include in its Tender Offer
Solicitation/Recommendation Statement filed with the Commission on 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 DLJ 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
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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
Delaware General Corporate Law (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 when the certificate of merger is so filed (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.
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.
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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 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
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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 Parent and the
Company (the "Confidentiality Agree-
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ment"). 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.
Covenants of the Parent and the Purchaser. 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 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 will 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
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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 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.
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.
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 of the Merger Agreement.
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
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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.
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
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Directors 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 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 arising out of the
applicability of the Confidentiality Agreement to information provided
pursuant to the Merger 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.
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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 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.
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.
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THE FOREGOING SUMMARY OF THE RIGHTS OF SHAREHOLDERS DOES NOT PURPORT TO BE
A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY 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.
SECTION 14. 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,
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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;
(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.
SECTION 15. CERTAIN LEGAL MATTERS
General. Except as otherwise disclosed herein, based on information
furnished by the Company or filed by the Company with the Commission, neither
the Purchaser nor the Parent is aware of (i) any license or regulatory permit
that appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of Shares
by the Purchaser pursuant to the Offer or the Merger or (ii) any approval or
other action, by any governmental, administrative or regulatory agency or
authority, domestic, foreign or supranational, that would be required for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required, the Purchaser currently
contemplates that such approval or action would be sought. While the Purchaser
does not currently intend to delay the acceptance for payment of Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or action, if needed, would be obtained or
would be obtained without substantial conditions or that adverse consequences
might not result to the business of the Company, the Purchaser or the Parent or
that certain parts of the businesses of the Company, the Purchaser or the Parent
might not have to be disposed of in the event that such approvals were not
obtained or any other actions were not taken. The Purchaser's obligation under
the Offer to accept for payment and pay for Shares is subject to certain
conditions. See Section 14.
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 Parent and the Company each expect to file Notification and
Report Forms with respect to the Offer and the Merger on or about August 19,
1997.
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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,
if the Parent makes the filing on August 19, 1997, the waiting period with
respect to the Offer will expire at 11:59 p.m., Eastern Daylight Saving Time, on
September 3, 1997 unless the Parent or the Company 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 Parent or the Company concerning the Offer, the waiting period
will be extended and would expire at 11:59 p.m., Eastern Daylight Saving Time,
on the tenth calendar day after the date of substantial compliance by the Parent
or the Company 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 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 DGCL
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 Company's certificate of incorporation
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
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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 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.
SECTION 16. FEES AND EXPENSES
Smith Barney is acting as Dealer Manager in connection with the Offer and
serving as exclusive financial advisor to the Parent in connection with the
Offer and the Merger. Pursuant to the terms of Smith Barney's engagement, the
Parent has agreed to pay Smith Barney a fee of $1.4 million in connection with
the Offer and the Merger. In addition, the Parent has agreed to reimburse Smith
Barney for its reasonable travel and out-of-pocket expenses, including, without
limitation, fees and disbursements of its counsel, incurred in connection with
the Offer and the Merger or otherwise arising out of Smith Barney's engagement,
and has also agreed to indemnify Smith Barney and certain related parties
against certain liabilities and expenses, including, without limitation, certain
liabilities under the federal securities laws, arising out of Smith Barney's
engagement. In the ordinary course of business, Smith Barney and its affiliates
may actively trade or hold the securities of the Parent and the Company for
their own account or for the account of customers and, accordingly, may at any
time hold a long or short position in such securities.
Georgeson & Company Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee shareholders to forward material
relating to the Offer to beneficial owners of Shares. The Purchaser will pay the
Information Agent reasonable and customary compensation for all such services in
addition to reimbursing the Information Agent for reasonable out-of-pocket
expenses in connection therewith. The Purchaser has agreed to indemnify the
Information Agent against certain liabilities and expenses in connection with
the Offer, including, without limitation, certain liabilities under the federal
securities laws.
Harris Trust Company of New York, has been retained as the Depositary. The
Purchaser will pay the Depositary reasonable and customary compensation for its
services in connection with the Offer, will reimburse the Depositary for its
reasonable out-of-pocket expenses in connection therewith and will indemnify
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the Depositary against certain liabilities and expenses in connection therewith,
including, without limitation, certain liabilities under the federal securities
laws.
Except as set forth above, neither the Parent nor the Purchaser will pay
any fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies and other nominees will, upon request, be reimbursed by the
Parent or the Purchaser for customary clerical and mailing expenses incurred by
them in forwarding offering materials to their customers.
SECTION 17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue sky or other laws of such jurisdiction. Neither the Purchaser nor the
Parent is aware of any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser or the Parent becomes aware of any
state law that would limit the class of offerees in the Offer, the Purchaser
will amend the Offer and, depending on the timing of such amendment, if any,
will extend the Offer to provide adequate dissemination of such information to
such holders of Shares prior to the expiration of the Offer. In any jurisdiction
the securities, blue sky or other laws of which require the Offer to be made by
a licensed broker or dealer, the Offer is being made on behalf of the Purchaser
by the Dealer Manager or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THE PURCHASER AND THE PARENT HAVE FILED WITH THE COMMISSION A TENDER OFFER
STATEMENT ON SCHEDULE 14D-1 PURSUANT TO RULE 14D-3 UNDER THE EXCHANGE ACT,
TOGETHER WITH EXHIBITS, FURNISHING CERTAIN ADDITIONAL INFORMATION WITH RESPECT
TO THE OFFER, AND MAY FILE AMENDMENTS THERETO. SUCH SCHEDULE 14D-1 AND ANY
AMENDMENTS THERETO, INCLUDING EXHIBITS, MAY BE INSPECTED AND COPIES MAY BE
OBTAINED IN THE MANNER SET FORTH IN SECTION 8 WITH RESPECT TO THE COMPANY
(EXCEPT THAT SUCH MATERIAL WILL NOT BE AVAILABLE AT THE REGIONAL OFFICES OF THE
COMMISSION).
