<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
and
AMENDMENT NO. 2
to
SCHEDULE 13D
Under the Securities Exchange Act of 1934
---------------
EXOGEN, INC.
(Name of Subject Company)
---------------
SMITH & NEPHEW ACQUISITION, INC.
a wholly owned subsidiary of
SMITH & NEPHEW, INC.
and
an indirect wholly owned subsidiary of
SMITH & NEPHEW PLC
(Bidders)
---------------
Common Stock, $.0001 par value
(Title of Class of Securities)
---------------
302092101
(CUSIP Number of Class of Securities)
---------------
James A. Ralston, Senior Vice President and General Counsel
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, TN 38116
(901) 399-5000
(Name, address and telephone number of persons authorized to
receive notices and communications on behalf of bidders)
Copy to
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
(312) 853-7000
Attention: Dennis V. Osimitz
July 25, 1999
(Date of Event Which Requires Filing Statement on Schedule 13D)
---------------
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Transaction Valuation* Amount of Filing Fee
- ------------------------------------------------------
$68,532,857 $13,707
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* For the purpose of calculating the fee only, this amount assumes the
purchase of 13,307,351 shares of Common Stock, $.0001 par value, of Exogen,
Inc. at $5.15 per share. Such number includes all outstanding shares as of
July 23, 1999 (other than 820,000 shares owned by an affiliate of Smith &
Nephew plc), and assumes the exercise of all stock options and warrants to
purchase shares of Common Stock (other than an option granted to Smith &
Nephew, Inc. under an agreement dated August 10, 1998) and the exchange for
Common Stock of all exchangeable securities which are outstanding as of such
date.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULES 14D-1 and 13D
Page 2 of 9 Pages
CUSIP NO. 302092 10 1
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Smith & Nephew Acquisition, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)[X]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS:
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f):
[_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
None*
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES:
[X]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON:
CO
- --------------------------------------------------------------------------------
- --------
* See second paragraph on page 5.
2
<PAGE>
SCHEDULES 14D-1 and 13D
Page 3 of 9 Pages
CUSIP NO. 302092 10 1
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Smith & Nephew, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 51-0123924
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS:
WC, AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f):
[_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
None*
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES:
[X]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON:
CO
- --------------------------------------------------------------------------------
- --------
* See second paragraph on page 5.
3
<PAGE>
SCHEDULES 14D-1 and 13D
Page 4 of 9 Pages
CUSIP NO. 302092 10 1
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Smith & Nephew plc
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)[X]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS:
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f):[_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
England and Wales
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
820,000 Shares*
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES:
[X]
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
6.4% of the Shares issued and outstanding as of July 23, 1999.*
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON:
CO
- --------------------------------------------------------------------------------
- --------
* See second paragraph on page 5.
4
<PAGE>
Page 5 of 9 Pages
This Statement relates to a tender offer by Smith & Nephew Acquisition, Inc.,
a Delaware corporation (the "Offeror") and a wholly owned subsidiary of Smith &
Nephew, Inc., a Delaware corporation (the "Parent"), and an indirect wholly
owned subsidiary of Smith & Nephew plc, a corporation organized under the laws
of England and Wales ("S&N"), to purchase all outstanding shares of common
stock, $.0001 par value (together with the Rights (as defined herein), the
"Shares"), of Exogen, Inc., a Delaware corporation (the "Company"), at a
purchase price of $5.15 per Share, net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated July 30, 1999 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which together constitute the "Offer"), copies of which
are filed as Exhibits (a)(1) and (a)(2) hereof, respectively, and which are
incorporated herein by reference. The cover page above and item numbers and
responses thereto below are in accordance with the requirements of Schedule
14D-1.
The Offeror and Parent have entered into Stockholder Agreements dated July
25, 1999 (the "Stockholder Agreements"), with each of the directors of the
Company (the "Tendering Stockholders"), pursuant to which the Tendering
Stockholders have agreed to tender their Shares (as defined herein) (the
"Committed Shares") pursuant to the Offer. Pursuant to the Stockholder
Agreements, the Tendering Stockholders have also agreed that, among other
things, until the termination of the Merger Agreement to vote such Committed
Shares in favor of the Merger (as defined herein) and against certain competing
transactions. The Offeror, Parent and S&N have been advised that the Tendering
Stockholders beneficially own 786,972 Shares. The Offeror and Parent disclaim
ownership of the Committed Shares. Additional information about the Stockholder
Agreements is contained in Section 13 ("The Merger Agreement and the
Stockholder Agreements") of the Offer to Purchase.
Item 1. Security and Subject Company.
(a) The name of the subject company is Exogen, Inc. The address of the
principal executive offices of the Company is set forth in Section 8 ("Certain
Information Concerning the Company") of the Offer to Purchase and is
incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is the Common Stock, $.0001 par value, of the Company, including the
Preferred Stock Purchase Rights associated with the Shares (the "Rights")
issued pursuant to the Rights Agreement, dated as of December 6, 1996, as
amended (the "Rights Agreement"), between the Company and Registrar and
Transfer Company, as rights agent (the "Rights Agent"). The information set
forth in the Introduction to the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a) through (d), (g): The information set forth in the Introduction and
Section 9 ("Certain Information Concerning the Offeror, Parent and S&N") of the
Offer to Purchase, and in Annex I thereto, is incorporated herein by reference.
(e) and (f): None of the Offeror, the Parent, S&N nor, to the best of their
knowledge, any of the persons listed in Annex I of the Offer to Purchase, has
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
5
<PAGE>
Page 6 of 9 Pages
Item 3. Past Contacts, Transactions or Negotiations With the Subject Company.
(a) The information set forth in the Introduction and Section 11 ("Background
of the Offer; Past Contacts, Transactions or Negotiations with the Company") of
the Offer to Purchase is incorporated herein by reference.
(b) The information set forth in the Introduction and Section 11 ("Background
of the Offer; Past Contacts, Transactions or Negotiations with the Company") of
the Offer to Purchase is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a) and (b): The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a) through (e): The information set forth in the Introduction, Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company"), Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company") and Section 13 ("The Merger Agreement and the Stockholder
Agreements") of the Offer to Purchase is incorporated herein by reference.
(f) and (g): The information set forth in Section 7 ("Certain Effects of the
Transaction") of the Offer to Purchase is incorporated herein by reference.
Item 6. Interest in Securities of the Subject Company.
(a) and (b): The information set forth in the Introduction, Section 9
("Certain Information Concerning the Offeror, Parent and S&N") and Section 13
("The Merger Agreement and the Stockholder Agreements") of the Offer to
Purchase is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships With Respect
to the Subject Company's Securities.
The information set forth in the Introduction and Section 11 ("Background of
the Offer; Past Contacts, Transactions or Negotiations with the Company") and
Section 13 ("The Merger Agreement and the Stockholder Agreements") of the Offer
to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in the Introduction and in Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in Section 9 ("Certain Information Concerning the
Offeror, Parent and S&N") of the Offer to Purchase is incorporated herein by
reference.
The incorporation by reference herein of the above-mentioned financial
information does not constitute an admission that such information is material
to a decision by a security holder of the Company as whether to sell, tender or
hold Shares being sought in the Offer.
6
<PAGE>
Page 7 of 9 Pages
Item 10. Additional Information.
(a) The information set forth in Section 13 ("The Merger Agreement and the
Stockholder Agreements") of the Offer to Purchase is incorporated by reference.
(b) and (c) The information set forth in Section 16 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Certain Effects of the
Transaction") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase, dated July 30, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Announcement, dated July 30, 1999.
(a)(8) Press Release issued by S&N and Parent and the Company on July 26,
1999.
(a)(9) Press Release issued by Parent on July 30, 1999.
(c)(1) Agreement and Plan of Merger, dated as of July 25, 1999, among the
Parent, the Offeror and the Company.
(c)(2) Stockholder Agreement, dated as of July 25, 1999, among John P. Ryaby,
the Offeror and Parent.
(c)(3) Stockholder Agreement, dated as of July 25, 1999, among Buzz Benson,
the Offeror and Parent.
(c)(4) Stockholder Agreement, dated as of July 25, 1999, among Donald J.
Lothrop, the Offeror and Parent.
(c)(5) Stockholder Agreement, dated as of July 25, 1999, among Peter C.
Madeja, the Offeror and Parent.
(c)(6) Stockholder Agreement, dated as of July 25, 1999, among David J.
Ottensmeyer, the Offeror and Parent.
(c)(7) Stockholder Agreement, dated as of July 25, 1999, among Terence D.
Wall, the Offeror and Parent.
7
<PAGE>
Page 8 of 9 Pages
(c)(8) Stockholder Agreement, dated as of July 25, 1999, among Patrick A.
McBrayer, the Offeror and Parent.
(c)(9) Master Agreement, dated August 10, 1998, between the Company and
Parent. Incorporated by reference to Exhibit 10.22 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1998.
(c)(10) Common Stock Purchase Agreement, dated August 10, 1998, between the
Company and S&N. Incorporated by reference to Exhibit 10.23 to the Company's
Annual Report on Form 10-K for the year ended September 30, 1998.
