<PAGE>
SCHEDULE 14C
(Rule 14c-101)
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE
SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d) (2))
[ ] Definitive Information Statement
MEDISENSE, INC.
----------------------------------------------------------------------
(Name of Registrant As Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $ 125 per Exchange Act Rules 0-11 (c)(1)(ii), or 14c-5(g).
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
COMMON STOCK, CLASS B COMMON STOCK
-----------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
330,015
-----------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
$45 PER SHARE (PRICE AT WHICH SHARES WERE TENDERED PURSUANT TO TENDER
-----------------------------------------------------------------
OFFER)
-----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$14,850,675
-----------------------------------------------------------------
(5) Total fee paid:
$2,971
-----------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid
-----------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.
-----------------------------------------------------------------
(3) Filing Party
-----------------------------------------------------------------
(4) Date Filed.
-----------------------------------------------------------------
<PAGE>
MEDISENSE, INC.
266 SECOND AVENUE
WALTHAM, MASSACHUSETTS 02154
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on _______, 1996
----------------
To the Stockholders of MediSense, Inc.:
A Special Meeting of Stockholders (the "Special Meeting") of MediSense,
Inc., a Massachusetts corporation (the "Company"), will be held on _______, 1996
at ____ a.m., local time, at _______________________, for the following
purposes:
(1) To consider and vote upon a proposal to adopt an Agreement and
Plan of Merger dated as of March 29, 1996, as amended by the Amendment
thereto dated as of May ___, 1996 (as so amended, the "Merger Agreement"),
by and among the Company, Abbott Laboratories, an Illinois corporation
("Parent"), AAC Acquisition, Inc., a Massachusetts corporation and a wholly
owned subsidiary of Parent ("AAC Acquisition"), and AAC Merger, Inc., a
Massachusetts corporation and a wholly owned subsidiary of AAC Acquisition
("AAC Merger"), pursuant to which, among other things, (a) AAC Merger will
be merged with and into the Company (the "Merger"), and the Company will be
the surviving corporation and will become a wholly owned indirect
subsidiary of Parent, and (b) each outstanding share of the Company's
common stock, par value $.01 per share (the "Common Stock") (other than
shares of Common Stock held by Parent, AAC Acquisition, AAC Merger, or in
the treasury of the Company or any of their subsidiaries or that are held
by those stockholders who perfect their appraisal rights under
Massachusetts law), will be converted into the right to receive $45.00 in
cash without interest thereon per share of Common Stock (the "Merger
Consideration"); and
(2) To transact such other business as may properly come before the
Special Meeting or any adjournment or postponement thereof.
A copy of the Merger Agreement is attached as Annex I to the Information
Statement that accompanies this Notice of Special Meeting of Stockholders (the
"Notice") and is incorporated by reference into this Notice.
The Merger Agreement has been approved by the Board of Directors of the
Company (the "Board"). The Board has carefully reviewed and considered the
terms and conditions of the proposed Merger, and the Board believes the Merger
is in the best interests of the Company and its stockholders. The Board has
received a written opinion dated March 29, 1996 from Alex. Brown & Sons
Incorporated ("Alex. Brown"), financial advisor to the Company, to the effect
that, as of the date of such written opinion, the cash consideration to be
received by the holders of shares of Common Stock of the Company pursuant to the
Merger Agreement is fair from a financial point of view to such stockholders.
THE BOARD RECOMMENDS A VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
<PAGE>
Under Massachusetts law and the Company's Restated Articles of Organization
and Bylaws, the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock that are entitled to vote thereon is required to adopt
the Merger Agreement. AAC Acquisition owns approximately 98% of the issued and
outstanding shares of Common Stock on a fully diluted basis. PARENT, AAC
ACQUISITION AND THE COMPANY HAVE AGREED THAT PARENT AND AAC ACQUISITION WILL
VOTE ALL SHARES OF COMMON STOCK HELD BY THEM AS OF THE RECORD DATE (AS DEFINED
BELOW) IN FAVOR OF ADOPTION OF THE MERGER AGREEMENT. ACCORDINGLY, UNDER
MASSACHUSETTS LAW, WITH THE VOTE OF SUCH SHARES OF COMMON STOCK IN FAVOR OF THE
ADOPTION OF THE MERGER AGREEMENT, THE MERGER AGREEMENT WILL BE ADOPTED AND THE
TRANSACTIONS CONTEMPLATED THEREBY WILL BE CONSUMMATED WITHOUT THE AFFIRMATIVE
VOTE OF ANY OTHER STOCKHOLDERS. IN LIGHT OF THE FOREGOING, THE COMPANY HAS
DETERMINED NOT TO SOLICIT PROXIES FROM ITS STOCKHOLDERS.
Only stockholders of record at the close of business on _______, 1996 (the
"Record Date") will be entitled to notice of and to vote at the Special Meeting
or any adjournment or postponement thereof.
If the Merger Agreement is approved by the stockholders at the meeting and
the Merger is consummated, any stockholder (1) who files with the Company,
before the taking of the vote on the approval of such action, a written
objection to the proposed action stating that he intends to demand payment for
his shares if the action is taken and (2) whose shares are not voted in favor of
such action has or may have the right to demand in writing from the Company,
within twenty days after the date of mailing to him of notice in writing that
the corporate action has become effective, payment for his shares and an
appraisal of the value thereof. The Company and any such stockholder shall in
such cases have the rights and duties and shall follow the procedure set forth
in sections 86 to 98, inclusive, of chapter 156B of the General Laws of
Massachusetts. See "STOCKHOLDERS' RIGHTS OF APPRAISAL" in the accompanying
Information Statement for a statement of the appraisal rights of stockholders
and a description of the procedures required to be followed by them to obtain
appraisal of their shares.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE READ THE
ATTACHED INFORMATION STATEMENT CAREFULLY. THE COMPANY IS NOT ASKING YOU FOR A
PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR STOCK AT THIS TIME. YOU WILL
RECEIVE INSTRUCTIONS REGARDING THE SURRENDER OF YOUR STOCK CERTIFICATES AND
RECEIPT OF PAYMENT FOR YOUR SHARES AFTER THE MERGER IS EFFECTIVE.
----------------
By Order of the Board of Directors,
------------------
CLERK
Waltham, Massachusetts
_______, 1996
2
<PAGE>
MEDISENSE, INC.
266 SECOND AVENUE
WALTHAM, MASSACHUSETTS 02154
----------------
INFORMATION STATEMENT
----------------
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ______, 1996
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
INTRODUCTION
This Information Statement is being furnished to the holders of record as
of _______, 1996 (the "Record Date") of shares of common stock, par value $.01
per share (the "Common Stock") of MediSense, Inc., a Massachusetts corporation
(the "Company"), in connection with the Special Meeting of Stockholders of the
Company (the "Special Meeting") to be held on _______, 1996 at _____ a.m., local
time, at __________________, and any adjournment or postponement thereof. The
purpose of the Special Meeting is to vote upon the adoption of the Agreement and
Plan of Merger dated as of March 29, 1996, as amended by the Amendment thereto
dated as of May __, 1996 (as so amended, the "Merger Agreement"), by and among
the Company, Abbott Laboratories, an Illinois corporation ("Parent"), AAC
Acquisition, Inc., a Massachusetts corporation and a wholly owned subsidiary of
Parent ("AAC Acquisition"), and AAC Merger, Inc., a Massachusetts corporation
and a wholly owned subsidiary of AAC Acquisition ("AAC Merger").
The Merger Agreement provides for, among other things, the merger of AAC
Merger with and into the Company (the "Merger"). Pursuant to the Merger
Agreement, (1) AAC Merger will be merged with and into the Company and the
Company will be the surviving corporation and will become a wholly owned
indirect subsidiary of Parent, and (2) each share of Common Stock (other than
shares of Common Stock held by Parent, AAC Acquisition, AAC Merger, or in the
treasury of the Company or any of their subsidiaries or that are held by those
stockholders who perfect their appraisal rights under Massachusetts law) will be
converted into the right to receive $45.00 in cash, without interest thereon
(the "Merger Consideration").
As of the Record Date, there were issued and outstanding _____ shares of
Common Stock. No shares of the Company's Class B common stock, par value $.01
per share (the "Class B Common Stock" and, together with the Common Stock, the
"Shares"), by virtue of their conversion into shares of Common Stock, remain
outstanding as of the Record Date. Under Massachusetts law and the Company's
Restated Articles of Organization and Bylaws, the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock that are
entitled to vote thereon is required to adopt the Merger Agreement. AAC
Acquisition owns approximately 98% of the issued and outstanding Shares on a
fully
1
<PAGE>
diluted basis, which were acquired by AAC Acquisition in a tender offer for all
outstanding Shares, made at $45.00 per Share, which expired on May 1, 1996 (the
"Offer"). PARENT, AAC ACQUISITION, AND THE COMPANY HAVE AGREED THAT PARENT AND
AAC ACQUISITION WILL VOTE ALL SHARES OF COMMON STOCK HELD BY THEM AS OF THE
RECORD DATE IN FAVOR OF ADOPTION OF THE MERGER AGREEMENT. ACCORDINGLY, ADOPTION
OF THE MERGER AGREEMENT IS ASSURED WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER.
YOU ARE NOT BEING ASKED FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND ONE. YOU
MAY VOTE YOUR SHARES, IF YOU SO WISH, BY ATTENDING THE SPECIAL MEETING IN
PERSON.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN, OR INCORPORATED BY REFERENCE IN,
THIS INFORMATION STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, PARENT, AAC ACQUISITION, AAC MERGER, OR ANY OTHER PERSON.
All information contained in this Information Statement relating to the
Company and its subsidiaries has been supplied by the Company, and all
information contained in this Information Statement relating to Parent, AAC
Acquisition, AAC Merger, and their subsidiaries (other than the Company and its
subsidiaries) has been supplied by Parent.
The date of this Information Statement is __________, 1996. This
Information Statement is first being mailed to the holders of shares of Common
Stock on or about ______, 1996.
AVAILABLE INFORMATION
The Company and Parent are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Copies of such reports, proxy statements, and other information may be inspected
and copied at the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street N.W., Washington, DC 20549; and at the public
reference facilities of the Commission's regional offices at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and Suite 1300, 7 World Trade
Center, New York, New York 10048. Copies of such material may be obtained by
mail, at prescribed rates, from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, DC 20549. In addition, such material
relating to the Company should also be available for inspection at the library
of Nasdaq and such material relating to Parent should also be available for
inspection at the library of the New York Stock Exchange.
The Common Stock is currently registered under the Exchange Act. Following
the Merger, the Company will become a wholly owned indirect subsidiary of
Parent. Public trading of Common Stock will stop no later than the time of the
Merger. Accordingly, registration of the shares of Common Stock under the
Exchange Act will be terminated upon application by the Company to the
Commission no later than the time the Merger is consummated and thereafter the
Company will no longer be subject to the reporting requirements of the Exchange
Act.
2
<PAGE>
TABLE OF CONTENTS
PAGE
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . 2
TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
THE SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 17
CONFIDENTIALITY AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . 25
STOCKHOLDERS' RIGHTS OF APPRAISAL. . . . . . . . . . . . . . . . . . . . 25
MARKET PRICES OF THE COMMON STOCK AND DIVIDEND POLICY. . . . . . . . . . 27
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . 28
INTERESTS OF CERTAIN PERSONS IN OR OPPOSITION TO
MATTERS TO BE ACTED UPON . . . . . . . . . . . . . . . . . . . . . . 29
SELECTED FINANCIAL DATA - MEDISENSE, INC.. . . . . . . . . . . . . . . . 32
SELECTED FINANCIAL DATA - ABBOTT LABORATORIES. . . . . . . . . . . . . . 33
CERTAIN INFORMATION CONCERNING AAC MERGER,
AAC ACQUISITION, AND PARENT. . . . . . . . . . . . . . . . . . . . . 34
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . 34
INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . 34
OTHER MATTERS TO COME BEFORE THE MEETING . . . . . . . . . . . . . . . . 35
3
<PAGE>
SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THIS INFORMATION STATEMENT. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND
IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION CONTAINED IN THIS
INFORMATION STATEMENT AND THE ANNEXES HERETO, TO WHICH REFERENCE IS MADE FOR A
COMPLETE STATEMENT OF THE MATTERS DISCUSSED BELOW. CAPITALIZED TERMS USED AND
NOT DEFINED IN THE FOLLOWING SUMMARY HAVE THE MEANINGS SET FORTH UNDER
"INTRODUCTION" ABOVE. STOCKHOLDERS ARE URGED TO READ THIS INFORMATION STATEMENT
AND THE ANNEXES HERETO IN THEIR ENTIRETY.
TRANSACTION PARTIES
MEDISENSE, INC. (THE "COMPANY"). The Company develops, manufactures, and
markets self-testing blood glucose monitoring systems that enable people with
diabetes to manage their disease more effectively. The principal executive
offices of the Company are located at 266 Second Avenue, Waltham, Massachusetts
02154, and its telephone number is (617) 895-6000.
ABBOTT LABORATORIES ("PARENT"). The Parent's principal business is the
discovery, development, manufacture, and sale of a broad and diversified line of
health care products and services. The principal executive offices of Parent
are located at 100 Abbott Park Road, Abbott Park, Illinois 60064, and its
telephone number is (847) 937-6100.
AAC ACQUISITION, INC. ("AAC ACQUISITION"). AAC Acquisition is a wholly
owned subsidiary of Parent. AAC Acquisition is a recently organized corporation
that has not conducted any business except in connection with the transactions
contemplated by the Merger Agreement. The principal executive offices of AAC
Acquisition are located at 100 Abbott Park Road, Abbott Park, Illinois 60064.
AAC MERGER, INC. ("AAC MERGER"). AAC Merger is a wholly owned subsidiary
of AAC Acquisition. AAC Merger is a recently organized corporation that has not
conducted any business except in connection with the transactions contemplated
by the Merger Agreement. The principal executive offices of AAC Merger are
located at 100 Abbott Park Road, Abbott Park, Illinois 60064.
THE TRANSACTION
Pursuant to the Merger Agreement, AAC Acquisition commenced a tender offer
(the "Offer") on April 4, 1996, in which AAC Acquisition offered to purchase any
and all outstanding Shares at $45.00 per Share in cash. 19,861,081 Shares were
validly tendered and not withdrawn prior to the expiration of the Offer on May
1, 1996. On May 2, 1996, AAC Acquisition accepted for payment and, therefore,
purchased all 19,861,081 Shares tendered in response to the Offer. All of the
outstanding shares of Class B Common Stock were tendered in response to the
Offer. Pursuant to their terms, upon AAC Acquisition's purchase of all of the
outstanding shares of Class B Common Stock, each such share of Class B Common
Stock was automatically converted into one share of Common Stock. As a result,
no shares of Class B Common Stock remain outstanding. The Merger Agreement
further provides that following the consummation of the Offer, Parent would
cause a direct or indirect wholly owned subsidiary of Parent to be merged with
and into the Company, with the Company to be the surviving corporation. In the
Merger, each remaining Share (other than Shares held by Parent, AAC Acquisition,
AAC Merger, or in the treasury of the Company or any of their subsidiaries or
that are held by those stockholders who perfect their appraisal rights under
Massachusetts law) will be converted into the right to receive the Merger
Consideration. As a result of the Merger, the Company will become a wholly
owned indirect subsidiary of Parent. Parent is obtaining
4
<PAGE>
the approximately $876 million required for these transactions from the proceeds
of unsecured short-term borrowings at market interest rates.
THE SPECIAL MEETING
DATE, TIME AND PLACE OF SPECIAL MEETING. __________ at ____ a.m., local
time, at _______________.
PURPOSE. To consider and act upon a proposal to adopt the Merger
Agreement. See "THE MERGER AGREEMENT."
RECORD DATE. __________, 1996.
VOTE REQUIRED. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock as of the Record Date entitled to vote
thereon will be required to adopt the Merger Agreement. Parent, AAC
Acquisition, and Company have agreed that AAC Acquisition will vote all its
shares of Common Stock in favor of adoption of the Merger Agreement. Because
AAC Acquisition owns approximately 98% of the outstanding shares of Common Stock
on a fully diluted basis, the adoption of the Merger Agreement is assured.
ACCORDINGLY, ADOPTION OF THE MERGER AGREEMENT IS ASSURED WITHOUT THE VOTE OF ANY
OTHER STOCKHOLDER. YOU ARE NOT BEING ASKED FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND ONE. STOCKHOLDERS OF RECORD MAY VOTE THEIR SHARES, IF THEY SO WISH,
BY ATTENDING THE SPECIAL MEETING IN PERSON. SEE "THE SPECIAL MEETING -- VOTING
RIGHTS AND VOTE REQUIRED."
THE MERGER AGREEMENT
BACKGROUND OF THE MERGER. See "THE MERGER -- Background of the Merger."
RECOMMENDATION OF THE BOARD. THE BOARD OF DIRECTORS OF THE COMPANY (THE
"BOARD") HAS DETERMINED THAT THE MERGER AGREEMENT IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS. THE BOARD HAS APPROVED THE
MERGER AGREEMENT AND RECOMMENDS THAT STOCKHOLDERS ADOPT THE MERGER AGREEMENT.
See "THE MERGER -- Recommendation of the Board; Reasons for the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER. In considering the
recommendation of the Board with respect to the Merger Agreement, stockholders
should be aware that certain members of the Board and of the Company's
management may have certain interests in the Merger that are in addition to or
different from the interests of the stockholders of the Company generally. See
"INTERESTS OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON."
EXCHANGE OF SHARES. Pursuant to the Merger, each share of Common Stock
(other than shares of Common Stock held by Parent, AAC Acquisition, AAC Merger,
or in the treasury of the Company or any of their subsidiaries or that are held
by those stockholders who perfect their appraisal rights under Massachusetts
law) will be converted into and represent the right to receive the Merger
Consideration. A letter of transmittal for use in surrendering stock
certificates and obtaining payment for surrendered shares will be mailed to such
holders promptly following the Effective Time (as defined below). See "THE
MERGER AGREEMENT -- The Merger." CERTIFICATES SHOULD NOT BE SURRENDERED UNTIL
THE LETTER OF TRANSMITTAL AND INSTRUCTIONS ARE OBTAINED AND THEN SHOULD BE
SURRENDERED ONLY IN ACCORDANCE WITH SUCH INSTRUCTIONS.
5
<PAGE>
OPINION OF THE COMPANY'S FINANCIAL ADVISOR. Alex. Brown has delivered to
the Board its written opinion, dated as of March 29, 1996 to the effect that, as
of the date of such written opinion, the cash consideration to be received by
the holders of the Shares is fair from a financial point of view to such
stockholders. A copy of the full text of the written opinion of Alex. Brown,
which sets forth among other things, the opinion expressed, assumptions made,
procedures followed, matters considered, and limitations of review undertaken in
connection with such opinion, is attached hereto as Annex II and should be read
in its entirety. See "THE MERGER -- Opinion of Financial Advisor."
CONDITIONS TO THE MERGER. Consummation of the Merger is subject to certain
conditions, including without limitation (1) the adoption of the Merger
Agreement by the requisite vote of the stockholders entitled to vote thereon and
(2) the absence of any statute, rule, regulation, order, decree, ruling,
injunction, or other order prohibiting the Merger or making the Merger illegal.
See "THE MERGER AGREEMENT -- Conditions to Consummation of the Merger."
EFFECTIVE TIME OF THE MERGER. The Merger shall become effective upon the
filing of the articles of merger with the Secretary of State of the Commonwealth
of Massachusetts (the "Effective Time"). See "THE MERGER AGREEMENT -- The
Merger."
EFFECTS OF THE MERGER. Pursuant to the Merger, holders of shares of Common
Stock (other than shares of Common Stock held by Parent, AAC Acquisition, AAC
Merger, or in the treasury of the Company or any of their subsidiaries or that
are held by those stockholders who perfect their appraisal rights under
Massachusetts law) will be entitled to receive the Merger Consideration for
shares of Common Stock owned by them. After consummation of the Merger, the
Company will become a wholly owned indirect subsidiary of Parent and the former
holders of the Shares will no longer possess any interest in the Company. No
later than the consummation of the Merger, the Company will terminate the
registration of the Common Stock under Section 12 of the Exchange Act. Also no
later than the consummation of the Merger, the Common Stock will no longer be
listed on any public stock exchange. See "THE MERGER -- Certain Effects of the
Merger."
TAX CONSEQUENCES TO STOCKHOLDERS. The receipt of cash by a Company
stockholder pursuant to the Merger will be a taxable transaction for federal
income tax purposes and may also be taxable under applicable state, local, and
foreign tax laws. See "THE MERGER -- Certain Federal Income Tax Consequences."
ALL STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS.
ACCOUNTING TREATMENT. The Merger will be accounted for under the
"purchase" method of accounting. See "THE MERGER -- Accounting Treatment of the
Merger."
APPRAISAL RIGHTS. If the Merger Agreement is approved by the stockholders
at the meeting and the Merger is consummated, any stockholder (1) who files with
the Company, before the taking of the vote on the approval of such action, a
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) whose shares are not voted
in favor of such action has or may have the right to demand in writing from the
Company, within twenty days after the date of mailing to him of notice in
writing that the corporate action has become effective, payment for his shares
and an appraisal of the value thereof. The Company and any such stockholder
shall in such cases have the rights and duties and shall follow the procedure
set forth in sections 86 to 98, inclusive, of chapter 156B of the General Laws
of Massachusetts. See "STOCKHOLDERS' RIGHTS OF APPRAISAL" and Annex III.
6
<PAGE>
THE SPECIAL MEETING
INTRODUCTION
This Information Statement is being furnished to the stockholders of the
Company as of the Record Date in connection with the Special Meeting to be held
on ______, 1996 at ______ a.m., local time, at _________________, and any
adjournment or postponement thereof.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, holders of shares of Common Stock will be asked to
consider and vote upon a proposal to adopt the Merger Agreement, pursuant to
which AAC Merger will be merged with and into the Company, with the Company as
the surviving corporation after the Effective Time (the "Surviving
Corporation"), and the Company will become a wholly owned indirect subsidiary of
Parent. The Company's stockholders also will consider and vote upon such other
matters as may properly come before the Special Meeting.
VOTING RIGHTS AND VOTE REQUIRED
Only holders of record of shares of Common Stock issued and outstanding as
of the close of business on the Record Date will be entitled to vote at the
Special Meeting, or any adjournment or postponement thereof, with respect to the
proposal for the adoption of the Merger Agreement. As of the Record Date, the
_________ shares of Common Stock issued and outstanding were held by
approximately _____ holders of record, and, by virtue of their conversion into
shares of Common Stock, no shares of Class B Common Stock were outstanding. At
such date, 19,861,081 shares of Common Stock (or approximately 98% on a fully
diluted basis) were held by AAC Acquisition.