STERIS ACQUISITION CORPORATION
August 18, 1997
31
<PAGE> 34
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT AND THE PURCHASER
The Parent. Set forth below are the name, business address and present
principal occupation or employment, and material occupations, positions, offices
or employments for the past five years of each director and executive officer of
the Parent. Except as otherwise noted, the business address of each such person
is 5960 Heisley Road, Mentor, Ohio 44060, and each such person is a United
States citizen. In addition, except as otherwise noted, each director and
executive officer of the Parent has been employed in his or her present
principal occupation listed below during the last five years. Directors of the
Parent are indicated by an asterisk.
<TABLE>
<CAPTION>
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. He joined the Parent in
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. 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. 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 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.
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 a General Manager of Marketing with
GE Medical Systems.
Jerry E. Robertson*......... Dr. Robertson joined the Parent's Board of Directors in 1994.
He retired from 3M Company in March 1994 where he most recently
served (since 1986) as Executive Vice President, Life
Sciences Sector and Corporate Services and as a member of the
Board of Directors. Dr. Robertson is also currently a member
of the Boards of Directors of Manor Care, Inc., Life
Technologies, Inc., Haemonetics Corporation, Coherent, Inc.,
Cardinal Health, Inc., Medwave, Inc., Allianz Life Insurance
Company of North America, and Choice Hotels International.
</TABLE>
32
<PAGE> 35
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT,
NAME 5-YEAR EMPLOYMENT HISTORY
- ---------------------------- ---------------------------------------------------------------
<S> <C>
Frank E. Samuel, Jr.*....... Mr. Samuel joined the Parent's Board of Directors in 1992.
Since February 1995, Mr. Samuel has been the President of
Edison BioTechnology Center, a business formation
organization for the State of Ohio in the biotechnology,
biomedical devices, and medical software fields. From January
1990 to February 1995, Mr. Samuel was an independent
healthcare industry consultant. From February 1984 through
December 1989, Mr. Samuel was President of the Health
Industry Manufacturers Association, a national trade
association representing medical technology manufacturers.
Mr. Samuel is also currently a member of the Boards of
Directors of Protocol Systems, Inc. and Life Technologies,
Inc.
Loyal W. Wilson*............ Mr. Wilson joined the Parent's Board of Directors in 1987. He
has been a Managing Director of Primus Venture Partners, Inc.
since its inception in 1983.
Raymond A. Lancaster*....... Mr. Lancaster joined the Parent's Board of Directors in 1988.
Since February 1995, he has held the position of Managing
Partner of Kirtland Capital Partners II L.P., a middle market
leveraged buy out partnership. From 1990 to 1994, Mr.
Lancaster was Managing Director of Key Equity Capital
Corporation, a wholly-owned subsidiary of KeyCorp.
Thomas J. Magulski*......... Mr. Magulski joined the Parent's Board of Directors in 1989. He
has served as President, Chief Operating Officer, and a member
of the Board of Directors of VERSA Technologies, Inc. since
December 1993. Mr. Magulski was President of Dover Partners,
a consulting firm, from March 1992 to December 1993.
J.B. Richey*................ Mr. Richey joined the Parent's Board of Directors in 1987.
Since 1984, he has been Senior Vice President of Invacare
Corporation, a provider of home healthcare medical equipment.
Mr. Richey is also currently a member of the Boards of
Directors of Invacare Corporation, Royal Appliance
Manufacturing Company, and Unique Mobility, Inc.
</TABLE>
The Purchaser. The name and position with the Purchaser of each director and
executive officer of the Purchaser are set forth below. The business address,
present principal occupation or employment, five-year employment history and
citizenship of each such person is set forth above.
<TABLE>
<CAPTION>
NAME POSITION WITH THE PURCHASER
- ---------------------------- ---------------------------------------------------------------
<S> <C>
Bill R. Sanford............. Chairman of the Board, President, Chief Executive Officer and
Director
Michael A. Keresman, III.... Vice President, Treasurer and Director
David C. Dvorak............. Vice President, Secretary and Director
</TABLE>
33
<PAGE> 36
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1023 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1023 New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions
Only)
(212) 701-7636 or 7637
For Information Telephone
(call collect):
(212) 701-7624
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses or telephone numbers
set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and all other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
(Georgeson & Company Logo)
Wall Street Plaza
New York, New York 10005
Call Collect (Banks and Brokers): (212) 440-9800
or
CALL TOLL FREE: (800) 223-2064
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-7527
34
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ISOMEDIX INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED AUGUST 18, 1997
BY
STERIS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
STERIS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN DAY-
LIGHT SAVING TIME, ON TUESDAY, SEPTEMBER 16, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1023 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1023 By Facsimile Transmission: New York, NY 10005
(for Eligible Institutions
Only)
(212) 701-7636 or 7637
For Information Telephone
(call collect):
(212) 701-7624
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Co. or Philadelphia Depository
Trust Co. (each a "Book-Entry Transfer Facility" and collectively, the
"Book-Entry Transfer Facilities") pursuant to the book-entry transfer procedure
described in Section 2 of the Offer to Purchase (as defined below). Delivery of
documents to a Book-Entry Transfer Facility does not constitute delivery to the
Depositary.
Shareholders whose certificates evidencing Shares ("Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section l of the Offer to Purchase) or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis and who wish
to tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 2 of the Offer to Purchase. See Instruction 2.
<PAGE> 2
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
- --------------------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE) [ ] The Depository Trust Co. [ ] Philadelphia Depository
Trust Co.