(c)(11) United States Sales Representative Agreement, dated August 10, 1998,
the Company and Parent. Incorporated by reference to Exhibit 10.24 to the
Company's Current Report on Form 8-K, dated August 10, 1998.*
(c)(12) License Agreement, dated August 10, 1998, between the Company and
Parent. Incorporated by reference to Exhibit 10.25 to the Company's Current
Report on Form 8-K, dated August 10, 1998.
(d) None.
(e) Not applicable.
(f) None.
- --------
*The Company has applied for confidential treatment of portions of this
Exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
8
<PAGE>
Page 9 of 9 Pages
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: July 30, 1999
Smith & Nephew PLC
/s/ Peter Hooley
By: _________________________________
Name: Peter Hooley
Title: Finance Director
Smith & Nephew, Inc.
/s/ Clifford K. Lomax
By: _________________________________
Name: Clifford K. Lomax
Title: Treasurer
Smith & Nephew Acquisition, Inc.
/s/ Clifford K. Lomax
By: _________________________________
Name: Clifford K. Lomax
Title: Chairman
9
<PAGE>
EXHIBIT (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
EXOGEN, INC.
at
$5.15 Net Per Share
by
SMITH & NEPHEW ACQUISITION, INC.
a wholly owned subsidiary of
SMITH & NEPHEW, INC.
and
an indirect wholly owned subsidiary of
SMITH & NEPHEW PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 26, 1999, UNLESS THE OFFER IS EXTENDED.
THIS OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND
PLAN OF MERGER, DATED AS OF JULY 25, 1999 (THE "MERGER AGREEMENT"), AMONG SMITH
& NEPHEW, INC. ("PARENT"), SMITH & NEPHEW ACQUISITION, INC. (THE "OFFEROR") AND
EXOGEN, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS
UNANIMOUSLY APPROVED AND ADOPTED THE MERGER AGREEMENT, APPROVED THE OFFER AND
THE MERGER (AS DEFINED HEREIN), AND DETERMINED THAT THE TERMS OF THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS AND RECOMMENDS THAT HOLDERS OF THE SHARES (AS DEFINED HEREIN)
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES THAT, TOGETHER WITH THE SHARES CURRENTLY OWNED BY AN AFFILIATE OF THE
OFFEROR, WOULD CONSTITUTE AT LEAST A MAJORITY OF THE SHARES THAT ARE
OUTSTANDING DETERMINED ON A FULLY DILUTED BASIS, (ii) ANY WAITING PERIOD UNDER
THE HSR ACT (AS DEFINED HEREIN) AND ANY WAITING PERIODS UNDER ANY FOREIGN LAWS
APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR
HAVING BEEN TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER AND (iii) THE
SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 15.
----------------
IMPORTANT
Any stockholder desiring to tender Shares should either (i) complete and sign
the Letter of Transmittal or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal and deliver the Letter of Transmittal
with the Shares and all other required documents to the Depositary (as defined
herein) or follow the procedure for book-entry transfer set forth in Section 3
or (ii) request such stockholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for the stockholder.
Stockholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such person if
they desire to tender their Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply
with the procedures for book-entry transfer on a timely basis or who cannot
deliver all required documents to the Depositary, in each case prior to the
expiration of the Offer, must tender such Shares pursuant to the guaranteed
delivery procedure set forth in Section 3.
Questions and requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Information Agent
or to the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase.
----------------
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
July 30, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Introduction............................................................. 3
1. Terms of the Offer.................................................... 5
2. Acceptance for Payment and Payment for Shares......................... 7
3. Procedure for Tendering Shares........................................ 8
4. Withdrawal Rights..................................................... 10
5. Certain United States Federal Income Tax Consequences................. 11
6. Price Range of Shares; Dividends...................................... 12
7. Certain Effects of the Transaction.................................... 13
8. Certain Information Concerning the Company............................ 14
9. Certain Information Concerning the Offeror, Parent and S&N............ 16
10. Source and Amount of Funds........................................... 18
11. Background of the Offer; Past Contacts, Transactions or Negotiations
with the Company........................................................ 18
12. Purpose of the Offer and the Merger; Plans for the Company........... 21
13. The Merger Agreement and the Stockholder Agreements.................. 22
14. Dividends and Distributions.......................................... 30
15. Certain Conditions to the Offeror's Obligations...................... 30
16. Certain Legal Matters................................................ 32
17. Fees and Expenses.................................................... 33
18. Miscellaneous........................................................ 33
Annex I. Certain Information Concerning the Directors and Executive
Officers of S&N, Parent and the Offeror................................. 35
</TABLE>
2
<PAGE>
To the Holders of Common Stock (including the associated
Preferred Stock Purchase Rights) of Exogen, Inc.:
INTRODUCTION
Smith & Nephew Acquisition, Inc., a Delaware corporation (the "Offeror"), a
wholly owned subsidiary of Smith & Nephew, Inc., a Delaware corporation
("Parent"), and an indirect wholly owned subsidiary of Smith & Nephew plc, a
corporation organized under the laws of England and Wales ("S&N"), hereby
offers to purchase all outstanding shares of Common Stock, $.0001 par value
(together with the Rights (as defined herein), the "Shares"), of Exogen, Inc.,
a Delaware corporation (the "Company"), at a purchase price of $5.15 per Share,
net to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer"). Unless the context otherwise
requires, all references to Shares include the associated Rights, and all
references to Rights shall include all benefits that may inure to the holders
of the Rights pursuant to the Rights Agreement (as defined herein). Tendering
holders of Shares will not be obligated to pay brokerage fees or commissions
or, except as set forth in the Letter of Transmittal, stock transfer taxes on
the purchase of Shares by the Offeror pursuant to the Offer. The Offeror will
pay all charges and expenses of Chase Securities Inc. (the "Dealer Manager"),
Registrar and Transfer Company (the "Depositary") and ChaseMellon Shareholder
Services L.L.C. (the "Information Agent") in connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND ADOPTED
THE MERGER AGREEMENT (AS DEFINED HEREIN), APPROVED THE OFFER AND THE MERGER (AS
DEFINED HEREIN), AND DETERMINED THAT TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS
THAT THE HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
U.S. Bancorp Piper Jaffray Inc. ("Piper Jaffray"), the Company's financial
advisor, has delivered to the Company's Board of Directors its written opinion
dated July 25, 1999 that, as of such date and based upon and subject to certain
matters set forth in such opinion, the consideration to be received by the
holders of Shares (other than the Offeror, Parent and their affiliates)
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view. A copy of such opinion is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 which is being
distributed to the Company's stockholders.
The Offer is conditioned upon, among other things, (i) there having been
validly tendered and not withdrawn prior to the expiration of the Offer such
number of Shares that, together with the Shares currently owned by Smith &
Nephew Holdings, Inc., a Delaware corporation and the parent of Parent
("Holdings"), or Parent and its Subsidiaries, would constitute a majority of
the Shares that are outstanding determined on a fully diluted basis, assuming
the exercise of all options to purchase Shares, other than the Parent Option
(as defined below), and the exchange of all securities convertible or
exchangeable into Shares (the "Minimum Condition"), (ii) any waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and any other waiting periods under any foreign laws applicable to
the purchase of Shares pursuant to the Offer having expired or having been
terminated prior to the expiration of the Offer (the "HSR Condition") and (iii)
the satisfaction of certain other terms and conditions. See Section 15.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of July 25, 1999 (the "Merger Agreement"), among Parent, the Offeror and the
Company. The Merger Agreement provides that, among other things, after the
purchase of Shares pursuant to the Offer and the satisfaction of the other
conditions set forth in the Merger Agreement and in accordance with the
relevant provisions of the Delaware General Corporation Law, as amended (the
"DGCL"), the Offeror will be merged with and into the Company (the "Merger").
Following consummation of the Merger, the Company will continue as the
surviving corporation (the "Surviving Corporation") and will be a wholly owned
subsidiary of Parent and an indirect
3
<PAGE>
wholly owned subsidiary of S&N. At the effective time of the Merger (the
"Effective Time"), each Share that is issued and outstanding (other than Shares
owned by the Company, any wholly owned subsidiary of the Company, Parent, the
Offeror, any other wholly owned subsidiary of Parent or Holdings or by
stockholders, if any, who are entitled to and who properly exercise dissenter's
rights under the DGCL ("Dissenting Shares")) will be converted into the right
to receive from the Surviving Corporation $5.15 (or any higher price that may
be paid for each Share pursuant to the Offer) in cash, without interest thereon
(the "Offer Price"). See Section 5 for a description of certain United States
federal income tax consequences of the Offer and the Merger.
In connection with the Merger Agreement, the Offeror and Parent entered into
Stockholder Agreements dated as of July 25, 1999 (the "Stockholder
Agreements"), with each of the following directors of the Company: John Ryaby,
Buzz Benson, Donald J. Lothrop, Peter C. Madeja, Patrick A. McBrayer, David J.
Ottensmeyer and Terence D. Wall (the "Tendering Stockholders"), pursuant to
which the Tendering Stockholders have agreed to tender the 556,972 Shares owned
of record by the Tendering Stockholders and 230,000 Shares issuable to the
Tendering Stockholders upon the exercise of options to purchase Shares held by
such Tendering Stockholders (the "Committed Shares"). Pursuant to the
Stockholder Agreements, the Tendering Stockholders have also agreed that, among
other things, until such agreement terminates, such Tendering Stockholders will
not transfer the Committed Shares and will vote the Committed Shares in favor
of the Merger and against certain competing transactions. The Committed Shares
represent approximately 5.6% of the Shares that, as of July 23, 1999, were
issued and outstanding on a fully diluted basis.