Holders of record of shares of Common Stock at the close of business on the
Record Date are entitled to one vote per share with respect to the proposal for
the adoption of the Merger Agreement at the Special Meeting or any adjournment
or postponement thereof. The presence of the holders of a majority of the
shares of Common Stock entitled to vote on the Merger is necessary to constitute
a quorum to transact business at the Special Meeting. If a quorum is not
present at the Special Meeting, the holders of Common Stock who are present and
entitled to vote at the Special Meeting may, by majority vote, adjourn the
Special Meeting from time to time without notice or other announcement until a
quorum is present. BECAUSE THE SHARES OF COMMON STOCK OWNED BY AAC ACQUISITION
WILL BE REPRESENTED AT THE SPECIAL MEETING, A QUORUM WILL BE PRESENT, EVEN IF NO
OTHER SHARES OF COMMON STOCK ARE REPRESENTED.
Adoption of the Merger Agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
thereon. Under Massachusetts law and the Company's Restated Articles of
Organization and Bylaws, the affirmative vote of the holders of a majority of
the outstanding shares of Common Stock that are entitled to vote thereon is
required to adopt the Merger Agreement. Abstentions of shares of Common Stock
that are present at the Special Meeting will have the same effect as votes
against adoption of the Merger Agreement, and broker non-votes will have the
same effect as a vote against adoption of the Merger Agreement. AAC Acquisition
owns approximately 98% of the issued and outstanding shares of Common Stock on a
fully diluted basis.
7
<PAGE>
PARENT, AAC ACQUISITION, AND THE COMPANY HAVE AGREED THAT PARENT AND AAC
ACQUISITION WILL VOTE ALL SHARES OF COMMON STOCK HELD BY THEM AS OF THE RECORD
DATE IN FAVOR OF ADOPTION OF THE MERGER AGREEMENT. ACCORDINGLY, ADOPTION OF THE
MERGER AGREEMENT IS ASSURED WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER. YOU ARE
NOT BEING ASKED FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND ONE. YOU MAY VOTE
YOUR SHARES, IF YOU SO WISH, BY ATTENDING THE SPECIAL MEETING IN PERSON.
STOCKHOLDERS' RIGHTS OF APPRAISAL
As more fully described in "STOCKHOLDERS' RIGHTS OF APPRAISAL," holders of
shares of Common Stock have the right to demand appraisal of, and obtain a cash
payment for, the "fair value" of their shares (excluding any element of value
arising from the consummation of the Merger Agreement) pursuant to Sections 86
to 98, inclusive, of Chapter 156B of the General Laws of Massachusetts. In
order to exercise such rights, such holders of Common Stock must comply with the
procedural requirements of Sections 86 to 98, inclusive, of Chapter 156B of the
General Laws of Massachusetts. The full text of Sections 86 to 98, inclusive,
of Chapter 156B of the General Laws of Massachusetts is attached to this
Information Statement as Annex III and any stockholder of the Company desiring
to exercise rights of appraisal in connection with the Merger should consult
with legal counsel prior to taking any action to ensure that the stockholder
complies with the applicable statutory provisions. Failure to take any of the
steps required under Sections 86 to 98, inclusive, of Chapter 156B of the
General Laws of Massachusetts on a timely basis may result in the loss of
appraisal rights. See Annex III.
THE MERGER
BACKGROUND OF THE MERGER
On February 15, 1996, Miles D. White, Senior Vice President, Diagnostic
Operations of Parent, and Robert L. Coleman, President and Chief Executive
Officer of the Company met and discussed, in general terms, the Company's
business and prospects and the possibility of a business combination between
Parent and the Company.
On February 27, 1996, Dr. Coleman, Richard C.E. Morgan, Chairman of the
Board of Directors of the Company, and James R. Tobin, a Director of the
Company, met with Mr. White, Duane L. Burnham, Chairman and Chief Executive
Officer of Parent, Thomas R. Hodgson, President and Chief Operating Officer of
Parent, and Gary P. Coughlan, Senior Vice President, Finance and Chief Financial
Officer of Parent, to discuss further the business of the Company and the
possibility that Parent might acquire the Company.
On March 2, 1996, the Board met via teleconference. At this meeting, Mr.
Morgan and Dr. Coleman summarized to the Board their conversations with the
representatives of Parent. The Board and the Company's legal and financial
advisors discussed these conversations, as well as the advisability of the
Company's entering into a business combination at that time compared to
remaining independent. The Board and its advisors also discussed the likelihood
that there would be other interested parties, as well as possible antitrust and
other issues with respect to potential interested parties. Following these
discussions, the Board authorized the Company's management to enter into a
confidentiality agreement
8
<PAGE>
with Parent containing "standstill" provisions prohibiting certain unsolicited
proposals and transactions and to commence discussions of a possible business
combination with Parent.
Following the Company's March 2, 1996 Board meeting, the Company and Parent
began to discuss a confidentiality and standstill agreement. From March 2 to
March 13, 1996, representatives of Parent and the Company and their respective
financial and legal advisors exchanged drafts and discussed various provisions
of a confidentiality and standstill agreement.
On March 13, 1996, the Company and Parent entered into a confidentiality
agreement (the "Confidentiality Agreement") providing for the mutual non-
disclosure of confidential information exchanged by the Company and Parent. The
Confidentiality Agreement also provided for a one year standstill by Parent,
subject to certain exceptions, and a 16-day period during which the Company
would negotiate exclusively with Parent. Immediately thereafter,
representatives of Alex. Brown, financial advisors to the Company, met with
representatives of Goldman, Sachs & Co., financial advisors to Parent, to
discuss the financial advisors' respective views as to the methodologies that
should be used to value the Company.
Later on March 13, 1996, Mr. Burnham telephoned Mr. Morgan to discuss
certain financial aspects of the proposed transaction. On March 15, 1996,
representatives of Alex. Brown and Goldman, Sachs & Co. met again to discuss
valuation methodologies. From March 13, 1996 through March 29, 1996, Parent's
financial and legal advisors continued to request and review various documents
containing confidential information supplied by the Company and discuss various
due diligence matters.
On March 18, 1996, Mr. White and certain other representatives of Parent
and Parent's financial advisors met with Dr. Coleman and certain other
representatives of the Company and the Company's financial advisors. At that
meeting, representatives of the Company made a financial presentation to
Parent's representatives and financial advisors and discussed various aspects of
the Company's business. Tentative discussions of a possible purchase price
indicated that the views of the Company and Parent were significantly different.
From March 18, 1996 through March 25, 1996, the parties exchanged numerous
telephone calls with respect to valuation and other matters.
On March 25, 1996, Mr. Burnham and Mr. White met with Mr. Morgan and Dr.
Coleman to discuss the terms of a possible transaction. At that meeting, Mr.
Burnham and Mr. Morgan, after extensive discussion, established a preliminary
basis, subject to satisfactory completion of Parent's due diligence review of
the Company, negotiation of satisfactory terms of a merger agreement, the
receipt of fairness opinions and the approval of the respective Boards of
Directors of Parent and the Company, to continue discussions regarding an
acquisition of the Company by Parent at a price of $45.00 per Share, which
represented a compromise between the competing views as to the price.
On March 26, 1996, the Board at a regular meeting discussed the proposed
transaction and received the views of the Company's financial and legal
advisors. At the meeting, the Board received presentations from management and
the Company's financial and legal advisors. The Company's management reviewed
the state of the Company's business and its prospects. Shearman & Sterling, the
Company's special counsel, reviewed the Board's fiduciary duties to the Company
and its stockholders, and Alex. Brown presented its analysis as to the proposed
consideration to be received by the Company's stockholders. Following the
presentations, the Board, management, and the Company's advisors discussed the
merits and risks of alternative transactions. The Board again discussed the
number of likely
9
<PAGE>
alternative bidders and the antitrust and other risks that would impact the
likelihood of consummation of a transaction with such other bidders. During
this meeting, special counsel to the Company contacted counsel to Parent by
telephone to discuss certain aspects of a possible agreement relating to the
proposed transaction.
On March 26, 1996, counsel for Parent distributed a draft Merger Agreement
to the Company and its legal and financial advisors. On March 26 and 27, 1996,
representatives of Parent met with representatives of the Company to discuss
certain additional due diligence matters and request certain additional
information. Also on March 27, 1996, the Company's legal advisors distributed a
revised draft Merger Agreement to Parent and its legal and financial advisors.
On March 28, 1996, a representative of the Company and the Company's legal
advisors met with representatives of Parent and Parent's legal advisors to
continue negotiation of the terms of the proposed Merger Agreement. On March
28, 1996, Parent's financial advisors held discussions by telephone with the
Company's financial advisors regarding certain financial aspects of the proposed
transaction.
On the morning of March 29, 1996, after completion of the negotiations over
the proposed Merger Agreement, the Board held a special meeting by
teleconference to review, with the advice and assistance of the Company's
financial and legal advisors, the proposed Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger. At the meeting,
counsel to the Company reviewed the terms of the Merger Agreement. Alex. Brown
presented an update of its financial analysis and rendered to the Board its
written opinion that the cash consideration of $45.00 per Share to be received
by holders of the Shares pursuant to the Merger Agreement is fair from a
financial point of view to such stockholders. Following a number of questions
from, and discussion among the directors, the Board unanimously (1) approved the
Merger Agreement and the transactions contemplated thereby and authorized the
execution and delivery thereof, (2) determined that the Offer and the Merger,
taken together, are fair to, and in the best interests of, the Company and its
stockholders, and (3) recommended that the Company's stockholders accept the
Offer and tender their Shares to AAC Acquisition.
Simultaneously with the special meeting of the Board on March 29, 1996,
the Board of Directors of Parent held a special meeting to review, with the
advice and assistance of Parent's financial and legal advisors, the proposed
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger. At such meeting, Parent's management, financial advisors and
legal advisors made presentations to the Board concerning the transaction and
Parent's financial advisor, Goldman, Sachs & Co., provided its written opinion
to the effect that the consideration to be paid by Parent pursuant to the Merger
Agreement is fair to the stockholders of Parent from a financial point of view.
Following the Board of Directors' review of the transaction, Parent's Board of
Directors unanimously approved the Merger Agreement and the transactions
contemplated thereby, and authorized the execution and delivery thereof.
Also on March 29, 1996, immediately after the respective meetings of the
Boards of Directors of the Company and Parent had concluded, the Merger
Agreement was executed and delivered by the Company, Parent, and AAC Acquisition
and the Company and Parent issued the following joint press release:
ABBOTT LABORATORIES TO ACQUIRE MEDISENSE, INC.
Abbott Park, Ill., and Waltham, Ma., March 29, 1996 - Abbott
Laboratories (NYSE: ABT) and MediSense, Inc. (NASDAQ: MSNS) today announced
that they have signed a
10
<PAGE>
definitive agreement through which Abbott will acquire MediSense, the
biosensor technology leader in blood glucose self-testing systems for
people with diabetes.
Under the terms of the agreement, Abbott will make a tender offer to
acquire 100 percent of the outstanding shares of MediSense for $45 per
share, or an equity value of approximately $876 million. The Abbott and
MediSense boards of directors have endorsed the offer. The tender offer is
expected to be completed in approximately five weeks, subject to regulatory
approvals and customary closing conditions. Following the tender offer,
MediSense will be merged into a wholly-owned subsidiary of Abbott
Laboratories, and each remaining MediSense shareholder will receive $45 per
share in exchange for each MediSense share held.
"We are extremely pleased to add MediSense's superior technology and
outstanding people to our company," said Duane L, Burnham, chairman and
chief executive officer of Abbott Laboratories. "MediSense fits very well
with our diagnostics operations, and will create many opportunities for
synergy with our other divisions as well."
According to Miles D. White, senior vice president, diagnostics
operations, the acquisition advances Abbott's interests in the glucose
monitoring market. "This important strategic step, combined with other
internal and external initiatives to secure industry-leading technology in
glucose monitoring, will position Abbott very favorably in this market. In
addition to providing immediate access to the fastest-growing segment of
the diagnostics market, MediSense's research and development program will
augment our existing work to develop and commercialize future noninvasive
monitoring technologies," said White.
"We are delighted to become a part of the world's leading diagnostics
company," said Robert L. Coleman, Ph.D., president and chief executive
officer of MediSense. "The combination of the two organizations will
accelerate market growth and will ensure continued development and
availability of therapies to improve the care of people with diabetes."
MediSense manufactures products that allow people with diabetes to
routinely measure blood glucose which is critical to diabetes management.
The products are compact, easy-to-use home glucose meters and disposable
single-use test strips. MediSense was the first company to develop a
biosensor-based blood glucose self-testing system. MediSense's leading
system, the Precision Q-I-D-TM-, provides accurate results, with less
blood, faster than any competing product.
The MediSense subsidiary of Abbott will continue to be located in
Massachusetts, with Dr. Coleman remaining as president of the subsidiary.
MediSense is a worldwide developer, manufacturer and marketer of blood
glucose self-testing systems that enable people with diabetes to manage
their disease more effectively. MediSense believes the convenience and
simplicity of its products promote increased testing compliance by
individuals with diabetes and provide for more effective management of
their condition.
Abbott Laboratories is a diversified global manufacturer of health
care products, employing 50,000 people. The company researches, develops
and markets pharmaceutical, diagnostic, nutritional and hospital products.
In 1995, the company's sales and net earnings were $10.0 billion and $1.7
billion, respectively, with earnings per share of $2.12.
* * *
11
<PAGE>
AAC Acquisition commenced the Offer on April 4, 1996.
Parent received early termination of the waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act and on April 11, 1996, Parent
issued the following press release:
ABBOTT LABORATORIES ACQUISITION OF MEDISENSE, INC. RECEIVES ANTITRUST
CLEARANCE
ABBOTT PARK, Ill., April 11, 1996 -- Abbott Laboratories (NYSE: ABT)
announced today that it received early termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act applicable to
Abbott's pending acquisition of MediSense, Inc. The termination of the
Hart-Scott-Rodino waiting period satisfies one of the principal conditions
to the pending acquisition.
The two companies announced on March 29 that they had signed a
definitive agreement through which Abbott will acquire MediSense, the
biosensor technology leader in blood glucose self-testing systems for
people with diabetes. Abbott commenced a cash tender offer on April 4,
1996, for all outstanding shares of MediSense common stock at a price of
$45 per share. The tender offer is scheduled to expire at midnight, May 1,
1996, subject to customary closing conditions.
Following the tender offer, MediSense will be merged with a wholly
owned indirect subsidiary of Abbott Laboratories, and each remaining
MediSense shareholder will receive $45 per share in exchange for each
MediSense share held.
Abbott Laboratories is a worldwide manufacturer of health care
products, employing 50,000 people. In 1995, the company's sales and net
earnings were $10.0 billion and $1.7 billion, respectively, with earnings
per share of $2.12.
* * *
The Offer expired pursuant to its terms on May 1, 1996. On May 2, 1996,
Parent accepted for payment and, therefore, purchased all of the 19,861,081
Shares that were validly tendered and not withdrawn prior to the expiration of
the Offer. The Shares so purchased by AAC Acquisition represent approximately
98% of the outstanding Shares on a fully diluted basis.
Also on May 2, 1996, Richard C.E. Morgan, John F. Gaither, Jr., Raymond D.
Oddi, Kenneth E. Quickel, Jr., M.D., Peter R. Rosenblatt, and James R. Tobin
resigned as directors of the Company and Gary P. Coughlan, Miles D. White, and
Jose M. de Lasa, designees of Parent, were elected as directors of the Company.
Robert L. Coleman, Ph.D., remains a director of the Company.
RECOMMENDATION OF THE BOARD; REASONS FOR THE MERGER
At a special meeting held on March 29, 1996, the Board unanimously approved
the Merger Agreement and the transactions contemplated thereby and determined
that the Merger and the Offer, taken together, are fair to, and in the best
interests of, the Company and its stockholders.
12
<PAGE>
THE BOARD RECOMMENDS A VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
In light of the Board's review of the Company's competitive and financial
position, recent operating results and prospects, the Board determined that the
Offer and the Merger, taken together, are fair to, and in the best interests of,
the Company and its stockholders. In making such recommendation and in
approving the Merger Agreement and the transactions contemplated thereby, the
Board considered a number of factors, including, but not limited to, the
following:
(1) the terms and conditions of the Merger Agreement;
(2) the views expressed by management of the Company (at the Board
meetings on March 26, 1996, March 29, 1996 and at previous Board meetings)
regarding the financial condition, results of operations, business and prospects
of the Company, including the prospects of the Company if the Company were to
remain independent;
(3) the trading price of the shares of Common Stock following the
Company's initial public offering on July 8, 1994; and that the $45.00 per Share
to be paid in the Offer and as the consideration in the Merger represents a
premium of approximately 48.8% over the $30.25 closing sale price for the Shares
on the Nasdaq National Market on March 28, 1996, the last trading day prior to
the public announcement of the execution of the Merger Agreement and a premium
of approximately 45.2% over the $31.00 closing sale price for the Shares on the
Nasdaq National Market one month prior to March 28, 1996;
(4) although the Company had not had any recent discussions with other
potential acquirors of the Company, prior to the time of the initial public
offering of the Common Stock, Alex. Brown had made inquiries of a number of
potential acquirors, and those inquiries had failed to identify a transaction
which would have resulted in an acquisition that appeared more attractive to the
Board than the initial public offering of the Common Stock;
(5) the views expressed by management and Alex. Brown, that there appeared
to be a limited number of parties with which the Company would be a good
strategic fit, the views of management and the Company's counsel that antitrust
and other issues might affect the likelihood of consummation of any alternative
transaction, and the Board's conclusion that it was not likely that any other
party would consider a transaction that was more favorable to the Company and
its stockholders;
(6) the oral and written presentations by Alex. Brown at the March 26,
1996 and March 29, 1996 Board meetings and the opinion of Alex. Brown delivered
to the Board at the March 29, 1996 Board meeting that, as of such date, and
subject to the assumptions made, matters considered, and limitations set forth
in such opinion, the consideration to be received by the holders of the Shares
pursuant to the Merger Agreement is fair from a financial point of view to such
stockholders. A copy of the opinion of Alex. Brown is attached hereto as Annex
II to this Information Statement and is incorporated herein by reference.
STOCKHOLDERS ARE URGED TO READ THE OPINION OF ALEX. BROWN CAREFULLY AND IN ITS
ENTIRETY;
(7) the Merger Agreement permits the Board, in the exercise of its
fiduciary duties, to furnish nonpublic information and data, and enter into
discussions and negotiations in connection with an unsolicited acquisition
proposal and recommend an unsolicited acquisition proposal to the Company's
stockholders;
13
<PAGE>
(8) the Merger Agreement permits the Board, in the exercise of its
fiduciary duties, to terminate the Merger Agreement in favor of a superior
alternative acquisition proposal; upon such termination, the Company shall pay
Parent a fee of $17,500,000 (representing approximately 2% of the total value of
the consideration to be paid in the Offer and the Merger); and
(9) the transactions contemplated by the Merger Agreement provided for an
all cash payment to shareholders, with no financing condition; there appeared to
be no significant regulatory impediments to consummation of the Merger;
accordingly, the Offer and the Merger could be promptly completed with a high
degree of certainty.
The Board did not assign relative weights to the above factors or determine
that any factor was of particular importance. Rather, the Board viewed its
position and recommendations as being based on the totality of the information
presented to and considered by it.
The Board recognized that, while the consummation of the Offer and the
Merger gives the Company's stockholders the opportunity to realize a significant
premium over the price at which the Shares were traded prior to the public
announcement of the Offer, the Offer and the Merger would eliminate the
opportunity for such stockholders to participate in the future growth and
profits of the Company. The Board believed that the loss of the opportunity to
participate in the growth and profits of the Surviving Corporation was reflected
in the Offer Price. The Board also recognized that there can be no assurance as
to the level of growth or profits to be attained by the Surviving Corporation in
the future.
OPINION OF FINANCIAL ADVISOR
The Company retained Alex. Brown on May 12, 1994 to act as the Company's
financial advisor in connection with an acquisition transaction, such as the
Offer and the Merger, including rendering its opinion to the Board as to the
fairness from a financial point of view of such transaction. Pursuant to a
letter agreement dated May 12, 1994 between the Company and Alex. Brown, the
Company agreed to pay Alex. Brown a cash fee equal to 1.0% of the aggregate
consideration received by the Company's stockholders in an acquisition
transaction. The Company also agreed to reimburse Alex. Brown for its
reasonable out-of-pocket expenses, including reasonable fees and disbursements
of its counsel. The Company further agreed to indemnify and hold harmless Alex.
Brown and each of its directors, officers, agents, employees, and controlling
persons against any losses, claims, damages, or liabilities (or actions or
proceedings in respect thereof) related to or arising out of its rendering of
services under its engagement as financial advisor, and will reimburse Alex.
Brown and each other person indemnified for all legal and other expenses as
incurred in connection with investigating or defending any such loss, claim,
damage, liability, action, or proceeding.
Alex. Brown, 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, negotiated underwritings, secondary distributions of
securities, private placements, and valuations for corporate and other purposes.
Alex. Brown has served as financial advisor to the Company in connection with
the Merger and will receive a fee for its services, a substantial portion of
which is contingent upon the consummation of the Merger. Alex. Brown served as
underwriter to the Company in its initial public offering of Common Stock in
June 1994 and its follow-on offering of Common Stock in February 1995. Alex.
Brown maintains a market in the Common Stock and regularly publishes research
reports regarding the health
14
<PAGE>
care industry and the businesses and securities of publicly owned companies in
that industry, including the Company and Parent.
At the March 26, 1996 meeting of the Board, representatives of Alex. Brown
made a presentation with respect to the proposed consideration to be received by
the Company's stockholders in the Offer and the Merger. At the March 29, 1996
meeting of the Board, Alex. Brown rendered to the Board its written opinion
that, as of such date, and subject to the assumptions made, matters considered,
and limitations set forth in such opinion and summarized below, the
consideration to be received by the holders of Shares pursuant to the Merger
Agreement is fair from a financial point of view to such stockholders. No
limitations were imposed by the Board upon Alex. Brown with respect to the
investigations made or procedures followed by it in rendering its opinion.
THE FULL TEXT OF ALEX. BROWN'S WRITTEN OPINION DATED MARCH 29, 1996 WHICH
SETS FORTH, AMONG OTHER THINGS, ASSUMPTIONS MADE, MATTERS CONSIDERED, AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED HERETO AS ANNEX II AND IS
INCORPORATED HEREIN BY REFERENCE. THE COMPANY'S STOCKHOLDERS ARE URGED TO READ
THE ALEX. BROWN OPINION IN ITS ENTIRETY. THE ALEX. BROWN OPINION IS DIRECTED TO
THE BOARD, ADDRESSES ONLY THE FAIRNESS OF THE CONSIDERATION TO BE RECEIVED BY
THE HOLDERS OF SHARES PURSUANT TO THE MERGER AGREEMENT FROM A FINANCIAL POINT OF
VIEW, AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER
SUCH STOCKHOLDER SHOULD VOTE HIS SHARES IN FAVOR OF ADOPTION OF THE MERGER
AGREEMENT. THE ALEX. BROWN OPINION WAS RENDERED TO THE BOARD FOR ITS
CONSIDERATION IN DETERMINING WHETHER TO APPROVE THE MERGER AGREEMENT AND
RECOMMEND THAT HOLDERS OF SHARES ACCEPT THE OFFER. THE DISCUSSION OF THE ALEX.