Account Number Transaction Code Number
----------------------- ------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY:
Name(s) of Registered Holder(s)
-------------------------------------------------
Window Ticket No. (if any)
------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
------------------------------
Name of Institution which Guaranteed Delivery
-----------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARE SHARES EVIDENCED NUMBER
CERTIFICATE BY SHARE OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
TOTAL SHARES
- ----------------------------------------------------------------------------------------------------------------------
* Need not be completed by shareholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the
Depositary are being tendered hereby. See Instruction 4.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to STERIS Acquisition Corporation, a
Delaware corporation ("Purchaser") and a wholly owned subsidiary of STERIS
Corporation, an Ohio corporation ("Parent"), the above-described shares of
common stock, par value $.01 per share, and the associated preferred stock
purchase rights (together with the rights, the "Shares"), of Isomedix Inc., a
Delaware corporation (the "Company"), pursuant to Purchaser's offer to purchase
all outstanding Shares, at $20.50 per Share, net to the seller in cash, without
interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated August 18, 1997 (the "Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby and all dividends, distributions (including, without
limitation, distributions of additional Shares and other securities) and rights
declared, paid or distributed in respect of such Shares on or after August 15,
1997 (collectively, "Distributions"), and irrevocably appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Shares and all Distributions, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver Share Certificates evidencing such Shares and all
Distributions, or transfer ownership of such Shares and all Distributions on the
account books maintained by a Book-Entry Transfer Facility, together, in either
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of Purchaser, (ii) present such Shares and all Distributions for
transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints Bill R. Sanford, Michael A. Keresman, III, and David C. Dvorak of the
Purchaser as proxies of the undersigned, each with full power of substitution,
to the full extent of the undersigned's rights with respect to the Shares
tendered by the undersigned and accepted for payment by the Purchaser (and any
and all Distributions). All such proxies shall be considered coupled with an
interest in the tendered Shares. This appointment will be effective if, when,
and only to the extent that, the Purchaser accepts such Shares for payment
pursuant to the Offer. Upon such acceptance for payment, all prior proxies given
by the undersigned with respect to such Shares (and any such other Shares and
securities) will, without further action, be revoked, and no subsequent proxies
may be given nor any subsequent written consent executed by the undersigned
(and, if given or executed, will not be deemed to be effective) with respect
thereto. The designees of the Purchaser named above will, with respect to the
Shares and other securities for which the appointment is effective, be empowered
to exercise all voting and other rights of the undersigned as they in their sole
discretion may deem proper at any annual or special meeting of the shareholders
of the Company or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise, and the Purchaser reserves the right to
require that, in order for Shares or other securities to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser must be able to exercise full voting rights with respect
to such Shares or other securities.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, and that when such Shares are accepted
for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title
<PAGE> 4
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase
price, the amount or value of such Distribution as determined by Purchaser in
its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as otherwise stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer, including, without
limitation, the undersigned's representation and warranty that the undersigned
owns the Shares being tendered.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
<PAGE> 5
- -------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificate(s) evidencing Shares not tendered or not
purchased are to be issued in the name of someone other than the
undersigned.
Issue [ ] Check [ ] Share Certificate(s) to:
Name:
------------------------------------------------------------------------
(PRINT)
Address:
---------------------------------------------------------------------
-----------------------------------------------------------------------------
(ZIP CODE)
-----------------------------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificate(s) evidencing Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or to
the undersigned at an address other than that shown under "Description of
Shares Tendered."
Mail [ ] Check [ ] Share Certificate(s) to:
Name:
------------------------------------------------------------------------
(PRINT)
Address:
---------------------------------------------------------------------
-----------------------------------------------------------------------------
(ZIP CODE)
- --------------------------------------------------------------------------------
<PAGE> 6
IMPORTANT
- -------------------------------------------------------------------------------
SHAREHOLDER(S): SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X
-------------------------------------------------------------------------------
X
-------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated: 1997
------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share Certificate(s) or on a security position listing or by a person authorized
to become a registered holder by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information. See
Instruction 5.)
Name(s):
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
----------------------------------------------------
Taxpayer Identification or
Social Security No.:
----------------------------------------------------------
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN SPACE BELOW.
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in a Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered hereby
and such holder(s) has (have) completed neither the box entitled "Special
Payment Instructions" nor the box entitled "Special Delivery Instructions" or
(ii) such Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in Section 2 of the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of all
Shares delivered by book-entry transfer, in each case together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth at the front hereof prior to the
Expiration Date (as defined in Section l of the Offer to Purchase). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Shareholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 2 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Depositary within three New York
Stock Exchange, Inc. ("NYSE") trading days after the date of execution of such
Notice of Guaranteed Delivery, all as described in Section 2 of the Offer to
Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
<PAGE> 8
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions," as soon as practicable after the expiration or termination of the
Offer. All Shares evidenced by Share Certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT
BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES
EVIDENCING THE SHARES TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal
<PAGE> 9
or to the person(s) signing this Letter of Transmittal but at an address other
than that shown in the box entitled "Description of Shares Tendered," the
appropriate boxes on the reverse of this Letter of Transmittal must be
completed.
8. WAIVER OF CONDITIONS. Except as described in the Offer to Purchase, the
conditions to the Offer may be waived by the Purchaser in whole or in part at
any time and from time to time in its sole discretion.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Dealer Manager or the
Information Agent at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or from brokers, dealers, commercial banks or trust companies.
10. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below
and to certify, under penalties of perjury, that such number is correct and that
such shareholder is not subject to backup withholding of federal income tax. If
a tendering shareholder has been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding, such shareholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
shareholder has since been notified by the Internal Revenue Service that such
shareholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering shareholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such shareholder. If the tendering shareholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such shareholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part l and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such shareholder until a TIN is provided to
the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED WITH ANY REQUIRED SIGNATURE GUARANTEES, AND SHARE
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND OR A PROPERLY COMPLETED
AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS
MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes,
<PAGE> 10
a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN) and (b) that
(i) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such shareholder that such shareholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering shareholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
shareholder until a TIN is provided to the Depositary.
<PAGE> 11
ALL TENDERING SHAREHOLDERS MUST COMPLETE THE FOLLOWING:
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
- ----------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- Taxpayer Identification
Number -- For all accounts, enter taxpayer ------------------------------
FORM W-9 identification number in the box at right. Social Security Number(s)
(For most individuals, this is your social OR
DEPARTMENT OF THE TREASURY security number. If you do not have a ------------------------------
INTERNAL REVENUE SERVICE number, see Obtaining a Number in the Employer Identification Number
enclosed Guidelines.) Certify by signing and (If awaiting TIN write
dating below. Note: If the account is in "Applied For")
more than one name, see the chart in the
enclosed Guidelines to determine which
number to give the payer.
