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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 21, 2000.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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ENDOSONICS CORPORATION
(NAME OF SUBJECT COMPANY)
ENDOSONICS CORPORATION
(NAME OF PERSON FILING STATEMENT)
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COMMON STOCK, PAR VALUE $.001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
29264K-10-5
(CUSIP NUMBER OF CLASS OF SECURITIES)
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REINHARD J. WARNKING
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ENDOSONICS CORPORATION
2870 KILGORE ROAD
RANCHO CORDOVA, CALIFORNIA 95670
(916) 638-8008
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT)
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COPIES TO:
JOHN M. NEWELL, ESQ.
LATHAM & WATKINS
505 MONTGOMERY STREET, SUITE 1900
SAN FRANCISCO, CALIFORNIA 94111
(415) 391-0600
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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ITEM 1. SUBJECT COMPANY INFORMATION.
(a). NAME AND ADDRESS. The name of the subject company is EndoSonics
Corporation, a corporation organized under the laws of the State of Delaware
(the "Company"), and the address of the principal executive offices of the
Company is 2870 Kilgore Road, Rancho Cordova, California 95670. The telephone
number of the principal executive offices of the Company is (916) 638-8008.
(b). SECURITIES. The title of the class of equity securities to which this
statement relates is the common stock, par value $.001 per share, of the Company
(the "Common Stock"), including the associated rights to purchase shares of the
Company's Series A Participating Preferred Stock (the "Rights" and together with
the Common Stock, the "Shares") issued pursuant to the Preferred Shares Rights
Agreement (the "Rights Agreement") dated as of October 20, 1998, between the
Company and ChaseMellon Shareholders Services, L.L.C. (in such capacity, the
"Rights Agent"). As of August 18, 2000, there were 17,844,098 shares of Common
Stock outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF THE FILING PERSON.
(a). NAME AND ADDRESS. The name, business address and business telephone
number of the Company, which is the person filing this Schedule 14D-9, are set
forth in Item 1 above.
(d). TENDER OFFER. This Schedule 14D-9 relates to the offer by JOMED
Acquisition Corp., a corporation organized under the laws of the State of
Delaware ("Purchaser") and a wholly owned subsidiary of JOMED N.V., a
corporation organized under the laws of The Netherlands ("JOMED"), disclosed in
a Tender Offer Statement on Schedule TO, dated August 21, 2000 (the "Schedule
TO"), to purchase all of the issued and outstanding Shares at a price of $11.00
per Share, net to the seller in cash (the "Offer Price"), upon the terms and
subject to the conditions set forth in the offer to purchase (the "Offer to
Purchase"), dated August 21, 2000, and the related letter of transmittal (the
"Letter of Transmittal," which, as may be amended and supplemented from time to
time, together with the Offer to Purchase, constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 5, 2000 (the "Merger Agreement"), by and among the Company, JOMED
and Purchaser, a copy of which is filed as Exhibit (e)(1) hereto and is
incorporated herein by reference. Subject to certain terms and conditions of the
Merger Agreement, Purchaser will be merged with and into the Company (the
"Merger") as soon as practicable after the consummation of the Offer, with the
Company being the surviving corporation in the Merger (the "Surviving
Corporation") and becoming a wholly owned subsidiary of JOMED.
The Schedule TO states that the address of the principal executive offices
of JOMED and Purchaser is Drottninggatan 94, S-252 21 Helsingborg, Sweden.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(d). CONFLICTS OF INTEREST. Except as described or referred to below,
there exists on the date hereof no material agreement, arrangement or
understanding and no actual or potential conflict of interest between the
Company or its affiliates and (i) the Company or its executive officers,
directors or affiliates or (ii) JOMED, Purchaser or their executive officers,
directors or affiliates.
Certain contracts, agreements, arrangements and understandings between the
Company and certain of its directors, executive officers and affiliates are
described in the Company's Information Statement in the sections entitled "Board
of Directors -- Director Compensation," "Executive Officer Compensation --
Management Contracts and Change in Control Agreements" and "Executive Officer
Compensation -- Compensation Committee Report." The Information Statement is
attached hereto as Annex A and is incorporated herein by reference. Certain of
these contracts, agreements, arrangements and understandings will be affected by
the Merger, as described below.
In connection with the transactions contemplated by the Merger, the
following agreements were entered into: the Merger Agreement and the
Confidentiality Agreement dated June 26, 2000 between the Company
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and JOMED (the "Confidentiality Agreement"). A copy of the Confidentiality
Agreement is filed as Exhibit (e)(2) hereto and is incorporated herein by
reference.
The Merger Agreement. The summary of the material terms of the Merger
Agreement set forth under the caption "11. The Merger Agreement" in the Offer to
Purchase is incorporated by reference herein. The summary of the Merger
Agreement contained in the Offer to Purchase is qualified in its entirety by
reference to the Merger Agreement, a copy of which is filed as Exhibit (e)(1)
hereto and is incorporated herein by reference.
Confidentiality Agreement. The following summary is qualified in its
entirety by reference to the complete text of the Confidentiality Agreement
which is filed as Exhibit (e)(2) hereto and incorporated herein by reference.
On June 26, 2000, JOMED and the Company entered into a Confidentiality
Agreement, pursuant to which JOMED agreed to keep confidential certain
information received from the Company. The Confidentiality Agreement includes,
among other provisions, two-year standstill and employee non-solicitation
agreements by JOMED in favor of the Company. The Confidentiality Agreement does
not contain a provision providing for an exclusive negotiating period with
JOMED. The Confidentiality Agreement has a five-year term.
Treatment of Stock Options. The Merger Agreement provides that each
outstanding option to purchase Shares which has been granted under the Company's
stock option plans, programs, arrangements and agreements, including those
granted to directors and executive officers of the Company, will be cancelled.
In consideration thereof, upon the consummation of the Offer, the Company will
pay in cash an amount equal to the number of Shares subject to such option,
whether or not vested or exercisable, as of the consummation of the Offer
multiplied by the excess, if any, of $11.00 over the exercise price per Share of
each such option. The aggregate cash value (measured by calculating the
difference between $11.00 per Share and the weighted average exercise price) for
all "in-the-money" outstanding options held by the Company's directors and
executive officers is approximately $6,652,000.
Key Employee Retention Agreements. The Company's Key Employee Retention
Agreements with Michael J. Eberle, Jeffrey Elder, Richard Hebert, Robrecht L.W.
Michiels, Joerg Schulze-Clewing, Reinhard J. Warnking, Gary L. Wilson, and Oti
M. Wooster (the "Key Employees") have been amended to clarify that their "Change
in Control" benefits will be triggered by the Offer and the Merger. If a Key
Employee is terminated in an "Involuntary Termination" (as defined in the Key
Employee Retention Agreements) within 12 months after the Merger, such employee
(other than Reinhard J. Warnking) will have all the options granted to him or
her become fully vested and will receive a payment equal to 1.5x base salary
plus 1.0x bonus accrued during such 12-month period. (Reinhard J. Warnking would
receive 2.0x base salary and 1.5x bonus under his Key Employee Retention
Agreement.) Key Employees terminated within 18 months of the Change in Control
will receive a payment equal to 1.0x base salary plus 1.0x bonus accrued during
the additional 6-month period. Terminated Key Employees will also receive
continued health care coverage for up to 18 months after the Change in Control.
Employee Benefits. The Merger Agreement provides that, for a period of one
year following the effective date of the Merger, Purchaser will, or will cause
the Surviving Corporation to, provide all of the employees of the Surviving
Corporation and its subsidiaries with employee benefit plans, programs, policies
or arrangements as are substantially equivalent, in the aggregate, to those
currently provided by the Company's current employee benefits plans, programs,
policies or arrangements.
Indemnification; Directors' and Officers' Insurance. The Merger Agreement
provides that all rights to indemnification existing in favor of the present or
former directors, officers, employees, fiduciaries and agents of the Company or
any of its Subsidiaries (collectively, the "Indemnified Parties") as provided in
the Company's certificate of incorporation or by-laws or the certificate or
articles of incorporation, by-laws or similar organizational documents of any of
the subsidiaries of the Company as in effect as of the effective date of the
Merger will survive the Merger and will continue in full force and effect for
six years after the effective date of the Merger (without modification or
amendment, except as required by applicable law) in accordance
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with their terms, to the fullest extent permitted by law, and will be
enforceable by the Indemnified Parties against the Surviving Corporation.
The Merger Agreement also provides that Purchaser will cause to be
maintained in effect for not less than six years from the effective date of the
Merger the current policies of the directors' and officers' liability insurance
maintained by the Company (provided that Purchaser has the right to substitute
therefor policies of at least equivalent coverage containing terms and
conditions which are no less advantageous) with respect to matters occurring
prior to the effective date of the Merger, provided that in no event is
Purchaser or the Surviving Corporation required to expend to maintain or procure
insurance coverage in any amount per annum in excess of $400,000. In the event
the payment of such amount for any year is insufficient to maintain such
insurance or equivalent coverage cannot otherwise be obtained, the Surviving
Corporation is obligated to purchase as much insurance as may be purchased for
the amount indicated.
Prior Agreements with JOMED. In December 1998, the Company and JOMED
entered into an agreement for exclusive distribution of certain EndoSonics
products into specified European and Middle Eastern countries (the "1998
Distribution Agreement"). Also in December 1998, the Company and JOMED entered
into an IVUS guided stent delivery system agreement that called for the
development of a JOMED balloon and stent incorporated into a modular EndoSonics
IVUS catheter (the "Stent Delivery System Agreement"). Under the terms of the
Stent Delivery System Agreement, the Company was required to supply
subassemblies to JOMED which would complete the manufacturing process and
distribute the resulting product in the territory which was defined as certain
European and Middle Eastern countries. In certain countries within the
territory, the Company could distribute exclusively or jointly with JOMED. On
August 27, 1999, the Company informed JOMED in writing of breaches of certain
operational obligations by JOMED under the terms of both the 1998 Distribution
Agreement and the Stent Delivery System Agreement. Following JOMED's failure to
cure the breaches under the 1998 Distribution Agreement noted in the August 27,
1999 written notice, the 1998 Distribution Agreement was terminated on October
1, 1999. Following JOMED's failure to cure the breaches under the Stent Delivery
System Agreement noted in the August 27, 1999 written notice, the Stent Delivery
System Agreement was terminated on November 5, 1999. During the fourth quarter
of 1999, the Company and JOMED agreed on a payment schedule for JOMED to pay its
outstanding invoices as well as on a financial arrangement with regard to the
mutual losses incurred in connection with the terminated Stent Delivery System
Agreement. Subsequently, in December 1999, a new distribution agreement was
restructured between JOMED and the Company to provide more specific metrics
regarding performance and was implemented in December 1999 (the "Master
Distribution Agreement"). Also in December 1999, JOMED satisfied its outstanding
payment obligations to the Company.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a). SOLICITATION OR RECOMMENDATION. The Company's Board of Directors (the
"Board"), at a special meeting held on August 5, 2000, unanimously
- determined that the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, are fair to and in the best
interests of the Company's stockholders;
- approved and declared advisable the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger; and
- recommended that the Company's stockholders accept the Offer and tender
their Shares thereunder.
A copy of the Company's letter to its stockholders, dated as of August 21,
2000, is filed as Exhibit (a)(1)(D) hereto and is attached hereto.
(b). REASONS.
Background. In the fall of 1997, the Company's senior management and the
Board began to examine the Company's strategic position in the interventional
cardiology market in light of, among other things, the upcoming expiration of
some of the Company's key distribution agreements, the ongoing healthcare reform
and the continued emergence of managed care organizations in the United States,
the increasing pressure on
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healthcare providers and other participants in the healthcare industry to reduce
costs and, in light of this general market environment, the Company's prospects
for continued growth as a manufacturer of stand-alone diagnostic products.
Senior management and the Board determined that the Company should take action
to explore strategic alternatives that would enable the Company to integrate its
diagnostic technology with therapeutic modalities in a single product platform
that would increase demand for the Company's core diagnostic technology.
At a regularly scheduled Board meeting on November 3, 1997, Reinhard
Warnking, the Company's President and Chief Executive Officer, raised the
possibility of pursuing strategic partnerships and other alternative business
ventures and combinations designed to enable the Company to integrate its
diagnostic technology with therapeutic modalities in a single product platform.
Representatives from U.S. Bancorp Piper Jaffray Inc. ("U.S. Bancorp Piper
Jaffray"), the Company's financial advisor, were also in attendance at the
meeting. At the conclusion of the meeting, the Board of Directors authorized Mr.
Warnking to explore strategic alternatives and to engage U.S. Bancorp Piper
Jaffray to assist in this process.
Following the November 3, 1997 Board meeting, between November 3, 1997 and
the end of April 1998, the Company's senior management made preliminary contacts
with several leading interventional cardiology companies to explore strategic
options for the Company. Of the companies contacted by the Company, several
received information about the Company prepared by management. After significant
due diligence by several parties, none of the companies contacted by management
expressed an interest in entering into a business combination with the Company
at that time.
In April 1998, the Company terminated its exclusive distribution agreement
with Cordis Corporation, a unit of Johnson & Johnson, due to a decline in orders
of the Company's products from Cordis in the United States, Europe and certain
other territories and the anticipated inability of Cordis to meet the minimum
agreed-upon sales performance milestones for these territories. Subsequently,
the Company established a direct sales force in the United States and Germany
and, in December 1998, entered into the 1998 Distribution Agreement with JOMED
that granted JOMED exclusive distribution rights with respect to certain of the
Company's products in specified European and Middle Eastern countries. Also in
December 1998, the Company and JOMED entered into the Stent Delivery System
Agreement that called for the development of a JOMED balloon and stent
incorporated into a modular EndoSonics IVUS catheter.
In June 1999, Mr. Peters contacted Mr. Warnking and requested a meeting to
discuss JOMED's potential acquisition of the Company. On June 29, 1999, Mr.
Warnking and representatives from U.S. Bancorp Piper Jaffray met with Mr. Peters
and representatives from CSFB, JOMED's financial advisor in New York, New York.
At this meeting, the parties discussed several proposed alternative transaction
structures.
After the June 29, 1999 meeting in New York, Messrs. Warnking and Peters
and representatives from U.S. Bancorp Piper Jaffray and CSFB continued to
discuss a potential business combination between the Company and JOMED. In late
September 1999, Mr. Peters called Mr. Warnking and told him he was not
interested in pursuing a business combination at that time.
On October 4, 1999, the Company announced its operating results for the
quarter ended September 30, 1999. The Company reported revenue of $10.5 million
for the quarter, compared to $14.0 million for the prior quarter, a decrease of
24.8%. The Company stated that revenue for the quarter was lower than
anticipated primarily as a result of a substantial decline in orders from the
prior quarter from JOMED, which at the time was the Company's principal
distributor in Europe, and that as a result of JOMED's failure to honor its
payment obligations, the Company had terminated the 1998 Distribution Agreement.
The Stent Delivery System Agreement was terminated on November 5, 1999.
