<PAGE>
SCHEDULE 14C
(Rule 14c-101)
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14c-5(d) (2))
[x] 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).
[ ] 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
----------------------------------------------------------
[x] 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 August 7, 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 August 7, 1996 at 10:00 a.m., local time, at 4A Crosby Drive, Bedford,
Massachusetts, 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 30, 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.
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 July 11, 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,
Keith R. Higgins
Clerk
Waltham, Massachusetts
July 15, 1996
<PAGE>
MediSense, Inc.
266 Second Avenue
Waltham, Massachusetts 02154
_________________
INFORMATION STATEMENT
_________________
SPECIAL MEETING OF STOCKHOLDERS
To be held on August 7, 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 July 11, 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 August 7, 1996 at 10:00 a.m., local time, at 4A Crosby Drive, Bedford,
Massachusetts, 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 30, 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 20,024,502
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 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 July 15, 1996. This
Information Statement is first being mailed to the holders of shares of
Common Stock on or about July 15, 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. 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. In addition,
material filed electronically with the Commission by either Parent or the
Company is available at the Commission's Web site, http://www.sec.gov,
which contains reports, proxy and information statements and other
information regarding issuers that file electronically with the Commission.
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 the Common Stock ceased on June
12, 1996 when the Common Stock was removed from quotation on the Nasdaq
Stock Market. 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.
<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. . . . . . . . . . . . . . . . . . . . . . . 23
CONFIDENTIALITY AGREEMENT . . . . . . . . . . . . . . . . . . . . 30
STOCKHOLDERS' RIGHTS OF APPRAISAL . . . . . . . . . . . . . . . . 31
MARKET PRICES OF THE COMMON STOCK AND DIVIDEND POLICY . . . . . . 32
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT. . . . . . . . . . . . . . . . . 33
INTERESTS OF CERTAIN PERSONS IN OR OPPOSITION TO
MATTERS TO BE ACTED UPON. . . . . . . . . . . . . . . . . . . . . 34
SELECTED FINANCIAL DATA - MEDISENSE, INC. . . . . . . . . . . . . 37
SELECTED FINANCIAL DATA - ABBOTT LABORATORIES . . . . . . . . . . 38
CERTAIN INFORMATION CONCERNING AAC MERGER,
AAC ACQUISITION, AND PARENT . . . . . . . . . . . . . . . . . . . 39
INDEPENDENT PUBLIC ACCOUNTANTS. . . . . . . . . . . . . . . . . . 39
INCORPORATION BY REFERENCE. . . . . . . . . . . . . . . . . . . . 39
OTHER MATTERS TO COME BEFORE THE MEETING. . . . . . . . . . . . . 40
<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 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. August 7, 1996 at 10:00
a.m., local time, at 4A Crosby Drive, Bedford, Massachusetts.
Purpose. To consider and act upon a proposal to adopt the Merger
Agreement. See "THE MERGER AGREEMENT."
Record Date. July 11, 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.
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.
<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 August 7, 1996 at 10:00 a.m., local time, at 4A Crosby Drive,
Bedford, Massachusetts, 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 20,024,502 shares of Common Stock issued and
outstanding were held by approximately 70 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.
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.
In accordance with Massachusetts law, if the Company and any
stockholders who properly perfect their appraisal rights fail to agree on
the value of the share(s) of Common Stock, either any such stockholder or
the Company may file a bill in equity to petition the Superior Court in the
county where the Company has its principal office in the Commonwealth of
Massachusetts to determine the value of the share(s) of Common Stock. The
Company has not made any determination at this time as to whether it would
file such a bill in equity. Therefore, if the Company and any objecting
stockholder fail to agree on the value of the stock, the stockholder may be
required to file a bill in equity in accordance with Sections 86 to 98,
inclusive, of Chapter 156B of the General Laws of Massachusetts for the
action to proceed.
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 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 potential merits and
risks of possible alternative transactions as well as the potential merits
and risks of remaining independent. Although the Company had not received
any proposals from other bidders, the Board again discussed the number of
likely alternative bidders and the antitrust and other risks that would
impact the likelihood of consummation of a transaction with such other
possible 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 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 mil-
lion. 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, 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, manu-
facturer 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, nutri-
tional 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.