BROWN OPINION IN THIS INFORMATION STATEMENT IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF THE ALEX. BROWN OPINION.
In connection with its opinion, Alex. Brown reviewed the Merger Agreement
and certain publicly available financial information concerning the Company.
Alex. Brown reviewed certain internal financial analyses and other information
of the Company made available to it by the management of the Company and held
discussions with members of the senior management of the Company regarding the
business and prospects of the Company. In addition, Alex. Brown (1) reviewed
the reported price and trading activity for the Common Stock, (2) compared
certain financial and stock market information for the Company with similar
information for certain publicly traded companies, (3) reviewed the financial
terms of certain recent business combinations, and (4) performed such other
studies and analyses and took into account such other matters as it deemed
necessary.
In conducting its review and arriving at its opinion, Alex. Brown assumed
and relied upon, without independent verification, the accuracy and completeness
of the information reviewed by it for purposes of its opinion. With respect to
the financial projections and information relating to the prospects of the
Company, Alex. Brown assumed that such information had been reasonably prepared
on bases reflecting the best currently available estimates and judgments of
management of the Company as to the likely future financial prospects of the
Company. In addition, Alex. Brown did not make an independent valuation or
appraisal of the assets of the Company (nor was it furnished with any such
valuation or appraisal) nor did it make any physical inspection of the
properties or assets of the Company. The Alex. Brown opinion is based on
market, economic, financial, and other conditions as they existed and could be
evaluated as of the date of its opinion.
15
<PAGE>
CERTAIN EFFECTS OF THE MERGER
At the Effective Time, all of the properties, rights, privileges, powers,
and franchises of the Company and AAC Merger will vest in the Surviving
Corporation, and all debts, liabilities, restrictions, disabilities, and duties
of the Company and AAC Merger will become the debts, liabilities, restrictions,
disabilities, and duties of the Surviving Corporation. Except for certain
indemnification provisions, at the Effective Time, the Articles of Organization
of AAC Merger in effect immediately prior to the Effective Time shall be the
Articles of Organization of the Surviving Corporation until amended in
accordance with applicable law; PROVIDED, however, that at the Effective Time,
Article I of the Articles of Organization of the Surviving Corporation shall be
amended to read as follows: "The name by which the corporation shall be known
is MediSense, Inc." The By-Laws of AAC Merger in effect at the Effective Time
shall be the By-Laws of the Surviving Corporation until amended in accordance
with applicable law.
As a result of the Offer and the Merger, no later than the Effective Time,
the Common Stock no longer will be publicly traded and AAC Acquisition will
become the sole stockholder of the Surviving Corporation. Following the Merger,
the current stockholders other than Parent, AAC Acquisition, and AAC Merger will
no longer have an opportunity to continue their interests in the Company as an
ongoing corporation and therefore will not share in its future earnings and
potential growth. Trading in the Common Stock on Nasdaq will cease no later
than the Effective Time. Registration of the Common Stock under the Exchange
Act also will be terminated, as will the ongoing disclosure requirements
thereunder.
At the Effective Time, by virtue of the Merger and without any action on
the part of Parent, AAC Acquisition, AAC Merger, the Company, or the holder of
any of the shares of Common Stock, each share of Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares of Common
Stock held by Parent, AAC Acquisition, AAC Merger, or in the treasury of the
Company or any of their subsidiaries or that are held by those stockholders who
perfect their appraisal rights under Massachusetts law), shall by virtue of the
Merger and without any action on the part of the holder thereof be cancelled and
extinguished and be converted into the right to receive an amount equal to the
Merger Consideration. Each share of Common Stock issued and outstanding
immediately prior to the Effective Time and owned by Parent, AAC Acquisition, or
AAC Merger or any direct or indirect subsidiary of Parent, AAC Acquisition or
AAC Merger, or which is held in the treasury of the Company or any of its
subsidiaries, shall be cancelled and retired and no payment of any consideration
shall be made with respect thereto. Each share of common stock, par value $0.01
per share, of AAC Merger issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly issued, fully paid
and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for under the "purchase" method of accounting.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the principal federal income tax
consequences of the Offer and the Merger to holders whose shares of Common Stock
are purchased pursuant to the Offer and the Merger (including any cash amounts
received by dissenting stockholders pursuant to the exercise of
16
<PAGE>
appraisal rights). The discussion applies only to holders of shares of Common
Stock in whose hands shares of Common Stock are capital assets, and may not
apply to shares of Common Stock received pursuant to the exercise of employee
stock options or otherwise as compensation, or to holders of shares of Common
Stock who are not citizens or residents of the United States.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON PRESENT LAW. BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES OF COMMON STOCK IS
URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF
THE RULES DISCUSSED BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF
THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL,
AND OTHER TAX LAWS.
The receipt of cash pursuant to the Offer and the Merger (including any
cash amounts received by dissenting stockholders pursuant to the exercise of
appraisal rights) will be a taxable transaction for federal income tax purposes
under the Internal Revenue Code of 1986 (the "Code") and also may be a taxable
transaction under applicable state, local, and other income tax laws. In
general, for federal income tax purposes, a stockholder will recognize gain or
loss equal to the difference between the cash received by the stockholder
pursuant to the Offer and the Merger and the stockholder's adjusted tax basis in
the shares of Common Stock purchased pursuant to the Offer and the Merger. Gain
or loss must be determined separately for each block of shares of Common Stock
(i.e., shares of Common Stock acquired at the same capital cost in a single
transaction) purchased pursuant to the Offer and the Merger. Such gain or loss
will be capital gain or loss and will be long-term gain or loss if, on the
effective date of the Merger, the shares of Common Stock were held for more than
one year. There are limitations on the deductibility of capital losses.
Payments in connection with the Offer and the Merger may be subject to
"backup withholding" at a 31% rate. Backup withholding generally applies if the
stockholder fails to furnish such stockholder's social security number or other
taxpayer identification number ("TIN"), or furnishes an incorrect TIN. Backup
withholding is not an additional tax but merely an advance payment, which may be
refunded to the extent it results in an overpayment of tax. Certain persons
generally are exempt from backup withholding, including corporations and
financial institutions. Certain penalties apply for failure to furnish correct
information and for failure to include the reportable payments in income.
Stockholders should consult with their own tax advisors as to the qualifications
for exemption from withholding and the procedure for obtaining such exemption.
THE MERGER AGREEMENT
GENERAL
The following is a brief summary of certain provisions of the Merger
Agreement, a copy of which is attached as Annex I to this Information Statement
and is incorporated herein by reference. This summary does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement.
ALL STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE MERGER AGREEMENT IN ITS
ENTIRETY.
17
<PAGE>
THE MERGER
The Merger Agreement provides that, at the Effective Time and upon the
terms and subject to the conditions of the Merger Agreement and Massachusetts
law, AAC Merger will be merged with and into the Company, and the separate
existence of AAC Merger will cease with the Company continuing as the Surviving
Corporation. At AAC Acquisition's option, the Merger may be structured so that
any direct or indirect subsidiary of Parent is merged with and into the Company.
As soon as practicable after the satisfaction or waiver of the conditions
to the Merger, the parties will file with the Secretary of State of the
Commonwealth of Massachusetts the articles of merger and will make all other
filings or recordings required by Massachusetts law. The Merger will become
effective upon the filing and acceptance of the articles of merger, or at such
later time as is specified in the articles of merger.
At the Effective Time, each Share outstanding immediately prior to the
Effective Time (other than Shares held by Parent, AAC Acquisition, AAC Merger,
or in the treasury of the Company or any of their subsidiaries or that are held
by those stockholders who perfect their appraisal rights under Massachusetts
law), will be cancelled and extinguished and will be converted into the right to
receive an amount equal to the Merger Consideration.
Shares outstanding immediately prior to the Effective Time and held by a
holder who has not voted in favor of the Merger or consented thereto in writing
and who has demanded appraisal for such Shares in accordance with Massachusetts
law will not be converted into a right to receive the Merger Consideration
unless such holder fails to perfect or withdraws or otherwise loses such
holder's right to appraisal. If, after the Effective Time, such holder fails to
perfect or withdraws or loses such holder's right to appraisal, such Shares will
be treated as if they had been converted into a right to receive the Merger
Consideration.
The Merger Agreement provides that, if approval by the Company's
stockholders is required by applicable law to consummate the Merger, the Company
will, as soon as practicable following the consummation of the Offer, hold an
annual or special meeting of its stockholders to consider and take action upon
the Merger Agreement, including in the proxy or information statement the
recommendation of the Board that stockholders vote in favor of the approval of
adoption of the Merger Agreement and the transactions contemplated thereby. At
such meeting, Parent and AAC Acquisition will vote all Shares owned by them in
favor of the Merger Agreement and the transactions contemplated thereby.
Promptly after the Effective Time, the Surviving Corporation will mail to
each record holder a letter of transmittal and instructions for effecting the
surrender of certificate(s) which, prior to the Effective Time, represented
Shares. Upon surrender of the certificate(s) representing a holder's Shares,
together with a completed and validly executed letter of transmittal, such
holder will be entitled to receive the Merger Consideration in respect thereof.
Until so surrendered or exchanged, each certificate will represent only the
right to receive the Merger Consideration.
18
<PAGE>
THE OFFER
Pursuant to the terms of the Merger Agreement, AAC Acquisition was required
to commence the Offer no later than the fifth business day following the public
announcement of the terms of the Merger Agreement. The obligation of AAC
Acquisition to accept for payment and pay for any Shares tendered pursuant to
the Offer was subject only to the Offer conditions. The Merger Agreement
allowed AAC Acquisition to increase the Offer price and make any other changes
in the terms and conditions of the Offer, provided that, unless previously
approved by the Company in writing, no change would be made that would decrease
the price per Share payable in the Offer, change the form of consideration
payable in the Offer, reduce the maximum number of Shares to be purchased in the
Offer, or impose conditions to the Offer in addition to certain conditions set
forth in the Merger Agreement.
Subject to the satisfaction of certain conditions set forth in the Merger
Agreement, AAC Acquisition agreed to accept for payment and pay for Shares that
were validly tendered and not withdrawn pursuant to the Offer as soon as it was
permitted to do so under applicable law. Notwithstanding the foregoing, if the
number of Shares tendered and not withdrawn had represented less than 90% of the
Shares outstanding on a fully diluted basis, AAC Acquisition was permitted to
extend the Offer up to the tenth business day following the date on which all
conditions to the Offer had first been satisfied or waived.
The Merger Agreement provides that if the Offer Conditions had not been
satisfied on the initial expiration date of the Offer, AAC Acquisition would
have been required to extend (and re-extend) the Offer through June 30, 1996 to
provide time to satisfy such conditions; provided that, if AAC Acquisition had
not purchased Shares pursuant to the Offer prior to June 30, 1996 as the result
of the receipt by the Company of an Acquisition Proposal (as defined below) or
as a result of a failure of the applicable waiting period under the HSR Act to
expire or the failure to obtain any necessary governmental or regulatory
approvals, AAC Acquisition would have been required to extend (and re-extend)
the Offer through September 30, 1996.
The Merger Agreement required, as soon as practicable on the date of
commencement of the Offer, (a) Parent and AAC Acquisition to file with the
Commission a Tender Offer Statement on Schedule 14D-1 with respect to the Offer
that contained the offer to purchase and form of the related letter of
transmittal and (b) the Company to file with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9 that it mailed to
stockholders promptly after the commencement of the Offer. AAC Acquisition and
the Company also agreed to take all steps necessary to cause the offer to
purchase and the form of the related letter of transmittal to be disseminated to
holders of Shares as and to the extent required by applicable federal securities
laws.
BOARD REPRESENTATION
Following the purchase by AAC Acquisition of Shares pursuant to the Offer
and from time to time thereafter, AAC Acquisition is entitled to designate a
number of directors on the Board equal to the product of (1) the total number of
directors on the Board and (2) AAC Acquisition's percentage ownership of the
outstanding Shares of the Company. The Company will either increase the size of
the Board or secure the resignation of the necessary number of directors to
enable AAC Acquisition's designees to be elected to the Board and will cause
such designees to be elected to the Board.
19
<PAGE>
Any amendment of the Merger Agreement or the Restated Articles of
Organization or By-laws of the Company, any termination of the Merger Agreement
by the Company, and any extension by the Company of the time for performance of
obligations or the waiver of any rights under the Merger Agreement will require
the vote of a majority of directors of the Company who are not AAC Acquisition's
designees or employees of the Company.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of the
Company, including representations by the Company as to: (1) organization,
qualification, and similar corporate matters of the Company and its
subsidiaries, (2) capitalization of the Company and its subsidiaries, (3) the
authorization, execution, delivery, performance, and enforceability of the
Merger Agreement, (4) the non-contravention of the Merger Agreement and related
transactions with any charter provision, by-law, material contract, order, law,
or regulation to which the Company or its subsidiaries is a party or by which it
is bound or obligated, (5) the filing of required Commission reports and the
absence of untrue statements of material facts or omissions of material facts in
such reports, (6) the absence of changes or events which have had a material
adverse effect on the Company and the absence of certain derivative instruments
that would result in a material adverse effect on the Company, (7) the absence
of untrue statements of material facts or omissions of material facts in the
Schedule 14D-9 and the proxy or information statement to be sent to
stockholders, (8) the absence of payments to any intermediary other than Alex.
Brown of any finder's or other fee or commission, (9) claims and litigation,
(10) the filing of tax returns and the payment of taxes, (11) employee benefits
matters, (12) compliance with laws, rules, statutes, orders ordinances or
regulations, and material notes, bonds, mortgages, indentures, contracts,
agreements, leases, licenses, permits, franchise, or other instruments or
obligations of the Company or any of its subsidiaries which would result in a
Material Adverse Effect, (13) the absence of environmental claims and compliance
with all environmental laws and regulations, (14) possession of all necessary
rights and licenses in intellectual property, (15) possession of all necessary
insurance, (16) the absence of real property ownership and the possession and
enforceability of all real property leases, (17) the absence of notices,
citations, or decisions of governmental or regulatory bodies and recalls or
warning letters from the Food and Drug Administration with respect to any
product produced, manufactured, marketed, or distributed by the Company, and
possession of and compliance with all necessary approvals, clearances,
authorizations, licenses, and registrations relating to such products, (18)
labor matters, (19) applicable voting requirements, and (20) inapplicability of
state takeover laws.
The Merger Agreement contains various customary representations and
warranties of Parent and AAC Acquisition, including representations by Parent
and AAC Acquisition as to: (1) organization, qualification, and similar
corporate matters of Parent and AAC Acquisition, (2) the authorization,
execution, delivery, performance, and enforceability of the Merger Agreement,
(3) the non-contravention of the Merger Agreement and related transactions with
any charter provision, by-law, material contract, order, law, or regulation to
which Parent or AAC Acquisition is a party or by which it is bound or obligated,
(4) the absence of untrue statements of material facts or omissions of material
facts in any documents related to the Offer and in information provided to the
Company in connection with the Schedule 14D-1 and proxy statement, (5) the
absence of prior activities of AAC Acquisition other than in connection with or
as contemplated by the Merger Agreement, and (6) the possession of all funds
necessary to satisfy AAC Acquisition's obligations under the Merger Agreement.
20
<PAGE>
The representations and warranties in the Merger Agreement shall not
survive beyond the Effective Time, except that the covenants and agreements in
the Merger Agreement shall survive in accordance with their respective terms.
COVENANTS
CONDUCT OF BUSINESS PENDING THE CLOSING. From the date of the Merger
Agreement to the time AAC Acquisition's designees are elected as directors of
the Company, the Company and its subsidiaries were each required to conduct its
operations in the ordinary course of business consistent with past practice, and
the Company and its subsidiaries were each required to use its reasonable best
efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain existing relationships
with licensors, licensees, suppliers, contractors, distributors, customers, and
others having business relationships with it.
Accordingly, prior to the date AAC Acquisition's nominees were elected to
the Board, neither the Company nor any of its subsidiaries were permitted to,
without prior written consent of AAC Acquisition, engage or agree to engage in
an enumerated list of transactions generally characterized as being outside the
ordinary course of business. Transactions requiring AAC Acquisition's prior
approval included actions by the Company or its subsidiaries to (1) amend its
articles of organization or by-laws or increase or propose to increase the
number of directors; (2) authorize for issuance, issue, sell, deliver, or agree
to commit to issue, sell or deliver any stock of any class or any other
securities or equity equivalents (including, without limitation, stock
appreciation rights), except as required by option agreements and option plans
as in effect as of the date of the Merger Agreement, or amend any of the terms
of any such securities or agreements outstanding as of the date of the Merger
Agreement; (3) split, combine, or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock, or property or any combination thereof) in respect of its capital stock,
or redeem, repurchase or otherwise acquire any of its securities or any
securities of its subsidiaries; (4) incur any debt or issue any debt securities
or assume, guarantee, or endorse the obligations of any other person, make any
loans, advances, or capital contributions to, or investments in, any other
person (other than to wholly owned subsidiaries of the Company), pledge or
otherwise encumber shares of capital stock of the Company or any of its
subsidiaries or mortgage or pledge any of its assets or create any lien
thereupon; (5) enter into, adopt, amend, or terminate any bonus, compensation,
severance, termination, or employee benefit arrangement not required by any such
plan or arrangement; (6) acquire, sell, lease, license, encumber, transfer, or
dispose of any assets of the Company and its subsidiaries; (7) change any of the
accounting principles or practices used by it, except as may be required as a
result of a change in law or in generally accepted accounting principles; (8)
acquire any corporation, partnership, or other business organization or division
thereof, authorize any new capital expenditure not reflected in the Company's
capital budget or settle any litigation for amounts in excess of $500,000
individually or $1,000,000 in the aggregate; (9) make any tax election or settle
or compromise any material tax liability; (10) pay, discharge, or satisfy any
claims, liabilities, or obligations outside the ordinary course or not in
accordance with their terms, except where such action would not result in a
material adverse effect; (11) enter into any agreement providing for the
acceleration of payment or performance or other consequence as a result of a
change in control of the Company; (12) enter into any agreement providing for
any license, sale, assignment, or otherwise transfer any patent rights or grant
any covenant not to sue with respect to any of its patent rights or take such
action with respect to the Company's Intellectual Property that would have a
Material Adverse Effect; or (13) take or agree to take any action which would
make any of the
21
<PAGE>
representations or warranties of the Company contained in the Merger Agreement
untrue or incorrect or would result in any of the conditions to the Offer not
being satisfied.
Notwithstanding the above, the Company was permitted to adopt a shareholder
rights plan, issue rights thereunder and issue securities upon exercise of such
rights; provided, however, that such rights plan exempted the Offer and the
Merger from the events which trigger the exercise of such rights.
ACCESS TO INFORMATION. The Company agreed to give Parent and AAC
Acquisition and their representatives reasonable access to all necessary
information. Parent and AAC Acquisition agreed to be bound by the
Confidentiality Agreement dated March 13, 1996 (described below).
REASONABLE BEST EFFORTS. Each of the parties promised to use its
reasonable best efforts to take all actions and do all things reasonably
necessary to consummate and make effective the transactions contemplated by the
Merger Agreement.
PUBLIC ANNOUNCEMENTS. Parent and AAC Acquisition, on the one hand, and the
Company, on the other hand, promised to consult with each other before issuing
any press release or otherwise making any public statements with respect to the
transactions contemplated by the Merger Agreement.
INDEMNIFICATION. The Surviving Corporation has agreed to keep in effect
the provisions in its Articles of Organization and By-laws with respect to
exculpation of director and officer liability and indemnification set forth in
the Restated Articles of Organization and Amended and Restated By-laws of the
Company on the date of the Merger Agreement. From and after the Effective Time,
Parent will guarantee and cause the Surviving Corporation to perform all of its
obligations under the Restated Articles of Organization and By-laws of the
Company with respect to indemnification.
Parent will cause the Surviving Corporation to use its reasonable best
efforts to maintain in effect for five years from the Effective Time, if
available, the coverage provided by the current directors' and officers'
liability insurance policies maintained by the Company with respect to matters
occurring prior to the Effective Time; provided, however, that the Surviving
Corporation will not be required to incur any annual premium in excess of 200%
of the last annual aggregate premium paid prior to the date of the Merger
Agreement for all current directors' and officers' liability insurance policies
maintained by the Company.
NOTIFICATION OF CERTAIN MATTERS. The Company will give prompt notice to
Parent or AAC Acquisition, and Parent or AAC Acquisition will give prompt notice
to the Company, as the case may be, of (1) the occurrence or non-occurrence of
any event which would be likely to cause any representation or warranty
contained in the Merger Agreement to be untrue or inaccurate and (2) any failure
of the Company, Parent, or AAC Acquisition, as the case may be, to comply with
or satisfy any covenant, condition, or agreement under the Merger Agreement.
TERMINATION OF STOCK PLANS. Prior to the consummation of the Offer, the
Board promised to adopt resolutions or take other actions necessary to ensure
that, following the Effective Time, no participant in any stock, stock option,
stock appreciation, or other benefit plan of the Company or any of its
subsidiaries or any holder of any option would have any right thereunder to
acquire any capital stock of the Surviving Corporation or any subsidiary
thereof.
22
<PAGE>
NO SOLICITATION. The Merger Agreement required the Company immediately to
cease any existing discussions or negotiations with any third parties with
respect to any inquiry, proposal or offer for a merger, consolidation, business
combination, sale of substantial assets, sale of shares of capital stock
(including, without limitation, by way of a tender offer) or similar
transactions involving the Company or any of its subsidiaries (an "Acquisition
Proposal"). The Company was not permitted to, directly or indirectly, through
any officer, director, employee, representative, or agent or any of its
subsidiaries, (1) solicit, initiate, continue or encourage an Acquisition
Proposal, (2) solicit, initiate, continue, or engage in negotiations or
discussions concerning, or provide any nonpublic information or data to any
person or entity relating to, any Acquisition Proposal, or (3) agree to approve
or recommend any Acquisition Proposal; provided, that if the Board determined,
after receiving advice of its independent counsel, that to do so would be
required for the discharge of its fiduciary obligations, the Company was
permitted, after receiving an executed confidentiality agreement (with terms no
less favorable to the Company than those contained in the Confidentiality
Agreement entered into with Parent), to furnish nonpublic information or data
to, or to enter into discussions or negotiations with, any person in connection
with an unsolicited Acquisition Proposal or to recommend an unsolicited
Acquisition Proposal to the stockholders of the Company. The Company would have
been required to advise Parent of all such nonpublic information delivered to
such person, and would have been required to notify Parent immediately (and in
no event later than 24 hours) after receipt by the Company of any Acquisition
Proposal or any request for nonpublic information in connection with an
Acquisition Proposal or for access to the properties, books or records of the
Company by any person or entity that informed the Company that it was
considering making, or had made, an Acquisition Proposal.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
The obligations of the Company, Parent, and AAC Acquisition under the
Merger Agreement are subject to the satisfaction or, if appropriate, waiver of
the following conditions:
(A) PURCHASE OF SHARES. AAC Acquisition having purchased Shares pursuant
to the Offer. This condition was met on May 2, 1996.