In December 1999, a new distribution agreement was restructured between
JOMED and the Company to provide more specific metrics regarding performance and
was implemented in December 1999 (the "Master Distribution Agreement"). Also in
December 1999, JOMED satisfied its outstanding payment obligations to the
Company.
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JOMED's ordinary shares commenced trading on the SWX Swiss Exchange on
April 19, 2000 and the related initial public offering was completed on April
26.
On May 25, Messrs. Warnking and Peters met at the European Transcatheter
Conference in Paris, France. Dr. Hans P. de Weerd, Senior Advisor to the
Company, and Antti Ristinmaa, Vice President, Finance and Chief Financial
Officer of JOMED, were also in attendance. Messrs. Warnking and Peters
reinitiated their discussions concerning a potential business combination
between the Company and JOMED.
On May 29, Messrs. Warnking and de Weerd met with Mr. Peters and other
senior management of JOMED in Rangendingen, Germany and Beringen, Switzerland.
Mr. Peters proposed a business combination pursuant to which the Company would
be acquired by and merged with and into JOMED, and discussion ensued.
On May 31, Mr. Peters contacted Mr. Warnking by telephone to continue these
discussions. After speaking with Mr. Peters, Mr. Warnking contacted U.S. Bancorp
Piper Jaffray, and representatives from U.S. Bancorp Piper Jaffray contacted
representatives from CSFB later that day and continued these merger discussions.
Between May 31 and June 15, Messrs. Warnking and Peters and representatives
from U.S. Bancorp Piper Jaffray and CSFB continued these discussions
telephonically. Preliminary discussions concerning the appropriate valuation of
the Company also ensued.
On June 16, the Board held a special telephonic meeting, at which all
members of the Board except Thomas J. Cable were present, as well as U.S.
Bancorp Piper Jaffray and representatives from Latham & Watkins, legal counsel
to the Company ("Latham"). At this meeting, Mr. Warnking updated the Board on
the status of his discussions with Mr. Peters, and discussion ensued regarding
the history of the Company's relationship with JOMED, the strategic reasons for
the combination of the Company with JOMED and the appropriate valuation of the
Company in the proposed transaction. The Board authorized Mr. Warnking and U.S.
Bancorp Piper Jaffray to continue their discussions with Mr. Peters and CSFB, to
commence due diligence with JOMED and to negotiate and enter into a
confidentiality agreement.
On or about June 19, the financial advisors for a public medical device
company ("Company A") contacted Mr. Warnking and requested a meeting. On June
23, Mr. Warnking and Jeffrey Elder, Senior Vice President and Chief Financial
Officer of the Company, met with representatives from Company A and Company A's
financial advisors at the Company's headquarters in Rancho Cordova, California
and commenced discussions concerning a potential business combination between
the Company and Company A.
On June 26, Mr. Peters and other members of JOMED's senior management met
with Mr. Warnking and other members of the Company's senior management at the
Company's headquarters in Rancho Cordova, California to commence due diligence,
and the Company and JOMED executed the Confidentiality Agreement. The
Confidentiality Agreement included, among other provisions, two-year standstill
and employee non-solicitation agreements by JOMED in favor of the Company. On
June 27, two members of JOMED's senior management met with the general manager
of the Company's manufacturing facilities in San Diego, California and Mr. de
Weerd to conduct further operational and business due diligence.
On June 29, Messrs. Warnking and de Weerd traveled to Company A's
headquarters and met with Company A's Chairman and Chief Executive Officer and
other members of Company A's senior management. On June 30, Messrs. Warnking and
de Weerd and a representative from U.S. Bancorp Piper Jaffray met with Company
A's Chairman and Chief Executive Officer and other members of Company A's senior
management at Company A's headquarters to continue discussions concerning a
potential business combination between the Company and Company A. Preliminary
discussions concerning the appropriate valuation of the Company also ensued, and
Company A's representatives orally proposed to acquire the Company in a
stock-for-stock merger transaction that would be accounted for as a pooling of
interests.
On July 3, the Board held a special telephonic meeting, at which all
members of the Board were present, as well as representatives from U.S. Bancorp
Piper Jaffray and Latham. At this meeting, Mr. Warnking updated the Board on the
status of his discussions with both JOMED and Company A, and discussion ensued
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regarding the relative merits of a transaction with JOMED versus a transaction
with Company A, strategic considerations weighing in favor of each alternative
transaction and the appropriate valuation of the Company in the proposed
transactions. At the conclusion of the meeting, the Board authorized Mr.
Warnking and U.S. Bancorp Piper Jaffray to continue discussions with both
parties.
On July 5, representatives from Company A again traveled to the Company's
headquarters in Rancho Cordova, California and continued financial, operational
and legal due diligence. On July 6, representatives from Company A performed
additional operational due diligence at the Company's manufacturing facilities
in San Diego, California.
On July 7, Mr. Warnking again met with Company A's management at Company
A's headquarters to continue negotiations and discussions with Company A.
On July 7, Mr. Warnking received a letter from Mr. Peters containing an
offer to purchase all of the outstanding shares of the Company's common stock
for a price of $10.50 per share in cash. The letter indicated that the
transaction would be structured as a cash tender offer for all of the shares of
the Company's common stock followed by a merger of the Company with and into a
wholly owned subsidiary of JOMED, with the Company surviving the merger as a
wholly owned subsidiary of JOMED. The purchase offer was subject to JOMED's
completion of additional due diligence, approval of the Board and JOMED's board
of directors, execution of a definitive agreement and the receipt of certain
standard governmental, regulatory and third-party approvals. The offer letter
also stated that the transaction would be financed from JOMED's current
resources and a follow-on equity offering, but that in any event, any offer made
by JOMED would not be contingent upon JOMED obtaining third-party financing.
On July 9, representatives from Company A's financial advisors informed
U.S. Bancorp Piper Jaffray that Company A was not in a position to propose a
transaction that would be superior to the JOMED proposal.
On July 10, the Board held a special telephonic meeting, at which all
members of the Board were present, as well as representatives from U.S. Bancorp
Piper Jaffray and Latham. At this meeting, Mr. Warnking presented JOMED's
proposal to the Board, and discussion ensued as to the merits of JOMED's
proposal. The Board noted that JOMED's proposal was at a price that was in
excess of the range of prices that had been discussed with Company A, that
JOMED's offer was for cash rather than stock and that JOMED's offer was not
contingent on JOMED's receipt of third-party financing, and the Board authorized
management to pursue negotiations with JOMED on an expedited basis. After the
meeting, Mr. Warnking sent a letter to Mr. Peters in response to JOMED's offer
letter, responding to certain due diligence questions and other issues related
to JOMED's proposal. In addition, representatives from U.S. Bancorp Piper
Jaffray held several telephonic conversations with CSFB to discuss the valuation
cited in JOMED's proposal.
On July 12, Mr. Warnking received another letter from Mr. Peters containing
an offer to purchase all of the outstanding shares of the Company's common stock
for a price of $11.00 per share in cash. The offer letter indicated that the
transaction would be structured as a cash tender offer for all of the shares of
the Company's common stock followed by a merger of the Company with and into a
wholly owned subsidiary of JOMED, with the Company surviving the merger as a
wholly owned subsidiary of JOMED. The purchase offer was subject to JOMED's
completion of additional confirmatory due diligence, approval of the Board and
JOMED's board of directors and execution of a definitive agreement, subject to
customary closing conditions. The offer letter again stated that the transaction
would be financed from JOMED's current resources and a follow-on equity
offering, but that in any event, any offer made by JOMED would not be contingent
upon JOMED obtaining third-party financing.
On July 14, the Board held another telephonic special meeting, at which all
directors were present. Representatives from U.S. Bancorp Piper Jaffray and
Latham were also in attendance, and U.S. Bancorp Piper Jaffray presented the
Board of Directors with an analysis that evaluated the valuation cited in
JOMED's proposal. Discussion ensued, and the members of the Board were given an
opportunity to ask additional questions about U.S. Bancorp Piper Jaffray's
analysis and the methodology on which it was predicated.
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On July 20 and July 21, representatives from Skadden, Arps, Slate, Meagher
& Flom LLP, JOMED's legal counsel ("Skadden"), performed legal due diligence
near the Company's headquarters in Rancho Cordova, California.
On the evening of July 20, Skadden delivered to Latham a proposed draft of
a merger agreement, which proposed a cash tender offer followed by a merger. The
draft merger agreement also proposed a lock-up option to purchase up to 19.9% of
the Company's common stock in the event the Company ultimately decided to enter
into an alternative transaction with a third party other than JOMED and gave
JOMED the ability to terminate the agreement in the event that JOMED's stock
price fell below a certain amount or in the event of a material adverse change
in the Company's business between the signing and the closing of the agreement.
On the afternoon of July 21, Messrs. Warnking and de Weerd and
representatives of U.S. Bancorp Piper Jaffray and Latham held a telephonic
conference call to discuss the proposed draft of the merger agreement and the
legal and business issues presented thereby and proposed revisions thereto. Also
on the afternoon of July 21, Skadden delivered to Latham a draft of the
commitment letter from CSFB to JOMED with respect to JOMED's proposed equity
offering.
On the morning of July 24, the Board held a regular meeting at the
Company's headquarters in Rancho Cordova, California. All members of the Board
attended the meeting either in person or by telephone, and representatives from
U.S. Bancorp Piper Jaffray and Latham were also in attendance. Latham presented
a summary of the proposed draft of the merger agreement and the comments that
were proposed to be delivered to JOMED's counsel in response thereto. Particular
emphasis was given to the inclusion of language in the proposed draft that gave
JOMED the ability to terminate the merger agreement in the event that JOMED's
stock price fell below a certain amount. The Board received a presentation by
Latham concerning the Board's fiduciary obligations in considering such a
transaction, and the Board authorized Mr. Warnking, U.S. Bancorp Piper Jaffray
and Latham to negotiate a definitive merger agreement with JOMED, CSFB and
Skadden.
On the afternoon of July 24, Latham delivered comments on the proposed
draft of the merger agreement to JOMED's counsel. Comments on the proposed draft
of the merger agreement included, among other things, deletion of the proposed
language that gave JOMED the ability to terminate the merger agreement in the
event that JOMED's stock price fell below a certain amount, deletion of the
proposed lock-up option to purchase up to 19.9% of the Company's common stock in
the event the Company ultimately decided to enter into an alternative
transaction with a third party other than JOMED, and revisions to the
termination provisions, conditions to the Offer, the non-solicitation covenant
and fees and expenses payable upon termination of the merger agreement.
A due diligence meeting was held on July 26, 2000 involving JOMED's senior
management and JOMED's financial advisors.
On July 26, Messrs. Warnking, de Weerd, Elder and Peters and
representatives from U.S. Bancorp Piper Jaffray, CSFB, Latham and Skadden met at
Skadden's offices in New York, New York to discuss and negotiate the proposed
draft merger agreement. At the meeting, much of the discussion focused on the
inclusion of the proposed language that gave JOMED the ability to terminate the
merger agreement in the event that JOMED's stock price fell below a certain
amount, as well as additional conditions to the Offer many of which (but not
all) were also conditions to the JOMED Equity Offering, that were proposed by
JOMED at this meeting. Following the negotiations, on the evening of July 26,
the Board held another telephonic special meeting relating to JOMED's financing
of the Offer. Representatives from U.S. Bancorp Piper Jaffray and Latham were
also in attendance and updated the Board on the status of the merger agreement
negotiations. The Board authorized Mr. Warnking, U.S. Bancorp Piper Jaffray and
Latham to continue to negotiate a definitive merger agreement with JOMED, CSFB
and Skadden. The Board also instructed Mr. Warnking to contact Company A to
determine whether the status of Company A's interest had changed. A
representative of the Company contacted Company A and was informed that Company
A's interest had not changed.
On July 27, Skadden distributed a revised draft of the merger agreement to
Latham. The revised draft omitted the 19.9% lock-up option, but still contained
reference to the additional conditions to the Offer that
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were raised in the July 26 meeting in New York. The revised draft also proposed
a termination fee of $8 million plus JOMED's expenses, with respect to which the
revised draft proposed a cap of $3 million. After conferring with the Company
and U.S. Bancorp Piper Jaffray, Latham transmitted additional comments on the
revised draft of the merger agreement to Skadden on July 28.
On July 31, U.S. Bancorp Piper Jaffray contacted CSFB to discuss the
status, timing and likelihood of success of JOMED's proposed equity offering.
Throughout the week of July 31, U.S. Bancorp Piper Jaffray continued to perform
financial and operational due diligence on JOMED.
On July 31, Mr. de Weerd met with Mr. Ristinmaa near JOMED's administration
headquarters in Sweden to discuss the extent of JOMED's proposed financing
contingency in the draft of the merger agreement and various ways to resolve the
outstanding issues in connection therewith.
On July 31 and August 1, a representative from JOMED's independent public
accountants performed financial and accounting due diligence on the Company at
the Company's headquarters in Rancho Cordova, California.
On July 31 and August 1, a representative from the Company's independent
auditors interviewed JOMED's independent public accountants near JOMED's
administration headquarters in Sweden. On August 1, the representative met with
Mr. Ristinmaa near JOMED's administration headquarters in Sweden.
On August 2, representatives of the Company, JOMED, Latham and Skadden held
a number of telephonic conference calls during the course of which outstanding
issues on the draft merger agreement were discussed. In particular, outstanding
issues regarding financing conditions were resolved and the termination fee was
reduced from $8 million plus $3 million of expenses to $7 million including
expenses, which remained capped at $3 million.
On August 3, 2000, JOMED's board of directors held a special meeting to
consider the terms of the proposed acquisition of EndoSonics. Members of JOMED's
management and JOMED's financial representatives briefed the directors on the
status of negotiations concerning the Merger Agreement. Management was directed
to continue negotiations, with the understanding that definitive terms of the
transaction would be presented to the directors at a subsequent meeting for
final consideration and approval.
In a telephone conversation on August 3, 2000, Mr. Peters informed Mr.
Warnking that he believed that he was prepared to submit the transaction to
JOMED's board of directors for their final consideration and approval. After
further discussions, Mr. Warnking agreed to submit the proposed transaction at
$11.00 per share to the Board for their consideration and approval.
On August 4, JOMED's board of directors held a regular meeting in
Amsterdam, The Netherlands. All members of JOMED's board of directors attended
in person, Mr. Ristinmaa attended by telephone, and representatives from CSFB
were also in attendance. CSFB presented a summary of the transaction rationale
and financial projections of the Company and discussed the timing of a cash
tender offer and follow-on financing. The JOMED board of directors approved the
terms of the Merger Agreement and the follow-on financing.
On August 4, U.S. Bancorp Piper Jaffray held a telephonic conference call
with Mr. Ristinmaa to discuss JOMED's results of operations for the quarter
ended June 30, JOMED's estimated results of operations for the quarter ending on
September 30 and to conduct further financial and operational due diligence on
JOMED.