The Merger Agreement and the Stockholder Agreements are more fully described
in Section 13.
Immediately prior to the execution of the Merger Agreement, the Company and
Registrar and Transfer Company, as rights agent (the "Rights Agent"), executed
the Second Amendment dated as of July 25, 1999 (the "Amendment") to Rights
Agreement dated as of December 6, 1996, as amended (the "Rights Agreement"),
between the Company and the Rights Agent, that rendered the Rights Agreement
inapplicable to the Offer, the Merger and the transactions contemplated
thereby.
The Merger Agreement provides that, promptly after the Offeror acquires
Shares pursuant to the Offer, the Offeror will be entitled to designate such
number of directors on the Board of Directors of the Company, subject to
compliance with Section 14(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as will make the percentage of the Company's
directors designated by the Offeror equal to the percentage of the aggregate
voting power of the Shares held by Parent or any of its subsidiaries and the
Company shall, at such time, cause the Offeror's designees to be so elected by
its existing Board of Directors. However, until the Effective Time, the Board
of Directors of the Company shall have at least three directors who were
directors on the date of the Merger Agreement and who are not officers of the
Company. The Company has agreed, at the option of Parent, either to increase
the size of the Board of Directors of the Company and/or obtain the resignation
of such number of directors as is necessary to enable the Offeror's designees
to be elected or appointed to the Board.
If the Minimum Condition and the other conditions to the Offer are satisfied
and the Offer is consummated, the Offeror, together with Holdings, will own a
sufficient number of Shares to ensure that the Merger will be approved. Under
the DGCL, if, after consummation of the Offer, the Offeror owns at least 90% of
the Shares then outstanding, the Offeror will be able to cause the Merger to
occur without a vote of the Company's stockholders. If, however, after
consummation of the Offer, the Offeror owns less than 90% of the then
outstanding Shares, a vote of the Company's stockholders will be required under
the DGCL to approve the Merger, and a significantly longer period of time will
be required to effect the Merger.
The Company has advised the Offeror that as of July 23, 1999, there were (a)
12,752,855 Shares issued and outstanding, (b) 1,089,864 Shares reserved for
issuance upon the exercise of outstanding stock options ("Company Stock
Options") issued under the Company's 1995 Stock Option Plan (the "Company Stock
Option Plan"), (c) 159,632 Shares reserved for issuance pursuant to the
Company's Employee Stock Purchase Plan (the "Stock Purchase Plan"), (d) 80,000
Shares reserved for issuance upon the exercise of the Warrant
4
<PAGE>
dated September 30, 1998 issued to Arthur A. Pilla (the "Pilla Warrant") and
(e) 45,000 Shares reserved for issuance upon exercise of the Warrant dated
September 30, 1998 issued to Alessandro Chiabrera (the "Chiabrera Warrant," and
together with the Pilla Warrant, the "Warrants"). Based on the foregoing, the
Minimum Condition will be satisfied if at least 7,063,676 Shares (which
includes the Shares currently owned by Holdings), or approximately 55.4% of the
outstanding Shares as of July 23, 1999 (just more than 50% of the Shares on a
fully diluted basis), are validly tendered and not withdrawn prior to the
Expiration Date.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. Terms of the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment and thereby purchase all Shares
validly tendered prior to the Expiration Date and not withdrawn in accordance
with Section 4. The term "Expiration Date" means 12:00 Midnight, New York City
time, on August 26, 1999, unless the Offeror has extended the period of time
for which the Offer is open, in which event the term "Expiration Date" will
mean the latest time and date at which the Offer, as so extended by the
Offeror, will expire.
If the Offeror decides, in its sole discretion, to increase the consideration
offered in the Offer to holders of Shares and if, at the time that notice of
such increase is first published, sent or given to holders of Shares in the
manner specified below, the Offer is scheduled to expire at any time earlier
than the expiration of a period ending on the tenth business day from, and
including, the date that such notice is first so published, sent or given, then
the Offer will be extended until the expiration of such period of ten business
days. For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or a federal holiday and consists of the time period from
12:01 a.m. through 12:00 Midnight, New York City time.
The Offer is conditioned upon satisfaction of the Minimum Condition, the
expiration or termination of any waiting period under the HSR Act and any other
waiting periods under any foreign laws applicable to the purchase of Shares
pursuant to the Offer and certain other terms and conditions. See Section 15.
The Merger Agreement and the Offer may be terminated by the Offeror and Parent
if certain events occur. The Offeror reserves the right (but is not obligated),
in accordance with applicable rules and regulations of the United States
Securities and Exchange Commission (the "Commission"), subject to the
limitations set forth in the Merger Agreement and described below, to waive or
reduce the Minimum Condition or to waive any other condition to the Offer. If
the Minimum Condition or any condition set forth in Section 15 has not been
satisfied by 12:00 Midnight, New York City time, on August 26, 1999, (or any
other time then set as the Expiration Date), the Offeror may, subject to the
terms of the Merger Agreement as described below, elect to (i) extend the Offer
and, subject to applicable withdrawal rights, retain all tendered Shares until
the expiration of the Offer, as extended, (ii) subject to complying with
applicable rules and regulations of the Commission, accept for payment all
Shares so tendered and not extend the Offer or (iii) terminate the Offer and
not accept for payment any Shares and return all tendered Shares to tendering
stockholders. During any extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer and subject to the right of a
tendering stockholder to withdraw such stockholder's Shares. See Section 4.
Under no circumstances will the Offeror pay interest on the purchase price for
tendered Shares whether or not it extends the Offer.
Under the terms of the Merger Agreement, the Offeror may not, without the
consent of the Company, reduce the number of Shares subject to the Offer,
reduce the Offer Price, impose any other conditions to the Offer other than the
conditions set forth in Section 15 or modify such conditions (other than to
waive any such conditions to the extent permitted by the Merger Agreement),
extend the Offer (except as described in the next sentence), or change the form
of consideration payable in the Offer. Notwithstanding the foregoing, the
Offeror
5
<PAGE>
may, without the consent of the Company, (i) extend the Offer, if at the
scheduled or extended expiration date of the Offer any of the conditions shall
not be satisfied or waived, until such time as such conditions are satisfied or
waived, (ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission or the Commission staff applicable
to the Offer and (iii) extend the Offer for any reason on one or more occasions
for an aggregate period of not more than 15 business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) of
this sentence, in each case subject to the right of Parent, the Offeror or the
Company to terminate the Merger Agreement pursuant to the terms thereof. If at
any scheduled Expiration Date, the Minimum Condition, the HSR Condition or the
Offer conditions concerning representations, warranties and covenants are not
satisfied but all other Offer conditions shall then be satisfied, then at the
request of the Company the Offeror will extend the Offer, subject to the right
of Parent, the Offeror or the Company to terminate the Merger Agreement
pursuant to the terms thereof.
Subject to the limitations set forth in this Offer and the Merger Agreement,
the Offeror reserves the right (but will not be obligated), at any time or from
time to time in its sole discretion, to extend the period during which the
Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. There can be
no assurance that the Offeror will exercise its right to extend the Offer.
Subject to the applicable rules and regulations of the Commission and subject
to the limitations set forth in the Merger Agreement, the Offeror expressly
reserves the right, at any time and from time to time, in its sole discretion,
(i) to delay payment for any Shares regardless of whether such Shares were
theretofore accepted for payment, or to terminate the Offer and not to accept
for payment or pay for any Shares not theretofore accepted for payment or paid
for, upon the occurrence of any of the conditions set forth in Section 15, by
giving oral or written notice of such delay or termination to the Depositary,
and (ii) at any time or from time to time, to amend the Offer in any respect.
The Offeror's right to delay payment for any Shares or not to pay for any
Shares theretofore accepted for payment is subject to the applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act,
relating to the Offeror's obligation to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will
be followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of
Rules 14d-4(c) and 14e-1(d) under the Exchange Act. Without limiting the
obligation of the Offeror under such rule or the manner in which the Offeror
may choose to make any public announcement, the Offeror currently intends to
make announcements by issuing a press release to the Dow Jones News Service and
making any appropriate filing with the Commission.
If, subject to the terms of the Merger Agreement, the Offeror makes a
material change in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer (including, with the
consent of the Company, a waiver of the Minimum Condition), then the Offeror
will disseminate additional tender offer materials and extend the Offer if and
to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act or otherwise. The minimum period during which a tender offer must remain
open following material changes in the terms of the Offer or the information
concerning the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality of the changes. In the Commission's view, an offer should remain
open for a minimum of five business days from the date the material change is
first published, sent or given to stockholders, and, if material changes are
made with respect to information not materially less significant that the Offer
Price and the percentage of securities sought, then a minimum ten business day
period may be required to allow for adequate dissemination to stockholders and
investor response. With respect to a change in price or a change in percentage
of securities sought, a minimum ten business day period is generally required
to allow for adequate dissemination to stockholders and investor response.