* * *
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.
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;
(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 paid Alex. Brown a $8.5
million transaction fee. The Company also reimbursed Alex. Brown for
its reasonable out-of-pocket expenses, including reasonable fees and
disbursements of its counsel. The Company 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, is an internationally recognized investment bank and 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 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 maintained a
market in the Common Stock and regularly published research reports
regarding the Company. Alex. Brown regularly publishes research reports
regarding the health care industry and the businesses and securities of
publicly owned companies in that industry, including 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 was 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 how such
stockholder should vote at the Special Meeting. The Alex. Brown opinion
was rendered to the Board for its consideration in determining whether
to approve the Merger Agreement and for the Board's determination in
connection with its recommendation 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.
The following is a summary of the analyses performed and factors
considered by Alex. Brown in connection with the rendering of the Alex.
Brown opinion.
Historical Financial Position
In rendering its opinion, Alex. Brown reviewed and analyzed the
historical and current financial condition of the Company which included
(i) an assessment of the Company's recent financial statements; (ii) an
analysis of the Company's revenue, growth and operating performance; and
(iii) an assessment of the Company's margins.
Historical Stock Price Performance
Alex. Brown reviewed and analyzed the daily closing per share market
prices and trading volume for the Company over the period from June 30,
1994, through March 26, 1996. Alex. Brown also reviewed the daily
closing per share market price of the Common Stock and compared the
movement of such daily closing price with the movement of the S&P 500
composite average over the periods from June 30, 1994 through March 26,
1996 and January 3, 1995 through March 26, 1996. Alex. Brown noted
that, on a relative basis, the Company outperformed the S&P 500
composite average over the longer period and underperformed in the more
recent period. Alex. Brown also reviewed the daily closing per share
market prices of the Common Stock and compared the movement of such
closing prices with the movement of a composite average of certain
publicly traded companies (consisting of Arrow International, Inc.,
Ballard Medical Products, Guidant Corporation, Nellcor Puritan Bennett
Incorporated, Respironics, Inc., and Stryker Corporation) (collectively,
the "Selected Companies") over the periods from January 3, 1995 through
March 26, 1996 and June 30, 1994 through March 26, 1996. On a relative
basis, the Common Stock price underperformed the composite average over
the more recent period and outperformed the composite average over the
longer period. This information was presented to give the Board
background information regarding the respective stock price performance
of the Company over the periods indicated.
Analysis of Certain Other Publicly Traded Companies
Alex. Brown compared certain financial information (based on the
commonly used valuation measurements described below) relating to the
Offer and the Merger to certain corresponding information from the
Selected Companies. Such financial information included, among other
things (i) common equity market valuation; (ii) capitalization ratios;
(iii) operating performance; (iv) ratios of common equity market value
as adjusted for debt and cash ("Adjusted Value") to revenues, earnings
before interest expenses and income taxes ("EBIT"), and earnings before
interest expense, income taxes, depreciation, and amortization
("EBITDA"), each for the latest reported twelve month period as derived
from publicly available information; and (v) ratios of common equity
market prices per share ("Equity Value") to earnings per share ("EPS").
The financial information used in connection with the multiples provided
below with respect to the Selected Companies was based on the latest
reported twelve month period as derived from publicly available
information and on estimated EPS for calendar years 1996 and 1997 as
reported by the Institutional Brokers Estimating System ("IBES"). The
financial information used in connection with the multiples provided
below with respect to the Company was based on the latest reported
twelve month period as derived from publicly available information and
on estimated EPS for calendar years 1996 and 1997 as reported in Alex.
Brown Research. Alex. Brown noted that, on a trailing twelve month
basis, the multiple of Adjusted Value to revenues was 5.0x for the Offer
and the Merger compared to a range of 2.6x to 5.3x, with a mean of 3.9x,
and a median of 3.8x, for the Selected Companies, the multiple of
Adjusted Value to EBIT was 26.6x for the Offer and the Merger compared
to a range of 14.4x to 21.5x, with a mean of 18.0x and a median of
17.7x, for the Selected Companies. Alex. Brown also noted that, on a
trailing basis, the multiple of Adjusted Value to EBITDA was 23.6x for
the Offer and the Merger, compared to a range of 12.3x to 16.2x, with a
mean of 14.6x and a median of 14.8x for the Selected Companies. Alex.