On August 5, the Board held a telephonic special meeting at which all
directors except Dr. Gregg Stone were present. At this meeting, the Board
considered the final terms of the Offer, the Merger and the Merger Agreement.
The terms of the proposed transaction were reviewed with the Company's
management and representatives of both Latham and U.S. Bancorp Piper Jaffray.
The Board received and participated in a presentation by Latham with respect to
the terms of the proposed transaction and a summary of the Board's fiduciary
obligations in considering such a transaction. The Board also received and
participated in a presentation by U.S. Bancorp Piper Jaffray with respect to the
financial terms of the proposed transaction.
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<PAGE> 10
At the conclusion of its presentation, representatives of U.S. Bancorp
Piper Jaffray delivered the oral opinion of U.S. Bancorp Piper Jaffray to the
Board (which was subsequently confirmed in writing) that, as of such date, the
offer price of $11.00 per Share in cash proposed to be received in the Offer and
the Merger by the stockholders of the Company (other than JOMED, Purchaser and
its affiliates) pursuant to the Merger Agreement is fair, from a financial point
of view, to such stockholders.
The Board, at the August 5 special telephonic meeting, (1) determined that
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, are fair to and in the best interests of the Company's
stockholders; (2) approved and declared advisable the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger; and (3)
recommended that the Company's stockholders accept the Offer and tender their
Shares thereunder. The entire Board, including Dr. Gregg Stone, who was not
present at the August 5 Board meeting, reaffirmed the above actions by unanimous
written consent dated August 5, 2000.
Following the approval by the Board on August 5, Mr. Warnking executed the
Merger Agreement and delivered it to JOMED, and Mr. Peters simultaneously
delivered an executed copy of the Merger Agreement to the Company.
On August 6, 2000, JOMED and EndoSonics jointly issued a press release
announcing the execution of the Merger Agreement.
On August 21, 2000, in accordance with the Merger Agreement, Purchaser
commenced the Offer.
Reasons for the Board's Conclusions. In reaching the determination
described above, the Board considered a number of factors including, without
limitation, the following:
- The Company's financial condition, results of operations and business and
strategic objectives, as well as the risks involved in achieving those
objectives;
- Current conditions and trends in the healthcare industry in general and
the interventional cardiology market in particular, and the effect of
those conditions and trends on the Company;
- The significant competition and consolidation in the industry and market
in which the Company operates, the relative size of other participants in
the industry and the available capital and resources of these other
participants as compared to the Company;
- The current prospects for appreciation of the Company's valuation given
the Company's relatively small market capitalization;
- A review of the possible alternatives to the transactions contemplated by
the Merger Agreement, including the possibilities of continuing to
operate the Company as an independent entity, a strategic acquisition of
another company, a strategic merger with another company in the same
industry and a sale or partial sale of the Company through a merger or by
other means, and, in respect of each alternative, the timing and the
likelihood of actually accomplishing the alternative;
- The results of the efforts undertaken by the Company's management to
solicit indications of interest in the possible acquisition of the
Company from third parties other than JOMED;
- The financial and valuation analyses presented to the Board by U.S.
Bancorp Piper Jaffray, including market prices and financial data
relating to other companies engaged in businesses considered comparable
to the Company and the prices and premiums paid in recent selected
acquisitions of companies engaged in businesses considered comparable to
those of the Company;
- The oral opinion of U.S. Bancorp Piper Jaffray, which was later confirmed
in a written opinion, dated August 5, 2000, to the effect that, as of the
date of the opinion, the offer price of $11.00 per Share in cash proposed
to be received in the Offer and the Merger by the stockholders of the
Company (other than JOMED, Purchaser and its affiliates) pursuant to the
Merger Agreement is fair, from a financial point of view, to such
stockholders. The full text of U.S. Bancorp Piper Jaffray's written
opinion, which sets forth the procedures followed, the limitations of the
review undertaken and the assumptions made
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<PAGE> 11
by U.S. Bancorp Piper Jaffray in rendering the opinion, is attached as
Annex B hereto and incorporated herein by reference. STOCKHOLDERS ARE
URGED TO READ THE OPINION CAREFULLY AND IN ITS ENTIRETY;
- The terms and conditions of the Merger Agreement, including, without
limitation, that the terms of the Merger Agreement will not prevent other
third parties from making proposals to the Company after the execution of
the Merger Agreement, will not prevent the Board from providing
information to and engaging in negotiations with other third parties that
make proposals that (A) a majority of the Board reasonably determines in
good faith (after consultation with U.S. Bancorp Piper Jaffray) that
taking such action would be reasonably likely to lead to the delivery to
the Company of a proposal that is superior to JOMED's proposal and (B) a
majority of the Board determines in good faith (after consultation with
Latham) that it is necessary to take such actions in order to comply with
its fiduciary duties under applicable law, and will permit the Company,
subject to the non-solicitation provisions and the payment of the
termination fee discussed under the caption "11. The Merger Agreement --
Payment of Certain Fees and Expenses," in the Offer to Purchase to enter
into a transaction with another third party that a majority of the
Company's Board of Directors determines in good faith (after consultation
with U.S. Bancorp Piper Jaffray) to be superior to the Company and its
stockholders (in their capacity as stockholders) from a financial point
of view (taking into account, among other things, all legal, financial,
regulatory and other aspects of the proposal and identity of the offeror)
as compared to the JOMED proposal, and which is reasonably capable of
being consummated if the Company's Board of Directors reasonably
determines in good faith (after consultation with Latham) that it is
necessary to terminate the Merger Agreement and enter into an agreement
to effect the superior proposal in order to comply with its fiduciary
duties under applicable law;
- The likelihood that the Merger would be consummated, including JOMED's
experience, reputation and financial condition and based on the Company's
past dealings with JOMED, as well as the risks to the Company if the
Merger were not consummated;
- The fact that JOMED had received a firm commitment from CSFB to finance
up to $150 million of the Offer;
- The structure of the transaction, which is designed, among other things,
to result in the holders of the Shares receiving, at the earliest
practicable time, the consideration paid in the Offer;
- The relationship of the Offer price to the historical market prices for
the Shares and to the Company's per share book value; and
- The availability to the Company's stockholders of dissenters' rights in
the Merger under applicable law.
In view of the wide variety of factors considered in connection with its
evaluation of the Offer and the Merger, the Board did not find it practicable
to, and did not, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching its respective determinations.
(c). INTENT TO TENDER. To the best of the Company's knowledge, all of its
executive officers, directors, affiliates or subsidiaries currently intend to
tender all Shares which are held of record or beneficially owned by such persons
pursuant to the Offer, other than Shares, if any, held by such persons which, if
tendered, could cause such person to incur liability under the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended.
ITEM 5. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a). The Company has retained U.S. Bancorp Piper Jaffray as its financial
advisor in connection with the Offer and the Merger. Pursuant to the terms of
their engagement, the Company has agreed to pay U.S. Bancorp Piper Jaffray the
following compensation:
- a retainer fee of $25,000 that was paid upon engagement, and is to be
credited against the fee described immediately below;
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<PAGE> 12
- if a transaction is consummated in which more that 15% of the Company's
equity or assets are to be acquired by a third party pursuant to an
agreement or commitment which is entered into during the term of the
engagement or within 12 months from the date of the termination of the
engagement, and during the term of the engagement, such third party had
contact with U.S. Bancorp Piper Jaffray or with the Company concerning
such a transaction, the Company is required to pay a cash fee equal to
1.375% of the aggregate consideration paid to the Company and/or its
stockholders in connection with such transaction, provided that in no
event will such fee be less than $600,000; and
- in the event a fairness opinion is requested from U.S. Bancorp Piper
Jaffray, the Company will pay to U.S. Bancorp Piper Jaffray a cash fee of
$400,000 due upon delivery of the fairness opinion to the Board, such fee
being credited against the fee described immediately above.
The Company also has agreed to reimburse U.S. Bancorp Piper Jaffray for
reasonable expenses and to indemnify U.S. Bancorp Piper Jaffray and related
parties against certain liabilities, including liabilities under the federal
securities laws, arising out of their engagement. In the ordinary course of
business, U.S. Bancorp Piper Jaffray and its affiliates may actively trade or
hold the securities of the Company and affiliates of Purchaser for their own
accounts or for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any other person to make solicitations or
recommendations to stockholders on its behalf concerning the Offer or the
Merger.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(b). Except as set forth below no transactions in the Shares have been
effected during the past 60 days by the Company or, to the best of the Company's
knowledge, by any executive officer, director, affiliate or subsidiary of the
Company.
Messrs. Warnking, Wilson, Schulze-Clewing and Ms. Wooster participated in
the Company's 1998 Employee Stock Purchase Plan for the subscription periods
ended July 31 and August 18, 2000. Purchases for 3,095, 354, 1,791, and 800
Shares, respectively were purchased at $4.0375 per Share for the subscription
period ended July 31. Purchases for 737, 34, 181, and 132 Shares, respectively,
were purchased at $6.2688 per Share for the subscription period ended August 18,
2000.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(d) SUBJECT COMPANY NEGOTIATIONS.
Prior to entering into the Merger Agreement, the Company had contacts and
negotiations with other entities that had expressed interest in the Company.
Prior to execution of the Merger Agreement, the Company ceased contacts with
such other entities. No discussions are underway or are being undertaken by the
Company in response to the Offer that relate to or would result in a tender
offer or other acquisition of the Company by the Company or any of its
subsidiaries, or any other person or (1) any extraordinary transaction, such as
a merger, reorganization or liquidation, involving the Company or any of its
subsidiaries, (2) any purchase, sale or transfer of a material amount of assets
of the Company or any of its subsidiaries or (3) any material change in the
present dividend rate or policy, or indebtedness or capitalization of the
Company.
There is no transaction, board resolution, agreement in principle or signed
contract entered into in response to the Offer that relates to or would result
in a tender offer or other acquisition of the Company by the Company or any of
its subsidiaries, or any other person or (1) any extraordinary transaction, such
as a merger, reorganization or liquidation, involving the Company or any of its
subsidiaries, (2) any purchase, sale or transfer of a material amount of assets
of the Company or any of its subsidiaries or (3) any material change in the
present dividend rate or policy, or indebtedness or capitalization of the
Company.
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ITEM 8. ADDITIONAL INFORMATION.
(b) OTHER MATERIAL INFORMATION.
Section 14(f) Information Statement. The Information Statement attached as
Annex A hereto is being furnished in connection with the possible designation by
Purchaser, pursuant to the Merger Agreement, of certain persons to be appointed
to the Board other than at a meeting of the Company's stockholders.
Section 203 of the Delaware General Corporation Law. As a Delaware
corporation, the Company is subject to Section 203 ("Section 203") of the
Delaware General Corporation Law ("DGCL"). Under Section 203, certain "business
combinations" between a Delaware corporation whose stock is publicly traded or
held of record by more than 2,000 stockholders and an "interested stockholder"
are prohibited for a three-year period following the date that such a
stockholder became an interested stockholder, unless, among other possible
exemptions, the transaction in which the stockholder became an interested
stockholder or the business combination was approved by the board of directors
of the corporation before such other party to the business combination became an
interested stockholder. The term "business combination" is defined generally to
include mergers or consolidations between a Delaware corporation and an
interested stockholder, transactions with an interested stockholder involving
the assets or stock of the corporation or its majority-owned subsidiaries and
transactions which increase an interested stockholder's percentage ownership of
stock. The term "interested stockholder" is defined generally as a stockholder
who, together with affiliates and associates, owns (or, within three years
prior, did own) 15% or more of a Delaware corporation's voting stock. An owner
includes a person who has the right to acquire such stock, including upon the
exercise of an option.
In accordance with the Merger Agreement and Section 203, at its meeting on
August 5, 2000, the Board unanimously approved the Offer and the Merger and
determined to make the restrictions of Section 203 inapplicable to the Offer and
the Merger.
Section 253 of the Delaware General Corporation Law. Under Section 253 of
the DGCL, if Purchaser acquires, pursuant to the Offer or otherwise, at least
90% of the outstanding Shares, Purchaser will be able to effect the Merger after
the consummation of the Offer without a meeting of the Company's stockholders.
However, if Purchaser does not acquire at least 90% of the outstanding Shares
pursuant to the Offer or otherwise, a meeting of the Company's stockholders will
be required under the DGCL to effect the Merger.
Appraisal Rights under Section 262 of the Delaware General Corporation
Law. No appraisal rights are available in connection with the Offer. However,
if the Merger is consummated, stockholders who have not tendered their Shares
will have certain rights under the DGCL to dissent from the Merger and demand
appraisal of, and to receive payment in cash of the fair value of, their Shares.
Stockholders who perfect such rights by complying with the procedures set forth
in Section 262 of the DGCL ("Section 262") will have the "fair value" of their
Shares (exclusive of any element of value arising from the accomplishment or
expectation of the Merger) determined by the Delaware Court of Chancery and will
be entitled to receive a cash payment equal to such fair value from the
Surviving Corporation. In addition, such dissenting stockholders would be
entitled to receive payment of a fair rate of interest from the date of
consummation of the Merger on the amount determined to be the fair value of
their Shares. In determining the fair value of the Shares, the court is required
to take into account all relevant factors. Accordingly, such determination could
be based upon considerations other than, or in addition to, the market value of
the Shares, including, among other things, asset values and earning capacity. 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. The Weinberger court also noted that
under Section 262, fair value is to be determined "exclusive of any element of
value arising from the accomplishment or expectation of the merger." In Cede &
Co. v. Technicolor, Inc., however, the Delaware Supreme Court stated that, in
the context of a two-step cash merger, "to the extent that value has been added
following a change in majority control before cash-out, it is still value
attributable to the going concern," to be included in the appraisal process. As
a consequence, the value so determined in any appraisal proceeding could be the
same, more or less than the purchase price per Share in the Offer or the Merger
Consideration.
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In addition, several decisions by Delaware courts have held that, in
certain circumstances, a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders which requires that the merger
be fair to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority stockholders 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 procedural unfairness,
including fraud, misrepresentation or other misconduct.
The Company understands that JOMED does not intend to object, assuming the
proper procedures are followed, to the exercise of appraisal rights by any
stockholder and the demand for appraisal of, and payment in cash for the fair
value of, the Shares. The Company understands that JOMED intends, however, to
cause the Surviving Corporation to argue in an appraisal proceeding that, for
purposes of such proceeding, the fair value of each Share is less than or equal
to the Merger Consideration. In this regard, stockholders should be aware that
opinions of investment banking firms as to the fairness from a financial point
of view (including U.S. Bancorp Piper Jaffray) are not necessarily opinions as
to "fair value" under Section 262.
The foregoing summary of the rights of dissenting stockholders under the
DGCL does not purport to be a complete statement of the procedures to be
followed by stockholders desiring to exercise any dissenters' rights under the
DGCL. The preservation and exercise of dissenters' rights require strict
adherence to the applicable provisions of the DGCL.
Preferred Stock Purchase Rights. Each Right issued pursuant to the Rights
Agreement entitles the registered holder thereof to purchase one one-thousandth
of a share of the Company's Series A Participating Preferred Stock, subject to
adjustment, for an exercise price of $35.00 per Right, subject to adjustment.