6
<PAGE>
The Company has provided the Offeror with the Company's list of stockholders
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and
will be furnished by the Offeror to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. Acceptance for Payment and Payment for Shares.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Offeror will purchase, by accepting for payment, and will pay
for, all Shares validly tendered and not withdrawn in accordance with Section 4
prior to the Expiration Date promptly after the later to occur of (a) the
Expiration Date and (b) the satisfaction or waiver of the conditions set forth
in Section 15 related to regulatory matters. Subject to compliance with Rule
14e-1(c) under the Exchange Act, the Offeror expressly reserves the right, in
its sole discretion, to delay acceptance of, or payment for, Shares in order to
comply in whole or in part with any applicable law. See Sections 1 and 16. In
all cases, payment for Shares purchased pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates representing such
Shares or timely confirmation (a "Book-Entry Confirmation") of a book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
Company (the "Book-Entry Transfer Facility"), pursuant to the procedures set
forth in Section 3, (ii) the appropriate letter of transmittal, properly
completed and duly executed (or a facsimile thereof) with all required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message (as defined below) and (iii) any other documents required by the Letter
of Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against the participant.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as,
if and when the Offeror gives oral or written notice to the Depositary of the
Offeror's acceptance of such Shares for payment pursuant to the Offer. In all
cases, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Offeror
and transmitting such payment to tendering stockholders. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer
is delayed, or the Offeror is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to the Offeror's rights under
Section 1, the Depositary may, nevertheless, on behalf of the Offeror, retain
tendered Shares, and such Shares may not be withdrawn, except to the extent
that the tendering stockholders are entitled to withdrawal rights as described
in Section 4 below and as otherwise required by Rule 14e-1(c) under the
Exchange Act. Under no circumstances will interest on the purchase price for
Shares be paid by the Offeror.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, then certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer to the Book-Entry Transfer Facility,
such Shares will be credited to an account maintained within such Book-Entry
Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Offeror increases the price being paid
for Shares accepted for payment pursuant to the Offer, then such increased
consideration will be paid to all stockholders whose Shares are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
7
<PAGE>
The Offeror reserves the right, subject to the provisions of the Merger
Agreement, to transfer or assign, in whole or from time to time in part, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but no such transfer or assignment will
relieve the Offeror of its obligations under the Offer or prejudice the rights
of tendering stockholders to receive payment for Shares validly tendered and
accepted for payment.
3. Procedure for Tendering Shares.
Valid Tenders. Except as set forth below, for Shares to be validly tendered
pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase prior to the Expiration Date or the tendering stockholder
must comply with the guaranteed delivery procedure set forth below. In
addition, either (i) certificates representing tendered Shares must be received
by the Depositary along with the Letter of Transmittal or such Shares must be
tendered pursuant to the procedure for book-entry transfer set forth below, and
a Book-Entry Confirmation must be received by the Depositary, in each case
prior to the Expiration Date, or (ii) the guaranteed delivery procedures set
forth below must be complied with. No alternative, conditional or contingent
tenders will be accepted. The method of delivery of certificates, the Letter of
Transmittal and all other required documents is at the option and sole risk of
the tendering stockholder, and delivery will be deemed made only when actually
received by the Depositary (including, in the case of a book-entry transfer, by
book-entry confirmation). If delivery is by mail, registered mail with return
receipt requested, properly insured, is recommended. In all cases, sufficient
time should be allowed to ensure timely delivery.
Book-Entry Transfer. The Depositary will establish an account with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing such Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
at such Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other required documents, must, in any case, be transmitted
to and received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Depositary.
Signature Guarantee. Signatures on the Letter of Transmittal must be
guaranteed by a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or by any other bank, broker, dealer, credit union,
savings association or other entity which is an "eligible guarantor
institution," as such term is defined in Rule 17Ad-15 under the Exchange Act
(each of the foregoing constituting an "Eligible Institution"), unless the
Shares tendered thereby are tendered (i) by a registered holder of Shares who
has not completed either the box labeled "Special Delivery Instructions" or the
box labeled "Special Payment Instructions" on the Letter of Transmittal or (ii)
for the account of any Eligible Institution. If the certificates are registered
in the name of a person or persons other than the signer of the Letter of
Transmittal, or if payment is to be made, or delivered to, or certificates for
unpurchased Shares are to be issued or returned to, a person other than the
registered holder, then the tendered certificates must be endorsed or
accompanied by duly executed stock powers, in either case signed exactly as the
name or names of the registered holder or holders appear on the certificates,
with the signatures on the certificates or stock powers guaranteed by an
Eligible Institution as provided in the Letter of Transmittal. See Instructions
1 and 5 to the Letter of Transmittal.
If the certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) must
accompany each such delivery.
8
<PAGE>
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates are not immediately available or
time will not permit all required documents to reach the Depositary prior to
the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all of
the following guaranteed delivery procedures are duly complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Offeror, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates (or a Book-Entry Confirmation) representing all
tendered Shares, in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
and any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other documents required by the
Letter of Transmittal are received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed Delivery. The
term "trading day" is any day on which the Nasdaq National Market
("Nasdaq") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery and a representation that the stockholder on whose behalf the tender
is being made is deemed to own the Shares being tendered within the meaning of
Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for, or a Book-Entry Confirmation
with respect to, such Shares, (ii) a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof), with all required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message, and
(iii) any other documents required by the Letter of Transmittal. Accordingly,
tendering stockholders may be paid at different times depending upon when
certificates are received by the Depository or Book-Entry Confirmations with
respect to Shares are received into the Depositary's account at the Book-Entry
Transfer Facility. Under no circumstances will interest be paid on the purchase
price of the Shares to be paid by the Offeror, regardless of any extension of
the Offer or any delay in making any payment.
Backup Federal Income Tax Withholding. To prevent 31% "backup" federal income
tax withholding with respect to payment of the purchase price of Shares
purchased pursuant to the Offer, each stockholder must, subject to certain
exceptions, provide the Depositary with such stockholder's correct Taxpayer
Identification Number ("TIN") and certify that such stockholder is not subject
to backup federal income tax withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. Foreign holders must generally submit a
completed Form W-8 to avoid backup withholding. This form may be obtained from
the Depositary. See Instructions 8 and 9 set forth in the Letter of
Transmittal.
Determination of Validity. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment of
any tender of Shares will be determined by the Offeror, in its sole discretion,
and its determination will be final and binding on all parties. The Offeror
reserves the absolute right to reject any or all tenders of any Shares that are
determined by it not to be in proper form or the acceptance of or payment for
which may, in the opinion of the Offeror, be unlawful. The Offeror also
reserves the absolute right to waive any of the conditions of the Offer,
subject to applicable law and the limitations set forth in the Merger
Agreement, or any defect or irregularity in the tender of any Shares whether or
not similar defects or irregularities are waived in the case of other
stockholders. The Offeror's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the Instructions to the Letter
of Transmittal) will be final and binding on all parties. No tender of Shares
will be deemed to have been validly
9
<PAGE>
made until all defects and irregularities have been cured or waived. None of
the Offeror, Parent, S&N, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification.
Other Requirements. By executing the Letter of Transmittal as set forth above
(including through delivery of an Agent's Message), a tendering stockholder
irrevocably appoints designees of the Offeror as such stockholder's agents,
attorneys in fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to exercise all voting and other
rights of the stockholder as each such attorney and proxy or his substitute
shall in his sole judgment deem proper, with respect to all of the Shares
tendered by such stockholder and accepted for payment by the Offeror (and any
and all other Shares or other securities issued or issuable in respect of such
Shares on or after the date of this Offer to Purchase). All such powers of
attorney and proxies will be considered irrevocable and coupled with an
interest in the tendered Shares. This appointment is effective when, and only
to the extent that, the Offeror accepts for payment the Shares in accordance
with the terms of the Offer. Upon acceptance for payment, all prior powers of
attorney, proxies and written consents granted by the stockholder at any time
with respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney or proxies may be given
or written consent executed by such stockholder (and, if given or executed,
will not be deemed effective). The designees of the Offeror will, with respect
to the Shares and other securities or rights, be empowered to exercise all
voting and other rights of such stockholder as they in their sole judgment deem
proper in respect of any annual or special meeting of the Company's
stockholders, or any adjournment or postponement thereof, any actions by
written consent in lieu of any such meeting or otherwise. In order for Shares
to be deemed validly tendered, immediately upon the Offeror's payment for such
Shares, the Offeror must be able to exercise full voting and other rights with
respect to such Shares and the other securities or rights issued or issuable in
respect of such Shares, including voting at any meeting of stockholders
(whether annual or special or whether or not adjourned) in respect of such
Shares.
A tender of Shares pursuant to any one of the procedures described above will
constitute the tendering stockholder's acceptance of the terms and conditions
of the Offer, as well as the tendering stockholder's representation and
warranty that (i) such stockholder has the full power and authority to tender,
sell, assign and transfer the tendered Shares (and any and all other Shares or
other securities issued or issuable in respect of such Shares), and (ii) when
the same are accepted for payment by the Offeror, the Offeror will acquire good
and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claims. A tender of
Shares pursuant to any of the procedures described above will constitute the
tendering stockholder's acceptance of the terms and conditions of the Offer, as
well as the tendering stockholder's representation and warranty to Purchaser
that (a) such stockholder has a net long position in such Shares being tendered
within the meaning of Rule 14e-4 under the Exchange Act and (b) the tender of
such Shares complies with Rule 14e-4 under the Exchange Act. It is a violation
of Rule 14e-4 under the Exchange Act for a person, directly or indirectly, to
tender Shares for such person's own account unless, at the time of tender, the
person so tendering (i) has a net long position equal to or greater than the
amount of (x) Shares tendered or (y) other securities immediately convertible
into or exchangeable or exercisable for the Shares tendered and such person
will acquire such Shares for tender by conversion, exchange or exercise and
(ii) will cause such Shares to be delivered in accordance with the terms of the
Offer. Rule 14e-4 provides a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person. The Offeror's acceptance for
payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the tendering stockholder and the Offeror upon the terms and
subject to the conditions of the Offer.