Brown further noted that the multiple of Equity Value to trailing twelve
months net income calculated on a fully taxed basis for the Offer and
the Merger was 40.0x for the Offer and the Merger, compared to a range
of 23.7x to 35.0x, with a mean of 29.1x and a median of 27.6x, for the
Selected Companies; the multiple of Equity Value to calendar year 1996
EPS was 31.7x for the Offer and the Merger, compared to a range of 19.7x
to 25.5x, with a mean of 22.4x, and a median of 22.3x for the Selected
Companies; and the multiple of Equity Value to calendar year 1997 EPS
was 24.5x for the Offer and the Merger, compared to a range of 16.5x to
21.2x, with a mean of 18.7x, and a median of 18.6x for the Selected
Companies.
Analysis of Selected Mergers and Acquisitions
Alex. Brown reviewed the financial terms, to the extent publicly
available, of 21 proposed, pending or completed mergers and acquisitions
since February 1993 in the following transactions (the "Selected
Transactions"). Alex. Brown calculated various financial multiples and
the premiums over market value based on certain publicly available
information for each of the Selected Transactions and compared them to
corresponding financial multiples and the premiums over market for the
Offer and the Merger, based on the $45.00 per share purchase price. The
21 transactions reviewed, in reverse chronological order of the public
announcements were: St. Jude Medical, Inc./Daig Corporation; Boston
Scientific Corp./Symbiosis Corp. (AHP); Johnson & Johnson / Cordis
Corporation; Boston Scientific Corp./EP Technologies, Inc.; Boston
Scientific Corp./Meadox Medicals, Inc.; Boston Scientific Corp./Heart
Technology, Inc.; Schering Berlin, Inc. (Schering A.G.)/Medrad, Inc.;
Sybron International Corp./Nunc Group (BTR PCL); C.R. Bard
Corporation/MedChem Products, Inc.; Nellcor, Inc./Puritan-Bennett
Corporation; Smith & Nephew PLC/Acufex Microsurgical, Inc. (AHP);
Orthofix International N.V./American Medical Electronics, Inc.; Circon
Corporation/Cabot Medical Corporation; Johnson & Johnson/Mitek Surgical
Products, Inc.; Boston Scientific Corp./SciMed Life Systems Inc.;
Pfizer, Inc./Namic U.S.A. Corp.; Boston Scientific Corp./Cardiovascular
Imaging Systems, Inc.; St. Jude Medical, Inc./Siemens-Pacesetter,
Inc.(Siemens-Elema A.B.): Medtronic, Inc./Electromedics, Inc.; Danek
Group, Inc./Sofamor, S.A.; Bausch & Lomb, Inc./Dahlberg, Inc. These
transactions involved the acquisition of companies that primarily sold
their products into the medical device market. Alex. Brown noted that
the multiple of aggregate purchase price (value of consideration paid
for common equity adjusted for debt, preferred stock and cash) to
trailing twelve months revenues was 5.0x for the Offer and the Merger
versus a range of 1.4x to 10.5x, with a mean of 3.9x, and a median of
2.8x, for the Selected Transactions and the multiple of aggregate
purchase price to trailing twelve months operating income was 26.6x for
the Offer and the Merger versus a range of 12.7x to 49.2x, with a mean
of 25.7x, and a median of 20.2x for the Selected Transactions. Alex.
Brown further noted that the multiple of equity purchase price to
trailing twelve months net income (the Company's latest twelve months
net income calculated on a fully taxed basis) was 40.0x for the Offer
and the Merger versus a range of 20.7x to 81.5x, with a mean of 38.8x,
and a median of 31.4x for the Selected Transactions and the multiple of
equity purchase price to 1997 EPS was 30.2x for the Offer and the Merger
versus a range of 14.5x to 43.0x, with a mean of 26.8x and a median of
24.8x for the multiple of equity purchase price to forward 12 month EPS
for the Selected Transactions. All multiples for the Selected
Transactions were based on public information available at the time of
announcement of such transaction, without taking into account differing
market and other conditions during the period during which the Selected
Transactions occurred.