Generally, upon the earlier of (i) the close of business on the tenth day after
the date of public announcement by the Company or a person that a person has
become the beneficial owner of 20% or more of the shares of Common Stock then
outstanding (an "Acquiring Person") or (ii) the close of business on the tenth
day after the date of the commencement of a tender or exchange offer by a
person, the consummation of which would result in that person becoming an
Acquiring Person (the earliest of such dates being the "Distribution Date"), the
Rights become exercisable and trade separately from the Common Stock.
After the Distribution Date, following the date a person becomes an
Acquiring Person, each holder of each of the Rights (other than the Acquiring
Person) will thereafter have the right to receive, upon exercise, Common Stock
having a value equal to two times the exercise price of the Right. In addition,
following the date a person becomes an Acquiring Person, upon the occurrence of
certain transactions with the Acquiring Person, each holder of each of the
Rights (other than the Acquiring Person) will thereafter have the right to
receive, upon exercise, common stock of the Acquiring Person having a value
equal to two times the exercise price of the Right. However, a person will not
be deemed to be an "Acquiring Person" if such person has the right to acquire
Common Stock pursuant to any merger or other acquisition agreement between the
Company and such person, if such agreement has been approved by the Board of
Directors prior to such person becoming the beneficial owner of 20% or more of
the shares of Common Stock then outstanding. Because the Board of Directors of
the Company unanimously approved the Merger Agreement, Rights holders will not
be entitled to exercise their Rights for shares of Common Stock or shares of the
common stock of Purchaser in connection with Offer and the Merger.
United States Antitrust Compliance. Under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and the rules that have
been promulgated thereunder by the Federal Trade Commission (the "FTC"), 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 FTC and certain waiting period requirements have
been satisfied. The purchase of Shares pursuant to the Offer is subject to such
requirements.
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Pursuant to the requirements of the HSR Act, Purchaser expects to file a
Notification and Report Form with respect to the Offer and Merger with the
Antitrust Division and the FTC on or about August 21, 2000. The initial waiting
period applicable to the purchase of Shares pursuant to the Offer would expire
at 11:59 p.m., New York City time, 15 days after such filing. However, prior to
such time, the Antitrust Division or the FTC may extend the waiting period by
requesting additional information or documentary material relevant to the Offer
from Purchaser. If such a request is made, the waiting period will be extended
until 11:59 p.m., New York City time, on the tenth day after substantial
compliance by Purchaser with such request. Only one extension of the waiting
period pursuant to a request for additional information or documentary material
is authorized by the rules promulgated under the HSR Act. Thereafter, such
waiting period can be extended only by court order or by consent of Purchaser.
The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by Purchaser
pursuant to the Offer. At any time before or after the consummation of any such
transactions, the Antitrust Division or the FTC could take such action under the
antitrust laws of the United States as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant to
the Offer or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of JOMED or the Company. Private parties (including
individual States) may also bring legal actions under the antitrust laws of the
United States. Purchaser does not believe that the consummation of the Offer
would violate any applicable antitrust laws. However, there can be no assurance
that a challenge to the Offer on antitrust grounds will not be made, or if such
a challenge is made, what the result will be.
Other Filings. JOMED and the Company each conduct operations in a number
of foreign countries, and filings may have to be made with foreign governments
under their pre-merger notification statutes. The filing requirements of various
nations are being analyzed by the parties and, where necessary, such filings
will be made.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
-------
<S> <C>
(a)(1)(A) Offer to Purchase dated August 21, 2000 ("Offer to
Purchase") (incorporated herein by reference to Exhibit
(a)(1)(A) to Schedule TO filed by Purchaser with respect to
the Company on August 21, 2000 ("Schedule TO")).
(a)(1)(B) Letter of Transmittal (incorporated herein by reference to
Exhibit (a)(1)(B) to Schedule TO).
(a)(1)(C) Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 thereunder
(incorporated by reference herein and attached hereto as
Annex A).
(a)(1)(D) Letter to Stockholders of the Company dated August 21, 2000
(incorporated by reference herein and attached hereto as
Annex C).
(a)(5)(A) Text of Press Release dated August 7, 2000 (incorporated
herein by reference to Exhibit (a)(5) of the Company's
Schedule 14D-9 filed with the Securities and Exchange
Commission (the "Commission") on August 7, 2000).
(a)(5)(B) Summary Advertisement as published in The Wall Street
Journal on August 21, 2000 (incorporated herein by reference
to Exhibit (a)(5)(B) to Schedule TO).
(e)(1) Agreement and Plan of Merger, dated as of August 5, 2000, by
and among JOMED, Purchaser and the Company (incorporated
herein by reference to the Company's Current Report on Form
8-K filed with the Commission on August 9, 2000).
(e)(2) Confidentiality Agreement, dated June 26, 2000, between
JOMED and the Company.
(e)(3) Opinion of U.S. Bancorp Piper Jaffray Inc. dated August 5,
2000 (incorporated by reference herein and attached hereto
as Annex B).
(e)(4) Certificate of Incorporation of the Company.
(e)(5) Amended Bylaws of the Company.
(e)(6) 1988 Stock Option Plan and form of a Stock Option Agreement.
(e)(7) Form of Indemnification Agreement between the Company and
the directors of the Company.
(e)(8) Distribution Agreement, dated December 15, 1998, between the
Company and JOMED (incorporated herein by reference to the
Company's Annual Report on Form 10-K (File No. 0-19880)
filed with the Commission on March 31, 1999).
(e)(9) IVUS Guided Stent Delivery System Development, Supply and
Distribution Agreement, dated December 15, 1998, between the
Company and JOMED (incorporated herein by reference to the
Company's Annual Report on Form 10-K (File No. 0-19880)
filed with the Commission on March 31, 1999).
(e)(10) Master Distribution Agreement, dated December 13, 1999,
between the Company and JOMED (incorporated herein by
reference to the Company's Annual Report on Form 10-K (File
No. 0-19880) filed with the Commission on March 30, 2000).
(e)(11) 1999 Nonstatutory Stock Option Plan of the Company
(incorporated herein by reference to the Company's Annual
Report on Form 10-K (File No. 0-19880) filed with the
Commission on March 30, 2000).
(e)(12) Nonstatutory Stock Option Agreement, dated November 8, 1999,
by and between the Company and Robrecht L.W. Michiels
(incorporated herein by reference to the Company's Annual
Report on Form 10-K (File No. 0-19880) filed with the
Commission on March 30, 2000).
(e)(13) 1998 Stock Option Plan.
</TABLE>
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SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
ENDOSONICS CORPORATION
By: /s/ REINHARD J. WARNKING
------------------------------------
Reinhard J. Warnking
Chairman and Chief Executive Officer
Dated: August 21, 2000
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ANNEX A
ENDOSONICS CORPORATION
2870 KILGORE ROAD
RANCHO CORDOVA, CALIFORNIA 95670
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about August 21, 2000, as
part of the Company's Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9"). Capitalized terms used and not otherwise defined herein
shall have the meaning ascribed to them in the Schedule 14D-9. You are receiving
this Information Statement in connection with the possible election of persons
designated by Purchaser to at least a majority of the seats on the Board of
Directors of the Company (the "Board"). The Merger Agreement requires the
Company, after the purchase by Purchaser pursuant to the Offer of such number of
Shares representing not less than a majority of the outstanding Shares on a
fully diluted basis, to cause Purchaser's designees (the "Designees") to be
elected to at least a majority of the seats on the Board as set forth below.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14f-1 thereunder.
You are urged to read this Information Statement carefully. However, you are not
required to take any action.
Pursuant to the Merger Agreement, on August 21, 2000, JOMED and Purchaser
commenced the Offer. The Offer is scheduled to expire on September 19, 2000.
The information contained in this Information Statement (including
information listed in Schedule I attached hereto) concerning JOMED, Purchaser
and the Designees has been furnished to the Company by JOMED and Purchaser, and
the Company assumes no responsibility for the accuracy or completeness of such
information.
The common stock of the Company, par value $.001 per share (the "Shares"),
is the only class of voting securities of the Company outstanding. Each Share
has one vote. As of August 18, 2000, there were 17,844,098 Shares outstanding.
BOARD OF DIRECTORS
GENERAL
The Board is currently comprised of seven members. Pursuant to the
Company's Bylaws (the "Bylaws"), directors are elected annually. All directors
of the Company hold office until the election and qualification of their
successors.
DESIGNEES
Pursuant to the Merger Agreement, promptly upon the acceptance for payment
of, and payment by Purchaser in accordance with the Offer for, Shares
representing not less than a majority of the outstanding Shares on a fully
diluted basis pursuant to the Offer, Purchaser is entitled to designate such
number of members of the Board, rounded up, such that the percentage of its
designees on the Board equals the percentage of Shares it beneficially owns;
provided, however, that until the effective date of the Merger, there shall be
at least three directors of the Company who are directors of the Company as of
the date hereof. Upon the request of Purchaser, the Company shall promptly (i)
either increase the size of the Board or use its best efforts to secure the
resignation of such number of its current directors as is necessary to enable
the Designees to be so elected to the Board and (ii) use its best efforts to
cause the Designees to be so elected. Pursuant to the Common Stock Purchase
Agreement, made as of October 7, 1998, between the Company and Fukuda Denshi
Co., Ltd. ("Fukuda"), for so long as Fukuda owns 650,000 shares of Common Stock,
the Company is required to nominate a designee of Fukuda reasonably acceptable
to the Board to serve as a member of the Board. Mr. Jakob Stapfer is the current
director designated by Fukuda.
A-1
<PAGE> 19
Purchaser has informed the Company that it will choose the Designees from
the directors and executive officers of JOMED listed in Schedule I attached
hereto. Purchaser has informed the Company that each of the directors and
executive officers listed in Schedule I has consented to act as a director, if
so designated. The business address of JOMED and Purchaser is Drottninggatan 94,
S-252 21 Helsingborg, Sweden.
It is expected that the Designees may assume office at any time following
the purchase by Purchaser pursuant to the Offer of such number of Shares
representing not less than a majority of the outstanding Shares on a fully
diluted basis, which purchase cannot be earlier than September 19, 2000, and
that upon assuming office, the Designees will thereafter constitute at least a
majority of the Board.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Directors
Set forth below, for each director of the Company, is information regarding
their age as of August 18, 2000, position(s) with the Company, the period they
have served as a director, any family relationship with any other director or
executive officer of the Company, and the directorships currently held by them
in corporations whose shares are publicly registered.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
---- --- -------- --------
<S> <C> <C> <C>
Julie A. Brooks.................... 54 Vice President, Legal and Public Affairs and 1998
General Counsel of Channelpoint, Inc., an Internet
company headquartered in Colorado, since 1999.
Thomas J. Cable.................... 60 Private investor and consultant. 1994
Dale Conrad........................ 61 Private investor and consultant. 1998
Jakob Stapfer...................... 50 European Representative of Fukuda Denshi America, 1998
a Japanese medical equipment producer.
Gregg W. Stone, M.D................ 43 Director of Cardiovascular Research and Education 1999
at the Cardiovascular Research Foundation, Lenox
Hill Heart and Vascular Institute, New York City,
New York.
Reinhard J. Warnking............... 51 Chairman of the Board, President and Chief 1993
Executive Officer
W. Michael Wright.................. 52 President and Chief Executive Officer of 1997
WellPartner, Inc.
</TABLE>
Except as set forth below, each of the directors has been engaged in the
principal occupation set forth next to his or her name above during the past
five years. There is no family relationship between any director or executive
officer of the Company.
Ms. Brooks has served as a director of the Company since June 1998. She is
currently the Vice President, Legal and Public Affairs and General Counsel of
Channelpoint, Inc., an Internet company headquartered in Colorado, since 1999.
Previously, Ms. Brooks was Senior Vice President, Legal & External Affairs,
General Counsel and Secretary of Access Health, Inc. from 1996 to 1999. Prior to
her role at Access Health, she founded and managed The General Counsel, Inc., a
Seattle-based legal services company, from 1992 to 1996. She was Vice President,
Legal Affairs, General Counsel and Secretary for Westmark International, Inc. an
international manufacturer of diagnostic ultrasound, patient monitoring systems
and clinical information systems, from 1986 to 1992.
Mr. Cable is a private investor and a director of Fischer Imaging
Corporation, and Ostex International. He founded and was a general partner of
Cable and Howse Ventures, a venture capital firm, from 1976 through 1998.
Mr. Conrad has served as director of the Company since August 1998. Prior
to that he was on the Board of Directors of Fiberchem, Inc. from August 1995
until April 1998. He was the CEO of FCI Environmental from March 1993 until
August 1995.
Mr. Stapfer has served as director of the Company since October 1998. He is
the European Representative of Fukuda Denshi America, a Japanese medical
equipment producer.
A-2
<PAGE> 20
Dr. Stone has served as director of the Company since February 1999. He is
the Director of Cardiovascular Research and Education at the Cardiovascular
Research Foundation, Lenox Hill Heart and Vascular Institute, New York City, New
York. Dr. Stone graduated from the University of Michigan and the Johns Hopkins
School of Medicine in Baltimore, and completed his internship and residency at
New York Hospital's Cornell Medical Center in New York City in 1985. He then
completed a Cardiology Fellowship at Cedars Sinai Medical Center in Los Angeles
in 1988, and a second Fellowship in Advanced Coronary Angioplasty at the Mid
America Heart Institute in 1989. He also serves as chairman of the EndoSonics
scientific advisory board, along with terms on numerous other advisory boards,
key editorial positions and participation in major research products.
Mr. Warnking joined EndoSonics in 1993 as a director, President and Chief
Operating Officer. Mr. Warnking was appointed Chief Executive Officer on
February 1, 1995. On June 22, 2000, Mr. Warnking was elected as Chairman of the
Board. He was the President and Chief Executive Officer of Acoustic Imaging
Technology Corporation, a manufacturer of ultrasound and transducer systems,
from August 1991 to March 1993. From February 1989 to September 1990, he founded
and operated Warnking Medizintechnik GmbH, which was acquired by Dornier
Medizintechnik GmbH in September 1990. After the acquisition, Mr. Warnking
founded and managed the ultrasound division of Dornier Medizintechnik. From
August 1985 to February 1989, he held positions as Technical Director, General
Manager and Vice President International for Squibb Medical Systems and Advanced
Technology Laboratories (ATL).
Mr. Wright has served as Director of the Company since December 1997. He
has been President and Chief Executive Officer of WellPartner, Inc. since July
1999. Prior to this role, Mr. Wright held the position of President and Chief
Executive Officer for Gene Therapeutics, Inc., MicroHeart, Inc. and TomTec
Imaging Systems, Inc. Mr. Wright also served in various management capacities
with Johnson & Johnson from 1968 to 1995.