4. Withdrawal Rights.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment pursuant to the Offer, may also be withdrawn
at any time after
10
<PAGE>
September 27, 1999. If acceptance of any Shares tendered is delayed for any
reason or if the Offeror is unable to accept for payment or pay for Shares
tendered pursuant to the Offer, then, without prejudice to the Offeror's rights
under the Offer, the Depositary may, on behalf of the Offeror, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that
tendering stockholders are entitled to and duly exercise withdrawal rights as
set forth in this Section 4.
For a withdrawal of Shares tendered pursuant to the Offer to be effective, a
written telegraphic or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase. Any notice of withdrawal must specify the name
of the person who tendered the Shares to be withdrawn, the number of Shares to
be withdrawn and (if certificates have been tendered) the name in which the
certificates are registered, if different from that of the person who tendered
the Shares. If certificates have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
stockholder must submit the serial numbers shown on the certificates evidencing
the Shares to be withdrawn to the Depositary and, unless such Shares have been
tendered for the account of an Eligible Institution, the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution. If Shares
have been tendered pursuant to the procedures for book-entry transfer set forth
in Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and must otherwise comply with such Book-Entry Transfer
Facility's procedures. All questions as to the form and validity (including
time of receipt) of notices of withdrawal will be determined by the Offeror, in
its sole discretion, and its determination will be final and binding on all
parties. None of the Offeror, Parent, S&N, the Depositary, the Information
Agent, the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
5. Certain United States Federal Income Tax Consequences.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to beneficial owners of Shares whose
Shares are purchased pursuant to the Offer or whose Shares are converted to
cash in the Merger. The discussion is for general information only and does not
purport to consider all aspects of United States federal income taxation that
might be relevant to beneficial owners of Shares. The discussion is based on
current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), proposed, temporary and final regulations promulgated thereunder and
administrative and judicial interpretations thereof, all of which are subject
to change, possibly on a retroactive basis. The discussion applies only to
beneficial owners of Shares in whose hands Shares are capital assets within the
meaning of Section 1221 of the Code, and may not apply to Shares received
pursuant to the exercise of employee stock options or otherwise as
compensation, or to certain types of beneficial owners of Shares (such as
insurance companies, tax-exempt organizations, mutual funds and broker-dealers)
who might be subject to special rules. This discussion does not discuss the
United States federal income tax consequences to a beneficial owner of Shares
who, for United States federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership or a foreign estate or
trust, nor does it consider the effect of any foreign, state or local tax laws.
Because individual circumstances may differ, each beneficial owner of Shares
should consult such beneficial owner's own tax advisor to determine the
applicability of the rules discussed below to such beneficial owner and the
particular tax effects to such beneficial owner of the Offer and the Merger,
including the application and effect of state, local and other tax laws.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for United States federal income tax purposes. In general,
for United States federal income tax purposes, a beneficial owner of Shares
will recognize gain or loss equal to the difference (if any) between the
beneficial owner's
11
<PAGE>
adjusted tax basis in the Shares sold pursuant to the Offer or converted to
cash in the Merger and the amount of cash received therefor. In general, such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if the beneficial owner held the Shares for more than one year as of the
date of sale (in the case of the Offer) or the Effective Time (in the case of
the Merger). The excess of net long-term capital gains over net short-term
capital losses is currently taxed at a maximum rate of 20% for noncorporate
taxpayers.
Payments in connection with the Offer or the Merger might be subject to
"backup withholding" at a rate of 31%, unless a beneficial owner of Shares (a)
is a corporation or comes within certain exempt categories and, when required,
demonstrates this fact or (b) provides a correct TIN to the payor, certifies as
to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A beneficial owner who
does not provide a correct TIN may be subject to penalties imposed by the
Internal Revenue Service. Any amount paid as backup withholding does not
constitute an additional tax and will be creditable against the beneficial
owner's United States federal income tax liability. Each beneficial owner of
Shares should consult with such owner's tax advisor as to such owner's
qualification for exemption from backup withholding and the procedure for
obtaining such exemption. Those tendering their Shares in the Offer may prevent
backup withholding by completing the Substitute Form W-9 included in the Letter
of Transmittal. See Section 3. Similarly, those who convert their Shares into
cash in the Merger may prevent backup withholding by completing the Substitute
Form W-9 provided by the paying agent for the Merger.
In general, cash received in respect of Dissenting Shares will result in the
recognition of capital gain or loss to the beneficial owner of such Shares. Any
such beneficial owner should consult such owner's tax advisor in that regard.
Parent and the Offeror will be entitled to deduct and withhold from the
consideration otherwise payable in connection with the Offer or the Merger to
any holder of Shares such amounts as Parent or the Offeror is required to
deduct and withhold with respect to the making of such payment. To the extent
that amounts are so withheld by Parent or the Offeror, such withheld amounts
shall be treated for all purposes of the Merger Agreement as having been paid
to the holder of the Shares in respect of which such deduction and withholding
was made by Parent or the Offeror.
6. Price Range of Shares; Dividends.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1998, the Shares are traded on Nasdaq under the symbol
EXGN. The following table sets forth for the periods indicated the reported
high and low sales prices for the Shares for the periods indicated.
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal Year Ended September 30, 1997:
First Quarter............................................ $6.000 $3.250
Second Quarter........................................... 7.625 3.500
Third Quarter............................................ 5.750 3.375
Fourth Quarter........................................... 5.625 3.000
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal Year Ended September 30, 1998:
First Quarter............................................ $5.250 $3.125
Second Quarter........................................... 5.813 3.750
Third Quarter............................................ 6.000 2.500
Fourth Quarter........................................... 4.625 2.375
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal Year Ended September 30, 1999:
First Quarter............................................ $4.031 $2.625
Second Quarter........................................... 3.250 2.250
Third Quarter............................................ 3.250 1.938
Fourth Quarter (through July 29, 1999)................... 5.000 2.000
</TABLE>
12
<PAGE>
On July 23, 1999, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, according to publicly
available sources, the reported closing price per Share on Nasdaq was $4.3125.
On July 29, 1999, the last full day of trading prior to the commencement of the
Offer, according to publicly available sources, the reported closing price per
Share on Nasdaq was $5.00. Stockholders are urged to obtain current market
quotations for the Shares.
The Company has not declared or paid any cash dividends on the Shares.
7. Certain Effects of the Transaction.
The purchase of the Shares by the Offeror pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and will reduce the
number of holders of Shares, and could adversely affect the liquidity and
market value of the remaining Shares held by the public. The Company has
advised the Offeror that, as of July 23, 1999, there were approximately 200
holders of record and approximately 1,600 beneficial owners of the Shares. The
Offeror can not predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on
the market price for or marketability of the Shares or whether it would cause
future market prices to be greater or less than the Offer price therefor.
Nasdaq Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued inclusion
in Nasdaq. According to published guidelines, the Shares would not be eligible
for continued inclusion if the Shares fail to substantially meet, among other
things, the following standards: (i) 200,000 publicly held Shares, (ii) market
value of publicly held Shares of $1 million, and (iii) 400 holders of Shares or
300 holders of Shares of round lots. If these standards are not met, the Shares
might nevertheless continue to be included in the Nasdaq Small Cap Market, but
if, among other things, the number of holders of Shares falls below 300, or if
the number of publicly held Shares falls below 100,000, or if the aggregate
market value of such publicly held Shares falls below 200,000 or if there are
not at least two market makers (one of which may be a market maker entering a
stability bid), Nasdaq rules provide that the Shares would no longer qualify
for inclusion in Nasdaq and Nasdaq would cease to provide any quotations.
Shares held, directly or indirectly, by an officer or director of the Company,
or by any beneficial owner of more than 10% of the Shares, ordinarily will not
be considered as being publicly held for this purpose.
If the Shares are no longer eligible for Nasdaq quotation, quotations might
still be available from other sources. The extent of the public market for the
Shares and the availability of such quotations would, however, depend upon the
number of holders of such Shares remaining at such time, the interest in
maintaining a market in such Shares on the part of securities firms, the
possible termination of registration of such Shares under the Exchange Act as
described below and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the Commission if there are fewer than 300 record holders of the
Shares. It is the intention of the Offeror to seek to cause an application for
such termination to be made as soon after consummation of the Offer as the
requirements for termination of registration of the Shares are met. If such
registration were terminated, the Company would no longer legally be required
to disclose publicly in proxy materials distributed to stockholders the
information which it now must provide under the Exchange Act or to make public
disclosure of financial and other information in annual, quarterly and other
reports required to be filed with the Commission under the Exchange Act; the
Company would no longer be subject to Rule 13e-3 under the Exchange Act
relating to "going private" transactions; and the officers, directors and 10%
stockholders of the Company would no longer be subject to the "short-swing"
insider trading reporting and profit recovery provisions of the Exchange Act.