----------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART II -- For Payees Exempt From Backup Withholding, see the enclosed
IDENTIFICATION NUMBER Guidelines and complete as instructed therein.
("TIN") CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not
been notified by the Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of failure to report all
interest or dividends, or the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you
have been notified by the IRS that you are subject to backup withholding
because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out item
(2). (Also see instructions in the enclosed Guidelines.)
- ----------------------------------------------------------------------------------------------------------
Signature Date 1997
--------------------------------------------------------------------------- -------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 12
The Information Agent for the Offer is:
(Georgeson & Company Logo)
Wall Street Plaza
New York, New York, 10005
Call Collect (Banks and Brokers): (212) 440-9800
or
CALL TOLL FREE: (800) 223-2064
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-7527
August 18, 1997
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ISOMEDIX INC.
TO
STERIS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
STERIS CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if (i) certificates
("Share Certificates") evidencing shares of common stock, par value $.01 per
share, and the associated preferred stock purchase rights (together with the
rights, the "Shares"), of Isomedix Inc., a Delaware corporation (the "Company"),
are not immediately available, (ii) time will not permit all required documents
to reach Harris Trust Company of New York, as Depositary (the "Depositary"),
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase
(as defined below)), or (iii) the procedure for book-entry transfer cannot be
completed on a timely basis. This Notice of Guaranteed Delivery may be delivered
by hand or transmitted by telegram, facsimile transmission or mail to the
Depositary. See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1023 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1023 New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to STERIS Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of STERIS Corporation, an
Ohio corporation, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated August 18, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares specified below pursuant to the guaranteed delivery procedures
described in Section 2 of the Offer to Purchase.
Number of Shares:
---------------------------------------------------------------
Certificate No(s). (if available):
--------------------------------------------
Check ONE box if Shares will be tendered by book-entry transfer:
[ ] The Depository Trust Co.
[ ] Philadelphia Depository Trust Co.
Account Number:
-----------------------------------------------------------------
Name(s) of Record Holder(s):
---------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT
Address(es):
--------------------------------------------------------------------
ZIP CODE
Company Area Code and Tel. No.:
--------------------------------------------
Area Code and Tel. No.:
---------------------------------------------------------
Signature(s)
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: __________ , 1997
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a commercial bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
hereby (a) represents that the tender of Shares effected hereby complies with
Rule 14e-4 of the Securities Exchange Act of 1934, as amended, and (b)
guarantees delivery to the Depositary, at one of its addresses set forth above,
of Share Certificates evidencing the Shares tendered hereby in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts at The Depository Trust Co. or Philadelphia Depository
Trust Co., in each case with delivery of a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) with any required signature
guarantees, or an Agent's Message (as defined in Section 2 of the Offer to
Purchase), and any other documents required by the Letter of Transmittal, within
three New York Stock Exchange, Inc. trading days after the date of execution of
this Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and Share
Certificates to the Depositary within the time period shown herein. Failure to
do so could result in financial loss to such Eligible Institution.
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Zip Code)
AUTHORIZED SIGNATURE:
---------------------------------------------------------
Name:
---------------------------------------------------------------------------
Please Print
Title:
--------------------------------------------------------------------------
Area Code and Tel. No.:
------------------------------------------------------
Dated:_________, 1997
NOTE: DO NOT SEND SHARE CERTIFICATE(S) WITH THIS NOTICE OF GUARANTEED
DELIVERY. SHARE CERTIFICATE(S) SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ISOMEDIX INC.
BY
STERIS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
STERIS CORPORATION
AT
$20.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN DAY-
LIGHT SAVING TIME, ON TUESDAY, SEPTEMBER 16, 1997, UNLESS THE OFFER IS
EXTENDED.
August 18, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by STERIS Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of STERIS
Corporation, an Ohio corporation ("Parent"), to act as Dealer Manager in
connection with the Purchaser's offer to purchase all outstanding shares of
common stock, par value $.01 per share, including the associated preferred stock
purchase rights (together with such rights, the "Shares") of Isomedix Inc., a
Delaware corporation (the "Company"), at a price of $20.50 per Share, net to the
seller in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated August 18,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer") enclosed
herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED A NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED
BY PARENT, WOULD REPRESENT AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A
FULLY DILUTED BASIS ON THE DATE OF PURCHASE. THE OFFER IS NOT CONDITIONED ON THE
RECEIPT OF FINANCING.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. The Offer to Purchase, dated August 18, 1997;
2. The Letter of Transmittal to be used by holders of Shares in
accepting the Offer and tendering Shares;
3. The Notice of Guaranteed Delivery to be used to tender Shares
pursuant to the Offer if none of the procedures for tendering Shares set
forth in the Offer to Purchase can be completed on a timely basis;
4. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominees, with space provided for obtaining such clients' instructions
with regard to the Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
<PAGE> 2
6. A return envelope addressed to Harris Trust Company of New York, as
the Depositary.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will purchase, by accepting for payment, and will
pay for the Shares validly tendered prior to the Expiration Date (as defined in
the Offer to Purchase) promptly after the Expiration Date. For purposes of the
Offer, the Purchaser will be deemed to have accepted for payment, and thereby
purchased, tendered Shares as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance of such Shares for
payment pursuant to the Offer. In all cases, payment for Shares purchased
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the Share Certificates or timely confirmation of a book-entry transfer of
such Shares, if such procedure is available, into the Depositary's account at
The Depository Trust Co. or Philadelphia Depository Trust Co. pursuant to the
procedures set forth in Section 2 of the Offer to Purchase, (ii) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined in Section
2 of the Offer to Purchase), and (iii) any other documents required by the
Letter of Transmittal.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person (other than the Dealer Manager, the Information Agent and
the Depositary) in connection with the solicitation of tenders of Shares
pursuant to the Offer. The Purchaser will, however, upon request, reimburse you
for customary mailing and handling expenses incurred by you in forwarding the
enclosed materials to your clients.