Analysis of Premiums Paid
Alex. Brown reviewed the premiums paid to the Company's one day prior
to announcement per share market price and to the one month prior to
announcement per share market price for three groups of selected
transactions; (i) Industrial Transactions (44); (ii) Health Care
Transactions (21); and, (iii) Medical Device Transactions (15). Alex.
Brown noted that the means for the three groups one day prior and one
month prior, respectively, were (i) 39.0% and 53.7%; (ii) 55.7% and
69.8%; and, (iii) 28.8% and 46.5%. Transaction premiums for the Company
based on per share market price one day prior and one month prior to the
announcement of the Offer and the Merger were 48.8% and 55.8%,
respectively.
Discounted Cash Flow Analysis
Alex. Brown performed a discounted cash flow analysis of the Company.
The discounted cash flow approach values a business based on the current
value of the future cash flow that the business will generate. Alex.
Brown used estimates of projected financial performance for the Company
for the years 1996 through 2001 prepared by management. Alex. Brown
aggregated the present value of the cash flows through 2001 with the
present value of a range of terminal values. Alex. Brown discounted
these cash flows at discount rates ranging from 15.0% to 20.0%. The
terminal value was computed based on projected EBITDA in calendar year
2001 and a range of terminal multiples of 10.0x and 14.0x. This
analysis indicated a range of values of $31.57 to $49.30 per share.
No company used in the analysis of other publicly traded companies nor
any transaction used in the analysis of selected mergers and
acquisitions summarized above is identical to the Company or the Offer
and the Merger. Accordingly, such analyses must take into account
differences in the financial and operating characteristics of the
Selected Companies and the companies in the Selected Transactions and
other factors that would affect the public trading value and acquisition
value of the Selected Companies and the Selected Transactions,
respectively.
While the foregoing summary describes all analyses and factors that
Alex. Brown deemed material in its presentation to the Board, it is not
a comprehensive description of all analyses and factors considered by
Alex. Brown. The preparation of a fairness opinion is a complex process
involving various determinations as to the most appropriate and relevant
methods of financial analysis and the applications of these methods to
the particular circumstances and, therefore, such an opinion is not
readily susceptible to summary description. Alex. Brown believes that
its analyses must be considered as a whole and that selecting portions
of its analyses and of the factors considered by it, without considering
all analyses and factors, would create an incomplete view of the
evaluation process underlying the Alex. Brown opinion. In performing
its analyses, Alex. Brown considered general economic, market and
financial conditions and other matters, many of which are beyond the
control of the Company. The analyses performed by Alex. Brown are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than those suggested by such
analyses. Accordingly, such analyses and estimates are inherently
subject to substantial uncertainty. Additionally, analyses relating to
the value of a business do not purport to be appraisals or to reflect
the prices at which the business actually may be sold.
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.
Certain Projections
The Company does not as a matter of course prepare or make public any
forecasts as to future performance or earnings. However, management of
the Company prepared certain projections which were furnished to Alex.
Brown in March 1996. The projections were not prepared with a view to
public disclosure or compliance with published guidelines of the
Commission or the guidelines established by the American Institute of
Certified Public Accountants regarding projections nor do the
projections purport to comply with generally accepted accounting
principles. No independent public accountant has audited, examined,
reviewed or compiled such projections and accordingly, no such firm has
expressed any opinion or other form of assurance thereon or assumes any
responsibility for them. No other independent expert has reviewed these
projections. None of the Company, Abbott, AAC Acquisition, AAC Merger
or any party to whom any of these projections were provided assumes any
responsibility for the accuracy of such projections.