Furthermore, if such registration were terminated, the ability of "affiliates"
of the Company and persons holding "restricted securities" of the Company to
dispose of such securities under Rule 144 or Rule 144A promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), may be impaired, or,
with respect to certain persons, eliminated.
13
<PAGE>
If registration of the Shares is not terminated prior to the Merger, then the
Shares will no longer be eligible for Nasdaq quotation and the registration of
the Shares under the Exchange Act will be terminated following the consummation
of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares for the purpose of
buying, carrying or trading in securities ("Purpose Loans"). Depending upon
factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for Purpose Loans made by brokers. If registration of Shares
under the Exchange Act were terminated, such Shares would no longer be "margin
securities."
8. Certain Information Concerning the Company.
Except as otherwise set forth herein, the information concerning the Company
contained in this Offer to Purchase, including financial information, has been
furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Although none of the Offeror, Parent or S&N has any knowledge that
would indicate that statements contained herein based upon such documents are
untrue, none of the Offeror, Parent or S&N assume any responsibility for the
accuracy or completeness of the information concerning the Company or for any
failure by the Company to disclose events which may have occurred or may affect
the significance or accuracy of any such information but which are unknown to
the Offeror, Parent or S&N.
The Company is a Delaware corporation with its principal executive offices
located at 10 Constitution Avenue, Piscataway, New Jersey 08855. The Company
designs, develops, manufactures and markets medical devices for the non-
invasive treatment of musculoskeletal injury and disease. The Company's
proprietary ultrasound and mechanical-stress technologies deliver energy that
promotes the growth, repair and maintenance of bone. These technologies are
based on the principle that bone growth is stimulated by mechanical force. The
Company markets and sells its Sonic Accelerated Fracture Healing System device
primarily in the United States, Europe and Japan.
Set forth below is certain summary consolidated financial data with respect
to the Company excerpted or derived from financial information contained in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1998 and a press release issued by the Company on July 21, 1999. More
comprehensive financial information is included in such reports and other
documents filed by the Company with the Commission, and the following summary
is qualified in its entirety by reference to such reports and such other
documents and all the financial information (including any related notes)
contained therein. Such reports and other documents should be available for
inspection and copies thereof should be obtainable in the manner set forth
below.
14
<PAGE>
Exogen, Inc.
Selected Consolidated Financial Information
(in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months
Ended
Years Ended September 30, June 30,
--------------------------- ----------------
1998 1997 1996 1999 1998
------- -------- -------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Product sales................ $11,201 $ 7,081 $ 5,777 $10,912 $ 7,595
Revenues from development
agreements.................. 400 400 1,100 -- 400
------- -------- -------- ------- -------
Total revenues............. 11,601 7,481 6,877 10,912 7,995
------- -------- -------- ------- -------
Operating costs and expenses:
Cost of product sales........ 4,585 3,864 3,661 3,655 3,311
Research and development..... 2,792 3,124 3,988 2,445 2,173
Selling, general, and
administrative.............. 11,885 12,291 11,030 9,420 8,784
Nonrecurring charge for
international doubtful
accounts.................... 800 -- -- -- 800
------- -------- -------- ------- -------
Total operating costs and
expenses.................. 20,062 19,279 18,679 15,520 15,068
------- -------- -------- ------- -------
Operating loss................. (8,461) (11,798) (11,802) (4,608) (7,073)
------- -------- -------- ------- -------
Other income (expense):
Interest income, net......... 710 701 1,438 483 514
License fee.................. 1,000 -- -- -- --
Litigation settlement........ (851) -- -- -- --
Other, net................... 19 (51) (224) (13) (16)
------- -------- -------- ------- -------
Total other income, net.... 878 650 1,214 470 498
------- -------- -------- ------- -------
Loss before income taxes....... (7,583) (11,148) (10,588) (4,138) (6,575)
Provision for income taxes..... 2 4 -- 2 2
------- -------- -------- ------- -------
Net loss....................... $(7,585) $(11,152) $(10,588) $(4,140) $(6,577)
======= ======== ======== ======= =======
Basic net loss per common
share......................... $ (0.64) $ (1.12) $ (1.07) $ (0.33) $ (0.56)
======= ======== ======== ======= =======
Diluted net loss per common
share......................... $ (0.64) $ (1.12) $ (1.07) $ (0.33) $ (0.56)
======= ======== ======== ======= =======
Weighted average shares
outstanding, basic and
diluted(1).................... 11,860 9,946 9,875 12,727 11,701
</TABLE>
<TABLE>
<CAPTION>
September 30,
----------------------- June 30,
1998 1997 1996 1999
------- ------- ------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents and short- and
long-term investments.................... $15,582 $ 8,544 $19,534 $ 9,690
Working capital........................... 15,525 11,042 17,235 11,372
Total assets.............................. 20,796 14,789 25,511 16,186
Total stockholders' equity................ 16,297 12,091 23,077 12,223
</TABLE>
- --------
(1)Options and warrants are anti-dilutive, and therefore are not included in
the diluted shares outstanding.
15
<PAGE>
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. The Company is required to disclose in such proxy statements
certain information, as of particular dates, concerning the Company's directors
and officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interests of such persons
in transactions with the Company. Such reports, proxy statements and other
information may be inspected at the public reference facilities maintained by
the Commission at Room 1300, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
may also be obtained at prescribed rates from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports and other information regarding registrants that file
electronically with the Commission. Such material may also be inspected at the
offices of the National Association of Securities Dealers, Inc., at 1735 K
Street, N.W., Washington, D.C. 20006.
9. Certain Information Concerning the Offeror, Parent and S&N.
The Offeror is a newly incorporated Delaware corporation. To date, the
Offeror has not conducted any business other than that incident to its
formation, the execution and delivery of the Merger Agreement and the
commencement of the Offer. Accordingly, no meaningful financial information
with respect to the Offeror is available. The Offeror is a wholly owned
subsidiary of Parent. The principal executive office of the Offeror is located
at 1450 Brooks Road, Memphis, Tennessee 38116.
Parent, a Delaware corporation, has its principal executive office at 1450
Brooks Road, Memphis, Tennessee 38116. Parent is a wholly owned Subsidiary of
Holdings, which is a holding company. Parent consists of the following United
States operations: Orthopaedics, Memphis, Tennessee; ENT (Ear, Nose & Throat),
Bartlett, Tennessee; Endoscopy, Andover and Mansfield, Massachusetts and
Oklahoma City, Oklahoma; Wound Management, Largo, Florida; Rehabilitation,
Germantown, Wisconsin; and Casting, Charlotte, North Carolina. These six
divisions employ approximately 3,500 people in the United States.
S&N, a corporation organized under the laws of England and Wales, has its
principal executive office at 2 Temple Place, Victoria Embankment, London WC2R
3BP. S&N is a global healthcare company which, together with its subsidiaries,
has operations in 36 countries. The group employs almost 12,000 people
worldwide, including approximately 3,500 in the United States and approximately
3,000 in the United Kingdom. The group focuses on the marketing of clinically
superior products, principally in orthopaedics, endoscopy and wound management,
to deliver cost-effective solutions, significant advantage to physicians and
real patient benefits.
Because the only consideration in the Offer and Merger is cash, and in view
of the amount of consideration payable in relation to the financial capability
of Parent and its affiliates, Offeror believes the financial condition of S&N
and its affiliates is not material to a decision by a holder of Shares whether
to sell, tender or hold Shares pursuant to the Offer. Set forth below is a
summary of certain consolidated financial information with respect to S&N for
the fiscal years ended December 31, 1997 and 1998. The consolidated financial
information is stated in pounds sterling. Such information is provided for
supplemental information purposes only and is neither intended nor required to
comply with the requirements of the Exchange Act. On July 27, 1999, the noon
buying rate in The City of New York for cable transfers in pounds sterling as
certified for customs purposes by the Federal Reserve Bank of New York was
$1.5895. The following information was prepared in accordance with accounting
principles generally accepted in the United Kingdom and has not been reconciled
to generally accepted accounting principles in the United States.
16
<PAGE>
More comprehensive financial information is included in the Forms 20-F filed
by S&N with the Commission. Such reports may be examined and copies thereof may
be obtained at the public reference facilities maintained by the Commission at
Room 1300, 450 Fifth Street, N.W., Washington, D.C. 20549, or by faxing a
request for such documents to (202) 628-9001 (please include a daytime phone
number in your request).