(B) STOCKHOLDER APPROVAL. If required by Massachusetts law, the Merger
Agreement shall have been adopted by the affirmative vote of the stockholders of
the Company by the requisite vote in accordance with Massachusetts law.
(C) NO PROHIBITION. No order, decree, or ruling or other action
restraining, enjoining, or otherwise prohibiting the Merger, which shall have
been issued or taken by any court or other governmental body.
(D) HSR ACT. Any waiting period applicable to the HSR Act having
terminated. Such waiting period was terminated on April 11, 1996.
TERMINATION
The Merger Agreement provides that the Merger Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time (1) by
mutual written consent of Parent, AAC Acquisition, and the Company; (2) by
Parent or the Company to the extent that performance is prohibited, enjoined or
otherwise materially restrained by any final, non-appealable judgment; (3) by
Parent or the Company if AAC Acquisition had terminated the Offer or failed to
accept for purchase and
23
<PAGE>
pay for Shares pursuant to the Offer by June 30, 1996 unless AAC Acquisition
failed to accept for purchase and pay for Shares pursuant to the Offer as the
result of the receipt by the Company of an Acquisition Proposal or as a result
of a failure of the applicable waiting period under the HSR Act to expire or the
failure to obtain any necessary governmental or regulatory approvals, in which
case, if AAC Acquisition had failed to accept for purchase and pay for Shares
pursuant to the Offer by September 30, 1996, and the failure to purchase Shares
by that date did not result from the failure by the party seeking termination to
fulfill any obligation under the Merger Agreement; (4) by either Parent or the
Company if, prior to the purchase of Shares pursuant to the Offer, there had
been a material breach by the other party of any representation, warranty,
covenant, or agreement that had not been cured within twenty business days
notice of such breach; (5) by either Parent or the Company not sooner than three
days after the Company's notice to Parent of the Company's receipt of an
Acquisition Proposal determined by the Board to be more favorable to the Company
and to its stockholders than the transactions contemplated by the Merger
Agreement, or (6) by Parent if the Board withdraws or modifies in a manner
adverse to Parent or AAC Acquisition its approval of the Offer, the Merger
Agreement, or the Merger or its recommendation to the Company's stockholders.
If the Merger Agreement is terminated pursuant to clause (5) or (6) above,
the Company will pay Parent a nonrefundable fee of $17,500,000.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties in the Merger Agreement shall not
survive beyond the Effective Time, except that the covenants and agreements in
the Merger Agreement shall survive in accordance with their respective terms.
AMENDMENT; EXTENSION; WAIVER
Subject to approval by the Board in the manner described above under "Board
Representation," the Merger Agreement may be amended by the Company, Parent, and
AAC Acquisition in a writing signed on behalf of each of the parties; however,
after approval of the Merger Agreement by the stockholders of the Company (if
required by applicable law), no amendment may decrease the Merger Consideration
or change the form thereof which adversely affects the stockholders without
approval of such stockholders.
Subject to approval by the Board in the manner described above under "Board
Representation," at any time prior to the Effective Time, the Company, on the
one hand, and Parent and AAC Acquisition, on the other hand, may in writing (1)
extend the time for the performance of any of the obligations or other acts of
the other party, (2) waive any inaccuracies in the representations and
warranties of the other party, or (3) waive compliance by the other party with
any of the agreements or conditions contained in the Merger Agreement.
EXPENSES
Subject to the payment of a fee by the Company to Parent if the Merger
Agreement is terminated under certain circumstances, each party shall bear its
own expenses and costs in connection with the Merger Agreement and the
transactions contemplated thereby.
24
<PAGE>
GOVERNING LAW
The Merger Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
CONFIDENTIALITY AGREEMENT
The following summary of the Confidentiality Agreement does not purport to
be complete and is qualified in its entirety by reference to the complete text
of the Confidentiality Agreement, which is filed as an exhibit to the Schedule
14D-1.
On March 13, 1996, the Company and Parent entered into the Confidentiality
Agreement providing for the nondisclosure of confidential information to be
provided by the Company to Parent and by Parent to the Company. The
Confidentiality Agreement provided that for a period of 16 days from the date of
the Confidentiality Agreement, the Company would not initiate, solicit,
encourage, or engage in any discussions with a party other than Parent with
respect to any merger, consolidation, or other business combination transaction,
any sale, lease, exchange, transfer, or other disposition of all or
substantially all of the assets of the Company, any tender offer or exchange
offer for more than 20% of the outstanding shares of any class of the Company's
equity or voting securities or any solicitation of proxies with respect to the
Company's equity or voting securities in the election of directors or in a vote
on any of the foregoing transactions (a "Specified Transaction").
The Confidentiality Agreement also provides that, for a period of one year
from the date of the Confidentiality Agreement, without the prior written
consent of the Company, Parent will not (1) acquire, offer to acquire, or agree
to acquire any voting securities or any material assets of the Company, (2)
solicit any proxies to vote any voting securities of the Company, (3) make any
public announcement or submit any proposal for any extraordinary transaction
involving the Company, (4) form, join or participate in any "group" as defined
in Section 13(d)(3) of the Exchange Act in connection with any of the foregoing,
or (5) request the Company to amend or waive any of the foregoing provisions in
a manner that would be required to be disclosed publicly. The restrictions
discussed in the previous sentence are not binding upon Parent if, on or after
the date of the Confidentiality Agreement, (a) any person or group of persons
(other than certain institutional investors not having any intention to change
or influence control of the Company) acquires beneficial ownership of any equity
or voting security of the Company representing 15% or more of the then total
outstanding shares of any such class of the Company's securities, (b) the
Company issues or commits to issue any voting securities (other than shares of
Common Stock or securities convertible or exchangeable for shares of Common
Stock), or (c) it is publicly announced or disclosed that any person or group of
persons other than Parent, the Company, or any of their respective affiliates,
proposes to effect or has effected a Specified Transaction.
STOCKHOLDERS' RIGHTS OF APPRAISAL
Stockholders of the Company who do not vote in favor of adoption of the
Merger Agreement have the right to seek payment in cash of the fair value of
their shares of Common Stock by complying with Sections 86 to 98, inclusive, of
Chapter 156B of the General Laws of Massachusetts ("Sections 86-98").
25
<PAGE>
The following discussion is not a complete statement of the law pertaining
to appraisal rights under Massachusetts law, and is qualified in its entirety by
the full text of Sections 86-98, which are provided in their entirety as Annex
III to this Information Statement. All references in Sections 86-98 and in this
summary to a "stockholder" are to the record holder of the shares of Common
Stock as to which appraisal rights are asserted.
IF THE MERGER AGREEMENT IS APPROVED BY THE STOCKHOLDERS AT THE MEETING AND
THE MERGER IS CONSUMMATED, ANY STOCKHOLDER (1) WHO FILES WITH THE COMPANY BEFORE
THE TAKING OF THE VOTE ON THE APPROVAL OF SUCH ACTION WRITTEN OBJECTION TO THE
PROPOSED ACTION STATING THAT HE INTENDS TO DEMAND PAYMENT FOR HIS SHARES OF
COMMON STOCK IF THE ACTION IS TAKEN AND (2) WHOSE SHARES OF COMMON STOCK ARE NOT
VOTED IN FAVOR OF THE MERGER AGREEMENT HAS OR MAY HAVE THE RIGHT TO DEMAND IN
WRITING FROM THE COMPANY, WITHIN TWENTY DAYS AFTER THE DATE OF MAILING TO HIM OF
NOTICE IN WRITING THAT THE CORPORATE ACTION HAS BECOME EFFECTIVE, PAYMENT FOR
HIS SHARES OF COMMON STOCK AND AN APPRAISAL OF THE VALUE THEREOF. THE COMPANY
AND ANY SUCH STOCKHOLDER SHALL IN SUCH CASES HAVE THE RIGHTS AND DUTIES AND
SHALL FOLLOW THE PROCEDURE SET FORTH IN SECTIONS 86 TO 98, INCLUSIVE, OF CHAPTER
156B OF THE GENERAL LAWS OF MASSACHUSETTS.
Therefore, under Massachusetts law, a stockholder wishing to exercise his
appraisal rights (1) must not vote in favor of adoption of the Merger Agreement,
(2) must deliver to the Company prior to the vote on the Merger Agreement at the
Special Meeting to be held on __________, a written objection to the proposed
action stating that he intends to demand payment for his shares of Common Stock
if the action is taken, and (3) within twenty days after the date of mailing to
him of notice in writing that the Merger has become effective, must demand in
writing from the Company, payment for his shares of Common Stock. Within ten
days after the Effective Time, the Company will notify each stockholder who has
properly filed written objection and who did not vote in favor of adoption of
the Merger Agreement that the Merger has become effective. The stockholder must
be the record holder of such shares of Common Stock on the date the written
objection is made and must continue to hold such shares of Common Stock of
record until the Effective Time. Accordingly, a stockholder who is the record
holder of shares of Common Stock on the date the written demand for appraisal is
made, but who thereafter transfers such shares of Common Stock prior to the
Effective Time, will lose any right to appraisal in respect of such shares of
Common Stock.
26
<PAGE>
MARKET PRICES OF THE COMMON STOCK AND DIVIDEND POLICY
MARKET PRICES
The Company's Common Stock is listed and traded on Nasdaq under the symbol
MSNS. The following table sets forth, for the periods indicated, the high and
low sale prices per share for the Common Stock as reported in THE WALL STREET
JOURNAL for the periods indicated.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------
HIGH LOW
------- -------
<S> <C> <C>
Fiscal 1995:
Quarter Ended July 1, 1994 (from June 30, 1994). . . . $12 1/4 $12
Quarter Ended September 30, 1994 . . . . . . . . . . . 20 3/8 12
Quarter Ended December 30, 1994. . . . . . . . . . . . 26 16 3/4
Quarter Ended March 31, 1995 . . . . . . . . . . . . . 25 1/8 18 5/8
Fiscal 1996:
Quarter Ended July 1, 1995 . . . . . . . . . . . . . . 20 13 7/8
Quarter Ended September 30, 1995 . . . . . . . . . . . 27 1/4 17
Quarter Ended December 30, 1995. . . . . . . . . . . . 32 19 7/8
Quarter Ended March 31, 1996 . . . . . . . . . . . . . 46 1/2 24
</TABLE>
On March 28, 1996, the last full trading day prior to announcement of the
execution of the Merger Agreement and AAC Acquisition's intention to commence
the Offer, the closing sale price of the Common Stock on Nasdaq was $30 1/4 per
share of Common Stock. On _____ __, 1996, the last full trading day prior to
the printing of this Information Statement, such closing sales price was $___
per share and the high and low prices were $___ and $___, respectively.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES OF
COMMON STOCK.
DIVIDENDS
The Company has not paid or declared any dividends in respect of Shares.
27
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of _______, 1996 by (1) each person
who is known to the Company to beneficially own more than 5% of the outstanding
shares of Common Stock, (2) each of the chief executive officer and the four
other most highly paid executive officers of the Company in fiscal 1995
(collectively, the "Named Executive Officers") and each director of the Company,
and (3) all executive officers and directors of the Company as a group. Except
as otherwise indicated, each of the stockholders named below has sole voting and
investment power with respect to the shares of Common Stock beneficially owned:
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
---------------------------------
Percent of
Outstanding
Number of Shares (on a fully
Shares diluted basis)
----------- ------------------
<S> <C> <C>
5% STOCKHOLDERS
AAC Acquisition. . . . . . . . . . . . . . . . . . . .19,861,081 98.37%
100 Abbott Park Road
Abbott Park, Illinois 60064
NAMED EXECUTIVE OFFICERS
Robert L. Coleman(1/). . . . . . . . . . . . . . . . . 0 0
John H. Chiricotti . . . . . . . . . . . . . . . . . . 0 0
Geoffrey H. Jenkins. . . . . . . . . . . . . . . . . . 0 0
Donald H. Pieper . . . . . . . . . . . . . . . . . . . 0 0
DIRECTORS
Gary P. Coughlan . . . . . . . . . . . . . . . . . . . 0 0
Miles D. White . . . . . . . . . . . . . . . . . . . . 0 0
Jose M. de Lasa. . . . . . . . . . . . . . . . . . . . 0 0
All directors and executive officers as a group
(10 persons) . . . . . . . . . . . . . . . . . . . . 160,000(2/) *
</TABLE>
* Less than one percent.
(1/) Robert L. Coleman is also a Director.
(2/) Messrs. Huffman and Gonze each hold options to purchase 80,000 shares
of Common Stock.
28
<PAGE>
INTERESTS OF CERTAIN PERSONS IN OR OPPOSITION TO
MATTERS TO BE ACTED UPON
Except as described below or elsewhere in this Information Statement or
incorporated by reference herein, to the knowledge of the Company, as of the
date hereof, no person who has been a director or officer of the Company at any
time since the beginning of the last fiscal year or who is a nominee for
election as a director or who is an associate of such a director or nominee has
any substantial interest in the approval of the Merger Agreement. In addition,
no director has informed the Company in writing that he intends to oppose
approval of the Merger Agreement.
In November 1995, Lawrence W. Huffman, Corporate Vice President of the
Company for International Sales and Marketing, was granted options to purchase
80,000 shares of Common Stock. In December 1995, Peter C. Gonze, Corporate Vice
President of the Company for Sales and Marketing in North America, was granted
options to purchase 80,000 shares of Common Stock.
In addition, the Company is a party to an agreement with Gerald J. Bojas,
its Corporate Controller and Treasurer, dated November 15, 1990. Pursuant to
this agreement, Mr. Bojas will be entitled to receive a lump sum payment equal
to two times his base salary in the event that he is terminated after a Change
in Control of the Company or if he resigns for certain specified reasons after
such a Change in Control. A "Change in Control" is defined in the agreement as
any of several events, including the replacement of a majority of the directors
of the Company as a result of a tender offer, the acquisition by an entity (or a
group of entities acting together) of securities representing 30% of the voting
power of the Company and the execution of an agreement providing for any of the
transactions described in the definition of "Change in Control." To the extent
that any payments under the agreement are not deductible by the Company pursuant
to Section 280G of the Internal Revenue Code of 1986, as amended, such payments
will be reduced to the extent necessary to avoid the loss of the deduction.
AAC ACQUISITION DESIGNEES
Gary P. Coughlan, Jose M. de Lasa, and Miles D. White were elected as
directors of the Company on May 2, 1996 at the request of Parent. Messrs.
Coughlan, de Lasa, and White replaced Richard C.E. Morgan, John F. Gaither, Jr.,
Raymond D. Oddi, Kenneth E. Quickel, Jr., M.D., Peter R. Rosenblatt, and James
R. Tobin, who resigned as directors of the Company. Robert L. Coleman, Ph.D.,
remains a director of the Company.
Mr. Coughlan serves as sole director, Vice President and Treasurer of AAC
Acquisition. He was elected as a Corporate Officer of Parent in 1990. He has
served as Senior Vice President, Finance and Chief Financial Officer of Parent
for at least the past five years.
Mr. de Lasa has served as Senior Vice President, Secretary and General
Counsel of Parent since 1994. Prior to that, he served as Vice President and
Associate General Counsel of Bristol-Myers Squibb Company. In 1994 he also
became Secretary of such company.
Mr. White serves as President of AAC Acquisition. He also has served as
Senior Vice President, Diagnostic Operations of Parent since 1994. From 1993 to
1994 he served as Vice President, Diagnostic Systems and Operations of Parent,
and from 1992 to 1993 he served as Divisional Vice President and
29
<PAGE>
General Manager, Diagnostic Systems and Operations of Parent. Prior to 1992 he
served as Divisional Vice President and General Manager, Hospital Laboratory
Sector of Parent.
EMPLOYMENT AGREEMENTS
On September 24, 1991, Dr. Robert L. Coleman entered into a one-year
employment agreement with the Company that automatically extends for successive
one-year terms on each anniversary date unless terminated by either party on
ninety days' notice. Under the agreement, the Company agrees to pay Dr. Coleman
a base salary of $225,000 subject to annual review by the Board and a bonus
based on Company performance in the range of 35% to 70% of the base salary as
then in effect. The base salary for fiscal 1995 was $300,000. The agreement
granted Dr. Coleman an option to purchase 500,000 shares of Common Stock and
contains a clause prohibiting Dr. Coleman from competing for a period of two
years following termination of employment. In the event Dr. Coleman is
terminated without cause (as defined in the agreement), the Company is obligated
to pay his base salary for a period of twelve months from the date of
termination.
Mr. Jenkins has entered into an employment agreement with the Company dated
September 9, 1992. The agreement, which had an initial expiration of March 31,
1993, is automatically extended for one-year periods commencing on its
expiration date unless terminated by either party on ninety days' notice. Mr.
Jenkins is entitled to receive base salary at the rate of $145,000 per year,
subject to annual review by the Board, and a cash bonus of up to 40% of his base
salary based on the achievement of specific performance goals. Mr. Jenkins's
base salary for fiscal 1995 was $188,412. With respect to the options
outstanding prior to the date of the agreement, the agreement provides for
automatic vesting with respect to 75% of the shares covered thereby in the event
of the termination by the Company of Mr. Jenkins's employment without cause (as
defined in the agreement) or in the event of a merger, consolidation,
liquidation, dissolution or sale of all or substantially all of the Company's
assets. The agreement contains a clause prohibiting Mr. Jenkins from competing
for a period of two years following termination of employment. In the event Mr.
Jenkins is terminated without cause, the Company is obligated to pay his base
salary and fringe benefits for twelve months following the date of termination
and a bonus pro-rated for the year in which termination occurs.
Mr. Pieper entered into an employment agreement with the Company on
February 2, 1995 that governs his employment relationship from the commencement
of his employment (October 6, 1993). The agreement automatically extends for
successive one-year terms on October 6 of each year unless terminated by either
party on ninety days' notice. The agreement sets Mr. Pieper's base compensation
at $172,500 per year, subject to increase in the sole judgment of the Board. In
addition, each year Mr. Pieper will receive a bonus of between 30% and 60% of
his base compensation based upon the achievement of specific performance goals.
In the event of termination other than for cause, the Company will pay Mr.
Pieper base compensation and fringe benefits for twelve months and a bonus pro-
rated for the year in which termination occurs. For options outstanding on
February 2, 1995, the agreement provides for automatic vesting of all shares
covered thereby in the event of a merger, consolidation, liquidation,
dissolution, or sale of all or substantially all of the Company's assets. For
options subsequently granted, the agreements provide for automatic vesting as to
75% of the shares in such events. Mr. Pieper's agreement prohibits him from
competing with the Company for a period of 24 months following termination.
30
<PAGE>
Mr. Chiricotti's written offer of employment contained a provision which
provides that, if terminated, he will receive one year of severance pay. In
addition, the offer letter guarantees Mr. Chiricotti an annual bonus of at least
$50,000.
31
<PAGE>
SELECTED FINANCIAL DATA
MEDISENSE, INC.
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Nine Months
Ended Fiscal Year Ended March 31,
Dec. 31, 1995 1995 1994 1993 1992
------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Sales $129.7 $141.0 $110.4 $93.2 $89.8
Income from Continuing Operations 22.5 22.0 6.2 (2.5) (13.0)
Total Assets 110.3 82.0 43.5 45.6 56.2
Long-Term Debt 0.3 0.4 0.6 1.0 2.3
Book Value per Share 4.20 2.85 (A) (A) (A)
Income from Continuing Operations per Share 1.21 1.34 0.61 (B) (B)
Cash Dividends Declared per Common Share 0.00 0.00 0.00 0.00 0.00
Working Capital (Deficiency) 56.0 37.0 8.6 (1.7) (3.3)
Shareholders' Equity (Deficit) 73.9 48.8 (31.3) (37.8) (30.7)
Average Number of Common Shares
Outstanding (000s) 18,575 16,349 15,684 N/A N/A
</TABLE>
(A) Book value per share is not meaningful for these periods.
(B) Net income per share for the periods prior to fiscal 1995 has not been
presented, as such information is not considered meaningful.
32
<PAGE>
SELECTED FINANCIAL DATA
ABBOTT LABORATORIES
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months
Ended Fiscal Year Ended December 31,
March 31, 1996 1995 1994 1993 1992 1991
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Sales $2,672.2 $10,012.2 $9,156.0 $8,407.8 $7,851.9 $6,876.6
Income from Continuing Operations 480.1 1,688.7 1,516.7 1,399.1 1,239.1 1,088.7
Total Assets 9,312.0 9,412.6 8,523.7 7,688.6 6,941.2 6,255.3
Long-Term Debt 433.7 435.2 287.1 306.8 110.0 125.1
Book Value per Share 5.82 5.58 5.04 4.48 4.00 3.77
Income from Continuing Operations per Share 0.61 2.12 1.87 1.69 1.47 1.27
Cash Dividends Declared per Common Share 0.24 0.84 0.76 0.68 0.60 0.50
Working Capital 621.8 436.4 400.5 490.6 449.2 661.7
Shareholders' Equity 4,565.7 4,396.8 4,049.4 3,674.9 3,347.6 3,203.0
Average Number of Common
Shares Outstanding (000s) 785,836 795,362 812,236 828,988 844,122 854,062
</TABLE>
33
<PAGE>
CERTAIN INFORMATION CONCERNING AAC MERGER,
AAC ACQUISITION, AND PARENT
AAC MERGER
AAC Merger, a Massachusetts corporation and wholly owned subsidiary of AAC
Acquisition, recently was organized for the purpose of effecting the Merger and
has not carried on any activities except in connection with the Merger. The
principal executive offices of AAC Merger are located at 100 Abbott Park Road,
Abbott Park, Illinois. All the outstanding capital stock of AAC Merger is owned
by AAC Acquisition.
AAC ACQUISITION
AAC Acquisition, a Massachusetts corporation and wholly owned subsidiary of
Parent, recently was organized for the purpose of effecting the Offer and the
Merger and has not carried on any activities except in connection with the Offer
and the Merger. The principal executive offices of AAC Acquisition are located
at 100 Abbott Park Road, Abbott Park, Illinois. All the outstanding capital
stock of AAC Acquisition is owned by Parent.
PARENT
Parent is an Illinois corporation with its principal offices located at 100
Abbott Park Road, Abbott Park, Illinois. Parent's principal business is the
discovery, development, manufacture, and sale of a broad and diversified line of
health care products and services. Parent is a public company whose stock is
traded on the New York Stock Exchange, Chicago Stock Exchange, and Pacific Stock
Exchange.