The Purchaser will pay any stock transfer taxes incident to the transfer to
it of validly tendered Shares, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, EASTERN DAYLIGHT SAVING TIME, ON TUESDAY, SEPTEMBER 16, 1997, UNLESS
THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Depositary, and certificates evidencing the tendered Shares should be delivered
or such Shares should be tendered by book-entry transfer, all in accordance with
the Instructions set forth in the Letter of Transmittal and the Offer to
Purchase.
If holders of Shares wish to tender Shares, but it is impracticable for
them to forward their Share Certificates or other required documents to the
Depositary prior to the Expiration Date or to comply with the procedures for
book-entry transfer on a timely basis, a tender may be effected by following the
guaranteed delivery procedures specified under Section 2 of the Offer to
Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
Georgeson & Company Inc., the Information Agent, or Smith Barney Inc., the
Dealer Manager, at their respective addresses and telephone numbers set forth on
the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained by calling
Georgeson & Company Inc., the Information Agent, collect at (212) 440-9800 or
from brokers, dealers, commercial banks or trust companies.
Very truly yours,
SMITH BARNEY INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF PARENT, THE PURCHASER, THE COMPANY, THE
DEPOSITARY, THE INFORMATION AGENT OR THE DEALER MANAGER, OR ANY AFFILIATE OF ANY
OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR
MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER
THAN THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ISOMEDIX INC.
BY
STERIS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
STERIS CORPORATION
AT
$20.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN DAY-
LIGHT SAVING TIME, ON TUESDAY, SEPTEMBER 16, 1997, UNLESS THE OFFER IS
EXTENDED.
August 18, 1997
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated August 18,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the Offer by STERIS Acquisition Corporation, a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of STERIS Corporation, an Ohio
corporation ("Parent"), to purchase all outstanding shares of common stock, par
value $.01 per share, including the associated preferred stock purchase rights
(together with such rights, the "Shares"), of Isomedix Inc., a Delaware
corporation (the "Company"), at a price of $20.50 per Share, net to the seller
in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase.
Shareholders whose certificates evidencing Shares ("Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required by the Letter of Transmittal to the Depositary
prior to the Expiration Date (as defined in the Offer to Purchase) or who cannot
complete the procedure for delivery by book-entry transfer to the Depositary's
account at a Book-Entry Transfer Facility (as defined in Section 2 of the Offer
to Purchase) on a timely basis and who wish to tender their Shares must do so
pursuant to the guaranteed delivery procedure described in Section 2 of the
Offer to Purchase. See Instruction 2 of the Letter of Transmittal. Delivery of
documents to a Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures does not constitute delivery to the Depositary.
THE MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD BY
US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER OF RECORD
OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY
BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer to Purchase.
<PAGE> 2
Your attention is invited to the following:
1. The tender price is $20.50 per Share, net to the seller in cash,
without interest thereon.
2. The Offer and withdrawal rights will expire at 12:00 midnight,
Eastern Daylight Saving Time, on Tuesday, September 16, 1997, unless the
Offer is extended.
3. The Offer is being made for all outstanding Shares.
4. The Offer is conditioned upon, among other things, there being
validly tendered a number of Shares which, when added to the Shares
beneficially owned by Parent, would represent at least a majority of the
Shares outstanding on a fully diluted basis on the date of purchase. See
Section 14 of the Offer to Purchase.
5. The Offer is not conditioned on the receipt of financing.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Shares in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. Neither the Purchaser
nor Parent is aware of any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser or Parent becomes aware of any state
law that would limit the class of offerees in the Offer, the Purchaser will
amend the Offer and, depending on the timing of such amendment, if any, will
extend the Offer to provide adequate dissemination of such information to such
holders of Shares prior to the expiration of the Offer. In any jurisdiction the
securities, blue sky or other laws of which require the Offer to be made by a
licensed broker or dealer, the Offer is being made on behalf of the Purchaser by
the Dealer Manager or one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form contained in this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ISOMEDIX INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated August 18, 1997, and the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"), in
connection with the Offer by STERIS Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of STERIS
Corporation, an Ohio corporation, to purchase all outstanding shares of common
stock, par value $.01 per share, including the associated preferred stock
purchase rights (together with such rights, the "Shares"), of Isomedix Inc., a
Delaware corporation, at a price equal to $20.50 per Share, net to the seller in
cash.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) held by you
for the account of the undersigned, upon the terms and subject to the conditions
set forth in the Offer to Purchase.
Number of Shares to be Tendered*:
-------------------------------------
Dated:
--------------------------------- , 1997
SIGN HERE
Signature(s):
-------------------------------------------------------------------
Print or Type Name(s):
----------------------------------------------------------
Print or Type Address:
----------------------------------------------------------
Area Code and Telephone Number(s):
----------------------------------------------
Taxpayer Identification or Social Security Number(s):
---------------------------
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ---------------------------------------------------------
GIVE THE SOCIAL
SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ---------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner
account) of the account or,
if combined funds,
any one of the
individuals(1)
3. Husband and wife (joint account) The actual owner
of the account or,
if joint funds,
either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian The ward, minor,
or committee for a designated or incompetent
ward, minor, or incompetent person(3)
person
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that The actual
is not a legal or valid trust owner(1)
under State law
8. Sole proprietorship account The owner(4)
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ---------------------------------------------------------
<S> <C> <C>
9. A valid trust, estate, or The legal entity
pension trust (Do not furnish
the identifying
number of the
personal
representative or
trustee unless the
legal entity
itself is not
designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- ---------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Beginning January 1, 1993, payers
must generally withhold 31% of taxable interest, dividends, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonments.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
Exhibit (a)(8)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated August
18, 1997, and the related Letter of Transmittal and any amendments or
supplements thereto, and is being made to all holders of Shares. The Offer is
not being made to (nor will tenders be accepted from or on behalf of) holders of
Shares in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the securities, blue sky or other laws
of such jurisdiction. Neither the Purchaser nor the Parent is aware of any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or the Parent becomes aware of any state law that would limit the
class of offerees in the Offer, the Purchaser will amend the Offer and,
depending on the timing of such amendment, if any, will extend the Offer to
provide adequate dissemination of such information to such holders of Shares
prior to the expiration of the Offer. In any jurisdiction the securities, blue
sky or other laws of which require the Offer to be made by a licensed broker or
dealer, the Offer is being made on behalf of the Purchaser by the Dealer Manager
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ISOMEDIX INC.