Smith & Nephew plc
Selected Consolidated Financial Information
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------
(Pounds) (Pounds)
Millions Millions
---------- -----------
1998 1997
---------- -----------
<S> <C> <C>
Consolidated Income Statement Data
Group Turnover....................................... 1,053.4 1,048.1
Operating Profit Before Interest..................... 136.2 156.3
Profit Before Taxation............................... 134.5 152.4
Attributable Profit for the Year..................... 93.7 113.7
Earnings per Share................................... 8.42 pence 10.24 pence
Dividends per Share.................................. 6.20 pence 6.20 pence
Consolidated Balance Sheet Data
Fixed Assets......................................... 334.4 302.0
Current Assets....................................... 570.9 561.3
Creditors: Amounts Falling Due Within One Year....... (375.6) (357.5)
Net Current Assets................................... 195.3 203.8
Total Assets less Current Liabilities................ 529.7 505.8
Creditors: Amounts Falling Due After More Than One
Year................................................ 12.8 14.6
Provisions........................................... 31.4 29.9
Net Assets........................................... 485.5 461.3
Capital and Reserves................................. 485.5 461.3
</TABLE>
During the past five years, none of S&N, Parent or Offeror has been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
The name, citizenship, business address, present principal occupation and
material positions held during the past five years of each of the directors and
executive officers of S&N, Parent and the Offeror are set forth in Annex I to
this Offer to Purchase. Except as expressly noted in Annex I to this Offer to
Purchase, each such executive officer and director is a citizen of the United
States of America. During the past five years, none of the executive officers
or directors has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Larry W. Papasan, President of the Orthopaedic Division of Parent,
beneficially owns 5,800 Shares, which he acquired on October 29, 1998 through
an open market transaction. Except as described in this Offer to Purchase, none
of the Offeror, Parent, S&N, or to the best knowledge of the Offeror, Parent or
S&N, any of the persons listed in Annex I hereto, owns or has any right to
acquire any Shares and none of them has effected any transaction in the Shares
during the past 60 days.
17
<PAGE>
Except as set forth in this Offer to Purchase, none of the Offeror, Parent,
S&N or, to the best knowledge of the Offeror, Parent or S&N, any of the persons
listed in Annex I hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, there have been no
contacts, negotiations or transactions between the Offeror, Parent or S&N, or,
to the best of their knowledge, any of the persons listed in Annex I hereto, on
the one hand, and the Company or its affiliates, on the other hand, concerning
a merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets. Except as described in this Offer to Purchase, none of the
Offeror, Parent, S&N or, to the best knowledge of Parent, the Offeror or S&N,
any of the persons listed in Annex I hereto, has had any transaction with the
Company or any of its executive officers, directors or affiliates that would
require disclosure under the rules and regulations of the Commission applicable
to the Offer.
10. Source and Amount of Funds.
The Offeror estimates that the total amount of funds required to purchase
pursuant to the Offer the Shares that are outstanding on a fully diluted basis
and to pay fees and expenses related to the Offer and the Merger will be
approximately $67 million. The Offeror will obtain the funds from Parent.
Parent currently intends to provide the funds to be provided by it from
existing cash resources.
While the foregoing represents the current intention of Parent and the
Offeror with respect to the financial arrangements for such funds, such
financial arrangements may change depending upon such factors as Parent and the
Offeror may deem appropriate.
The Offer is not subject to a financing condition.
11. Background of the Offer; Past Contacts, Transactions or Negotiations with
the Company.
In September 1997, Parent and the Company commenced discussions concerning
cooperative business opportunities. These discussions resulted in the Company
entering into a number of agreements with Parent on August 10, 1998. These
agreements generally relate to (i) the right to market the Company's products
by Parent in the United States, (ii) the purchase of Shares and the grant of a
right to Parent to purchase additional Shares, (iii) rights granted to Parent
with respect to future distribution arrangements in countries other than the
United States and (iv) the non-exclusive right to negotiate with the Company
with regard to any strategic transaction that the Company might consider. The
maximum amount payable to the Company by Parent under these agreements
(excluding the amount paid for Shares purchased by Holdings as described below)
is $6 million. In addition, pursuant to certain of the agreements, the Company
paid to Parent commissions of $1,156,643 and $2,019,283 for the period from
August 10, 1998 (when these arrangements became effective) to December 31, 1998
and the first six months of 1999, respectively. Under the agreements, the
Company must notify Parent if, at any time prior to August 1, 2008, the Company
desires to enter into an agreement of any kind with respect to, or in
connection with, (i) the Company's ultrasound or mechanical-stress therapies,
or new applications of such therapies, or (ii) a merger, a sale of
substantially all of the Company's assets, or other similar transaction. Parent
then has the non-exclusive right to negotiate with the Company for a period of
45 days, during which time the Company may not execute a letter of intent or
definitive agreement with any other party.
In connection with the August 1998 transaction, Holdings entered into a stock
purchase agreement with the Company pursuant to which it purchased 820,000
Shares for an aggregate purchase price of $4.1 million. Holdings and the
Company also entered into a registration rights agreement with respect to the
Shares. The Company also granted to Parent an option (the "Parent Option") to
purchase Shares representing up to 19% (including the Shares already acquired
by Holdings) of the outstanding Shares for a price per Share based upon the
fair market value of the Shares at the time of exercise. Parent may exercise
this option only if it exercises it right to enter into a worldwide
distribution agreement with the Company.
18
<PAGE>
In October 1998, the Company engaged Piper Jaffray as its financial advisor
to assist the Company in evaluating various strategic alternatives with the
objective of maximizing shareholder value.
At the Company's Board of Directors meeting on February 22, 1999, Piper
Jaffray presented to the Board of Directors of the Company (the "Company
Board") and management the results of its analysis and the Board discussed
these results in detail.
As contemplated by the agreements signed in August 1998, in December 1998,
Parent and the Company entered into negotiations with respect to a distribution
agreement pursuant to which S&N or its affiliates would be the exclusive
distributors for the sale and promotion of the Company's Sonic Accelerated
Fracture Healing System in the United Kingdom. On April 9, 1999, Parent and the
Company entered into a United Kingdom Distribution Agreement in furtherance of
their existing sales and marketing relationship.
On March 29, 1999, while attending a sales and reimbursement review meeting
at Parent's headquarters in Memphis, Tennessee, Mr. Patrick A. McBrayer,
President and Chief Executive Officer of the Company, and Mr. Richard H.
Reisner, Vice President and Chief Financial Officer of the Company, met with
Mr. Larry Papasan, President of the Orthopedic Division of Parent. At that
meeting Mr. McBrayer indicated to Mr. Papasan that the Company Board had
provided direction to Mr. McBrayer to seek to establish strategic relationships
for certain new applications of the Company's ultrasound technology and to
consider a possible acquisition of the Company.
In anticipation of sending a formal notice pursuant to Parent's right of
first negotiation described above, Mr. Reisner provided Mr. David Evans, Group
Director, Business and Technical Support of the Orthopedic Division of Parent,
on March 31, 1999 with certain financial information regarding the Company.
On April 5, 1999, Mr. McBrayer wrote a letter to the Company Board updating
them as to the status of his efforts with respect to seeking strategic
partnerships and on April 20, 1999, he sent a letter (the "Notice") to Parent,
on behalf of the Company, formally notifying Parent of the Company's intention
to seek partners for certain new applications of the Company's ultrasound
technology and for a possible business combination.
In reaction to the Notice and in order to evaluate a possible transaction
with the Company, Mr. Papasan reviewed a preliminary valuation of the Company
prepared by Parent with the Group Executive Committee of S&N (the "S&N
Executive Committee") on April 26, 1999. After considering this valuation, the
members of the S&N Executive Committee instructed Mr. Papasan to continue
discussions with the Company. As a result, on April 29, 1999, Mr. Papasan sent
a letter to Mr. McBrayer notifying him of Parent's intent to exercise its right
of first negotiation with the Company with respect to possible partnering
relationships or a potential acquisition, thus triggering a period through June
15, 1999 during which the Company could not enter into a strategic alliance or
acquisition agreement with any other third party.
On May 18, 1999, Mr. Peter Huntley, Group Director, Business Development of
S&N, Mr. Evans and certain other officers of Parent, along with representatives
of Chase Securities Inc. ("Chase"), Parent's financial advisor, met with
members of senior management of the Company, including Mr. McBrayer and Mr.
Reisner, and Piper Jaffray, the Company's financial advisor, to discuss the
Company's financial performance and business prospects. Based upon this
information and preliminary due diligence conducted after that meeting, Parent
entered into a Confidentiality Agreement (the "Confidentiality Agreement") with
the Company on June 2, 1999 to enable Parent to conduct a due diligence
investigation and to decide whether to further its distribution relationship
with the Company or to seek a business combination with the Company. After the
execution of the Confidentiality Agreement, Parent continued its due diligence.
On June 8, 1999, Parent indicated to Piper Jaffray that it would consider a
possible business combination with the Company, subject to a number of
conditions, including the approval of the Board of Directors of S&N and
satisfactory due diligence results. Parent also communicated its preliminary
valuation of the Company. A
19
<PAGE>
special telephonic meeting of the Company Board was held on June 11, 1999 to
discuss this valuation and the status of discussions with Parent. In addition
to all of the members of the Board, Mr. Reisner and representatives of Piper
Jaffray and Brobeck, Phleger & Harrison LLC, the Company's counsel ("Brobeck"),
were present. Mr. McBrayer updated the directors on the status of discussions
with Parent, including its proposal to structure an acquisition as a cash
tender offer, the valuation proposed and the fact that the 45-day non-exclusive
right of negotiation period would expire on June 15, 1999. The directors
discussed the proposal at length and instructed Mr. McBrayer to inform Parent
that its proposed valuation would not be acceptable to the Company Board. The
directors acknowledged, however, that negotiations and due diligence were
proceeding in good faith and agreed to have the Company enter into an exclusive
non-solicitation agreement with Parent.