INDEPENDENT PUBLIC ACCOUNTANTS
No representatives of the Company's independent public accountants will be
present at the Special Meeting.
INCORPORATION BY REFERENCE
The following documents previously filed with the Commission by the Company
and Parent pursuant to the Exchange Act are incorporated by reference into this
Information Statement:
(1) the Annual Report on Form 10-K of Parent for the fiscal year ended December
31, 1995; (2) the Tender Offer Statement on Schedule 14D-1 filed by Parent and
AAC Acquisition on April 4, 1996; (3) the Current Report on Form 8-K of Parent
dated March 29, 1996; (4) the Quarterly Report on Form 10-Q of Parent for the
quarterly period ended March 31, 1996; (5) the Solicitation/Recommendation
statement on Schedule 14D-9 filed by the Company dated April 4, 1996; (6) the
Annual Report on Form 10-K of the Company for the fiscal year ended March 31,
1995; (7) the Quarterly Report on Form 10-Q of the Company for the quarterly
period ended July 1, 1995; (8) the Quarterly Report on Form 10-Q of the Company
for the quarterly period ended September 30, 1995; (9) the Quarterly Report on
Form 10-Q of the Company for the quarterly period ended December 30, 1995; and
(10) the Current Report on Form 8-K of the Company dated May 2, 1996.
34
<PAGE>
All documents filed by Parent or the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Information
Statement and prior to the date of the Special Meeting shall be deemed to be
incorporated by reference into this Information Statement and to be a part
hereof from the dates of filing such documents or reports. Any statement
contained herein or in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Information Statement
to the extent that a statement contained herein or in any other subsequently
filed document which is also incorporated or deemed to be incorporated herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Information Statement.
THIS INFORMATION STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN CERTAIN
EXHIBITS TO DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM A COPY OF THIS
INFORMATION STATEMENT HAS BEEN DELIVERED UPON WRITTEN OR ORAL REQUEST, IN THE
CASE OF COMPANY TO DOCUMENTS, TO MEDISENSE, INC., 266 SECOND AVENUE, WALTHAM,
MASSACHUSETTS 02154, ATTENTION: _______, TELEPHONE NUMBER (617) 895-6000, AND,
IN THE CASE OF PARENT DOCUMENTS, TO ABBOTT LABORATORIES, 100 ABBOTT PARK ROAD,
ABBOTT PARK, ILLINOIS 60064, ATTENTION: _____________, TELEPHONE NUMBER (847)
937-6100. IN ORDER TO ENSURE DELIVERY PRIOR TO THE SPECIAL MEETING, REQUESTS
SHOULD BE RECEIVED BY __________, 1996.
OTHER MATTERS TO COME BEFORE THE MEETING
No other matters are intended to be brought before the meeting by the
Company nor does the Company know of any matters that are expected to be brought
properly before the meeting by others.
------------------
By Order of the Board of Directors,
------------------
CLERK
Waltham, Massachusetts
_________, 1996
35
<PAGE>
ANNEX I
AGREEMENT AND PLAN OF MERGER
Among
MEDISENSE, INC.,
ABBOTT LABORATORIES
and
AAC ACQUISITION, INC.
dated as of March 29, 1996
as amended by ____________________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER . . . . . . . . . . . . . 1
Section 1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Company Action. . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Boards of Directors and Committees; Section 14(f) . . . . . 3
ARTICLE II
THE MERGER . . . . . . . . . . . . 4
Section 2.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Effective Time; Closing . . . . . . . . . . . . . . . . . . 4
Section 2.3 Effects of the Merger; Subsequent Actions . . . . . . . . . 5
Section 2.4 Articles of Organization; By-Laws . . . . . . . . . . . . . 5
Section 2.5 Directors . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.6 Officers. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.7 Conversion of Securities. . . . . . . . . . . . . . . . . . 6
Section 2.8 Stock Options . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.9 Company Employee Stock Purchase Plan. . . . . . . . . . . . 6
Section 2.10 Stockholders' Meeting . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
DISSENTING SHARES; EXCHANGE OF SHARES. . . . . . 7
Section 3.1 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . 7
Section 3.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . 9
Section 4.1 Organization and Qualification; Subsidiaries. . . . . . . . 9
Section 4.2 Capitalization of the Company and Its Subsidiaries. . . . . 9
Section 4.3 Authority Relative to This Agreement. . . . . . . . . . . . 10
Section 4.4 Non-Contravention; Required Filings and Consents. . . . . . 10
Section 4.5 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.6 Absence of Certain Changes; Derivatives . . . . . . . . . . 12
Section 4.7 Schedule 14D-9; Offer Documents; Proxy Statement. . . . . . 12
Section 4.8 Finder's Fee. . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.9 Absence of Litigation . . . . . . . . . . . . . . . . . . . 13
Section 4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.11 Employee Benefits . . . . . . . . . . . . . . . . . . . . . 14
Section 4.12 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . 15
i
<PAGE>
Section 4.13 Environmental Matters . . . . . . . . . . . . . . . . . . . 16
Section 4.14 Intellectual Property . . . . . . . . . . . . . . . . . . . 17
Section 4.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.16 Properties. . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.17 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . 18
Section 4.18 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.19 Voting Requirements . . . . . . . . . . . . . . . . . . . . 19
Section 4.20 State Takeover Laws . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION. 20
Section 5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.2 Authority Relative to this Agreement . . . . . . . . . . . . 20
Section 5.3 Non-Contravention; Required Filings and Consents . . . . . . 20
Section 5.4 Offer Documents; Schedule 14D-9; Proxy Statement . . . . . . 21
Section 5.5 No Prior Activities. . . . . . . . . . . . . . . . . . . . . 21
Section 5.6 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI
COVENANTS. . . . . . . . . . . . . 21
Section 6.1 Conduct of Business of the Company. . . . . . . . . . . . . 21
Section 6.2 Access to Information . . . . . . . . . . . . . . . . . . . 23
Section 6.3 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . 24
Section 6.4 Public Announcements. . . . . . . . . . . . . . . . . . . . 24
Section 6.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.6 Notification of Certain Matters . . . . . . . . . . . . . . 25
Section 6.7 Termination of Stock Plans. . . . . . . . . . . . . . . . . 25
Section 6.8 No Solicitation . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER. . . . . 26
Section 7.1 Conditions to Each Party's Obligation
to Effect the Merger. . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII
TERMINATION; EXPENSES; AMENDMENT; WAIVER. . . . . 26
Section 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 28
Section 8.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 28
Section 8.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.5 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . 28
ii
<PAGE>
ARTICLE IX
MISCELLANEOUS. . . . . . . . . . . . 29
Section 9.1 Nonsurvival of Representations and Warranties . . . . . . . 29
Section 9.2 Entire Agreement; Assignment. . . . . . . . . . . . . . . . 29
Section 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.5 Parties in Interest . . . . . . . . . . . . . . . . . . . . 30
Section 9.6 Specific Performance. . . . . . . . . . . . . . . . . . . . 30
Section 9.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.8 Descriptive Headings. . . . . . . . . . . . . . . . . . . . 30
Section 9.9 Certain Definitions . . . . . . . . . . . . . . . . . . . . 30
Section 9.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 31
iii
<PAGE>
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 29, 1996, is among
MediSense, Inc., a Massachusetts corporation (the "Company"), Abbott
Laboratories, an Illinois corporation ("Parent") and AAC Acquisition, Inc., a
Massachusetts corporation and a wholly owned subsidiary of Parent
("Acquisition").
WHEREAS, the Board of Directors of Parent, Acquisition and the Company have
each approved the acquisition of the Company by Parent upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, it is proposed that Acquisition shall make
a tender offer to acquire all outstanding shares of common stock, par value
$0.01 per share, of the Company (the "Common Stock") and all outstanding shares
of class B common stock, par value $0.01 per share, of the Company (the "Class B
Common Stock" and together with the Common Stock, the "Shares"), for a cash
amount of $45.00 per Share (such amount, or any greater amount per Share paid
pursuant to the tender offer, being hereinafter referred to as the "Per Share
Amount") in accordance with the terms and subject to the conditions provided for
herein (the "Offer");
WHEREAS, the Board of Directors of the Company (the "Board") has (i)
determined that the consideration to be paid for each Share in the Offer and the
Merger (as defined below) is fair to and in the best interests of the
stockholders of the Company and (ii) approved this Agreement and the
transactions contemplated hereby and resolved to recommend acceptance of the
Offer and approval and adoption of this Agreement by the stockholders of the
Company; and
WHEREAS, the Boards of Directors of Parent and Acquisition have each
approved the merger (the "Merger") of AAC Merger with and into the Company
following the Offer in accordance with the General Laws of the Commonwealth of
Massachusetts ("Massachusetts Law") upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
the Company, Parent and Acquisition hereby agree as follows;
ARTICLE I
THE OFFER
Section 1.1 THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.1, as promptly as practicable, but
in no event later than the fifth business day following the public announcement
of the terms of this Agreement, Acquisition shall commence the Offer. The
obligation of Acquisition to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the condition that a number of Shares
representing not less than a majority of the Company's outstanding voting power
(assuming the exercise of all outstanding options to purchase shares of Common
Stock and the conversion of all outstanding shares of Class B Common Stock into
Common Stock) shall have been validly tendered and not withdrawn prior to the
expiration date of the Offer (the "Minimum Condition"), and the obligation of
Acquisition to accept
<PAGE>
for payment and pay for Shares tendered pursuant to the Offer shall be subject
to the other conditions set forth in Annex A hereto. It is agreed that the
Minimum Condition and the other conditions set forth in Annex A hereto are for
the sole benefit of Acquisition and may be asserted by Acquisition regardless of
the circumstances giving rise to any such condition unless Parent, Acquisition
or their affiliates shall have caused the circumstances giving rise to such
condition. Acquisition expressly reserves the right in its sole discretion to
waive, in whole or in part, at any time or from time to time, any such condition
(other than the Minimum Condition, which may not be waived without the prior
written consent of the Company), to increase the price per Share payable in the
Offer or to make any other changes in the terms and conditions of the Offer;
PROVIDED that, unless previously approved by the Company in writing, no change
may be made that decreases the price per Share payable in the Offer, changes the
form of consideration payable in the Offer, reduces the maximum number of Shares
to be purchased in the Offer or imposes conditions to the Offer in addition to
those set forth in Annex A hereto. Acquisition covenants and agrees that,
subject to the conditions of the Offer set forth in Annex A hereto, Acquisition
shall accept for payment and pay for Shares which have been validly tendered and
not withdrawn pursuant to the Offer as soon as it is permitted to do so under
applicable law; PROVIDED that, if the number of Shares that have been validly
tendered and not withdrawn represent less than 90% of the Shares outstanding on
a fully diluted basis, Acquisition may extend the Offer up to the tenth business
day following the date on which all conditions to the Offer shall first have
been satisfied or waived. The Per Share Amount payable in the Offer shall be
paid net to the seller in cash, upon the terms and subject to the conditions of
the Offer. Acquisition agrees that if all conditions set forth in Annex A are
not satisfied on the initial expiration date of the Offer, Acquisition shall
extend (and re-extend) the Offer through June 30, 1996 to provide time to
satisfy such conditions; PROVIDED that, if Acquisition shall not have purchased
Shares pursuant to the Offer prior to June 30, 1996 as the result of the receipt
by the Company of an Acquisition Proposal (as defined below) or as a result a
failure of the applicable waiting period under the HSR Act (as defined below) to
expire or the failure to obtain any necessary governmental or regulatory
approvals, Acquisition shall extend (and re-extend) the Offer through September
30, 1996.
(b) As soon as practicable on the date of commencement of the Offer, Parent
and Acquisition shall file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer
which will contain the offer to purchase and form of the related letter of
transmittal (together with any supplements or amendments thereto, the "Offer
Documents"). Parent, Acquisition and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that any such information shall have become false or misleading in
any material respect and Parent and Acquisition each further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given a reasonable opportunity to review and comment on the
Offer Documents prior to their filing with the SEC and shall be provided with
any comments Parent, Acquisition and their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after receipt of such
comments.
Section 1.2 COMPANY ACTION. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Board, at a meeting
duly called and held on March 29, 1996, unanimously (i) determined that this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interests of the stockholders of the
Company, (ii) approved this Agreement and the transactions contemplated hereby,
including the Offer and the
2
<PAGE>
Merger and (iii) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares thereunder to Acquisition and, if required
by applicable law, approve and adopt this Agreement and the Merger. The Company
further represents and warrants that Alex. Brown & Sons Incorporated ("Alex.
Brown") has delivered to the Board its written opinion to the effect that, as of
the date of such opinion, the consideration to be received by the holders of
Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view. The Company has been authorized by Alex. Brown to
permit the inclusion of such fairness opinion in the Offer Documents and the
Schedule 14D-9 referred to below and the Proxy Statement referred to in Section
4.7. Subject to the fiduciary duties of the Board under applicable law (as
determined in good faith after consultation with independent counsel), the
Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Board described in this Section 1.2(a).
(b) As soon as practicable on the date of commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") and shall mail the Schedule 14D-9 to the stockholders of the
Company promptly after the commencement of the Offer. The Schedule 14D-9 shall,
subject to the fiduciary duties of the Board under applicable law (as determined
in good faith after consultation with independent counsel), at all times contain
the determinations, approvals and recommendations described in Section 1.2(a).
Parent, Acquisition and the Company each agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that any such information shall have become false or misleading in any material
respect and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Parent, Acquisition and their counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 prior to its
filing with the SEC and shall be provided with any comments the Company and its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt of such comments.
(c) In connection with the Offer, the Company will promptly furnish
Acquisition with mailing labels, security position listings and any available
listing or computer file containing the names and addresses of the record
holders of the Shares as of a recent date and shall furnish Acquisition with
such additional information and assistance (including, without limitation,
updated lists of stockholders, mailing labels and lists of securities positions)
as Acquisition or its agents may reasonably request in communicating the Offer
to the record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Acquisition and its affiliates and associates shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger, and, if this
Agreement shall be terminated, will deliver to the Company all copies of such
information then in their possession.
Section 1.3 BOARDS OF DIRECTORS AND COMMITTEES; SECTION 14(f). (a)
Promptly upon the purchase by Acquisition of Shares pursuant to the Offer and
from time to time thereafter, Acquisition shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board that
equals the product of (i) the total number of directors on the Board (giving
effect to the election of any additional directors pursuant to this Section) and
(ii) the percentage that the number of Shares owned by Acquisition and its
affiliates (including any Shares purchased pursuant to the Offer) bears to the
total number of outstanding Shares, and the Company shall, upon request by
Acquisition,
3
<PAGE>
subject to the provisions of Section 1.3(b), promptly either increase the size
of the Board (and shall, if necessary, amend the Company's By-Laws to permit
such an increase) or use its reasonable best efforts to secure the resignation
of such number of directors as is necessary to enable Acquisition's designees to
be elected to the Board and shall cause Acquisition's designees to be so
elected. Promptly upon request by Acquisition, the Company will, subject to the
provisions of Section 1.3(b), use its reasonable best efforts to cause persons
designated by Acquisition to constitute the same percentage as the number of
Acquisition's designees to the Board bears to the total number of directors on
the Board on (i) each committee of the Board, (ii) each board of directors or
similar governing body or bodies of each subsidiary of the Company designated by
Acquisition and (iii) each committee of each such board or body.
(b) The Company's obligations to appoint designees to the Board shall be
subject to Section 14(f) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.3 and shall include in the
Schedule 14D-9 or a separate Rule 14f-1 Statement provided to shareholders such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1. Parent or Acquisition will supply
to the Company in writing and be solely responsible for any information with
respect to either of them and their nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Acquisition's designees
pursuant to this Section 1.3 and prior to the Effective Time (as defined below),
any amendment of this Agreement or the Restated Articles of Organization or By-
Laws of the Company, any termination of this Agreement by the Company, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Acquisition or any waiver of any of the
Company's rights hereunder will require the concurrence of a majority of the
directors of the Company then in office who are not designees of Acquisition or
employees of the Company.
ARTICLE II
THE MERGER
Section 2.1 THE MERGER. At the Effective Time (as defined below) and upon
the terms and subject to the conditions of this Agreement and Massachusetts Law,
AAC Merger shall be merged with and into the Company whereupon the separate
corporate existence of AAC Merger shall cease and the Company shall continue as
the surviving corporation (the "Surviving Corporation"). At Acquisition's
option, the Merger may be structured so that any direct or indirect subsidiary
of Parent is merged with and into the Company. In the event of such election,
the parties agree to execute an appropriate amendment to this Agreement in order
to reflect such election.
Section 2.2 EFFECTIVE TIME; CLOSING. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto will file articles of merger with the Secretary of the Commonwealth of
Massachusetts and make all other filings or recordings required by Massachusetts
Law in connection with the Merger. The Merger shall become effective at such
time as the articles of merger are duly filed with the Secretary of the
Commonwealth of Massachusetts, or
4
<PAGE>
at such later time as is specified in the articles of merger (the "Effective
Time"). Prior to such filing, a closing shall be held at the offices of Mayer,
Brown & Platt, 190 South LaSalle Street, Chicago, Illinois 60603, or such other
place as the parties shall agree, for the purpose of confirming the satisfaction
or waiver of the conditions set forth in Article VII.
Section 2.3 EFFECTS OF THE MERGER; SUBSEQUENT ACTIONS. (a) The Merger
shall have the effects set forth in Massachusetts Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and AAC
Merger shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and AAC Merger shall become the debts, liabilities and
duties of the Surviving Corporation.
(b) If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or AAC Merger acquired or to be acquired by
the Surviving Corporation as a result of or in connection with the Merger, or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of the Company or AAC Merger, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm of record or otherwise any
and all right, title and interest in, to and under such rights, properties or
assets of the Surviving Corporation or otherwise to carry out this Agreement.
Section 2.4 ARTICLES OF ORGANIZATION; BY-LAWS. (a) Subject to Section
6.5, at the Effective Time, the Articles of Organization of AAC Merger in effect
immediately prior to the Effective Time shall be the Articles of Organization of
the Surviving Corporation until amended in accordance with applicable law;
PROVIDED, however, that at the Effective Time, Article I of the Articles of
Organization of the Surviving Corporation shall be amended to read as follows:
"The name by which the corporation shall be known is MediSense, Inc."
(b) The By-Laws of AAC Merger in effect at the Effective Time shall
be the By-Laws of the Surviving Corporation until amended in accordance with
applicable law.
(c) The Articles of Organization of the Surviving Corporation shall
state that the purpose of the Surviving Corporation shall be to carry on any
manufacturing, mercantile, selling, management, service or other business,
operation or activity which may be lawfully carried on by a corporation
organized under Massachusetts Law. The Surviving Corporation initially shall be
authorized to issue up to 1,000 shares of its common stock, par value $0.01 per
share.
Section 2.5 DIRECTORS. The directors of Acquisition at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Articles of Organization and By-Laws of the Surviving
Corporation and until his or her successor is duly elected and qualified.
5
<PAGE>
Section 2.6 OFFICERS. The officers of the Company at the Effective Time,
and any additional individuals designated by Parent, shall be the initial
officers of the Surviving Corporation, each to hold office in accordance with
the Articles of Organization and By-Laws of the Surviving Corporation and until
his or her successor is duly appointed and qualified.
Section 2.7 CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Acquisition, AAC
Merger, the Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be cancelled pursuant to Section 2.7(b)
hereof and Dissenting Shares (as defined in Section 3.1)), shall by virtue of
the Merger and without any action on the part of the holder thereof be cancelled
and extinguished and be converted into the right to receive an amount equal to
the Per Share Amount (the "Merger Consideration").
(b) Each Share issued and outstanding immediately prior to the
Effective Time and owned by Parent, Acquisition, AAC Merger or any direct or
indirect subsidiary of Parent, Acquisition or AAC Merger, or which is held in
the treasury of the Company or any of its subsidiaries, shall be cancelled and
retired and no payment of any consideration shall be made with respect thereto.
(c) Each share of common stock, par value $0.01 per share, of AAC
Merger issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation.
Section 2.8 STOCK OPTIONS. Immediately prior to the Effective Time, each
outstanding option (including any related stock appreciation right) (an
"Option") issued pursuant to the Company's 1983 Stock Option Plan, 1992
Directors' Stock Option Plan, 1993 Stock Option Plan, 1995 U.K. Stock Option
Scheme and 1995 Directors' Stock Option Plan or any other option plan or
agreement of the Company or other outstanding options to purchase Common Stock
granted by the Company to its executive officers, whether or not then
exercisable, shall be cancelled by the Company, and each holder of a cancelled
Option shall be entitled to receive at the Effective Time or as soon as
practicable thereafter from the Company in consideration for the cancellation of
such Option an amount in cash (less applicable withholding taxes) equal to the
product of (i) the number of shares of Common Stock previously subject to such
Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share of Common Stock previously subject to such Option.
Section 2.9 COMPANY EMPLOYEE STOCK PURCHASE PLAN. The Company shall take
such actions as are necessary to cause the exercise date applicable to the then
current Purchase Period (as defined in the Company's 1994 Employee Stock
Purchase Plan (the "Stock Purchase Plan")) to be the last trading day on which
the Common Stock is traded on the Nasdaq National Market immediately prior to
the Effective Time (the "Final Company Purchase Date"); PROVIDED that such
change in the exercise date shall be conditioned upon the consummation of the
Merger. On the Final Company Purchase Date, the Company shall apply the funds
credited as of such date under the Company Stock Purchase Plan within each
participant's payroll withholdings account to the purchase of whole shares of
Common Stock in accordance with the terms of the Company Stock Purchase Plan.
The cost to each participant in the Company Stock Purchase Plan for shares of
the Common Stock shall be the
6
<PAGE>
lower of 85% of the closing sale price of the Common Stock, as reported by
Nasdaq National Market (as published in THE WALL STREET JOURNAL) on (i) the
first day of the then current Purchase Period or (ii) the last trading day on or
prior to the Final Company Purchase Date.
Section 2.10 STOCKHOLDERS' MEETING. If approval by the Company's
stockholders is required by applicable law to consummate the Merger, the
Company, acting through the Board, shall in accordance with applicable law and
subject to the fiduciary duties of the Board under applicable law (as determined
in good faith after consultation with independent counsel), as soon as
practicable following the consummation of the Offer:
(a) duly call, give notice of, convene and hold an annual or special
meeting of its stockholders (the "Stockholders' Meeting") for the purpose of
considering and taking action upon this Agreement;
(b) include in the Proxy Statement (as defined in Section 4.7) the
recommendation of the Board that stockholders of the Company vote in favor of
the approval and adoption of this Agreement and the transactions contemplated
hereby; and
(c) use its reasonable best efforts (A) to obtain and furnish the
information required to be included by it in the Proxy Statement and, after
consultation with Parent, respond promptly to any comments made by the SEC with
respect to the Proxy Statement and any preliminary version thereof and cause the
Proxy Statement to be mailed to its stockholders at the earliest practicable
time following the consummation of the Offer and (B) to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby.