These projections are based on a number of estimates and assumptions
that, while considered reasonable by the Company at the time they were
made, were and are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are
beyond the control of the Company, and upon assumptions with respect to
future business decisions that were and are subject to change. The
projections were prepared in March 1996 based on estimates and
assumptions considered reasonable by the Company at that time. Many of
the estimates and assumptions on which the projections are based may not
be consistent with estimates and assumptions which the Company's
management would deem reasonable at the present time. For example, the
projections were based on the assumption that the Company would continue
as an independent business. In fact, the Company became a majority-
owned subsidiary of Abbott on May 2, 1996. Many of the estimates and
assumptions which the Company believed were reasonable at the time the
projections were prepared would no longer be valid now that the Company
is a subsidiary of Abbott. In addition, the projections included
projections for periods for which actual historical results are now
known. Future results may vary from the projections as a result of a
variety of other factors as well, including changes in the levels of
revenue derived from sales of the Company's products, the introduction
of alternate technologies by the Company or its competitors, changes in
medical treatments for diabetes, fluctuations in operating costs,
changes in the Company's strategy, the effects of major transactions
involving the Company (such as the Merger) and other industry and
general economic factors. Accordingly, the Company and Abbott believe
that the results projected may be materially different from the results
which actually will be realized.
The projections and actual results will vary because events and
circumstances frequently do not occur as expected, and such variations
may be material. The inclusion of the summary projections herein should
not be regarded as a representation by the Company, Abbott or any other
person that the projections will be achieved. Neither the Company nor
Abbott intends to update the summary projections.
The summary projections and assumptions stated below should be
reviewed carefully in conjunction with each other, with the consolidated
financial statements of the Company and the notes thereto incorporated
by reference in this Information Statement. The projections prepared by
management of the Company included the following (in thousands of
dollars) for fiscal years ended March 31: (i) revenues of $173,659 in
1996 (actual revenues in the year ended March 31, 1996 were $173,756),
$208,038 in 1997, $249,646 in 1998, $299,575 in 1999, $359,490 in 2000
and $431,388 in 2001, (ii) operating income of $33,391 in 1996 (actual
income from operations in the fiscal year ended March 31, 1996 was
$33,802), $42,370 in 1997, $53,424 in 1998, $67,104 in 1999, $84,121 in
2000 and $105,258 in 2001, (iii) net income of $31,047 in 1996 (actual
net income in the fiscal year ended March 31, 1996 was $31,834), $39,036
in 1997, $37,852 in 1998, $48,047 in 1999, $60,576 in 2000 and $76,198
in 2001 and (iv) net cash provided by operating activities of $32,171
(actual net cash provided by operating activities for the fiscal year
ended March 31, 1996 was $33,818), $35,182 in 1997, $40,202 in 1998,
$50,369 in 1999, $64,298 in 2000 and $80,135 in 2001.
Projected results for the fiscal year ended March 31, 1996 were based
on the Company's then current forecasts for that year, which was
substantially completed at the time the projections were prepared in
early March 1996. Projected results for the fiscal year ending March
31, 1997 were based on the Company's 1997 business plan prepared by the
Company's management. The Company's 1997 business plan was based upon
estimates prepared by the Company's corporate vice president of
operations, corporate vice president of finance, corporate vice
president of research and development and corporate vice president of
sales and marketing whose estimates, in turn, were prepared based on
their respective analyses of strategic plans, anticipated revenues and
estimated expenses which would be required to support the anticipated
level of revenues, in each case for the fiscal year ending March 31,
1997. Projected results for the fiscal years ended March 31, 1998
through March 31, 2001 were based on historical trends and did not
assume that the Company would introduce any new products or any other
major changes in the Company's business, structure, technologies,
competitive environment or products or any major changes affecting the
industry or the economy as a whole. Set forth below are certain
significant estimates and assumptions reflected in the summary
projections for the fiscal years ended March 31, 1998 through March 31,
2001 set forth above.
Revenue Growth. For fiscal years ended March 31, 1998 through March
31, 2001, the Company's management made the assumption that revenues
would increase by 20% per year in each year. This assumption was based
on historical trends which had been observed as of the time the
projections were prepared, then current perceptions of the development
of the market for the Company's products and an assumed incremental
increase in the Company's market share.
Gross Margin. For fiscal years ended March 31, 1998 through March 31,
2001, the Company's management made the assumption that gross margin
would increase by 20% per year in each year. This assumption was based
on the proportionate relationship between revenue and gross margin in
the Company's 1997 business plan.