BY
STERIS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
STERIS CORPORATION
AT
$20.50 NET PER SHARE
STERIS Acquisition Corporation, a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of STERIS Corporation, an Ohio corporation (the
"Parent"), is offering to purchase all outstanding shares of common stock, par
value $.01 per share, and the associated preferred stock purchase rights
(together with the rights, the "Shares"), of Isomedix Inc., a Delaware
corporation (the "Company"), at a price of $20.50 per Share, net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated August 18, 1997, and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN DAY-
LIGHT SAVING TIME, ON TUESDAY, SEPTEMBER 16, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 12, 1997 (the "Merger Agreement"), among the Purchaser, the Parent,
and the Company. The Merger Agreement provides, among other things, for the
merger of the Purchaser with and into the Company (the "Merger") following the
purchase of Shares pursuant to the Offer. In the Merger, each outstanding Share
(other than Shares owned by the Parent or any subsidiary of the Parent, Shares
held as treasury shares by the Company, and Shares owned by shareholders who
perfect appraisal rights under Delaware law) will be converted into the right to
receive $20.50 per Share net in cash.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS, AND RECOMMENDS THAT THE
SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
The Offer is conditioned upon, among other things, (i) there being validly
tendered a number of Shares which, when added to the Shares beneficially owned
by the Parent, would represent at least a majority of the Shares outstanding on
a fully diluted basis on the date of purchase (the "Minimum Condition"), and
(ii) the expiration or termination of all waiting periods imposed by the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations
thereunder. The Offer is not conditioned on the receipt of financing. If, by the
Expiration Date (including any extension required by the Merger Agreement), any
or all of the conditions to the Offer have not been satisfied or waived, the
Purchaser reserves the right (but will not be obligated), subject to the
applicable rules and regulations of the Securities and Exchange Commission, to
(a) terminate the Offer and not accept for payment
<PAGE> 2
or pay for any Shares and return all tendered Shares to tendering shareholders,
(b) waive all the unsatisfied conditions (except that the Purchaser may not
waive the Minimum Condition without the consent of the Company) and accept for
payment and pay for all Shares validly tendered prior to the Expiration Date,
(c) extend the Offer and, subject to the right of shareholders to withdraw
Shares until the Expiration Date, retain the Shares that have been tendered
during the period or periods for which the Offer is extended, or (d) amend the
Offer. The Merger Agreement provides that the Purchaser may not decrease the
price payable in the Offer, change the form of consideration payable in the
Offer, change the offer conditions, impose additional offer conditions, or
change any other terms of the Offer in a manner adverse to the holders of the
Shares.
The Merger Agreement provides that, at the Company's request, the Purchaser
will extend the Expiration Date from time to time for up to an aggregate of ten
business days following the Expiration Date if the Minimum Condition is not
fulfilled prior to 5:00 p.m. on the Expiration Date. In addition, the Merger
Agreement provides that the Purchaser may, in its discretion, extend the
Expiration Date to the extent required by applicable law or if any of the
conditions of the Offer are not satisfied.
The term "Expiration Date" means 12:00 midnight, Eastern Daylight Saving
Time, on Tuesday, September 16, 1997, unless the Purchaser extends the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, will expire.
For purposes of this Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser as,
if and when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance for payment of such Shares. Payment for Shares accepted
for payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for validly tendering
shareholders for the purpose of receiving payment from the Purchaser and
transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. In all cases, payment for Shares accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (i)
certificates evidencing such Shares or confirmation of a book-entry transfer of
such Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase), (ii) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), or in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase),
and (iii) any other required documents. Accordingly, payment may be made to
tendering shareholders at different times if delivery of the Shares and other
required documents occur at different times.
Except as otherwise provided below, tenders of Shares pursuant to the Offer
are irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant
to the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment by the Purchaser pursuant to the Offer,
may also be withdrawn at any time after October 16, 1997. For a withdrawal to be
effective, a written, telegraphic or facsimile transmission notice of withdrawal
must be timely received by the Depositary at its address set forth on the back
cover of the Offer to Purchase and must specify the name of the person having
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder of the Shares to be withdrawn, if different
from the name of the person who tendered the Shares. If Share Certificates have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such Share Certificates, the serial numbers shown on such
Share Certificates must be submitted to the Depositary and, unless such Shares
have been tendered by an Eligible Institution (as defined in the Offer to
Purchase), the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Purchaser, in its
sole discretion, whose determination will be final and binding on all parties.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the shareholder lists or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER.
Questions and requests for assistance or for additional copies of the Offer
to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Dealer Manager or the Information Agent at
their respective addresses and telephone numbers as set forth below, and copies
will be furnished promptly at Purchaser's expense. No fees or commissions will
be paid to brokers, dealers or other persons (other than the Dealer Manager and
the Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Telephone: (212) 440-9800
or
CALL TOLL FREE: (800) 223-2064
The Dealer Manager for the Offer is:
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
(212) 816-7527
<PAGE> 1
Exhibit (b)(2)
FIRST AMENDMENT AGREEMENT
First Amendment Agreement made as of the 22nd day of November, 1996, by
and among STERIS CORPORATION, an Ohio corporation ("Borrower"), KEYBANK NATIONAL
ASSOCIATION (formerly known as Society National Bank), as Agent ("Agent") and
the banking institutions listed on Schedule 1 attached hereto and made a part
hereof (the "Banks"):
WHEREAS, Borrower, Agent and the Banks are parties to a certain
credit agreement dated as of May 13, 1996, as it may from time to time be
amended, supplemented or otherwise modified, which provides, among other things,
for revolving loans and swing loans aggregating not more than One Hundred
Twenty-Five Million Dollars, all upon certain terms and conditions (the "Credit
Agreement");
WHEREAS, Borrower, Agent and the Banks desire to amend the Credit
Agreement by modifying certain provisions thereof,
WHEREAS, each term used herein shall be defined in accordance with the
Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein and for other valuable considerations, Borrower, Agent and the
Banks agree as follows:
1. The Credit Agreement is hereby amended by deleting the definition of
"Guarantor of Payment" contained in ARTICLE I in its entirety and by inserting
in place thereof the following:
"Guarantor of Payment" shall mean any one of AMSCO, Medical &
Environmental Designs, Inc., Ecomed, Inc., American Sterilizer Company,
AMSCO Sterile Recoveries, Inc., AMSCO International Sales Corporation,
HAS, Inc., AMSCO Europe, Inc., AMSCO Asia Pacific, Inc. and AMSCO Latin
America, Inc., which are each executing and delivering a Guaranty of
Payment, or any other party which shall deliver a Guaranty of Payment to
the Agent subsequent to the Closing Date.