At such meeting, Parent, Acquisition and AAC Merger will vote all Shares
owned by them in favor of this Agreement and the transactions contemplated
hereby.
ARTICLE III
DISSENTING SHARES; EXCHANGE OF SHARES
Section 3.1 DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, Shares outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who has demanded appraisal for such Shares in accordance with
Massachusetts Law ("Dissenting Shares") shall not be converted into a right to
receive the Merger Consideration unless such holder fails to perfect or
withdraws or otherwise loses his, her or its right to appraisal. If, after the
Effective Time, such holder fails to perfect or withdraws or loses his, her or
its right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
Consideration without interest thereon. The Company shall give Parent prompt
notice of any demands received by the Company for appraisal of Shares, and,
prior to the Effective Time, Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
7
<PAGE>
Section 3.2 EXCHANGE OF CERTIFICATES. (a) Prior to the Effective Time, a
bank or trust company shall be designated by Parent (the "Paying Agent") to act
as agent in connection with the Merger to receive the funds to which holders of
Shares shall become entitled pursuant to Section 2.7(a). Promptly after the
Effective Time, the Surviving Corporation shall cause to be mailed to each
record holder, as of the Effective Time, of a certificate or certificates (the
"Certificates") that, prior to the Effective Time, represented Shares and a form
of letter of transmittal and instructions for use in effecting the surrender of
the Certificates for payment of the Merger Consideration therefor. Upon the
surrender of each such Certificate formerly representing Shares, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the Paying Agent shall pay the holder of such
Certificate the Merger Consideration multiplied by the number of Shares formerly
represented by such Certificate, in exchange therefor, and such Certificate
shall forthwith be cancelled. Until so surrendered and exchanged, each such
Certificate (other than Certificates representing Dissenting Shares or Shares
held by Parent, Acquisition or the Company, or any direct or indirect subsidiary
thereof) shall represent solely the right to receive the Merger Consideration.
No interest shall be paid or accrue on the Merger Consideration. If the Merger
Consideration (or any portion thereof) is to be delivered to any person other
than the person in whose name the Certificate formerly representing Shares
surrendered in exchange therefor is registered, it shall be a condition to such
exchange that the Certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person requesting such
exchange shall pay to the Paying Agent any transfer or other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered, or shall establish to the
satisfaction of the Paying Agent that such tax has been paid or is not
applicable.
(b) When and as needed, Parent, Acquisition or AAC Merger shall deposit, or
cause to be deposited, in trust with the Paying Agent the Merger Consideration
to which holders of Shares shall be entitled at the Effective Time pursuant to
Section 2.7(a) hereof.
(c) The Merger Consideration shall be invested by the Paying Agent, as
directed by Parent, provided such investments shall be limited to direct
obligations of the United States of America, obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, commercial paper rated of the highest quality
by Moody's Investors Service, Inc. or Standard & Poor's Corporation, or
certificates of deposit issued by a commercial bank having at least
$1,000,000,000 in assets.
(d) Promptly following the date which is six months after the Effective
Time, Parent will cause the Paying Agent to deliver to the Surviving Corporation
all cash and documents in its possession relating to the transactions described
in this Agreement, and the Paying Agent's duties shall terminate. Thereafter,
each holder of a Certificate formerly representing a Share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Consideration, without any interest thereon.
(e) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Shares. If, after the
Effective Time, Certificates formerly representing Shares are presented to the
Surviving Corporation or the Paying Agent, they shall be cancelled and exchanged
for the Merger Consideration, as provided in this Article III, subject to
applicable law in the case of Dissenting Shares.
8
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedules delivered by the Company to Parent and
Acquisition concurrently with the execution of this Agreement and the SEC
Reports (as defined in Section 4.5) filed prior to the date hereof, the Company
represents and warrants to Parent and Acquisition as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not, individually or in the aggregate, have a material
adverse effect on the business, assets, liabilities, results of operations,
reserves or financial condition of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Effect"); PROVIDED, HOWEVER, that the term Material
Adverse Effect shall not include a material adverse change which affects the
glucose monitoring industry as a whole.
(b) Each of the Company and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction (including any foreign
country) in which the property owned, leased or operated by it or the nature of
the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect.
(c) The Company has heretofore made available to Parent complete and
correct copies of the Company's Restated Articles of Organization and By-Laws
and the equivalent organizational documents of each of its subsidiaries, each as
amended to the date hereof. Such Restated Articles of Organization, By-Laws and
equivalent organizational documents are in full force and effect and no other
organizational documents are applicable to or binding upon the Company or its
subsidiaries. The Company is not in violation of any of the provisions of its
Restated Articles of Organization or By-Laws and no subsidiary of the Company is
in violation of any of the provisions of such subsidiary's equivalent
organizational documents except, in each case, for such violations that would
not, individually or in the aggregate, have a Material Adverse Effect.
(d) The Company has heretofore furnished to Parent a complete and correct
list of all entities in which the Company owns, directly or indirectly, any
equity or voting interest, which list sets forth the amount of capital stock of
or other equity interests in such entities, directly or indirectly. No entity
in which the Company owns, directly or indirectly, less than a 50% equity
interest is, individually or when taken together with all other such entities,
material to the business of the Company and its subsidiaries, taken as a whole.
Neither the Company, nor any of its subsidiaries, is subject to any outstanding
material obligation or has made any commitment to purchase any additional equity
interests, make any capital contributions to or invest any funds in any business
or entity other than any wholly-owned subsidiary of the Company.
Section 4.2 CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES. The
authorized capital stock of the Company consists of (i) 30,000,000 shares of
Common Stock of which, as of March 28, 1996,
9
<PAGE>
16,792,849 shares of Common Stock were issued and outstanding (including 8,173
shares subject to restrictions issued pursuant to employee benefit plans of the
Company and its subsidiaries or otherwise), (ii) 3,000,000 shares of class A
common stock, par value $0.01 per share, of which, as of March 28, 1996, no
shares were issued and outstanding, (iii) 1,500,000 shares of Class B Common
Stock, of which, as of March 28, 1996, 897,340 shares were issued and
outstanding and (iv) 1,000,000 shares of undesignated preferred stock, of which,
as of March 28, 1996, no shares were issued and outstanding. All outstanding
shares of capital stock of the Company have been validly issued, and are fully
paid, nonassessable and free of preemptive rights. As of March 28, 1996,
Options to purchase an aggregate of 2,500,913 shares of Common Stock were
outstanding and the weighted average exercise price of such Options was $12.8656
per share of Common Stock. Except as set forth above, and except as a result of
the exercise of Options outstanding as of March 28, 1996, there are outstanding
(i) no shares of capital stock or other voting securities of the Company, (ii)
no securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company, (iii) no options,
subscriptions, warrants, convertible securities, calls or other rights to
acquire from the Company, and no obligation of the Company to issue, deliver or
sell any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company and (iv) no
equity equivalents, interests in the ownership or earnings of the Company or
other similar rights (collectively, "Company Securities"). There are no
outstanding obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities, other than the Company's
obligations hereunder to cancel the Options. Each of the outstanding shares of
capital stock of each of the Company's subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and is directly or indirectly owned by the
Company, free and clear of all security interests, liens, claims, pledges,
charges, voting agreements or other encumbrances of any nature whatsoever
(collectively, "Liens"). There are no existing options, calls or commitments of
any character relating to the issued or unissued capital stock or other
securities of any subsidiary of the Company.
Section 4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the
outstanding Shares if and to the extent required by applicable law and the
filing of the appropriate merger documents as required by Massachusetts Law).
This Agreement has been duly and validly executed and delivered by the Company
and constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms.
Section 4.4 NON-CONTRAVENTION; REQUIRED FILINGS AND CONSENTS. (a) The
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby (including the Merger) do
not and will not (i) contravene or conflict with the Restated Articles of
Organization or By-Laws of the Company or the equivalent organizational
documents of any of its subsidiaries; (ii) assuming that all consents,
authorizations and approvals contemplated by subsection (b) below have been
obtained and all filings described therein have been made, contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company,
any of its
10
<PAGE>
subsidiaries or any of their respective properties; (iii) conflict with, or
result in the breach or termination of any provision of or constitute a default
(with or without the giving of notice or the lapse of time or both) under, or
give rise to any right of termination, cancellation, or loss or impairment of
any benefit to which the Company or any of its subsidiaries is entitled under
any provision of any agreement, contract, license or other instrument binding
upon the Company, any of its subsidiaries or any of their respective properties,
or allow the acceleration of the performance of, any obligation of the Company
or any of its subsidiaries under any indenture, mortgage, deed of trust, lease,
license, contract, instrument or other agreement to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
or any of their respective assets or properties is subject or bound; or (iv)
result in the creation or imposition of any Lien on any asset of the Company or
any of its subsidiaries, except in the case of clauses (ii), (iii) and (iv) for
any such contraventions, conflicts, violations, breaches, terminations,
defaults, cancellations, losses, accelerations and Liens which would not
individually or in the aggregate have a Material Adverse Effect or materially
interfere with the consummation of the transactions contemplated by this
Agreement.
(b) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby
(including the Merger) by the Company require no action by or in respect of, or
filing with, any governmental body, agency, official or authority (either
domestic, foreign or supranational) other than (i) the filing of articles of
merger in accordance with Massachusetts Law; (ii) compliance with any applicable
requirements of the Hart-Scott Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"); (iii) compliance of any applicable requirements of any
laws or regulations relating to the regulation of monopolies or competition in
Germany; (iv) compliance with any applicable requirements of the Exchange Act
and state securities, takeover and Blue Sky laws; and (v) such actions or
filings which, if not taken or made, would not, individually or in the
aggregate, have a Material Adverse Effect or materially interfere with the
consummation of the transactions contemplated by this Agreement.
Section 4.5 SEC REPORTS. (a) The Company has filed all required forms,
reports and documents with the SEC since July 8, 1994 (collectively, the "SEC
Reports"), each of which has complied in all material respects with applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Exchange Act. As of their respective dates, none of the SEC Reports,
including, without limitation, any financial statements or schedules included
therein, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the SEC
Reports fairly present, in all material respects and in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof and
their consolidated results of operations and cash flows for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
(b) Except as reflected or reserved against in the audited consolidated
balance sheet of the Company and its subsidiaries at December 31, 1995, the
Company and its subsidiaries have no liabilities of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities incurred in the
ordinary course of business since December 31, 1995 or liabilities which would
not,
11
<PAGE>
individually or in the aggregate, have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries is liable as an indemnitor, guarantor,
surety or endorser, and no person has the power to confess judgment against the
Company or any of its subsidiaries, assets, properties or business except as
would not, individually or in the aggregate, result in or reasonably be likely
to result in a Material Adverse Effect.
Section 4.6 ABSENCE OF CERTAIN CHANGES; DERIVATIVES. (a) Since December
41, 1995, except as specifically disclosed in the SEC Reports filed prior to the
date of this Agreement, neither the Company nor any of its subsidiaries has (A)
except as disclosed on Schedule 4.6, taken any of the actions set forth in
Sections 6.1(a), (c), (d), (g), (h)(i), (h)(ii), (h)(iii), (i), (j) or (k), (B)
taken any of the actions set forth in Sections 6.1(e) or (f) except, in each
case, as would not individually or in the aggregate, result in a Material
Adverse Effect, or (C) entered into any transaction, or conducted its business
or operations, other than in the ordinary course of business consistent with
past practice. Since December 31, 1995, there has not been any change or event
resulting in a Material Adverse Effect.
(b) As of the date hereof, there are no futures, forward, swap, option or
swaption contract, or any other financial instruments with similar
characteristics and/or generally characterized as a "derivative" security except
as would not, individually or in the aggregate, result in or reasonably be
likely to result in a Material Adverse Effect.
Section 4.7 SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY STATEMENT. Neither the
Schedule 14D-9, nor any of the information provided by the Company and/or by its
auditors, legal counsel, financial advisors or other consultants or advisors
specifically for use in the Offer Documents shall, on the respective dates the
Schedule 14D-9, the Offer Documents or any supplements or amendments thereto are
filed with the SEC or on the date first published, sent or given to the
Company's stockholders, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The proxy or
information statement or similar materials distributed to the Company's
stockholders in connection with the Merger, including any amendments or
supplements thereto (the "Proxy Statement"), shall not, at the time filed with
the SEC, at the time mailed to the Company's stockholders, at the time of the
Stockholders' Meeting or at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information provided by Parent, Acquisition and/or by their auditors, legal
counsel, financial advisors or other consultants or advisors specifically for
use in the Schedule 14D-9 or the Proxy Statement. The Schedule 14D-9 and the
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
Section 4.8 FINDER'S FEE. No broker, finder, investment banker or other
intermediary (other than Alex. Brown) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and Alex. Brown pursuant to which Alex. Brown
would be entitled to any payment relating to the transactions contemplated
hereby.
12
<PAGE>
Section 4.9 ABSENCE OF LITIGATION. Except as disclosed
on Schedule 4.9, there is no action, suit, claim, investigation
or proceeding pending against or, to the knowledge of the Company, threatened
against, the Company or any of its subsidiaries or any of their respective
properties before any court or arbitrator or any administrative, regulatory or
governmental body, or any agency or official (i) which, individually or in the
aggregate, would reasonably be likely to have a Material Adverse Effect; (ii)
which, as of the date of this Agreement, in any manner challenges or seeks to
prevent, enjoin, alter or delay the Offer or the Merger or any of the other
transactions contemplated hereby; or (iii) which, as of the date of this
Agreement, alleges criminal action or inaction and which, as of the Effective
Time, alleges any criminal action or inaction which would reasonably be likely
to have a Material Adverse Effect. As of the date hereof, neither the Company
nor any of its subsidiaries nor any of their respective properties is subject to
any order, writ, judgment, injunction, decree, determination or award having,
(or which would reasonably be expected to have, a Material Adverse Effect or
which would prevent or delay the consummation of the transactions
contemplated hereby.
Section 4.10 TAXES. (a) All federal, state, local, foreign and other Tax
returns, reports, information returns and statements of the Company and each of
its subsidiaries (including any consolidated Tax returns that include the income
or loss of the Company or any of its subsidiaries) required by law to be filed
or sent as of the Effective Time have been or will be duly filed or sent, except
where the failure to file or send such returns, reports or statements would not
have a Material Adverse Effect and to the best knowledge of the Company such
returns, reports and statements are or will be true, complete and correct in all
respects, except where the failure to be true, complete and correct would not
have a Material Adverse Effect. All federal, state, local, foreign and other
taxes, assessments, fees and other governmental charges, including without
limitation income, gross receipts, net proceeds, alternative or add-on minimum,
ad valorem, value added, turnover, sales, use, property, personal property
(tangible and intangible), stamp, leasing, lease, user, excise, duty, franchise,
transfer, license, withholding, payroll, employment, fuel, excess profits,
occupational and interest equalization, windfall profits, severance, and other
charges (including interest and penalties) (collectively, "Taxes") imposed upon
the Company or any of its subsidiaries or any of the properties, assets or
income of the Company or any of its subsidiaries which are due and payable
through the Effective Time or claimed by any taxing authority to be due and
payable through the Effective Time have been or will be paid or reserved for, or
adequate provision will be made therefor, as of the Effective Time, other than
Taxes being contested in good faith by the Company or any of its subsidiaries
and other than where the failure to pay, reserve or provide for such Taxes would
not have a Material Adverse Effect. The most recent financial statements
contained in the SEC Reports reflect an adequate tax reserve in accordance with
generally accepted accounting principles.
(b) Neither the IRS nor any other taxing authority or agency, domestic or
foreign, has asserted or, to the best knowledge of the Company has threatened to
assert, against the Company or its subsidiaries any deficiency or claim for
additional Taxes which, if such deficiency or claims were finally resolved
against the Company or its subsidiaries, would have a Material Adverse Effect.
(c) The Company and all of its subsidiaries have paid or are withholding
and will pay when due to the proper taxing authorities all withholding amounts
required to be withheld with respect to all Taxes, including without limitation
sales and use Taxes and Taxes on income or benefits and taxes for unemployment,
social security or other similar programs with respect to salary and other
13
<PAGE>
compensation of directors, officers and employees of the Company and its
subsidiaries, except where the failure to withhold and pay such Taxes would not
have a Material Adverse Effect.
(d) Neither the Company nor any of its subsidiaries has any liability for
any federal, state, local, foreign or other Taxes of any corporation or entity
other than the Company and its subsidiaries, including without limitation any
liability arising from the application of U.S. Treasury Regulations Section
1.1502-6 or any analogous provision of state, local or foreign law, except any
liability that would not have a Material Adverse Effect.
(e) Neither the Company nor any of its subsidiaries is or has been a party
to any Tax sharing agreement with any corporation other than the Company and its
subsidiaries, except any Tax sharing agreement under which the liability of the
Company or its subsidiaries would not have a Material Adverse
Effect.
(f) To the best of the Company's knowledge and as of the date hereof, no
person who holds 5 percent or more of the stock of the Company is a "foreign
person" as defined in Section 1445(f)(3) of the Code.
Section 4.11 EMPLOYEE BENEFITS.(a) Schedule 4.11 lists all employee
pension plans (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended "ERISA")), all material employee welfare plans
(as defined in Section 3(l) of ERISA), and all other material bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance or termination and other similar fringe or employee
benefit plans, programs or arrangements, and any material current or former
employment, executive compensation or severance contracts or agreements, written
or otherwise, for the benefit of, or relating to, any employee of the Company,
any trade or business (whether or not incorporated) which is a member of a
controlled group including the Company or which is under common control with the
Company (an "ERISA Affiliate") within the meaning of Section 414 of the Code, or
Section 4001 of ERISA or any subsidiary of the Company, as well as each plan
with respect to which the Company or an ERISA Affiliate could incur liability
under Section 4069 (if such plan has been or were terminated) or Section 4212(c)
of ERISA (together, all of the foregoing plans, programs, arrangements contracts
or agreements referred to as the "Employee Plans"). There have been made
available to Parent copies of (i) each such written Employee Plan (other than
those referred to in Section 4(b)(4) of ERISA), and (ii) the most recent summary
plan description and annual report on Form 5500 series, with accompanying
schedules and attachments, filed with respect to each Employee Plan required to
make such a filing. Except as provided at Section 4.11(c), for purposes of this
Section 4.11, the term "material," used with respect to any Employee Plan, shall
mean that the Company or an ERISA Affiliate has incurred or may incur
obligations, or has or may have liabilities, in an amount exceeding $400,000
with respect to, or may have or under, such Employee Plan.
(b) (i) None of the Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person, and none of the Employee Plans is
a "multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii)
there has been no "prohibited transaction," as such term is defined in Section
406 of ERISA and Section 4975 of the Code, with respect to any Employee Plan,
which could result in any material liability of the Company or any of its
subsidiaries; (iii) all Employee Plans are in compliance in all material
respects with the requirements prescribed by any
14
<PAGE>
and all statutes (including ERISA and the Code), orders or governmental rules
and regulations currently in effect with respect thereto (including all
applicable requirements for notification to participants or the Department of
Labor, Internal Revenue Service (the "IRS") or Secretary of the Treasury) and
the Company and each of its subsidiaries have performed all material obligations
required to be performed by them under, are not in any material respect in
default under or violation of, and have no knowledge of any default or violation
by any other party to, any of the Employee Plans; (iv) each Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
determination letter from the IRS and, to the Company's knowledge, nothing has
occurred which may reasonably be expected to impair such determination; (v) all
contributions required to be made to any Employee Plan pursuant to Section 412
of the Code, or the terms of the Employee Plan, have been made on or before
their due dates; and (vi) none of the Employee Plans are subject to Title IV of
ERISA and none is intended to be a VEBA under Section 501(c)(9).
(c) No amounts payable under any Employee Plan or pursuant to this
Agreement (including but not limited to payments pursuant to Section 2.8 hereof)
will fail to be deductible for federal income tax purposes by virtue of Section
280G of the Code. For purposes of this Section 4.11 the term "Employee Plan"
shall include all Employee Plans described at Section 4.11(a), as well as any
plan, program, arrangement, contract or agreement that would be an Employee Plan
described at Section 4.11(a), but for the requirement that such plan, program,
arrangement, contract or agreement be "material."
(d) The consummation of the transactions contemplated by this Agreement
will not under any Employee Plans (i) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment (except as expressly provided in this
Agreement) or (ii) accelerate the time of payment or vesting (except in the case
of stock options), or increase the amount of compensation due any such employee
or officer.
(e) There are no material pending, threatened or anticipated claims by or
on behalf of any Employee Plan, by any employee or beneficiary covered under any
such Employee Plan, or otherwise involving any such Plan (other than routine
claims for benefits).
(f) The Company has the right to terminate any Plan which is a welfare
benefit plan, as that term is defined in section 3(1) of ERISA.
Section 4.12 COMPLIANCE. Neither the Company nor any of its subsidiaries
is in violation of, or has violated, any applicable provisions of (i) any laws,
rules, statutes, orders, ordinances or regulations or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise, or
other instrument or obligation to which the Company or its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective properties are bound or affected, which, in the case of either
subsection (i) or (ii), individually or in the aggregate, would result or
reasonably be likely to result in a Material Adverse Effect. Without limiting
the generality of the foregoing, neither the Company nor any of its subsidiaries
is in violation of, or has violated any applicable provisions of, the Foreign
Corrupt Practices Act, the Trading with the Enemy Act, the Anti-Economic
Discrimination Act or any law or regulation relating to Medicare or Medicaid
anti-kickback fraud and abuse, except for such violations that would not,
individually or in the aggregate, result in or reasonably be likely to result in
a Material Adverse Effect.
15
<PAGE>
Section 4.13 ENVIRONMENTAL MATTERS. (a) The Company and its subsidiaries
are in compliance with all applicable Environmental Laws (as defined below)
(which compliance includes, but is not limited to, the possession by the Company
and its subsidiaries of all permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof), except for any noncompliance that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.
To the knowledge of Cheryl Lawton or Robert Coleman, neither the Company nor any
of its subsidiaries has received any communication (written or oral), whether
from a governmental authority, citizens group, employee or otherwise, that
alleges that the Company or any of its subsidiaries is not in such compliance,
and there are no past or present (or to the knowledge of the Company, future)
actions, activities, circumstances, conditions, events or incidents that may
prevent or interfere with such compliance in the future, except for any such
interference that would not reasonably be likely to have a Material Adverse
Effect.
(b) There is no Environmental Claim (as defined below) pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, or, to the knowledge of the Company, against any person or entity
whose liability for any Environmental Claim the Company or any of its
subsidiaries has or may have retained or assumed either contractually or by
operation of law, which, individually or in the aggregate, would reasonably be
likely to have a Material Adverse Effect.