Research and Development. For fiscal years ended March 31, 1998
through March 31, 2001, the Company's management made the assumption
that research and development expenditures would increase at the same
rate as revenues. This assumption was based on the Company's then
present intentions regarding future research and development
expenditures.
Selling, General and Administrative Expenses. For fiscal years ended
March 31, 1998 through March 31, 2001, the Company's management
estimated that the Company's selling, general and administrative
expenses would decrease by 1% per year in each year. This estimate was
based on historical trends which had been observed as of the time the
projections were prepared.
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. 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.
The Common Stock is no longer publicly traded and, as a result of the
Offer and the Merger, 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 ceased on
June 12, 1996 when the Common Stock was removed from quotation on the
Nasdaq Stock Market. 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 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.
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.
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.
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.
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 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.
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 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.
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").
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 August 7, 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.
In accordance with Massachusetts law, if the Company and any
stockholders who properly perfect their appraisal rights fail to agree
on the value of the share(s) of Common Stock, either any such
stockholder or the Company may file a bill in equity to petition the
Superior Court in the county where the Company has its principal office
in the Commonwealth of Massachusetts to determine the value of the
share(s) of Common Stock. The Company has not made any determination at
this time as to whether it would file such a bill in equity. Therefore,
if the Company and any objecting stockholder fail to agree on the value
of the stock, the stockholder may be required to file a bill in equity
in accordance with Sections 86 to 98, inclusive, of Chapter 156B of the
General Laws of Massachusetts for the action to proceed.
<PAGE>
MARKET PRICES OF THE COMMON STOCK AND DIVIDEND POLICY
Market Prices
Prior to June 12, 1996, the Company's Common Stock was 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.
<PAGE>
<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
Fiscal 1997:
Quarter Ended July 1, 1996 (through June 11, 1996)............... 45 44-1/4
</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 June 11, 1996, the last day on
which the Common Stock was traded on the Nasdaq Stock Market, such
closing sales price was $44-5/8 per share and the high and low prices were
$44-5/8 and $44-5/8, respectively.
Dividends
The Company has not paid or declared any dividends in respect of
Shares.
<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 July 11, 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:
<PAGE>
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
-------------------------------
Percent of
Number of Outstanding
Shares Shares (on a
fully 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/<F1>........................................ 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/<F2> * <F3>
- ---------------------------
* <F3> Less than one percent. </F3>
1/ <F1> Robert L. Coleman is also a Director. </F1>
2/ <F2> Messrs. Huffman and Gonze each hold options to purchase 80,000
shares of Common Stock. </F2>
</TABLE>
<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 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.
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.
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
MEDISENSE, INC.
(dollars in millions except per share data)
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
<FN>
(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.
<PAGE>
<CAPTION>
SELECTED FINANCIAL DATA
ABBOTT LABORATORIES
(dollars in millions except per share data)
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 480.1 1,688.7 1,516.7 1,399.1 1,239.1 1,088.7
Operations
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>
<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, 1996; and (7)
the Current Report on Form 8-K of the Company dated May 2, 1996.
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: Shareholder Relations, telephone number (617) 895-6000, AND,
IN THE CASE OF PARENT DOCUMENTS, TO Abbott Laboratories, 100 Abbott Park
Road, Abbott Park, Illinois 60064, Attention: Shareholder Relations,
telephone number (847) 937-6100. IN ORDER TO ENSURE DELIVERY PRIOR TO
THE SPECIAL MEETING, REQUESTS SHOULD BE RECEIVED BY JULY 22, 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,
Keith F. Higgins
Clerk
Waltham, Massachusetts
July 15, 1996
<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 the Amendment dated as of May 30, 1996
<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
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
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
<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 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 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,
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 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.
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 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.
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.
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, 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
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, 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.
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 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 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.
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:
"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 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 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.
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.
(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 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;
(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 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.
(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 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:
(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
(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.
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
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;
(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.
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.
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================
<S> <C>
[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, Diagnostic
President, 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
====================================================================================================
</TABLE>
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.
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
<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.)
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
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.
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.)