Executive Officers
The executive officers of the Company, their ages as of August 18, 2000,
and their positions are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Reinhard J. Warnking................. 51 Chairman of the Board, President, Chief Executive
Officer and Director
Jeffrey Elder........................ 52 Senior Vice President and Chief Financial Officer
Kathleen E. Redd..................... 39 Vice President, Corporate Controller
Michael J. Eberle.................... 43 Senior Vice President and General Manager, SmartWire
Division
Joerg Schulze-Clewing................ 42 Vice President and General Manager, Imaging Division
Robrecht L.W. Michiels............... 50 Vice President and General Manager, Image Guided Therapy
Division
Richard Hebert....................... 44 Vice President, Clinical/Regulatory Affairs and Quality
Assurance
Gary L. Wilson....................... 46 Vice President, Worldwide Sales and Marketing
Oti M. Wooster....................... 47 Vice President, Human Resources and Administration
</TABLE>
The principal occupations of each executive officer and key employee of the
Company for at least the last five years are as follows:
Reinhard J. Warnking. Mr. Warnking joined EndoSonics in 1993 as a
director, President and Chief Operating Officer. Mr. Warnking was appointed
Chief Executive Officer on February 1, 1995. On June 22, 2000, Mr. Warnking was
elected as Chairman of the Board. He was the President and Chief Executive
Officer of Acoustic Imaging Technology Corporation, a manufacturer of ultrasound
and transducer systems, from August 1991 to March 1993. From February 1989 to
September 1990, he founded and operated Warnking Medizintechnik GmbH, which was
acquired by Dornier Medizintechnik GmbH in September 1990. After the
acquisition, Mr. Warnking founded and managed the ultrasound division of Dornier
Medizintechnik. From August 1985 to February 1989, he held positions as
Technical Director, General Manager and Vice President International for Squibb
Medical Systems and Advanced Technology Laboratories (ATL).
A-3
<PAGE> 21
Jeffrey Elder. Mr. Elder joined the Company in May, 2000 as Senior Vice
President and Chief Financial Officer. Before joining the Company, Mr. Elder was
a private consultant from 1998 to 2000. From 1989 to 1998 he served as Senior
Vice President and Chief Financial Officer of Foundation Health Systems and its
predecessor company, Foundation Health Corporation, of which Mr. Elder was also
a Director.
Kathleen E. Redd. Ms. Redd, a CPA., joined the Company in April 1996 as
Corporate Controller. In January 2000, Ms Redd was appointed the Acting Vice
President and Chief Financial Officer when Richard L. Fischer, former Vice
President, Finance and CFO, left this position because of personal reasons. On
May 1, 2000, Ms. Redd received a promotion and is now Vice President, Corporate
Controller. Before joining EndoSonics in 1996, Ms. Redd served as Controller for
Acordia Benefit Services of Northern California, a third party administrator for
health insurance providers, from 1991 to 1996.
Michael J. Eberle. Mr. Eberle joined the Company as Director of
Engineering in January 1985. In December 1985, he became a Vice President and
Director of Research, with primary responsibility for the development of the
Company's products. In 1992, Mr. Eberle became Senior Vice President,
Engineering and Chief Technical Officer. In 1998, Mr. Eberle became Senior Vice
President and General Manager of the Smart Wire Division. Prior to joining
EndoSonics, Mr. Eberle served as an independent consultant, Manager of
Electronic Research and Development at Second Foundation, an ultrasound imaging
company, and as a scientist at GEC Hirst Research Center in the United Kingdom.
Joerg Schulze-Clewing. Mr. Schulze-Clewing joined the Company in February
1997 as Vice President and Chief Technical Officer of MicroSound Corporation a
former subsidiary of EndoSonics Corporation. In September 1998, MicroSound was
merged with and into EndoSonics. Mr. Schulze-Clewing was promoted to the Vice
President and General Manager of EndoSonics' Imaging Division in July 1998.
Before joining EndoSonics in 1997, he was an independent consultant.
Robrecht L. W. Michiels. Mr. Michiels joined the Company in December 1999
as Vice President and General Manager of Image Guided Therapy Division. Prior to
joining the Company, from 1998 to 1999, Mr. Michiels served as Chief Executive
Officer of VenPro Corporation, a development stage venture company in
cardiovascular and less invasive surgery implants. From 1992 to 1998, Mr.
Michiels served as President and Chief Operating Officer of InterVentional
Technologies Inc., an interventional cardiology company.
Richard Hebert. Mr. Hebert returned to the Company as Vice President,
Clinical/Regulatory Affairs and Quality Assurance in April 1999. From May 1997
to May 1998 he served as Vice President of Operations and Administration for
BioSurgical & BioInterventional Corporations, sister companies developing
medical devices and bio-adhesives. Previously, from February 1993 through April
1997, he served in various positions with EndoSonics. Beginning in February 1993
Mr. Hebert served as Director of Quality Assurance until, in December 1994, when
he was promoted to Vice President of Operations with responsibility for leading
the Company's ultrasound transducer and catheter manufacturing facility in
Pleasanton, California. Mr. Hebert decided to leave the Company in May 1997 when
the corporate headquarters relocated from Pleasanton to Rancho Cordova,
California.
Gary L. Wilson. Mr. Wilson joined the Company in February 1996 as
Director, Asia Pacific/Latin America/Canada (APLAC) Sales. In August 1998, Mr.
Wilson was promoted to Vice President, APLAC Sales. In March 1999, he became
Vice President, Worldwide Sales and Marketing. Prior to joining EndoSonics, Mr.
Wilson was Director, Asia Pacific Sales for Advanced Technology Laboratories
(ATL), a manufacturer of diagnostic medical ultrasound equipment based in
Bothell, Washington.
Oti M. Wooster. Ms. Wooster joined the Company in April 1997 as Vice
President, Human Resources and Administration. She is responsible for directing
the Company's human resources, facilities and administration activities. From
1994 to 1997, Ms. Wooster was Director, Human Resources and Operations for U.S.
West Cellular, a multinational telecommunications company. From 1987 to 1994,
she was Vice President, Human Resources and Administration for Government
Technology Services, Inc., the world's largest seller of computer products and
services to the federal government. Prior to 1987, Ms. Wooster was a member of
the Executive Staff, and Cabinet member at Northern Telecom. She held various
line, human resources and administration management positions in both domestic
and international levels there and at General Electric Corporation.
A-4
<PAGE> 22
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board met nine times during the year ended December 31, 1999. Each
director attended at least 75% of the aggregate of (1) the total number of
meetings of the Board of Directors and (2) the total number of meetings held by
all Committees of the Board on which such director served.
The Company has a standing Audit Committee composed of Messrs. Thomas J.
Cable, and W. Michael Wright. The Audit Committee is primarily responsible for
approving the services performed by the Company's independent auditors and for
reviewing and evaluating the Company's accounting principles and reporting
practices and its system of internal accounting controls. The Audit Committee
met two times during the year ended December 31, 1999.
The Company has a standing Compensation Committee which met five times
during the year ended December 31, 1999. Through October 1999, this Committee
consisted of Mr. Roger Salquist and Ms. Julie Brooks. During November and
December 1999, the Compensation Committee consisted of Ms. Julie Brooks and Mr.
Michael Wright. The Committee administers the 1998 Employee Stock Purchase Plan,
the 1988 Stock Option Plan, the 1998 Stock Option Plan and the 1999 Nonstatutory
Stock Option Plan, and reviews and acts on matters relating to compensation
levels and benefit plans for key executives of the Company. The Compensation
Committee has the power and authority to make stock option grants under the 1998
Stock Option Plan to the Company's officers.
The Company has a standing Executive Committee which met three times during
the year ended December 31, 1999, two of these times consisted of a three-day
meeting and one time consisted of a one-day meeting. Since October 18, 1999,
this Committee has consisted of Dale Conrad. The Committee consults with
Reinhard J. Warnking, Chairman of the Board, President and Chief Executive
Officer of the Company, on operating and financial matters concerning the
Company, to assist in establishing strategic and tactical directions for the
Company and to address such other matters and take such actions as may be
authorized by the Board from time to time.
DIRECTOR COMPENSATION.
Remuneration. The following directors were paid the indicated fees and
retainers in connection with their Board service for the 1999 fiscal year.
<TABLE>
<S> <C> <C>
Roger Salquist (former Chairman)... $36,666.63 (For service through October 31, 1999)
Julie A. Brooks.................... $ 9,700.00
Thomas J. Cable.................... $ 9,200.00
Dale Conrad........................ $12,550.00
Edward Leonard..................... $ 2,277.76 (For service through June 9, 1999)
Jakob Stapfer...................... $ 7,250.00
Gregg W. Stone, M.D................ $ 6,321.13 (For service from February 8, 1999)
W. Michael Wright.................. $ 7,500.00
</TABLE>
The Directors' Compensation policy in effect for 1999 was as follows:
<TABLE>
<CAPTION>
COMPENSATION SERVICE
------------ -------
<C> <S>
$1,000.00 Per quarter retainer.
$ 500.00 Per in-person board meeting, or for committee meeting not
held in conjunction with Board of Directors meeting.
$ 250.00 For telephonic board or committee meeting, or for in-person
committee meeting held in conjunction with Board of
Directors meeting.
$ 100.00 Monthly retainer for Chairman of Compensation and Audit
Committees.
</TABLE>
Stock Options. Each non-employee Board member receives an automatic option
grant for 10,000 Shares under the Company's 1998 Stock Option Plan (the "Plan")
on the date of his or her initial election or appointment to the Board. In
addition, on the date of each Annual Stockholders Meeting, each individual re-
elected as a non-employee Board member will receive an automatic option grant
for an additional 5,000 Shares, provided such individual has served as a Board
member for at least six months. Each automatic option grant will become
exercisable for one-fourth of the Shares upon the optionee's completion of each
year of
A-5
<PAGE> 23
Board service over the four-year period measured from the grant date. However,
the option will become immediately exercisable for all of the option Shares if
the optionee dies or becomes disabled during his or her period of Board service
or if the Company is acquired by merger or asset sale, or if there should occur
a hostile take-over of the Company through a successful tender offer for more
than 25% of the Company's outstanding Shares or a change in the majority of the
Board effected through one or more contested elections for Board membership.
Each automatic option grant will have a maximum term of 10 years, subject to
earlier termination upon the optionee's cessation of Board service.
Upon the successful completion of a hostile tender offer for more than 50%
of the Company's outstanding Shares, each automatic option grant will be
canceled, and the non-employee Board member will be entitled to a cash
distribution from the Company based upon the tender-offer price.
At the 2000 Annual Stockholder Meeting held on June 22, 2000, Ms. Brooks
and Messrs. Cable, Conrad, Stapfer, Stone and Wright each received an automatic
stock option grant under the Automatic Option Grant Program of the 1998 Stock
Option Plan for 5,000 Shares in connection with their re-election as
non-employee Board members. Each of these options has an exercise price of $5.25
per Share, the fair market value per Share on the grant date.
At the 1999 Annual Stockholders Meeting held on June 10, 1999, Ms. Brooks
and Messrs. Cable, Conrad, Salquist, Stapfer, Stone and Wright each received an
automatic stock option grant under the Automatic Option Grant Program of the
1998 Option Plan for 5,000 Shares in connection with their re-election as
non-employee Board members. Each of those options has an exercise price of
$8.0625 per Share, the fair market value per Share on the grant date. Effective
November 1, 1999, Mr. Roger Salquist, Chairman, resigned from the Company's
Board of Directors, to devote his full attention to the portfolio companies and
the investing activities of the North American Nutrition and Agribusiness Fund
(NANAF), of which he is Chief Investment Officer.
At the 1998 Annual Stockholders Meeting held on June 4, 1998, Messrs.
Cable, Salquist and Wright each received an automatic stock option grant under
the Automatic Option Grant Program of the 1998 Option Plan for 5,000 Shares in
connection with their re-election as non-employee Board members. Each of those
options has an exercise price of $5.9375 per Share, the fair market value per
Share on the grant date.
At the 1997 Annual Stockholders Meeting held on May 28, 1997, Messrs.
Cable, Davis, and Henson, each received an automatic stock option grant under
the Automatic Option Grant Program of the Plan for 5,000 Shares in connection
with their re-election as non-employee Board members. Each of those options has
an exercise price of $10.875 per Share, the fair market value per Share on the
grant date.
Mr. Salquist received an automatic option grant for 10,000 Shares upon his
appointment to the Board on November 5, 1996 with an exercise price of $12.75.
Mr. Salquist also received three additional option grants in connection with his
commencement of Board service. The first two of those additional grants were
made on November 5, 1996 at the time he joined the Board. One grant is for 5,000
Shares and was made pursuant to the Discretionary Option Grant Program in effect
under the Plan and the second grant is for 25,000 Shares and was made to Mr.
Salquist as a special incentive for him to join the Board. Both grants have an
exercise price of $12.75 per Share. The final grant to Mr. Salquist covers
10,000 Shares and was made to him under the Discretionary Option Grant Program
on December 6, 1996. The remaining terms and provisions of each of these option
grants are basically the same as those in effect for his 10,000-Share option
grant under the Automatic Option Grant Program.
Dr. Stone, a member of the Board, has served as a member of the Company's
Clinical Advisory Board and a consultant for our Sales and Marketing department.
In these capacities, Dr. Stone received payments of $26,000 and $32,000,
respectively.
On April 19, 1999, Mr. Wright, as a member of the Board, signed a
Consulting Agreement to assist the Company in exploration of IVUS-guided joint
stenting with other companies. In this capacity, Mr. Wright was paid $7,500 for
his consulting services.
A-6
<PAGE> 24
SECURITY OWNERSHIP OF OFFICERS,
DIRECTORS AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to the Company
regarding the ownership of Shares as of August 18, 2000 (i) each stockholder
known to the Company to be a beneficial owner of more than five percent (5%) of
the Shares, (ii) each director and nominee for director, (iii) the Named
Officers (as such term is defined below under the caption "Executive Officer
Compensation") and (iv) all current directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(A)
------------------------
APPROXIMATE
NUMBER OF PERCENT
NAME AND ADDRESS SHARES OF CLASS
---------------- --------- -----------
<S> <C> <C>
INVESCO, Inc.(1)............................................ 2,465,000 13.8%
1315 Peachtree Street, N.E.
Suite 500
Atlanta, GA 30309
Paloma Partners LLC(2)...................................... 2,304,840 12.9%
2 American Lane
Greenwich, Connecticut 06836
Loomis, Sayles & Company, L.P.(3)........................... 1,248,700 7.0%
One Financial Center
Boston, MA 02111
Fukuda Denshi Company, Ltd.(4).............................. 1,052,577 5.9%
3-39-4 Hungo Bunkyo-Ku
Tokyo 113, Japan
Merrill Lynch & Company, Inc.(5)............................ 1,026,300 5.8%
World Financial Center, North Tower
250 Vesey Street
New York, NY 10381
Trimark Financial Corporation(6)............................ 907,900 5.1%
One First Canadian Place, Suite 5600
P.O. Box 487
Toronto, ON MSX 1E5
Reinhard J. Warnking(7)..................................... 558,527 3.1%
Michael J. Eberle(8)........................................ 191,666 1.0%
Jeffrey Elder(9)............................................ -- *
Richard D. Herbert(10)...................................... 11,460 *
Robrecht Michiels(11)....................................... -- *
Joerg Schulze-Clewing(12)................................... 74,617 *
Gary L. Wilson(13).......................................... 40,988 *
Oti M. Wooster(14).......................................... 75,213 *
Julie A. Brooks(15)......................................... 7,501 *
Thomas J. Cable(16)......................................... 43,755 *
Dale Conrad(17)............................................. 22,087 *
Jakob Stapfer(18)........................................... 6,461 *
Gregg W. Stone, M.D.(19).................................... 14,626 *
W. Michael Wright(20)....................................... 11,879 *
All directors and executive officers as a group (14
persons).................................................. 1,058,780 5.9%
</TABLE>
---------------
* Represents less than 1% of the issued and outstanding Shares
(a) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares subject to options and
warrants which are currently exercisable or convertible or which will
become exercisable or convertible within sixty (60) days after August 18,
2000 are deemed outstanding for computing the beneficial ownership of the
person holding such option but are not deemed outstanding for computing the
beneficial ownership of any other person. Except as indicated by footnote,
and subject to community
A-7
<PAGE> 25
property laws where applicable, the persons named in the table above have
sole voting and investment power with respect to all Shares shown as
beneficially owned by them.