(c) There are no past or present (or to the knowledge of the Company,
future) actions, activities, circumstances, conditions, events or incidents
(including, without limitation, the release, emission, discharge, presence or
disposal of any Hazardous Material (as defined below)) which could reasonably be
likely to form the basis of any Environmental Claim against the Company or any
of its subsidiaries, or, to the knowledge of the Company, against any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has or may have retained or assumed either contractually or by
operation of law, which, in either case, individually or in the aggregate, would
reasonably be likely to have a Material Adverse Effect.
(d) To the knowledge of Cheryl Lawton and Robert Coleman, neither the
Company nor any of its subsidiaries has received any request for information
regarding the contamination, or notice that it is a potentially responsible
party for the Cleanup (as defined below), of any property, whether or not owned
or operated by the Company or any of its subsidiaries, which individually or in
the aggregate would reasonably be likely to have a Material Adverse Effect.
(e) No transfers of permits or other governmental authorizations under
Environmental Laws, and no additional permits or other governmental
authorizations under Environmental Laws, will be required to permit the Company
and its subsidiaries or the Surviving Corporation and its subsidiaries, as the
case may be, to be in full compliance with all applicable Environmental Laws
immediately following the transactions contemplated hereby, as conducted by the
Company and its subsidiaries immediately prior to the date hereof. To the
extent that such transfers or additional permits and other governmental
authorizations are required, the Company and its subsidiaries agree to use its
reasonable best efforts to effect such transfers and obtain such permits and
other governmental authorizations prior to the consummation of the Offer.
(f) The following terms as used in this Section shall
have the following meanings:
16
<PAGE>
"Cleanup" means all actions required to: (1) clean up, remove, treat or
remediate Hazardous Materials in the indoor or outdoor environment; (2) prevent
the Release of Hazardous Materials so that they do not migrate, endanger or
threaten to endanger public health or welfare of the indoor or outdoor
environment; (3) perform pre-remedial studies and investigations and post-
remedial monitoring and care; or (4) respond to any government requests for
information or documents in any way relating to cleanup, removal, treatment or
remediation or potential cleanup, removal, treatment or remediation of Hazardous
materials in the indoor or outdoor environment.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or Release into the indoor
or outdoor environment, of any Hazardous Materials at any location, whether or
not owned or operated by the Company or any of its subsidiaries or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means all federal, state, local and foreign laws and
regulations, rules, permits, licenses, approvals and orders relating to
pollution or protection of human health or the environment, including without
limitation, laws relating to Releases or threatened Releases of Hazardous
Materials in or into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, Release, disposal, transport or handling of Hazardous
Materials and all laws and regulations with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials.
"Hazardous Materials" means all substances defined as Hazardous Substances
under Section 101(14) of the Comprehensive Environmental Response Compensation
and Liability Act, as amended ("CERCLA") except that the term Hazardous
Materials shall include petroleum, natural gas, natural gas liquids, liquefied
natural gas, synthetic gas, mixtures of any of the above, and constituents of
any of the above which are themselves considered hazardous or toxic. The term
shall also include any material which is regulated as a hazardous, toxic or
otherwise dangerous material by any state in the United States or by any human
health or environmental agency in the United Kingdom or which otherwise may be
the basis for any federal, state, local or foreign government requiring cleanup,
removal, treatment or remediation.
"Release" means any release, spill, emission, discharge, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration in or
into the indoor or outdoor environment (including, without limitation, ambient
air, surface water, groundwater and land surface or subsurface strata) or into
or out of any property, including the movement of Hazardous Materials through or
in the air, soil, surface water, groundwater or property.
Section 4.14 INTELLECTUAL PROPERTY.(a) Schedule 4.14 sets
forth a complete list of all patents, trademarks and service marks issued in the
United States and other material patents owned by the Company.
(b) Except as set forth on Schedule 4.14 and as otherwise would not result
in a Material Adverse Effect: (i) the Company and each of its subsidiaries owns
and has the exclusive right to make, have
17
<PAGE>
made, use, sell, import and offer for sale (in each case, free and clear of any
Liens), all Intellectual Property (as defined below) used in the conduct of its
business as currently conducted; (ii) to the knowledge of the Company, the
manufacture, use, sale, import or offer for sale of any Intellectual Property by
the Company and its subsidiaries does not infringe on or otherwise violate the
rights of any person; (iii) to the knowledge of the Company, no product (or
component thereof or process) used, sold, imported or manufactured by and/or
for, or supplied to, the Company or any of its subsidiaries infringes or
otherwise violates the Intellectual Property of any other person; (iv) to the
knowledge of the Company, no person is challenging, infringing on or otherwise
violating any right of the Company or any of its subsidiaries with respect to
any Intellectual Property owned by and/or licensed to the Company and its
subsidiaries; and (v) to the knowledge of the Company, the Company is not
obligated to pay royalties in respect of any Intellectual Property. For
purposes of this Agreement "Intellectual Property" shall mean trademarks,
service marks, brand names, certification marks, trade dress, assumed names,
trade names and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; inventions, discoveries and
ideas, whether patentable or not in any jurisdiction; patents, applications for
patents (including, without limitation, division, continuations, continuations
in part and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; nonpublic information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works, whether
copyrightable or not in any jurisdiction including, without limitation, products
being researched or developed; registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions thereof; any
similar intellectual property or proprietary rights; and any claims or causes of
action arising out of or related to any infringement or misappropriation of any
of the foregoing.
Section 4.15 INSURANCE. The coverage provided by the Company's insurance
policies is reasonable in scope and amount compared to similarly situated
companies, except where the failure to be so reasonable in scope and amount
would not have a Material Adverse Effect.
Section 4.16 PROPERTIES. The Company and its subsidiaries do not own any
real property. The Company and its subsidiaries are not parties to any material
real property leases other than the Company's leases with respect to the real
property located in Abingdon, England, Waltham, Massachusetts and Bedford,
Massachusetts, and true and complete copies of instruments setting forth
material terms of these leases have heretofore been furnished to Parent. Such
leases are valid and binding, and there does not exist any event which, with
notice or lapse of time or both, would constitute a material default under such
leases by the Company.
Section 4.17 REGULATORY MATTERS. (a) Except as disclosed in Schedule 4.17
and except as would not, individually or in the aggregate, have a Material
Adverse Effect, to the knowledge of the Company, (i) since December 31, 1995
through the date hereof there have been no written notices, citations or
decisions by any governmental or regulatory body that any product produced,
manufactured, marketed or distributed at any time by the Company or any Company
subsidiary (the "Company Products") is defective or fails to meet any applicable
standards promulgated by any such governmental or regulatory body, or any other
governmental or regulatory body, agency or office of any other jurisdiction to
which the Company or any of its subsidiaries is subject, (ii) since December 31,
1995 through the date hereof there have been no recalls, field notifications or
seizures ordered or
18
<PAGE>
threatened by the United States Food and Drug Administration (the "FDA") or any
other comparable governmental or regulatory body with respect to any of the
Company Products and (iii) since December 31, 1995 through the date hereof
none of the Company or the Company subsidiaries have received any warning
letter or Section 305 notices from the FDA (or comparable notices from such
other governmental or regulatory bodies).
(b) Except as set forth in Schedule 4.17 and as would not, individually or
in the aggregate, have a Material Adverse Effect, with respect to each Company
Product: (i) the Company and its subsidiaries have obtained all applicable
approvals, clearances, authorizations, licenses (including site licensures) and
registrations required by United States or foreign governments or government
agencies to permit the manufacturing, distribution, sale (including
reimbursement and pricing), marketing, export, import or human research
(including clinical and non-clinical trials) of such Product (collectively,
"Licenses"); and (ii) the Company and its subsidiaries are in full compliance
with all terms and conditions of each License in each country in which such
Company Product is marketed, and with all requirements pertaining to the
manufacturing (including current good manufacturing practices), distribution,
sale (including reimbursement and pricing), marketing, export, import or human
research (including good laboratory practices and clinical and non-clinical
trials) of such Company Product which is not required to be the subject of a
License.
Section 4.18 LABOR MATTERS. Neither the Company nor any of its
subsidiaries is a party to any collective bargaining or other labor union
contract applicable to persons employed by the Company or any of its
subsidiaries, no collective bargaining agreement is being negotiated by the
Company or any of its subsidiaries and the Company has no knowledge of any
activities or proceedings of any labor union to organize any of their respective
employees. There is no labor dispute, strike or work stoppage against the
Company or any of its subsidiaries pending or, to the Company's knowledge,
threatened.
Section 4.19 VOTING REQUIREMENTS. The affirmative vote of a majority of
the outstanding shares of Common Stock and Class B Common Stock approving this
Agreement is the only vote of the holders of any class or series of Company
Securities necessary to approve this Agreement and the transactions contemplated
by this Agreement. Pursuant to a stockholders' agreement with the J.P. Morgan
Capital Corporation, the holder of all of the issued and outstanding shares of
the Class B Common Stock ("Morgan"), Morgan is required to vote its shares of
Class B Common Stock in the same manner and proportion as the Common Stock is
voted with respect to approval of this Agreement and the transactions
contemplated by this Agreement.
Section 4.20 STATE TAKEOVER LAWS. The Board has approved the transactions
contemplated hereby so as to render inapplicable to such transactions,
including, without limitation, the Offer and the Merger, the restrictions on
business combinations contained in Chapter 110F of Massachusetts Law. The
provisions of Chapter 110D of Massachusetts Law are inapplicable to the Company,
the Offer and the Merger and the Offer and the Merger are exempt from the
requirements of any other "moratorium," "control share," "fair price," or other
anti-takeover laws or regulations of any state. The Company has taken all steps
necessary irrevocably to exempt the transactions contemplated by this Agreement
from any applicable provisions of the Company's Restated Articles of
Organization and By-Laws which would have the effect of delaying, preventing or
materially reducing the expected benefits to Parent or Acquisition of the
transactions contemplated by this Agreement.
19
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Each of Parent and Acquisition represents and warrants to
the Company as follows:
Section 5.1 ORGANIZATION. Each of Parent and Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power and authority would not reasonably be likely
to prevent or materially delay the consummation of the Offer or the Merger.
Section 5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the boards of directors of Acquisition
and Parent and by Parent as the sole stockholder of Acquisition, and no other
corporate proceedings on the part of Parent or Acquisition are necessary to
authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by each of
Parent and Acquisition and constitutes a legal, valid and binding agreement of
each of Parent and Acquisition, enforceable against each of Parent and
Acquisition in accordance with its terms.
Section 5.3 NON-CONTRAVENTION; REQUIRED FILINGS AND CONSENTS. (a) The
execution, delivery and performance by Parent and Acquisition of this Agreement
and the consummation of the transactions contemplated hereby (including the
Merger) do not and will not (i) contravene or conflict with the Certificate of
Incorporation or By-Laws of Parent or Acquisition; (ii) assuming that all
consents, authorizations and approvals contemplated by subsection (b) below have
been obtained and all filings described therein have been made, contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to Parent or
Acquisition or any of their respective properties; (iii) conflict with, or
result in the breach or termination of any provision of or constitute a default
(with or without the giving of notice or the lapse of time or both) under, or
give rise to any right of termination, cancellation, or loss of any benefit to
which Parent or Acquisition is entitled under any provision of any agreement,
contract, license or other instrument binding upon Parent, Acquisition or any of
their respective properties, or allow the acceleration of the performance of,
any obligation of Parent or Acquisition under any indenture, mortgage, deed of
trust, lease, license, contract, instrument or other agreement to which Parent
or Acquisition is a party or by which Parent or Acquisition or any of their
respective assets or properties is subject or bound; or (iv) result in the
creation or imposition of any Lien on any asset of Parent or Acquisition, except
in the case of clauses (ii), (iii) and (iv) for any such contraventions,
conflicts, violations, breaches, terminations, defaults, cancellations, losses,
accelerations and Liens which, individually or in the aggregate, would not
reasonably be likely to prevent or materially delay the consummation of the
Offer or the Merger.
20
<PAGE>
(b) The execution, delivery and performance by Parent and Acquisition of
this Agreement and the consummation of the transactions contemplated hereby
(including the Merger) by Parent and Acquisition require no action by or in
respect of, or filing with, any governmental body, agency, official or authority
(whether domestic, foreign or supranational) other than (i) the filing of
articles of merger in accordance with Massachusetts Law; (ii) compliance with
any applicable requirements of the HSR Act; (iii) compliance with any applicable
requirements of the Exchange Act and state securities, takeover and Blue Sky
laws; and (iv) such actions or filings which, if not taken or made, would not,
individually or in the aggregate, reasonably be likely to prevent the
consummation of the Offer or the Merger.
Section 5.4 OFFER DOCUMENTS; SCHEDULE 14D-9; PROXY STATEMENT. Neither the
Offer Documents, nor any of the information provided by Parent or Acquisition
and/or by their auditors, legal counsel, financial advisors or other consultants
or advisors specifically for use in the Schedule 14D-9 shall, on the respective
dates the Offer Documents, the Schedule 14D-9 or any supplements or amendments
thereto are filed with the SEC or on the date first published, sent or given to
the Company's stockholders, as the case may be, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, neither Parent nor Acquisition makes any representation or warranty
with respect to any information provided by the Company and/or by its auditors,
legal counsel, financial advisors or other consultants or advisors specifically
for use in the Offer Documents. None of the information provided by Parent or
Acquisition and/or by their auditors, attorneys, financial advisors or other
consultants or advisors specifically for use in the Proxy Statement shall, at
the time filed with the SEC, at the time mailed to the Company's stockholders,
at the time of the Stockholders' Meeting or at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Offer
Documents will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder.
Section 5.5 NO PRIOR ACTIVITIES. Since the date of its incorporation,
Acquisition has not engaged in any activities other than in connection with or
as contemplated by this Agreement or in connection with arranging any financing
required to consummate the transactions contemplated hereby.
Section 5.6 FINANCING. Acquisition has or will have available to it all
funds necessary to satisfy its obligations hereunder, including, without
limitation, the obligation to pay the Per Share Amount pursuant to the Offer and
the Merger Consideration pursuant to the Merger and to pay all related fees and
expenses in connection with the Offer and the Merger.
ARTICLE VI
COVENANTS
Section 6.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as otherwise
expressly provided in this Agreement, during the period from the date hereof to
the time Acquisition's designees are elected as directors of the Company
pursuant to Section 1.3, the Company and its subsidiaries will each conduct
21
<PAGE>
its operations in the ordinary course of business consistent with past practice,
and the Company and its subsidiaries will each use its reasonable best efforts
to preserve intact its business organization, to keep available the services of
its officers and employees and to maintain existing relationships with
licensors, licensees, suppliers, contractors, distributors, customers and others
having business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, prior
to the Effective Time, neither the Company nor any of its subsidiaries will,
without the prior written consent of Acquisition:
(a) amend or propose to amend its articles of organization or by-laws or
equivalent organizational documents, or increase or propose to increase the
number of directors of the Company;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities (or equity equivalents (including, without
limitation, stock appreciation rights), except as required by option agreements
and option plans as in effect as of the date hereof, or amend any of the terms
of any such securities or agreements outstanding as of the date hereof;
(c) split, combine (or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock, or property or any combination thereof) in respect of its capital stock,
or redeem, repurchase or otherwise acquire any of its securities or any
securities of its subsidiaries;
(d) (i) except in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or issue any debt
securities, or assume, guarantee or endorse the obligations of any other person;
(ii) make any loans, advances or capital contributions to, or investments in,
any other person (other than to wholly owned subsidiaries of the Company); (iii)
pledge or otherwise encumber shares of capital stock of the Company or any of
its subsidiaries; or (iv) except in the ordinary course of business consistent
with past practice, mortgage or pledge any of its assets, tangible or
intangible, or create or suffer to exist any Lien thereupon;
(e) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement, trust,
plan, fund or other arrangement for the benefit or welfare of any director,
officer or employee, or (except, in the case of employees who are not officers
or directors, for normal compensation increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not result in
a material increase in benefits or compensation expense to the Company) increase
in any manner the compensation or benefits of any director, officer or employee
or pay any benefit not required by any plan or arrangement as in effect as of
the date hereof (including, without limitation, the granting of stock options,
restricted stock, stock appreciation rights or performance units);
(f) acquire, sell, lease, license, encumber, transfer or dispose of any
assets outside the ordinary course of business consistent with past practice or
any assets which in the aggregate are material to the Company and its
subsidiaries, taken as a whole, or enter into any contract, agreement,
commitment or transaction outside the ordinary course of business consistent
with past practice;
22
<PAGE>
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(h) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) authorize any new capital expenditure or expenditures which was
not reflected in the capital budget previously furnished to Parent by the
Company; (iii) settle any litigation for amounts in excess of $500,000
individually or $1,000,000 in the aggregate; or (iv) enter into or amend any
contract, agreement, commitment or arrangement with respect to any of the
foregoing;
(i)make any tax election or settle or compromise any
material Tax liability;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in the consolidated financial statements (or the
notes thereto) of the Company and its consolidated subsidiaries or incurred in
the ordinary course of business consistent with past practice, except where such
action would not result in a Material Adverse Effect;
(k) enter into any agreement providing for the acceleration of payment or
performance or other consequence as a result of a change in control of the
Company;
(l)(i) enter into any agreement providing for any license, sale, assignment
or otherwise transfer any patent rights or grant any covenant not to sue with
respect to any of its patent rights or (ii) enter into any agreements providing
for any license, sale or assignment or otherwise transfer any Intellectual
Property or grant any covenant not to sue with respect to its Intellectual
Property, except if such agreement, assignment or transfer would not have a
Material Adverse Effect; or
(m) take, or agree in writing or otherwise to take, any of the actions
described above in Section 6.1 or any action which would make any of the
representations or warranties of the Company contained in this Agreement untrue
or incorrect or would result in any of the conditions to the Offer not being
satisfied.
Notwithstanding anything to the contrary contained herein, the Company may
adopt a shareholder rights plan, issue rights thereunder and issue securities
upon exercise of such rights; PROVIDED, HOWEVER, that such rights plan exempts
the Offer and the Merger from the events which trigger the exercise of such
rights.
Section 6.2 ACCESS TO INFORMATION.(a) Subject to applicable law and the
agreements set forth in Section 6.2(b), between the date hereof and the
Effective Time, the Company will give each of Parent and Acquisition and their
counsel, financial advisors, auditors, and other authorized representatives
reasonable access to all employees, plants, offices, warehouses and other
facilities and to all books and records of the Company and its subsidiaries,
will permit each of Parent and Acquisition and their respective counsel,
financial advisors, auditors and other authorized representatives to make such
inspections as Parent or Acquisition may reasonably require and will cause the
Company's officers or representatives and those of its subsidiaries to furnish
promptly to Parent or Acquisition or their
23
<PAGE>
representatives such financial and operating data and other information with
respect to the business and properties of the Company and any of its
subsidiaries as Parent or Acquisition may from time to time request. No
investigation pursuant to this Section 6.2 shall affect any representations or
warranties of the parties herein or the conditions to the obligations of the
parties hereunder.
(b) Parent and Acquisition agree to be bound by the confidentiality
agreement dated March 13, 1996 (the "Confidentiality Agreement"), among the
Company and Parent as if the references to Parent therein were to Acquisition.
Notwithstanding any provision of the Confidentiality Agreement, Parent and
Acquisition may (i) enter into this Agreement, (ii) acquire Shares pursuant to
the Offer and the Merger and (iii) make such disclosures in connection with the
Offer and the Offer Documents as Parent and Acquisition may determine in their
reasonable discretion is required by applicable law.
Section 6.3 REASONABLE BEST EFFORTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, Parent,
Acquisition and the Company shall cooperate with one another (i) in the
preparation and filing of the Offer Documents, the Schedule 14D-9, the Proxy
Statement and any required filings under the HSR Act and the other laws referred
to in Sections 4.4(b) and 5.3(b); (ii) in determining whether action by or in
respect of, or filing with, any governmental body, agency, official or authority
(either domestic or foreign) is required, proper or advisable or any actions,
consents, waivers or approvals are required to be obtained from parties to any
contracts, in connection with the transactions contemplated by this Agreement;
and (iii) in seeking timely to obtain any such actions, consents and waivers and
to make any such filings. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party hereto shall take all
such necessary action.
Section 6.4 PUBLIC ANNOUNCEMENTS. Parent and Acquisition, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated by this Agreement and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by applicable law or by applicable rules of any
securities exchange or the Nasdaq National Market. The initial joint
announcement of the transactions contemplated by this Agreement shall be in the
form attached hereto as Annex B.
Section 6.5 INDEMNIFICATION.(a) Parent shall cause the Surviving
Corporation to keep in effect the provisions in its Articles of Organization and
By-Laws containing the provisions with respect to exculpation of director and
officer liability and indemnification set forth in the Restated Articles of
Organization and Amended and Restated By-Laws of the Company on the date of this
Agreement to the fullest extent permitted under applicable law, which provisions
shall not be amended, repealed or otherwise modified except as required by
applicable law or except to make changes permitted by applicable law that would
enlarge the exculpation or rights of indemnification thereunder.
(b) From and after the Effective Time, Parent hereby agrees to guarantee
and to cause the Surviving Corporation to perform all of its obligations under
the Restated Articles of Organization and By-Laws of the Company with respect to
indemnification.
24
<PAGE>
(c) Parent shall cause the Surviving Corporation to use its reasonable
best efforts to maintain in effect for five years from the Effective Time, if
available, the coverage provided by the current directors' and officers'
liability insurance policies maintained by the Company (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially less
favorable) with respect to matters occurring prior to the Effective Time;
PROVIDED, HOWEVER, that nothing contained herein shall require the Surviving
Corporation to incur any annual premium in excess of 200% of the last annual
aggregate premium paid prior to the date of this Agreement for all current
directors' and officers' liability insurance policies maintained by the Company
which the Company represents and warrants to be $278,000 (the "Current
Premium"). If such premiums for such insurance would at any time exceed 200% of
the Current Premium, then the Surviving Corporation shall cause to be maintained
policies of insurance which, in the Surviving Corporation's good faith
determination, provide the maximum coverage available at an annual premium equal
to 200% of the Current Premium.
Section 6.6 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent or Acquisition, and Parent or Acquisition shall give
prompt notice to the Company, as the case may be, of (i) the occurrence, or non-
occurrence, of any event the respective occurrence, or non-occurrence, of which
would be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate and (ii) any failure of the Company, Parent
or Acquisition, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
PROVIDED, that the delivery of any notice pursuant to this Section 6.6 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 6.7 TERMINATION OF STOCK PLANS. Prior to the consummation of the
Offer, the Board (or, if appropriate, any committee thereof) shall adopt such
resolutions or take such other actions as are required to ensure that, following
the Effective Time, no participant in any stock, stock option, stock
appreciation or other benefit plan of the Company or any of its subsidiaries or
any holder of any Option shall have any right thereunder to acquire any capital
stock of the Surviving Corporation or any subsidiary thereof.
Section 6.8 NO SOLICITATION. (a) The Company will immediately cease any
existing discussions or negotiations with any third parties conducted prior to
the date hereof with respect to any Acquisition Proposal (as defined below).