2. The Credit Agreement is hereby amended by deleting Section 4.2 thereof
in its entirety and by inserting in place thereof the following:
SECTION 4.2 GUARANTIES OF PAYMENT. Each of AMSCO, Medical & Environmental
Designs, Inc., Ecomed, Inc., American Sterilizer Company, AMSCO Sterile
Recoveries, Inc., AMSCO International Sales Corporation, HAS, Inc., AMSCO
Europe, Inc., AMSCO Asia Pacific, Inc. and AMSCO Latin America, Inc.
shall have executed and delivered its Guaranty of Payment to the Agent.
3. The Credit Agreement is hereby amended by deleting Schedule 2 thereof
in its entirety and by inserting in place thereof new Schedule 2 in the form of
Schedule 2, attached hereto.
4. Borrower hereby represents and warrants to the Agent and the Banks
that (a) Borrower has the legal power and authority to execute and deliver this
First Amendment Agreement; (b) officials executing this First Amendment
Agreement have been duly authorized to execute and deliver the same and bind
Borrower with respect to the provisions hereof; (c) the execution and delivery
hereof by Borrower and the performance and observance by Borrower of the
provisions
<PAGE> 2
hereof do not violate or conflict with the organizational agreements of
Borrower or any law applicable to Borrower or result in a breach of any
provision of or constitute a default under any other agreement, instrument or
document binding upon or enforceable against Borrower; (d) no Possible Default
exists under the Credit Agreement, nor will any occur immediately after the
execution and delivery of the First Amendment Agreement or by the performance
or observance of any provision hereof, (e) neither Borrower nor any Subsidiary
has any claim or offset against, or defense or counterclaim to, any of
Borrower's or any Subsidiary's obligations or liabilities under the Credit
Agreement or any Related Writing, and Borrower and each Subsidiary hereby
waives and releases the Agent and each of the Banks from any and all such
claims, offsets, defenses and counterclaims of which Borrower and any
Subsidiary is aware, such waiver and release being with full knowledge and
understanding of the circumstances and effect thereof and after having
consulted legal counsel with respect thereto, and (f) this First Amendment
Agreement constitutes a valid and binding obligation of Borrower in every
respect, enforceable in accordance with its terms.
5. Each reference that is made in the Credit Agreement or any other
writing to the Credit Agreement shall hereafter be construed as a reference to
the Credit Agreement as amended hereby. Except as herein otherwise specifically
provided, all provisions of the Credit Agreement shall remain in full force and
effect and be unaffected hereby.
6. This First Amendment Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same agreement.
7. The rights and obligations of all parties hereto shall be governed by
the laws of the State of Ohio.
Address: 5960 Heisley Road STERIS CORPORATION
Mentor, OH 44060
By: /s/ Bill R. Sanford CEO
-------------------------------------
Bill R. Sanford, Chairman, President,
and Chief Executive Officer
And /s/ Michael A. Keresman, III CFO
-------------------------------------
Michael A. Keresman, III, Senior Vice
President and Chief Financial Officer
Address: Key Tower KEYBANK NATIONAL ASSOCIATION,
127 Public Square individually and as Agent
Mailcode: OH-01-27-0611
Cleveland, OH 44114-0611
By: /s/ Thomas A. Crandell
-------------------------------------
Thomas A. Crandell, Assistant Vice
President
2
<PAGE> 3
Address: 600 Superior Avenue BANK ONE, COLUMBUS, NA
Cleveland, OH 44114-2650
Attention: N. Ohio Large Corp.
Markets Group, #0149
By: /s/ Babette C. Coerdt
-----------------------------
Babette C. Coerdt,
Vice President and
Group Manager
Address: 611 Woodland Avenue NBD BANK
Detroit, MI 48226
Attention: Mid-corporate
Banking Division
By: /s/ Paul R. DeMelo
-----------------------------
Paul R. DeMelo,
Vice President
Address: One Cleveland Center PNC BANK, NATIONAL ASSOCIATION
1375 E. 9th St., Ste. 1250
Cleveland, OH 44114
Attention: Corporate Banking
By: /s/ Bryon A. Pike
-----------------------------
Bryon A. Pike, Vice President
Attention: Pittsburgh Branch ABN AMRO BANK N.V., PITTSBURGH
One PPG Place, Ste. 2950 BRANCH
Pittsburgh, PA 15222-5400 By: ABN AMRO North America, Inc.,
as agent
By: /s/ Roy D. Hasbrook
-----------------------------
Roy D. Hasbrook, Group Vice
President and Director
And: /s/ Kathyrn C. Toth
-----------------------------
Kathyrn C. Toth,
Vice President
3
<PAGE> 4
The undersigned each consent to the terms hereof.
AMSCO INTERNATIONAL, INC.
MEDICAL & ENVIRONMENTAL DESIGNS, INC.
ECOMED, INC.
AMERICAN STERILIZER COMPANY
AMSCO STERILE RECOVERIES, INC.
AMSCO INTERNATIONAL SALES CORPORATION
HAS, INC.