(1) Pursuant to a Schedule 13G filed with the Securities and Exchange
Commission on July 10, 2000, INVESCO, Inc. reported that as of December 31,
1999, it had shared voting and investment power over 2,465,000 Shares.
(2) Pursuant to a Schedule 13G filed with the Securities and Exchange
Commission on August 17, 2000, Paloma Partners LLC reported that as of
August 7, 2000, it had sole voting and investment power over 2,304,840
Shares.
(3) Pursuant to a Schedule 13G filed with the Securities and Exchange
Commission on February 4, 2000, Loomis, Sayles & Company, L.P. reported
that as of December 31, 1999, it had sole voting power over 1,020,200
Shares and investment power over 1,248,700 Shares.
(4) Pursuant to a Schedule 13G filed with the Securities and Exchange
Commission on October 7, 1998, Fukuda Denshi Company, Ltd. reported that as
of December 31, 1998, it had sole voting and investment power over
1,052,577 Shares.
(5) Pursuant to a Schedule 13G filed with the Securities and Exchange
Commission on February 4, 2000. Merrill Lynch & Company, Inc. reported that
as of December 31, 1999, it had shared and investment power over 1,026,300
Shares.
(6) Pursuant to a Schedule 13G filed with the Securities and Exchange
Commission on February 4, 2000. Trimark Financial Corporation reported that
as of December 31, 1999, it had sole voting and investment power over
907,900 Shares.
(7) Includes 196,172 Shares owned by Mr. Warnking and 362,355 Shares obtainable
upon exercise of options that are currently exercisable or will become
exercisable within 60 days after August 18, 2000.
(8) Includes 31,250 Shares owned by Mr. Eberle and 160,416 Shares obtainable
upon exercise of options that are currently exercisable or will become
exercisable within 60 days after August 18, 2000.
(9) Includes no Shares obtainable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after August 18,
2000.
(10) Includes 11,460 Shares obtainable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
August 18, 2000.
(11) Mr. Michiels currently has no Shares obtainable upon exercise of options
that are currently exercisable or will become exercisable within 60 days
after August 18, 2000.
(12) Includes 10,455 Shares owned by Mr. Schulze-Clewing and 64,162 Shares
obtainable upon exercise of options that are currently exercisable or will
become exercisable within 60 days after August 18, 2000.
(13) Includes 1,040 Shares owned by Mr. Wilson and 39,948 Shares obtainable upon
exercise of options that are currently exercisable or will become
exercisable within 60 days after August 18, 2000.
(14) Includes 1,265 Shares owned by Ms. Wooster and 73,948 Shares obtainable
upon exercise of options that are currently exercisable or will become
exercisable within 60 days after August 18, 2000.
(15) Includes 7,501 Shares obtainable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
August 18, 2000.
(16) Includes 43,755 Shares obtainable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
August 18, 2000.
(17) Includes 10,000 Shares owned by Mr. Conrad and 12,087 Shares obtainable
upon exercise of options that are currently exercisable or will become
exercisable within 60 days after August 18, 2000.
(18) Includes 6,461 Shares obtainable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
August 18, 2000.
(19) Includes 14,626 Shares obtainable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
August 18, 2000.
(20) Includes 11,879 Shares obtainable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
August 18, 2000.
A-8
<PAGE> 26
EXECUTIVE OFFICER COMPENSATION
The following table sets forth the compensation earned by the Company's
Chief Executive Officer, Mr. Warnking, who has served in such capacity since
February 1, 1995, and the other four most highly-compensated executive officers
whose compensation for the 1999 fiscal year was in excess of $100,000 for
services rendered in all capacities to the Company for each of the last three
fiscal years. No other executive officer who would have otherwise been
includable in such table on the basis of salary and bonus earned for the 1999
fiscal year resigned or terminated employment during that fiscal year. All the
individuals named in the table will are referred to herein as the "Named
Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
ANNUAL COMPENSATION -------------------------------------
------------------- OTHER ANNUAL NUMBER OF
NAME AND SALARY BONUS COMPENSATION SECURITIES UNDERLYING
PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2)(7) OPTIONS(#)
------------------ ---- -------- ------- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
Reinhard J. Warnking(3)........... 1999 290,000 (4) 266,354 80,000
Chief Executive Officer and 1998 223,712 85,026 92,987 60,000
President 1997 208,146 65,205 198,936 50,000
Michael J. Eberle................. 1999 172,559 11,625 -- 20,000
Senior Vice President and
General 1998 152,842 35,213 -- 30,000
Manager, Smartwire Division 1997 146,757 24,990 49,875 20,000
Richard L. Fischer................ 1999 153,916 25,113 -- 20,000
Vice President, Finance and 1998 140,013 29,009 -- 20,000
Chief Financial Officer 1997 20,377 5,600 -- 75,000
Joerg Schulze-Clewing............. 1999 142,688 10,500 -- 20,000
Vice President and General 1998 117,949 19,500 -- 40,000
Manager, Imaging Division 1997 108,557 10,000 -- 40,000
Michael J. Sorna.................. 1999 141,140 -- -- 4,000
Vice President, Sales and 1998 149,634 19,000 -- 20,000
Marketing, European
Operations(6) 1997 119,466 81,050 365,434 25,000
</TABLE>
---------------
(1) Except as otherwise indicated, the amounts shown under the Bonus column are
cash bonuses earned for the indicated fiscal years under the Employee Bonus
Plan.
(2) Except as otherwise indicated, Other Annual Compensation includes moving and
relocation expenses and compensation related to the distribution of RADX or
Cardiometrics stock based on outstanding options.
(3) Mr. Warnking first became employed by the Company on April 19, 1993 and was
elected Chief Executive Officer of the Company on February 1, 1995.
(4) Mr. Warnking received no cash bonus for fiscal year 1999. In lieu of a cash
bonus for 1999, on February 7, 2000, Mr. Warnking was granted an option for
the purchase of 100,000 Shares, which will vest in six equal installments,
with the first such installment vesting on November 2, 2000, and the balance
vesting over the next five calendar quarters. Vesting will be accelerated
fully in the event the price of the Shares reaches and remains at $10.00 per
Share under certain conditions.
(5) Mr. Fischer first became employed by the Company in November 1997 and was
appointed Vice President of Finance and Chief Financial Officer of the
Company in November 1997. Mr. Fischer resigned his position as Vice
President of Finance and Chief Financial Officer on January 7, 2000.
(6) Mr. Sorna became employed by the Company on July 24, 1997. He was previously
employed by Cardiometrics, Inc. Other annual compensation for 1997 includes
$203,746 of merger consideration based on Mr. Sorna's outstanding stock
options on the effective date of the Cardiometrics acquisition. Mr. Sorna
resigned his position effective September 10, 1999.
(7) This represents the gain on the exercise of non-qualified stock options.
A-9
<PAGE> 27
OPTION GRANTS IN LAST FISCAL YEAR
Stock Options. The following table provides information with respect to
the stock option grants made during the 1999 fiscal year under the Company's
1998 Stock Option Plan to the Named Officers which are reflected in the Summary
Comparison Table. Except for the limited stock appreciation rights described in
Footnote (1) below, no stock appreciation rights were granted during such fiscal
year to the Named Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------ POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE APPRECIATE
SECURITIES GRANTED TO EXERCISE OR FOR OPTION TERM
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(1) FISCAL YEAR (2)($/SH) DATE 5% ($)(3) 10% ($)(3)
---- ------------------ ------------ ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Reinhard J. Warnking... 80,000 12% $7.6250 7/29/09 383,600 972,400
Michael J. Eberle...... 20,000 3% $7.6250 7/29/09 95,900 243,100
Richard L. Fischer..... 20,000 3% $7.6250 7/29/09 95,900 243,100
Joerg
Schulze-Clewing...... 20,000 3% $7.6250 7/29/09 95,900 243,100
Michael J. Sorna....... 4,000 1% $7.6250 7/29/09 19,180 48,620
</TABLE>
---------------
(1) Options were granted on July 30, 1999.
The Shares subject to each option will immediately vest in the event the
Company is acquired by a merger or asset sale, unless the options are
assumed by the acquiring entity. The Plan Administrator also has the
discretionary authority to provide for accelerated vesting of the option
Shares upon the termination of the optionee's employment following a hostile
change in control of the Company, whether by tender offer for more than 25%
of the Company's outstanding voting stock or change in the majority of the
Board effected through one or more proxy contests. Each option has a maximum
term of 10 years, subject to earlier termination in the event of the
optionee's cessation of service with the Company.
Each option also includes a limited stock appreciation right pursuant to
which the underlying option will automatically be canceled upon the
successful completion of a hostile tender offer for more than 50% of the
outstanding Shares and the optionee will become entitled to a cash
distribution from the Company in an amount per canceled option Share
(whether or not the option is otherwise at the time exercisable for all the
option Shares) equal to the tender-offer price paid per Share less the
option exercise price payable per Share.
(2) The exercise price may be paid in cash, in Shares valued at fair market
value on the exercise date or through a cashless exercise procedure
involving a same-day sale of the purchased Shares. The Company may also
finance the option exercise by loaning the optionee sufficient funds to pay
the exercise price for the purchased Shares and the federal and state income
or employment tax liability incurred by the optionee in connection with such
exercise. The optionee may be permitted, subject to the approval of the Plan
Administrator, to apply a portion of the Shares purchased under the option
(or to deliver existing Shares) in satisfaction of such tax liability.
(3) There is no assurance provided to any executive officer or any other holder
of the Company's securities that the actual stock price appreciation over
the 10-year option term will be at the assumed 5% or 10% annual rates of
compounded stock price appreciation or at any other defined level. Unless
the market price of the Shares appreciates over the option term, no value
will be realized from the option grants made to the executive officers.
On July 24, 2000, the Company granted stock options under the EndoSonics
1998 Stock Option Plan to Messrs. Warnking, Wilson, Schulze-Clewing, Hebert,
Elder, Eberle, and Ms. Wooster for 65,000, 15,000, 7,500, 15,000, 40,000, 7,500
and 15,000 Shares, respectively, at $6.00 per Share.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The table below sets forth information concerning the exercise of options
during the 1999 fiscal year and unexercised options held by the Named Officers
as of the end of such year. No stock appreciation rights were
A-10
<PAGE> 28
exercised by the Named Officers during such fiscal year, and except for the
limited stock appreciation rights described in Footnote (1) to the Option Grant
table above, no stock appreciation rights were held by such individuals at the
end of such fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
SHARES UNDERLYING UNEXERCISED THE-MONEY
ACQUIRED AGGREGATE OPTIONS AT FY-END(#) OPTIONS AT FY-END($)(2)
ON VALUE REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Reinhard J. Warnking.... 40,622 0 291,314 172,713 $ 32,277 $76,580
Michael J. Eberle....... 0 0 139,791 52,709 2,000 0
Richard L. Fischer(3)... 0 0 38,334 76,666 0 0
Joerg Schulze-Clewing... 0 0 43,328 56,672 123,944 51,056
Michael J. Sorna(4)..... 0 0 0 0 0 0
</TABLE>
---------------
(1) Based upon the market price of the purchased Shares on the exercise date
less the option exercise price paid for such Shares.
(2) Based upon the market price of $4.50 per Share, which was the closing
selling price per Share on the Nasdaq National Market on the last day of the
1999 fiscal year, less the option exercise price payable per Share.
(3) Mr. Fischer resigned his position effective January 7, 2000. Mr. Fischer
will provide consulting services through March 7, 2000. On March 7, 2000,
Mr. Fischer's options stopped vesting, and those options that were not
exercisable will be cancelled. On June 7, 2000, Mr. Fischer's unexercised
vested options were cancelled.
(4) Mr. Sorna resigned his position effective September 10, 1999. On this date,
Mr. Sorna's options stopped vesting, and those options that were not
exercisable were cancelled. On December 10, 1999, Mr. Sorna's unexercised
vested options were cancelled.
MANAGEMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
None of the Named Officers have employment agreements with the Company. The
employment of each of those Named Officers may be terminated at any time at the
discretion of the Board of Directors.
The Compensation Committee of the Board of Directors has the authority as
administrator of the Company's 1988 Option Plan and the 1998 Option Plan and the
1999 Nonstatutory Stock Option Plan to provide for the accelerated vesting of
the shares of Common Stock subject to any outstanding options held by the Chief
Executive Officer and the Company's other executive officers and any unvested
shares actually held by those individuals under such plans, in the event their
employment were to be terminated (whether involuntarily or through a forced
resignation) following a hostile takeover of the Company effected through a
successful tender for more than 25% of the Company's outstanding Common Stock or
through a change in the majority of the Board as a result of one or more
contested elections for Board membership.
In addition, on August 5, 2000, the Board adopted a resolution, effective
upon the consummation of the Offer, accelerating the vesting of all shares of
Common Stock subject to any outstanding options immediately prior to the
consummation of the Offer. These resolutions also provided that immediately
prior to the consummation of the Offer, all outstanding options would be
cancelled and exchanged for an amount in cash, payable at the consummation of
the Offer, equal to the product of the number of shares of Common Stock subject
to each option, whether vested or unvested, and the excess, if any, of $11.00
over the per share exercise price of each option.
The Board, by resolution adopted August 5, 2000, clarified that the Offer
and the Merger will constitute a change-of-control transaction under the
provisions of early vesting upon termination provisions of the 1988 Stock Option
Plan, the 1998 Stock Option Plan and any other stock option plans of the
Company.