The Company shall not, directly or indirectly, through any officer, director,
employee, representative or agent or any of its subsidiaries, (i) solicit,
initiate, continue or encourage any inquiries, proposals or offers that
constitute, or could reasonably be expected to lead to, a proposal or offer for
a merger, consolidation, business combination, sale of substantial assets, sale
of shares of capital stock (including, without limitation, by way of a tender
offer) or similar transactions involving the Company or any of its subsidiaries,
other than the transactions contemplated by this Agreement (any of the foregoing
inquiries or proposals being referred to in this Agreement as an "Acquisition
Proposal"), (ii) solicit, initiate, continue or engage in negotiations or
discussions concerning, or provide any non-public information or data to any
person or entity relating to, any Acquisition Proposal, or (iii) agree to,
approve or recommend any Acquisition Proposal; PROVIDED, that nothing contained
in this Section 6.8 shall prevent the Company from, prior to the purchase by
Acquisition of Shares pursuant to the Offer, furnishing nonpublic information or
data to, or entering into discussions or negotiations with, any person in
connection with an unsolicited Acquisition Proposal by such person or
recommending an unsolicited Acquisition Proposal to the stockholders of the
Company, if and only to the extent that (1) the Company's
25
<PAGE>
directors determine in good faith, after receiving advice of its independent
counsel, that such action is required for the discharge of their fiduciary
duties to stockholders under applicable law and (2) prior to furnishing such
nonpublic information to, or entering into discussions or negotiations with,
such person, the Company receives from such person an executed confidentiality
agreement with terms no less favorable, taken as a whole, to the Company than
those contained in the Confidentiality Agreement, but which confidentiality
agreement shall not include any provision calling for any exclusive right to
negotiate with the Company, and (3) the Company advises Parent of all such
nonpublic information delivered to such person concurrently with its delivery to
the requesting party.
(b) The Company shall notify Parent immediately (and in no event later
than 24 hours) after receipt by the Company of any Acquisition Proposal or any
request for non-public information in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company by any person or
entity that informs the Company that it is considering making, or has made, an
Acquisition Proposal.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party hereto to effect the Merger is subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Acquisition shall have purchased Shares pursuant to the Offer;
(b) if required by Massachusetts Law, this Agreement shall have been
adopted by the affirmative vote of the stockholders of the Company by the
requisite vote in accordance with Massachusetts Law;
(c) there shall not be in effect any order, decree or ruling or other
action restraining, enjoining or otherwise prohibiting the Merger, which order,
decree, ruling or action shall have been issued or taken by any court of
competent jurisdiction or other governmental body located or having jurisdiction
within the United States or any country or economic region in which the Company
or any of its subsidiaries or Parent or any of its affiliates, directly or
indirectly, has material assets or operations; and
(d) any waiting period applicable to the Merger under
the HSR Act shall have terminated or expired.
ARTICLE VIII
TERMINATION; EXPENSES; AMENDMENT; WAIVER
Section 8.1 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, notwithstanding
approval thereof by the stockholders of the Company:
26
<PAGE>
(a) by mutual written consent of Parent, Acquisition
and the Company;
(b) by Parent or the Company if any court of competent jurisdiction or
other governmental body located or having jurisdiction within the United States
or any country or economic region in which the Company or any of its
subsidiaries or Parent or any of its affiliates, directly or indirectly, has
material assets or operations, shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the Offer
or the Merger and such order, decree, ruling or other action shall have become
final and nonappealable;
(c) by Parent or the Company if Acquisition shall have (A) terminated the
Offer or (B) failed to accept for purchase and pay for Shares pursuant to the
Offer by June 30, 1996 unless Acquisition shall have failed to accept for
purchase and pay for Shares pursuant to the Offer as the result of the receipt
by the Company of an Acquisition Proposal or as a result of a failure of the
applicable waiting period under the HSR Act to expire or the failure to obtain
any necessary governmental or regulatory approvals, in which case, if
Acquisition shall have failed to accept for purchase and pay for Shares pursuant
to the Offer by September 30, 1996; PROVIDED, that the right to terminate this
Agreement under the foregoing clauses (A) or (B) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause or resulted in any of the circumstances described in such clauses;
(d) by either Parent or the Company if, prior to the purchase of Shares
pursuant to the Offer, the other party shall have failed to comply in all
material respects with any of its covenants or agreements contained in this
Agreement required to be complied with prior to the date of such termination,
which failure to comply has not been cured within twenty business days following
receipt by such other party of written notice of such failure to comply;
PROVIDED, HOWEVER, that, if such breach is curable by the breaching party
through the exercise of the breaching party's best efforts and for so long as
the breaching party continues to exercise such best efforts, the nonbreaching
party may not terminate this Agreement under this Section 8.1(d);
(e) by either Parent or the Company if, prior to the purchase of Shares
pursuant to the Offer, there has been (i) a breach in any material respect by
the other party (in the case of Parent, including any material breach by
Acquisition) of any representation or warranty that is not qualified as to
materiality which has the effect of making such representation or warranty not
true and correct in all material respects or (ii) a breach by the other party
(in the case of Parent, including any material breach by Acquisition) of any
representation that is qualified as to materiality, in each case which breach
has not been cured within twenty business days following receipt by the
breaching party of written notice of the breach; PROVIDED, HOWEVER, that, if
such breach is curable by the breaching party through the exercise of the
breaching party's best efforts and for so long as the breaching party continues
to exercise such best efforts, the nonbreaching party may not terminate this
Agreement under this Section 8.1(e);
(f) by either Parent or the Company, not sooner than the third business day
after the Company's notice to Parent of the Company's receipt of an Acquisition
Proposal if the Board reasonably determines that such Acquisition Proposal
constitutes a Superior Proposal; or
27
<PAGE>
(g) by Parent if the Board shall have withdrawn or modified in a manner
adverse to Parent or Acquisition its approval of the Offer, this Agreement, the
Merger, its recommendation that the Company's stockholders accept the Offer and
the Company shall have entered into an agreement providing for an Acquisition
Proposal or the Board shall have resolved to do any of the foregoing.
"SUPERIOR PROPOSAL" shall mean a bona fide proposal or offer made by a
third party to acquire the Company pursuant to a tender or exchange offer, a
merger, consolidation, acquisition of a majority of the Shares or other business
combination or a sale of all or substantially all of the assets of the Company
and its subsidiaries on terms which the Board determines in good faith (after
consultation with independent financial advisors and counsel) to be more
favorable to the Company and to its stockholders than the transactions
contemplated hereby.
Section 8.2 EFFECT OF TERMINATION.(a) If this Agreement is terminated
pursuant to Section 8.1(f) or Section 8.1(g), the Company shall pay Parent a
non-refundable fee of $17,500,000, which amount shall be payable by wire
transfer of same day funds within two business days after the date this
Agreement is so terminated.
(b) In the event of the termination and abandonment of this Agreement
pursuant to Section 8.1, this Agreement shall forthwith become void and have no
effect, other than the provisions of this Section 8.2 and Section 8.3. No
termination of this Agreement and nothing contained in this Section 8.2 shall
relieve any party from liability for any breach of this Agreement.
Section 8.3 FEES AND EXPENSES. Subject to Section 8.2(a) above, each
party shall bear its own expenses and costs in connection with this Agreement
and the transactions contemplated hereby.
Section 8.4 AMENDMENT. Subject to Section 1.3(c), this Agreement may be
amended by action taken by the Company, Parent and Acquisition at any time
before or after adoption of the Merger by the stockholders of the Company (if
required by applicable law) but, after any such approval, no amendment shall be
made which decreases the Merger Consideration or changes the form thereof or
which adversely affects the rights of the Company's stockholders hereunder
without the approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 8.5 EXTENSION; WAIVER. Subject to Section 1.3(c), at any time
prior to the Effective Time, the Company, on the one hand, and Parent and
Acquisition, on the other hand, may (i) extend the time for the performance of
any of the obligations or other acts of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document, certificate or writing delivered pursuant hereto, or
(iii) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of any party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such rights.
28
<PAGE>
ARTICLE IX
MISCELLANEOUS
Section 9.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein shall not survive beyond the
Effective Time. The covenants and agreements herein shall survive in accordance
with their respective terms.
Section 9.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, and the
Confidentiality Agreement (i) constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (ii) shall not be assigned by operation
of law or otherwise; PROVIDED that Acquisition may assign its rights and
obligations in whole or in part to Parent or any subsidiary of Parent, but no
such assignment shall relieve Acquisition of its obligations hereunder if such
assignee does not perform such obligations.
Section 9.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested),
to the other party as follows:
if to Parent or Acquisition:
Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064
Fax: 847-937-4604
Attention: President, Diagnostics Division and,
Fax: 847-938-6277
Attention: General Counsel
with copies to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Fax: 312-701-7711
Attention: Robert A. Helman and Scott J. Davis
if to the Company:
MediSense, Inc.
266 Second Avenue
Waltham, Massachusetts 02154
Fax: 617-890-8637
Attention: General Counsel
29
<PAGE>
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Fax: 212-848-7179/80/81/82
Attention: Peter D. Lyons
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 9.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
applicable to contracts executed in and to be performed in that State.
Section 9.5 PARTIES IN INTEREST. Except for Section 6.5,
which shall inure to the benefit of the persons identified therein, this
Agreement shall be binding upon and inure solely to the benefit of each party
hereto and its successors and permitted assigns, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 9.6 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 9.7 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity and enforceability of the other provisions hereof. If
any provision of this Agreement, or the application thereof to any person or
entity or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid and
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
Section 9.8 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.9 CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "affiliate" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
30
<PAGE>
(b) "associate" of a Person means a corporation or organization of which
such person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities or any
person who is a director or officer of such person or any of its parents or
subsidiaries;
(c)"business day" shall mean any day other than a Saturday, Sunday or
federal holiday.
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "generally accepted accounting principles" shall mean the generally
accepted accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession in the United
States, in each case applied on a basis consistent with the manner in which the
audited financial statements for the fiscal year of the Company ended March 31,
1995 were prepared;
(f) "knowledge" or "known" means, with respect to any matter in question,
if the executive officers of the Company or Parent, as the case may be, have
actual knowledge of such matter;
(g) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holder of
which is generally entitled to vote for the election of the board of directors
or other governing body of such corporation, partnership, joint venture or other
legal entity.
Section 9.10. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
31
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its representatives thereunto duly authorized, all as
of the day and year first above written.
[CORPORATE SEAL] ABBOTT LABORATORIES
Attest by: /s/ Jose M. de Lasa By: /s/ Duane L. Burnham
------------------- -------------------------
Title: Senior Vice Title: Chairman of the Board
President, and Chief Executive
Secretary and Officer
General
Counsel
Attest by: /s/ Jose M. de Lasa By: /s/ Miles D. White
------------------- -------------------------
Title: Senior Vice Title: Senior Vice President,
President, Diagnostic Operations
Secretary and
General
Counsel
[CORPORATE SEAL] AAC ACQUISITION, INC.
Attest by: /s/ Jose M. de Lasa By: /s/ Miles D. White
------------------- -------------------------
Title: Clerk Title: President
Attest by: /s/ Jose M. de Lasa By: /s/ Miles D. White
------------------- -------------------------
Title: Clerk Title: President
[CORPORATE SEAL] MEDISENSE, INC.
Attest by: /s/ Jose M. de Lasa By: /s/ Robert L. Coleman
------------------- -------------------------
Title: Clerk Title: President, Chief
Executive Officer and
Director
Attest by: /s/ Jose M. de Lasa By: /s/ Gerald J. Bojas
------------------- --------------------------
Title: Clerk Title: Corporate Controller
and Treasurer
32
<PAGE>
ANNEX II
March 29, 1996
Alex. Brown
Board of Directors
MediSense, Inc.
266 Second Avenue
Waltham, MA 02154
Dear Sirs:
MediSense, Inc. ("MediSense" or the "Company"), Abbott Laboratories
("Abbott" or the "Buyer") and AAC Acquisition, Inc., a Massachusetts corporation
and a wholly owned subsidiary of Buyer (the "Merger Sub"), have entered into an
Agreement and Plan of Merger dated March 29, 1996 (the "Agreement"). Pursuant
to the Agreement, the Merger Sub will commence a tender offer (the "Tender
Offer") to purchase all the outstanding common stock, $.01 par value per share,
and all the outstanding Class B common stock, $01 par value (together, the
"Common Stock"), of MediSense at a price of $45.00 per share, net to the seller
in cash. The Agreement also provides that following such tender offer, Merger
Sub will be merged with and into MediSense (the "Merger"), and that each
outstanding share of Common Stock, other than the shares held by Abbott or the
Company, will be converted into the right to receive $45.00 in cash. You have
requested our opinion as to whether the consideration to be received by the
holders of the Common Stock pursuant to the Agreement is fair from a financial
point of view to such stockholders.
Alex. Brown & Sons Incorporated ("Alex. Brown"), 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, negotiated
underwritings, secondary distributions of securities, private placements and
valuations for corporate and other purposes. We have served as financial
advisor to the Company in connection with the Merger and will receive a fee for
our services, a substantial portion of which is contingent upon the consummation
of the Merger. Alex. Brown served as underwriter to MediSense in its initial
public offering of Common Stock in June 1994 and its follow-on offering of
Common Stock in February 1995. Alex. Brown maintains a market in MediSense and
regularly publishes research reports regarding the healthcare industry and the
businesses and securities of publicly owned companies in that industry,
including MediSense and Abbott.
In connection with this opinion, we have reviewed the Agreement and certain
publicly available financial information concerning MediSense and certain
internal financial analyses and other information furnished to us by the
Company. We have also held discussions with senior management of MediSense
regarding the business and prospects of the Company. In addition, we have (i)
reviewed the reported price and trading activity for MediSense Common Stock,
(ii) compared certain financial and stock market information for MediSense with
similar information for certain publicly traded companies, (iii) reviewed the
financial terms of certain recent business combinations and (iv) performed such
other studies and analyses and taken into account such other matters as we
deemed necessary.
1
<PAGE>
Board of Directors
MediSense, Inc.
March 29, 1996
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by us for purposes of this
opinion. With respect to financial projections and information relating to the
prospects of the Company, we have assumed that such information has been
reasonably prepared and reflects the best currently available estimates and
judgments of management of the Company as to the likely future financial
prospects of the Company. In addition, we have not made an independent
valuation or appraisal of the assets of the Company (nor have we been furnished
with any such valuation or appraisal), nor have we made any physical inspection
of the properties or assets of the Company. Our opinion is based on market,
economic, financial and other conditions as they exist and can be evaluated as
of the date of this letter.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by the Company with the Securities and Exchange Commission
with respect to the Tender Offer and the Merger. In addition, we express no
opinion as to whether the stockholders of the Company should tender their shares
of Common Stock in the Tender Offer.
Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the cash consideration to be received by the holders of the
Common Stock pursuant to the Agreement is fair from a financial point of view to
such stockholders.
Very truly yours,
ALEX. BROWN & SONS INCORPORATED
2
<PAGE>
ANNEX III
MASSACHUSETTS GENERAL LAWS
Business Corporation Law Chapter 156
Section 86 [RIGHT OF APPRAISAL]. - If a corporation proposes to take a
corporate action as to which any section of this chapter provides that a
stockholder who objects to such action shall have the right to demand payment
for his shares and an appraisal thereof, sections eighty-seven to ninety-eight,
inclusive, shall apply except as otherwise specifically provided in any section
of this chapter. Except as provided in sections eighty-two and eighty-three, no
stockholder shall have such right unless (1) he files with the corporation
before the taking of the vote of the shareholders on such corporate action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) his shares are not voted
in favor of the proposed action. (Last amended by Ch. 749, L. '73, eff. 10-8-
73.)
Section 87 [NOTICE OF STOCKHOLDERS MEETING TO CONTAIN STATEMENT AS TO
APPRAISAL RIGHTS]. - The notice of the meeting of stockholders at which the
approval of such proposed action is to be considered shall contain a statement
of the rights of objecting stockholders. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock, and the directors may authorize the inclusion in any such
notice of a statement of opinion by the management as to the existence or non-
existence of the right of the stockholders to demand payment for their stock on
account of the proposed corporate action. The notice may be in such form as the
directors or officers calling the meeting deem advisable, but the following form
of notice shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the corporation
before the taking of the vote on the approval of such action, written objection
to the proposed action stating that he intends to demand payment for his shares
if the action is taken and (2) whose shares are not voted in favor of such
action has or may have the right to demand in writing from the corporation (or,
in the case of a consolidation or merger, the name of the resulting or surviving
corporation shall be inserted), within twenty days after the date of mailing to
him of notice in writing that the corporate action has become effective, payment
for his shares and an appraisal of the value thereof. Such corporation and any
such stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 88 to 98, inclusive, of chapter 156B of the
General Laws of Massachusetts." (Last amended by Ch. 749, L. '73, eff. 10-8-
73.)
Section 88 [NOTICE TO OBJECTING STOCKHOLDER THAT CORPORATE ACTION HAS
BECOME EFFECTIVE]. - The corporation taking such action, or in the case of a
merger or consolidation the surviving or resulting corporation, shall, within
ten days after the date on which such corporate action became effective, notify
each stockholder who filed written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock. The notice shall be sent by registered or certified
mail, addressed to the stockholder at his last known address as it appears in
the records of the corporation. (Last amended by Ch. 749, L. '73, eff. 10-8-
73.)
<PAGE>
Section 89 [DEMAND FOR PAYMENT BY OBJECTING STOCKHOLDER]. - If within
twenty day after the date of mailing of a notice under subsection (e) of section
eighty-two, subsection (f) of section eighty-three, or section eighty-eight any
stockholder to whom the corporation was required to give such notice shall
demand in writing from the corporation taking such action, or in the case of a
consolidation or merger from the resulting or surviving corporation, payment for
his stock, the corporation upon which such demand is made shall pay to him the
fair value of his stock within thirty days after the expiration of the period
during which such demand may be made. (Last amended by Ch. 749, L. '73. eff.
10-8-73.)
Section 90 [DETERMINATION OF VALUE OF STOCK BY SUPERIOR COURT]. - If during
the period of thirty days provided for in section eighty-nine the corporation
upon which such demand is made and any such objecting stockholder fail to agree
as to the value of such stock, such corporation or any such stockholder may
within four months after the expiration of such thirty-day period demand a
determination of the value of the stock of all such objecting stockholders by a
bill in equity filed in the superior court in the county where the corporation
in which such objecting stockholder held stock had or has its principal office
in the commonwealth.
Section 91 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING
STOCKHOLDERS ON FAILURE TO AGREE ON VALUE THEREOF ETC; PARTIES TO BILL ETC;
SERVICE OF BILL ON CORPORATION; NOTICE TO STOCKHOLDER PARTIES ETC. - If the bill
is filed by the corporation, it shall name as parties respondent all
stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof. If the bill is
filed by a stockholder, he shall bring the bill in his own behalf and in behalf
of all other stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof, and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
Section 92 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING
STOCKHOLDERS ON FAILURE TO AGREE ON VALUE THEREOF, ETC; ENTRY OF DECREE
DETERMINING VALUE OF STOCK; DATE ON WHICH VALUE IS TO BE DETERMINED. - After
hearing the court shall enter a decree determining the fair value of the stock
of those stockholders who have become entitled to the valuation of and payment
for their shares, and shall order the corporation to make payment of such value,
together with interest, if any, as hereinafter provided, to the stockholders
entitled thereto upon the transfer by them to the corporation of the
certificates representing such stock if certificated or if uncertificated, upon
receipt of an instruction transferring such stock to the corporation. For this
purpose, the value of the shares shall be determined as of the day preceding the
date of the vote approving the proposed corporate action and shall be exclusive
of any element of value arising from the
2
<PAGE>
expectation or accomplishment of the proposed corporate action. (Last amended
by Ch. 522, L. '83, eff. 3-1-84.)
Section 93 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING
STOCKHOLDERS ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; COURT MAY REFER BILL,
ETC., TO SPECIAL MASTER TO HEAR PARTIES, ETC. - The court in its discretion may
refer the bill or any question arising thereunder to a special master to hear
the parties, make findings and report the same to the court, all in accordance
with the usual practice in suits in equity in the superior court.
Section 94 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING
STOCKHOLDERS ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; STOCKHOLDER PARTIES MAY
BE REQUIRED TO SUBMIT THEIR STOCK CERTIFICATES FOR NOTATION THEREON OF PENDENCY
OF BILL, ETC. - On motion the court may order stockholder parties to the bill to
submit their certificates of stock to the corporation for notation thereon of
the pendency of the bill, and may order the corporation to note such pendency in
its records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order. (Last amended by Ch. 522, L. '83, eff. 3-1-84.)
Section 95 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING
STOCKHOLDERS ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; TAXATION OF COSTS,
ETC.; INTEREST ON AWARD, ETC. - The costs of the bill, including the reasonable
compensation and expenses of any master appointed by the court, but exclusive of
fees of counsel or of experts retained by any party, shall be determined by the
court and taxed upon the parties to the bill, or any of them, in such manner as
appears to be equitable, except that all costs of giving notice to stockholders
as provided in this chapter shall be paid by the corporation. Interest shall be
paid upon any award from the date of the vote approving the proposed corporate
action, and the court may on application of any interested party determine the
amount of interest to be paid in the case of any stockholder. (Last amended by
Ch. 685, L. '65, eff. 10-1-65.)
Section 96 STOCKHOLDER DEMANDING PAYMENT FOR STOCK NOT ENTITLED TO NOTICE
OF STOCKHOLDERS' MEETINGS OR TO VOTE STOCK OR TO RECEIVE DIVIDENDS, ETC.;
EXCEPTIONS. - Any stockholder who has demanded payment for his stock as provided
in this chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section
ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the
corporation, or in the case of a consolidation or merger, the
resulting or surviving corporation, deliver to it a written
withdrawal of his objections to and an acceptance of such
corporate action.
3
<PAGE>
Section 97 CERTAIN SHARES PAID FOR BY CORPORATION TO HAVE STATUS OF
TREASURY STOCK, ETC. - The shares of the corporation paid for by the corporation
pursuant to the provisions of this chapter shall have the status of treasury
stock or in the case of a consolidation or merger the shares or the securities
of the resulting or surviving corporation into which the shares of such
objecting stockholder would have been converted had he not objected to such
consolidation or merger shall have the status of treasury stock or securities.
(Last amended by Ch. 685, L. '65, eff. 10-1-65.)
Section 98 ENFORCEMENT BY STOCKHOLDER OF RIGHT TO RECEIVE PAYMENT FOR HIS
SHARES TO BE EXCLUSIVE REMEDY; EXCEPTION. - The enforcement by a stockholder of
his right to receive payment for his shares in the manner provided in this
chapter shall be an exclusive remedy except that this chapter shall not exclude
the right of such stockholder to bring or maintain an appropriate proceeding to
obtain relief on the ground that such corporate action will be or is illegal or
fraudulent as to him. (Last amended by Ch. 685, L. '65, eff. 10-1-65.)
4