AMSCO EUROPE, INC.
AMSCO ASIA PACIFIC, INC.
AMSCO LATIN AMERICA, INC.
By: /s/ Bill R. Sanford
----------------------------------------
Bill R. Sanford, President of each
of the Companies listed above
And: /s/ Michael A. Keresman, III CFO
----------------------------------------
Michael A. Keresman, III, Vice President
and Secretary of each of the Companies
listed above
4
<PAGE> 5
SCHEDULE 1
----------
KEYBANK NATIONAL ASSOCIATION,
BANK ONE, COLUMBUS, NA
NBD BANK
PNC BANK, NATIONAL ASSOCIATION
ABN AMRO BANK N.V., PITTSBURGH BRANCH
<PAGE> 6
SCHEDULE 2
----------
INDEBTEDNESS OF BORROWER AND ITS SUBSIDIARIES
EXISTING ON THE CLOSING DATE
AMSCO's 4.5%/6.5% Step-Up Convertible Subordinated Debentures in the principal
amount of $ 100 million due October 15, 2002 (the "Debentures") will be subject
to redemption within a certain period after the Effective Date. The Borrower
anticipates that the proceeds from the Loans will be used, in part, to pay the
redemption price of the Debentures put to the Borrower for redemption.
AMSCO International, Inc. was granted a facility by ABN AMRO Bank N.V. in the
maximum principal amount of US $10,000,000, pursuant to which AMSCO subsidiaries
may borrow from ABN AMRO Bank N. V. and its affiliates upon the guaranty of
AMSCO thereof.
AMSCO International, Inc. has guaranteed the following indebtedness of its
subsidiaries:
AMSCO Finn-Aqua OY's standby letter of credit with ABN AMRO Bank N.V.
(London), in the amount of 100,000 pounds-sterling, issued in favor of
United Kingdom customs and duties due September 30, 1996;
Finn-Aqua SA loan from ABN AMRO Bank N.V. (Madrid), in the amount of 65
million Spanish peseta, due November 30, 1995; and
Finn-Aqua Santa Solo Sohlberg loan from ABN AMRO Bank (Deutschland) AG,
in the amount of 10 million deutschemarks, due November 30, 1996.
AMSCO International, Inc. also has a standby letter of credit from ABN AMRO Bank
N.V., in the amount of $11.5 million issued to Liberty Mutual Life Insurance
Co., due April 30, 1997 with a rollover provision if notice is not provided.
American Sterilizer Company has the following leases of capital equipment with
outstanding balances:
<TABLE>
<CAPTION>
BALANCE DUE
CAPITAL LEASE @ 3/31/96
---------
<S> <C>
CAD Equip. Sch. #02 15,357.74
Fifth Third
CAD Equip. Sch. #15 12,275.62
Fed. Data Corp.
ASPECT CALL SYSTEM Fed. 140,221.47
Data. Corp. ----------
167,854.83
==========
</TABLE>
<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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<TABLE>
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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>
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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>
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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
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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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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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<PAGE> 53
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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<PAGE> 54
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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<PAGE> 55
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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<PAGE> 56
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
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<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
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<PAGE> 58
LIST OF SCHEDULES
Schedule Designation
- -------- -----------
1.01(a) Offer Conditions
5.01 Company Conduct
6.02 Masefield Employment Agreement
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<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,
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<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.
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<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
2
<PAGE> 3
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.
3
<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
4
<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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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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Exhibit (c)(3)
[STERIS Corporation Letterhead]
August 12, 1997
CONFIDENTIAL FAX
- ----------------
Tom DeAngelo
Chief Financial Officer
Isomedix Inc.
11 Apollo Drive
Whippany, NJ 07981
Dear Tom:
This letter is to confirm our recent telephone conversation regarding your
employment and responsibilities with STERIS upon completion of the acquisition
of Isomedix. I am very pleased with your desire to remain as a key participant
and contributor to the growth of the Company.
Upon completion of the transaction, Isomedix will be a wholly owned subsidiary
of STERIS. You will become President of Isomedix with overall responsibilities
for day-to-day operations. You will report directly to John Masefield who has
agreed to serve as Chairman and CEO of the Isomedix subsidiary through December
31, 1999.
Your base salary will be at the annualized rate of $150,000.00 per year. As a
key manager within STERIS Corporation, you will be a participant in the
Management Incentive Compensation Plan with an opportunity for 50% of your base
salary as a performance bonus. You will also receive a non-qualified stock
option grant of 15,000 STERIS common shares that will vest at the rate of 25%
per year. The option price will be the closing price of STERIS common shares on
the date of completion of the acquisition.
Your participation in the STERIS Management Incentive Compensation Plan will
start on April 1, 1998, the beginning of STERIS's next fiscal year. Until that
time, you will be paid incentive compensation at the full achievement level
under your current Isomedix Plan. Therefore, you will receive your full bonus of
$64,350.00 for calendar year 1997 and $16,087.50 for the first calendar quarter
of 1998 (STERIS's fourth fiscal quarter).
Your initial work location will continue to be in Whippany. As you and I
discussed, there is a possibility that business reasons might justify your
relocation to another STERIS location at sometime in the future. If such becomes
the case, your relocation expenses would be covered under the STERIS relocation
policy.
You and your family will be full participants in the various STERIS benefit
programs, including health insurance, vacation, and the 401(k) Plan. Your date
of hire at Isomedix will be used for calculation of length of service as such
relates to Associate benefits.
<PAGE> 2
Tom DeAngelo
August 12,1997
Page 2
Tom, I again want to emphasize how thrilled I am that you are becoming a key
member of the STERIS team. The mutual opportunities for Isomedix and STERIS are
significant. We have the potential for growth that will directly benefit all of
our Associates (employees) as we serve our Customers better than anyone else
can.
Please call if you have any questions about STERIS or your new executive
position. I look forward to our association.
Best regards,
STERIS Corporation
/s/ Bill R. Sanford
- -------------------
Bill R. Sanford
Chairman of the Board, President,
and Chief Executive Officer
BRS:cc