In April 1998, the Board authorized the Company to enter into a Key
Employee Retention Agreement with each officer of the Company that would provide
to such officers certain benefits, including, among other things, acceleration
of vesting and salary continuation, in the event of the termination of the
officer's employment with the Company, other than for cause, following a
change-of-control transaction. On August 5,
A-11
<PAGE> 29
2000, the Key Employee Retention Agreements were amended to clarify that the
Offer and the Merger constituted a change-of-control transaction thereunder.
If the termination occurs more than 12 months but within 18 months after
the change in control, the employee receives the benefits described above except
that the base salary continuation period is 12 months and bonus payments equal
the bonus accrued within that additional period.
Mr. Jakob Stapfer, a member of the Company's Board of Directors, is the
European representative of Fukuda Denshi America, a wholly-owned subsidiary of
Fukuda Denshi Company, LLP, a corporation of Japan, with whom the Company has
entered into the following agreements: Distribution Agreement dated August 31,
1998, Amendment to the June 28, 1997 Distribution Agreement, dated August 31,
1998, Research and Development Agreement dated August 31, 1998, Common Stock
Purchase Agreement dated October 7, 1998, and the Investors' Rights Agreement
dated September 21, 1998. For fiscal year 1999, payments from Fukuda Denshi
Company, LLP under these agreements were in the aggregate approximately
$4,328,788.
COMPENSATION COMMITTEE REPORT
It is the responsibility of the Compensation Committee of the Board to make
recommendations to the Board with respect to the base salary and bonuses to be
paid to the Company's executive officers each fiscal year. In addition, the
Compensation Committee has the exclusive authority to administer the Company's
1988 Stock Option Plan, the 1998 Employee Stock Purchase Plan and the 1998 Stock
Option Plan with respect to the grants made thereunder to such officers and
other key employees. The following is a summary of the policies of the
Compensation Committee which affect the compensation paid to executive officers,
as reflected in the tables and text set forth elsewhere in this Information
Statement.
General Compensation Policy. Under the supervision of the Compensation
Committee, the Company has developed a compensation policy which is designed to
attract and retain qualified key executives critical to the Company's success
and to provide such executives with performance-based incentives tied to the
financial success of the Company. One of the Committee's primary objectives is
to have a substantial portion of each officer's compensation contingent upon the
Company's performance as well as upon the individual's contribution to the
success of the Company as measured by his or her personal performance.
Accordingly, each executive officer's compensation package is fundamentally
comprised of three elements: (i) base salary which reflects individual
performance and expertise and is designed to be competitive with salary levels
in the industry, (ii) variable performance awards payable in cash and tied to
the Company's achievement of certain financial goals; and (iii) long-term
stock-based incentive awards which strengthen the mutuality of interests between
the executive officers and the Company's stockholders.
Factors. The principal factors that were considered in establishing the
components of each executive officer's compensation package for the 1999 fiscal
year are summarized below. However, the Committee may in its discretion apply
different factors, particularly different measures of financial performance, in
setting executive compensation for future fiscal years.
- Base Salary. The base salary levels for the executive officers were
established for the 1999 fiscal year on the basis of the following
factors: personal performance, the estimated salary levels in effect for
similar positions as a select group of companies with which the Company
competes for executive talent, and internal comparability considerations.
The Committee, however, did not rely upon any specific compensation
surveys for comparisons. Instead, the Committee made its decisions as to
the appropriate market level of base salary for each executive officer on
the basis of its understanding of the salary levels in effect for similar
positions at those companies with which the Company competes for
executive talent. Base salaries will be reviewed on an annual basis, and
adjustments will be made in accordance with the factors indicated above.
- Annual Incentive Compensation. The Company has adopted an Employee Bonus
Plan pursuant to which the Board has discretionary authority to award
cash bonuses to executive officers and employees in accordance with
recommendations made by the Committee based upon the extent to which
certain financial and performance targets established semi-annually by
the Committee are met and the contribution of each such officer and
employee to the attainment of such targets. For fiscal year 1999, the
performance targets for each of the Named Officers included gross sales,
cash flow, engineering
A-12
<PAGE> 30
product goals and regulatory submission goals. The weight given to each
factor varied from individual to individual.
- Long-Term Incentive Compensation. EndoSonics has also adopted the 1988
Stock Option Plan and the 1998 Stock Option Plan. Each grant under these
plans is designed to align the interests of the executive officer with
those of the stockholders and provide each individual with a significant
incentive to manage the Company from the perspective of an owner with an
equity stake in the business. The number of shares subject to each option
grant is based upon the officer's tenure, level of responsibility and
relative position in the Company. The Committee has established certain
general guidelines in making option grants to the executive officers in
an attempt to target a fixed number of unvested option shares based upon
the individual's position with the Company and his or her existing
holdings of unvested options. However, the Committee does not adhere
strictly to these guidelines and will vary the size of the option grant
made to each executive officer as it feels the circumstances warrant.
Each grant allows the officer to acquire shares of the Common Stock at a
fixed price per share (the market price on the grant date) over a
specified period of time (up to 10 years). The option normally vests in
periodic installments over a four-year period, contingent upon the
executive officer's continued employment with the Company. Accordingly,
the option will provide a return to the executive officer only if he or
she remains in the Company's employ and the market price of the Company's
Common Stock appreciates over the option term.
- CEO Compensation. In setting the base salary for Mr. Reinhard J.
Warnking, the Company's Chief Executive Officer, for the 1999 fiscal
year, the Committee sought to provide him with a level of salary which is
at the median of the salaries paid to chief executive officers of
similarly-sized companies in the industry. There was no intent on the
Committee's part to have this particular component of Mr. Warnking's
compensation affected to any significant degree by the Company's
performance.
The Committee awards incentive cash compensation to management based on
the achievement of specified financial objectives and the Company's
overall performance. In consideration of these factors, Mr. Warnking
received no cash bonus for fiscal year 1999.
The long-term incentive component of Mr. Warnking's compensation for the
1999 fiscal year consisted of a stock option grant on July 30, 1999 to
purchase 80,000 shares at fair market value. As previously indicated,
this grant was designed to provide an incentive to Mr. Warnking to
contribute to the Company's financial success, and align his interests
with the Company's stockholders.
- Compliance with Internal Revenue Code Section 162(m). Section 162(m) of
the Internal Revenue Code, enacted in 1993, generally disallows a tax
deduction to publicly held corporations for compensation exceeding $1
million paid to certain of the corporation's executive officers. The
limitation applies only to compensation that is not considered to be
performance-based. The non-performance based compensation to be paid to
the Company's executive officers for the 1998 fiscal year did not exceed
the $1 million limit per officer, so it is expected that the
non-performance based compensation to be paid to the Company's executive
officers for fiscal year 1999 will exceed that limit. The Company's 1988
Stock Option Plan and 1998 Stock Option Plan are structured so that any
compensation deemed paid to an executive officer in connection with the
exercise of option grants made under such plans will qualify as
performance-based compensation which will not be subject to the $1
million limitation. Because it is very unlikely that the cash
compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1 million limit, the Committee has
decided at this time not to take any other action to limit or restructure
the elements of cash compensation payable to the Company's executive
officers. The Committee will reconsider this decision should the
individual cash compensation of any executive officer ever approach the
$1 million level.
COMPENSATION COMMITTEE
Julie A. Brooks
W. Michael Wright
A-13
<PAGE> 31
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board for the 1999 fiscal
year were Julie A. Brooks and Roger Salquist through October 31, 1999. From
November 1, 1999 through December 31, 1999, the members of the Compensation
Committee of the Board were Julie A. Brooks and W. Michael Wright. No member of
the Compensation Committee was at any time during the 1999 fiscal year or at any
other time an officer or employee of the Company.
No executive officer of the Company served on the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
STOCK PERFORMANCE GRAPH
The graph depicted below shows the Company's stock price as an index
assuming $100 invested on December 1, 1994 (the date of the Company's initial
public offering), along with the composite prices of companies listed on the
CRSP Total Return Index for National Association of Securities Dealers Automated
Quotation ("Nasdaq") Stock Market and the Chase H & Q, Incorporated Total Return
Index for Healthcare Companies (excluding Biotechnology). This information has
been provided to the Company by Chase H & Q, Incorporated.
<TABLE>
<S> <C> <C>
EndoSonics Corporation Nasdaq Stock Market -U.S.
Dec-94 100 100
Jan-95 123.64 100.53
Feb-95 110.91 105.81
Mar-95 116.36 108.95
Apr-95 114.55 112.38
May-95 114.55 115.29
Jun-95 161.82 124.62
Jul-95 147.27 133.77
Aug-95 165.45 136.49
Sep-95 192.73 139.63
Oct-95 230.91 138.83
Nov-95 207.27 142.09
Dec-95 220 141.34
Jan-96 200 142.04
Feb-96 214.55 147.46
Mar-96 260 147.95
Apr-96 252.73 160.21
May-96 221.82 167.56
Jun-96 260 160
Jul-96 181.82 145.76
Aug-96 209.09 153.95
Sep-96 203.64 165.72
Oct-96 183.64 163.88
Nov-96 167.27 174.04
Dec-96 221.82 173.89
Jan-97 187.27 186.23
Feb-97 165.45 175.92
Mar-97 138.18 164.45
April-97 127.27 169.58
May-97 161.82 188.79
Jun-97 158.18 194.59
Jul-97 192.73 215.09
Aug-97 170.91 214.77
Sep-97 213.64 227.5
Oct-97 167.27 215.65
Nov-97 170.91 216.78
Dec-97 156.36 213.05
Jan-98 117.27 219.8
Feb-98 149.09 240.46
Mar-98 150.91 249.35
Apr-98 94.55 253.56
May-98 88.18 239.47
Jun-98 87.27 256.19
Jul-98 125.45 253.21
Aug-98 70 203.01
Sep-98 69.09 231.18
Oct-98 111.82 241.34
Nov-98 123.64 265.87
Dec-98 144.55 300.42
Jan-99 178.18 344
Feb-99 120 313.21
Mar-99 94.55 336.89
Apr-99 73.64 347.75
May-99 99.09 338.47
Jun-99 101.82 368.91
Jul-99 110.91 362.14
Aug-99 120.91 377.36
Sep-99 123.64 377.88
Oct-99 54.09 408.13
Nov-99 72.73 457.79
Dec-99 65.45 558.46
Jan-00 70 537.79
Feb-00 83.64 640.29
Mar-00 91.82 626.9
Apr-00 66.36 527.11
May-00 62.73 463.52
Jun-00 81.82 544.93
Jul-00 100.91 515.68
<S> <C>
Chase H&Q Healthcare Excl. Biotech
Dec-94 100
Jan-95 106.37
Feb-95 108.84
Mar-95 116.81
Apr-95 115.33
May-95 115.88
Jun-95 120
Jul-95 130.26
Aug-95 138.2
Sep-95 150.11
Oct-95 152.74
Nov-95 156.17
Dec-95 166.5
Jan-96 178.1
Feb-96 178.1
Mar-96 178.12
Apr-96 174.7
May-96 174.79
Jun-96 167.41
Jul-96 153.34
Aug-96 163.34
Sep-96 183.72
Oct-96 174.15
Nov-96 179.53
Dec-96 184.85
Jan-97 194.94
Feb-97 191.73
Mar-97 175.59
April-97 179.48
May-97 197.25
Jun-97 210.21
Jul-97 221.79
Aug-97 210.67
Sep-97 220.32
Oct-97 209.44
Nov-97 213.35
Dec-97 220.29
Jan-98 220.73
Feb-98 241.14
Mar-98 250.49
Apr-98 258.39
May-98 248.17
Jun-98 255.22
Jul-98 250.51
Aug-98 208.3
Sep-98 225.29
Oct-98 237.29
Nov-98 251.77
Dec-98 267.67
Jan-99 256.05
Feb-99 248.76
Mar-99 255.02
Apr-99 255.38
May-99 254.11
Jun-99 261.7
Jul-99 255.71
Aug-99 250.57
Sep-99 226.05
Oct-99 221.97
Nov-99 234.24
Dec-99 233.86
Jan-00 241.21
Feb-00 235.54
Mar-00 248.17
Apr-00 264.5
May-00 275.37
Jun-00 301.41
Jul-00 305.56
</TABLE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, which might incorporate future filings,
including this Proxy Statement, the preceding Compensation Committee Report on
Executive Compensation and the Company Stock Performance Graph will not be
incorporated by reference into any of those prior filings, nor will such report
or graph be incorporated by reference into any future filings made by the
Company under those statutes.
A-14
<PAGE> 32
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The members of the Board of Directors, the executive officers of the
Company and persons who hold more than 10% of the Company's outstanding Common
Stock are subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended, which require them to file reports
with the Securities and Exchange Commission with respect to their ownership of
the Common Stock and their transactions in such Common Stock. Based upon (i) the
copies of Section 16(a) reports which the Company received from such persons for
their 1999 fiscal year transactions in the Common Stock and their Common Stock
holdings and (ii) the written representations received from one or more of such
persons that no annual Form 5 reports were required to be filed by them for the
1999 fiscal year, the Company believes that all reporting requirements under
Section 16(a) for such fiscal year were met in a timely manner by its executive
officers, Board members and greater than ten-percent stockholders.
A-15
<PAGE> 33
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
As of the date of this Information Statement, Purchaser has not determined
who will be Designees. However, such Designees will be selected from the
following list of directors and executive officers of JOMED upon the purchase by
Purchaser pursuant to the Offer of Shares representing not less than a majority
of the outstanding Shares on a fully diluted basis. The information contained
herein concerning JOMED and Purchaser and their respective directors and
executive officers has been furnished by JOMED and Purchaser. The Company
assumes no responsibility for the accuracy or completeness of such information.
The following tables set forth the name, present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years for each member of the Management Board and executive officer,
of JOMED N.V. Unless indicated otherwise, each person is a citizen of Sweden
with a principal business address at Drottninggatan 94, S-252 21 Helsingborg,
Sweden.
JOMED Management Board
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
NAME (AND CITIZENSHIP) TITLE EMPLOYMENT
---------------------- ----- -----------------------
<S> <C> <C>
Tor Peters (Sweden)......... President and Chief Executive Officer JOMED
Antti Ristinmaa (Sweden).... Vice President of Finance JOMED
Dr. Peter Klemm (Germany)... Vice President Operations JOMED
Rudi Ott (Switzerland)...... Vice President Clinical and Regulatory Affairs JOMED
Dr. Randolf von Oepen
(Germany)................. Vice President, Research and Development JOMED
</TABLE>
- Tor Peters has served as President and Chief Executive Officer of JOMED
since 1998 and Chief Executive Officer of JOMED i Helsingborg
International AB from 1996 to 1999. From 1993 through 1995, Mr. Peters
was Marketing Manager for Cardiology at SciMed Life Systems Inc. From
1988 to 1993, he was Sales Manager for Novo Pharma.
- Antti Ristinmaa has been JOMED's Vice President of Finance since 1998.
From 1994 to 1998, Mr. Ristinmaa served as the Vice President of Business
Control and Treasurer for Perstorp. From 1990 to 1994, he was Vice
President of Finance at Huhtamaki.
- Dr. Peter Klemm is Vice President Operations and is also responsible for
JOMED's cardiac assist products since 1999. From 1996 to 1999, he was
Head of Research for Grunenthal GmbH. From 1993 to 1996, Dr. Klemm was a
senior scientist at Hoechst Marion Rousel. He received his doctorate in
pharmacology from the University of Mainz and has completed post-doctoral
research at the William Harvey Research Institute in London.
- Rudi Ott is Vice President Clinical and Regulatory Affairs. Prior to
joining the Company in 1999, he was Vice President Clinical and
Regulatory for Schneider from 1994 to 1999 after having spent 10 years
with Ciba-Geigy. He graduated in 1978 from medical school in Germany.
- Dr. Randolf von Oepen joined JOMED in 1994 and became Vice President,
Research and Development, in 1998. Dr. von Oepen holds a doctorate in
mechanical engineering from the RWTH Institute in Aachen, Germany.
The members of the Management Board may be contacted at JOMED's executive
offices in Helsingborg, Sweden.
I-1
<PAGE> 34
JOMED Supervisory Board
The table below sets forth the names and addresses of the current members
of the Supervisory Board of the Company and their principal occupation or
employment history:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
NAME PRINCIPAL BUSINESS ADDRESS DATE OF APPOINTMENT EMPLOYMENT
---- -------------------------- ------------------- ------------------------------
<S> <C> <C> <C>
Jan-Eric Osterlund.... 23 Tedworth Square, February 2, 1998 Chairman of JOMED and Chairman
Chelsea, London or director of several
SW3 4DR investment and healthcare
United Kingdom companies.
Ahmet Aykac........... Rue Albert Einstein December 15, 1999 Professor and Director of the
BP 169 Theseus Institute, Sophia
06903 Sophia Antipolis Antipolis, France.
Cedex
France
Siegfried Einhellig... Schweidnitzer Strasse 33 February 2, 1998 Consultant to JOMED and
80997 Munich director of Prva Obrtnicka
Germany Stedionica.
Lars Sunnanvader...... Silberburgstrasse 6 February 2, 1998 Chairman of the Supervisory
72379 Hechinge Board of JOSTRA Medizintechnik
Germany AG, a medical device company.
Rene Garo............. Waldeggstrasse 2 March 24, 2000 Medical Technology Advisor.
St. Niklaus
4532 Feldbrunnen
Switzerland
</TABLE>
- Mr. Jan-Eric Osterlund is a partner of QueQuoin Holdings, an investment
group specializing in medical venture capital since 1992. He is also
chairman of Phairson Medical Ltd (a UK biotechnology group), Egalet A/S
(a Danish drug-delivery company) and Epiport Ltd (a drug-delivery
company). Mr. Osterlund also serves as a director of Vasogen Inc., a
public Canadian medical device company. He has also been a director of
several Swedish public companies, having served as Chairman of Investment
AB Skrinet and as a director of Independent Leasing AB.
- Dr. Ahmet Aykac is the Director General of the Theseus Institute and
Professor of Economics and Organizations since 1995. He is also a
consultant to the boards of several national and international agencies
and private organizations. Dr. Aykac is a fellow of the New York Academy
of Sciences.
- Mr. Siegried Einhellig is a consultant to JOMED and a director of Prva
Obrtnicka Stedionica d.d., a Croatian bank, assisting with its
international expansion plans. From 1997 to 1999, Mr. Einhellig was Vice
President of Sales for the JOMED Group and Executive Director of JOMED
Deutschland GmbH. Prior to joining the Company, he was Vice President
Europe for Boston Scientific GmbH's SciMed Division.
- Mr. Lars Sunnanvader is the founder of JOMED. He served as the Chief
Executive Officer of JOMED Implantate GmbH from 1990 to 1999. Mr.
Sunnanvader also founded Jostra Medizintechnik AG and is a member of its
Supervisory Board.
- Mr. Rene Garo is a member of the boards of Swisslog Holding AG (listed on
the SWX Swiss Exchange), Illbruck GmbH, Digital-Logic AG and Confida
Consulting AG. He is also an investment advisor to MicroValue AG. From
1996 to 1999, he was Chief Executive Officer of Haag-Streit Holding AG, a
producer of ophthalmic diagnostic instruments. Mr. Garo served as Chief
Executive Officer of MattisMedical AG from 1992 to 1996.
I-2
<PAGE> 35
ANNEX B
U.S. BANCORP PIPER JAFFRAY LOGO
August 5, 2000
The Board of Directors
EndoSonics Corporation
2870 Kilgore Road
Rancho Cordova, CA 95670
Members of the Board:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of common stock (the "Common Stock") of EndoSonics
Corporation ("EndoSonics") of the proposed cash consideration to be paid to the
holders of Common Stock pursuant to an Agreement and Plan of Merger to be dated
as of August 3, 2000 (the "Agreement"), among Jomed N.V. ("Parent"), Jomed
Acquisition Corp. ("Purchaser"), a wholly owned subsidiary of Parent, and
EndoSonics. Pursuant to the Agreement, Purchaser would make a cash tender offer
("Tender Offer") for all of the outstanding shares of Common Stock at a purchase
price of $11.00 per share in cash (the "Offer Price"). Following completion of
the Tender Offer, Purchaser would be merged into EndoSonics (the "Merger") and
each outstanding share of Common Stock would be converted into the right to
receive the Offer Price. The terms and conditions of the Tender Offer and Merger
(collectively, the "Transaction") are more fully set forth in the Agreement.
U.S. Bancorp Piper Jaffray Inc., as a customary part of its investment
banking business, is engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, underwriting and secondary
distributions of securities, private placements and valuations for estate,
corporate and other purposes. We have acted as exclusive financial advisor to
EndoSonics in connection with the Agreement and will receive a fee for our
services which is contingent upon consummation of the Transaction. In addition,
we will receive a separate fee for providing this opinion. This opinion fee is
not contingent upon the consummation of the Transaction. EndoSonics has also
agreed to indemnify us against certain liabilities in connection with our
services. We make a market in the Common Stock and provide research coverage for
EndoSonics. We acted as lead manager of the initial public offering of the
Common Stock on March 4, 1992 and lead manager of the subsequent offering of the
Common Stock on November 14, 1995. In the ordinary course of our business, we
and our affiliates may actively trade securities of EndoSonics for our own
account or the account of our customers and, accordingly, may at any time hold a
long or short position in such securities.
<PAGE> 36
In arriving at our opinion, we have undertaken such review, analyses and
inquiries as we deemed necessary and appropriate under the circumstances. Among
other things, we have reviewed (i) a draft copy of the Agreement and Plan of
Merger dated August 3, 2000, (ii) certain financial, operating, business and
other information relative to EndoSonics that was publicly available or
furnished by the management of EndoSonics, (iii) to the extent publicly
available, the stock price premiums paid and financial terms of certain
acquisition transactions involving companies operating in industries in which
EndoSonics operates and operating performance and valuation analyses of selected
public companies deemed comparable to EndoSonics, and (iv) certain publicly
available market and securities data of EndoSonics. In addition, we had
discussions with members of the management of EndoSonics concerning the
financial condition, current operating results and business outlook for
EndoSonics on a stand-alone basis.
We have relied upon and assumed the accuracy, completeness and fairness of
the financial statements and other information provided to us by EndoSonics, or
otherwise made available to us, and have not assumed responsibility for the
independent verification of such information. We have relied upon the assurances
of the management of EndoSonics that the information provided to us by
EndoSonics has been prepared on a reasonable basis, and, with respect to
financial planning data and other business outlook information, reflects the
best currently available estimates and judgement of EndoSonics' management, and
that they are not aware of any information or facts that would make the
information provided to us incomplete or misleading.
In arriving at our opinion, we have not performed any appraisals or
valuations of any specific assets or liabilities of EndoSonics, and have not
been furnished with any such appraisals or valuations. We express no opinion
regarding the liquidation value of any entity or regarding whether the necessary
regulatory approvals, equity financings of Parent or other conditions to
consummation of the Transaction contained in the Agreement will be obtained or
satisfied.
This opinion is necessarily based upon the information available to us and
facts and circumstances as they exist and are subject to evaluation on the date
hereof; events occurring after the date hereof could materially affect the
assumptions used in preparing this opinion. We are not expressing any opinion
herein as to the price at which shares of Common Stock have traded or may trade
at any future time. We have not undertaken to reaffirm or revise this opinion or
otherwise comment upon any events occurring after the date hereof and do not
have any obligation to update, revise or reaffirm this opinion.
2
<PAGE> 37
This opinion is directed to the Board of Directors of EndoSonics and is not
intended to be and does not constitute a recommendation to any stockholder of
EndoSonics. We were not requested to opine as to, and this opinion does not
address, the basic business decision to proceed with or effect the Transaction.
Except with respect to the use of this opinion in connection with the Schedule
14D-9 relating to the Tender Offer or the Proxy Statement relating to the Merger
in accordance with the terms of the engagement letter, this opinion shall not be
published or otherwise used, nor shall any public references to us be made,
without our prior written approval.
Based upon and subject to the foregoing and based upon such other factors
as we consider relevant, it is our opinion that the Offer Price of $11.00 per
share in cash proposed to be received in the Transaction by the stockholders of
EndoSonics (other than Parent, Purchaser and its affiliates) pursuant to the
Agreement for the Common Stock is fair, from a financial point of view, to such
stockholders as of the date hereof.
Sincerely,
/s/ U.S. Bancorp Piper Jaffray
U.S. BANCORP PIPER JAFFRAY INC.
3
<PAGE> 38
ANNEX C
[ENDOSONICS LOGO]
August 21, 2000
Dear Stockholder:
We are pleased to inform you that on August 5, 2000, EndoSonics Corporation
(the "Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with JOMED N.V. ("JOMED") and its subsidiary, JOMED Acquisition
Corp. ("Purchaser"), which provides for the acquisition of the Company by JOMED.
Under the terms of the Merger Agreement, Purchaser today commenced a tender
offer (the "Offer") to purchase all of the Company's outstanding shares of
common stock at a price of $11.00 per share in cash.
Following the successful completion of the Offer, Purchaser will be merged
with the Company (the "Merger"), and all shares of common stock not purchased in
the Offer will receive in the Merger the same $11.00 per share in cash. The
closing of the Offer will be conditioned upon (i) at least a majority of the
Company's fully diluted shares being tendered and not withdrawn prior to the
expiration of the Offer; (ii) expiration or termination of the appropriate
waiting period under the Hart-Scott-Rodino Act; (iii) the satisfaction of
certain conditions to funding under a Credit Suisse First Boston commitment
letter to JOMED; and (iv) other customary closing conditions.
THE COMPANY'S BOARD OF DIRECTORS (THE "BOARD"), AT A SPECIAL MEETING HELD
ON AUGUST 5, 2000, UNANIMOUSLY (1) DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR
TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS; (2) APPROVED AND
DECLARED ADVISABLE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER; AND (3) RECOMMENDED THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES THEREUNDER.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU ACCEPT THE OFFER AND
TENDER ALL OF YOUR SHARES OF COMMON STOCK PURSUANT TO THE OFFER.
In arriving at its recommendation, the Company's Board of Directors gave
careful consideration to a number of factors which are described in the enclosed
Schedule 14D-9, including the opinion of the Company's financial advisor, U.S.
Bancorp Piper Jaffray Inc., that, as of August 5, 2000, the offer price of
$11.00 per share in cash proposed to be received in the Offer and the Merger by
the stockholders of the Company (other than JOMED, Purchaser and its affiliates)
pursuant to the Merger Agreement is fair, from a financial point of view, to
such stockholders.
Additional information with respect to the Offer and the Merger is
contained in the enclosed Schedule 14D-9, and we urge you to consider this
information carefully.
On behalf of the management and directors of the Company, we thank you for
the support you have given the Company.
Sincerely yours,
/s/ Reinharad J. Warnking
Reinhard J. Warnking
Chairman and Chief Executive Officer
<PAGE> 39
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
-------
<S> <C>
(a)(1)(A) Offer to Purchase dated August 21, 2000 ("Offer to
Purchase") (incorporated herein by reference to Exhibit
(a)(1)(A) to Schedule TO filed by Purchaser with respect to
the Company on August 21, 2000 ("Schedule TO")).
(a)(1)(B) Letter of Transmittal (incorporated herein by reference to
Exhibit (a)(1)(B) to Schedule TO).
(a)(1)(C) Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 thereunder
(incorporated by reference herein and attached hereto as
Annex A).
(a)(1)(D) Letter to Stockholders of the Company dated August 21, 2000
(incorporated by reference herein and attached hereto as
Annex C).
(a)(5)(A) Text of Press Release dated August 7, 2000 (incorporated
herein by reference to Exhibit (a)(5) of the Company's
Schedule 14D-9 filed with the Securities and Exchange
Commission (the "Commission") on August 7, 2000).
(a)(5)(B) Summary Advertisement as published in The Wall Street
Journal on August 21, 2000 (incorporated herein by reference
to Exhibit (a)(5)(B) to Schedule TO).
(e)(1) Agreement and Plan of Merger, dated as of August 5, 2000, by
and among JOMED, Purchaser and the Company (incorporated
herein by reference to the Company's Current Report on Form
8-K filed with the Commission on August 9, 2000).
(e)(2) Confidentiality Agreement, dated June 26, 2000, between
JOMED and the Company.
(e)(3) Opinion of U.S. Bancorp Piper Jaffray Inc. dated August 5,
2000 (incorporated by reference herein and attached hereto
as Annex B).
(e)(4) Certificate of Incorporation of the Company.
(e)(5) Amended Bylaws of the Company.
(e)(6) 1988 Stock Option Plan and form of a Stock Option Agreement.
(e)(7) Form of Indemnification Agreement between the Company and
the directors of the Company.
(e)(8) Distribution Agreement, dated December 15, 1998, between the
Company and JOMED (incorporated herein by reference to the
Company's Annual Report on Form 10-K (File No. 0-19880)
filed with the Commission on March 31, 1999).
(e)(9) IVUS Guided Stent Delivery System Development, Supply and
Distribution Agreement, dated December 15, 1998, between the
Company and JOMED (incorporated herein by reference to the
Company's Annual Report on Form 10-K (File No. 0-19880)
filed with the Commission on March 31, 1999).
(e)(10) Master Distribution Agreement, dated December 13, 1999,
between the Company and JOMED (incorporated herein by
reference to the Company's Annual Report on Form 10-K (File
No. 0-19880) filed with the Commission on March 30, 2000).
(e)(11) 1999 Nonstatutory Stock Option Plan of the Company
(incorporated herein by reference to the Company's Annual
Report on Form 10-K (File No. 0-19880) filed with the
Commission on March 30, 2000).
(e)(12) Nonstatutory Stock Option Agreement, dated November 8, 1999,
by and between the Company and Robrecht L.W. Michiels
(incorporated herein by reference to the Company's Annual
Report on Form 10-K (File No. 0-19880) filed with the
Commission on March 30, 2000).
(e)(13) 1998 Stock Option Plan.
</TABLE>