Mr. Papasan and Mr. McBrayer spoke on June 17, 1999 to discuss Parent's
initial proposed valuation of the Company. Mr. McBrayer indicated that the
Company could not accept this valuation. Discussions regarding the appropriate
valuation of the Company continued on June 18, 1999 between Chase and Piper
Jaffray and Mr. Papasan and Mr. McBrayer.
On June 24, 1999, after further reviewing the Company's financial results and
business prospects with Parent, Chase contacted Piper Jaffray to indicate that
Parent would value the Company at $5.15 per Share, subject to the previously
communicated conditions. A special telephonic meeting of the Company Board to
discuss this valuation and the status of discussions with Parent was held on
June 28, 1999. In addition to a majority of the members of the Board, Mr.
Reisner and representatives of Piper Jaffray and Brobeck participated. Mr.
McBrayer updated the Company Board on the current status of negotiations and
due diligence by Parent, the proposed cash purchase price of $5.15 per share
and Parent's request for an extension of the Company's non-solicitation
agreement. After lengthy discussion, the Company Board authorized Mr. McBrayer,
on behalf of the Company, to extend the non-solicitation period through July
26, 1999. The Company's financial advisors responded on June 29, 1999 and
indicated that the Company would be willing to consider a business combination
at the proposed price. Parent and the Company then amended the Confidentiality
Agreement to extend the exclusivity period (which had expired on June 9, 1999)
to July 26, 1999.
On July 2, 1999, Mr. Papasan and Mr. McBrayer discussed key due diligence
issues, a schedule for completing due diligence and arrangements for
manufacturing and quality assurance audits of the Company to be performed by
Parent.
On July 7, 1999, management of S&N circulated a paper to the Board of
Directors of S&N indicating its preliminary recommendation of an acquisition of
the Company, subject to the completion of satisfactory due diligence and the
negotiation of satisfactory legal documentation.
On July 22, 1999, the Company Board held a regularly scheduled meeting at
which all directors were present. Mr. Reisner and representatives of Piper
Jaffray and Brobeck were also present. The directors reviewed in detail with
counsel drafts of the Merger Agreement, a form of the Stockholder Agreements
and a proposed amendment to the Rights Plan. Representatives of Piper Jaffray
delivered a presentation regarding financial analyses it had undertaken based
upon the proposed consideration to be received in the Merger.
On July 25, 1999, the Company Board held a telephonic meeting with all
members present. Mr. Reisner and representative of Piper Jaffray and Brobeck
also attended the meeting. Piper Jaffray updated the Company Board as to
certain aspects of its July 22 presentation, and rendered to the Board its oral
opinion (which opinion was subsequently confirmed by delivery of a written
opinion dated July 25, 1999) as to the fairness, from a financial point of
view, of the cash consideration to be received in the Offer and Merger by the
holders (other than the Offeror, Parent and their affiliates) of Shares. The
Company Board then unanimously (i) determined that the Merger Agreement was
fair and in the best interests of the stockholders of the Company, (ii)
declared the Merger Agreement and the transactions contemplated thereby to be
advisable and in the best interests of the stockholders of the Company, (iii)
approved the Merger Agreement and the transactions
20
<PAGE>
contemplated thereby, including the Second Amendment to the Rights Agreement,
and (iv) recommended that the holders of Shares accept the Offer, tender their
Shares pursuant to the Offer and approve and adopt the Merger Agreement and the
transactions contemplated thereby.
On July 25, 1999, all necessary responses from the Board of Directors of S&N
had been received and a board resolution approving the transactions was passed
authorizing the Banking & Finance Committee of S&N to effect the transaction.
On the afternoon of July 25, 1999, the Finance & Banking Committee, after
receiving a final due diligence report from certain officers of Parent,
approved the Merger Agreement and the Stockholder Agreements.
On July 25, 1999, the Merger Agreement and the Stockholder Agreements were
signed and delivered by the respective parties thereto.
On July 26, 1999, prior to the opening of stock trading, S&N, Parent and the
Company issued a press release announcing the transaction. On July 30, 1999,
the Offeror commenced the Offer.
12. Purpose of the Offer and the Merger; Plans for the Company.
The purpose of the Offer, the Merger, the Merger Agreement and the other
transactions contemplated thereby is to enable Parent to acquire control of,
and the entire equity interest in, the Company.
Pursuant to the DGCL and the Second Restated and Amended Certificate of
Incorporation (the "Charter") of the Company, adoption by the Board of
Directors of the Company and the affirmative vote of the holders of a majority
of all votes entitled to be cast by all shares entitled to vote are required to
approve the Merger Agreement. The Board of Directors of the Company has
unanimously approved and adopted the Merger Agreement and approved the terms of
the Offer and the Merger, and, unless the Merger is consummated pursuant to the
short form merger provisions under the DGCL as described below, the only
remaining required corporate action of the Company is the approval of the
Merger Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares. If the Offeror acquires, through the Offer or otherwise, a
majority of the combined voting power of the outstanding Shares (which would be
the case if the Minimum Condition were satisfied and the Offeror were to accept
for payment Shares tendered pursuant to the Offer), then it would have
sufficient voting power, together with Holdings, to effect the Merger without
the vote of any other stockholder of the Company.
Pursuant to the Merger Agreement, the Company has agreed that, as soon as
practicable following the expiration of the Offer, it will duly call, give
notice of, convene and hold a meeting of stockholders for the purpose of
obtaining the stockholders' approval of the Merger Agreement. Parent has agreed
that all Shares owned by the Offeror or any other subsidiary of Parent will be
voted in favor of approval of the Merger Agreement. If the Offeror acquires a
majority of the Shares through the Offer or otherwise, then approval of the
Merger Agreement can be obtained without the affirmative vote of any other
stockholder of the Company.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company will
have certain rights under the DGCL to dissent and demand appraisal of, and to
receive payment in cash for the fair value of, their Shares. Such rights to
dissent, if the stockholder does not vote in favor of the Merger and complies
with certain statutory procedures, could lead to a judicial determination of
the fair value of the Shares (excluding any appreciation or depreciation in
anticipation of the Merger unless such exclusion would be inequitable) required
to be paid in cash to such dissenting holders of their Shares. Such value could
be less than, equal to, or more than the Offer Price. In addition, such
dissenting stockholders may be entitled to receive payment of interest from the
date of consummation of the Merger on the amount determined to be the fair
value of their Shares. In determining the fair value of the Shares, a Delaware
court would be required to take into account all relevant factors. Accordingly,
such determination could be based upon considerations other than, or in
addition to, the market value of the Shares, including, among other things,
asset values and earning capacity.
21
<PAGE>
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may,
under certain circumstances, be applicable to the Merger or another business
combination in which the Offeror seeks to acquire the remaining Shares not held
by it following the purchase of Shares pursuant to the Offer. The Offeror
believes, however, that Rule 13e-3 will not be applicable to the Merger if the
Merger is consummated within one year after the termination of the Offer at the
Offer Price. If applicable, Rule 13e-3 requires, among other things, that
certain financial information concerning the Company and certain information
relating to the fairness of the proposed transaction and the consideration
offered to minority stockholders in such transaction be filed with the
Commission and disclosed to stockholders prior to consummation of the
transaction.
Plans for the Company. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger. Parent intends to seek additional
information about the Company during this period. Thereafter, Parent intends to
review such information as part of a comprehensive review of the Company's
business, operations, capitalization and management with a view to optimizing
the Company's potential contribution to Parent's business. Parent may
reorganize the capital structure of the Company or merge the Company into
Parent after the Merger.
Except as indicated in this Offer to Purchase, Parent does not have any
current plans or proposals which relate to or would result in any of the
following: an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries;
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries; any change in the present Board of Directors or management of the
Company; any material change in the Company's present capitalization or
dividend policy; or any other material change in the Company's corporate
structure or business. Notwithstanding the foregoing, promptly after the
Offeror acquires Shares pursuant to the Offer, the Offeror will be entitled to
designate such number of directors on the Board of Directors of the Company as
will make the percentage of the Company's directors designated by the Offeror
equal to the percentage of the aggregate voting power of the Shares held by
Parent or any of its Subsidiaries. In addition, assuming the designation of
directors as aforesaid and so long as there are holders of Shares other than
Parent or any of its subsidiaries, Parent expects that the Board of Directors
would not declare dividends on the Shares.
Parent is considering requesting the Company to offer to enter into retention
agreements with various employees of the Company, including management
employees, that would become effective upon the purchase of the Shares pursuant
to the Offer.
13. The Merger Agreement and the Stockholder Agreements.
The following is a summary of certain provisions of the Merger Agreement and
the Stockholder Agreements, copies of which are filed as exhibits to the
Schedule 14D-1, is qualified in its entirety by reference to the text of such
agreements. All capitalized terms used herein and not otherwise defined have
the meanings set forth in the Merger Agreement.
The Merger Agreement
The Offer. The Offeror commenced the Offer in accordance with the terms of
the Merger Agreement. Each of the Company, Parent and the Offeror has agreed to
use its reasonable best efforts to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements that may be imposed on
itself with respect to the Offer and the Merger and shall promptly cooperate
with and furnish information to each other in connection with any such
requirements imposed upon any of them in connection with the Offer and the
Merger. Each of the Company, Parent and the Offeror shall, and shall cause its
subsidiaries to, use its reasonable best efforts to take all reasonable actions
necessary to obtain (and shall cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
governmental entity or other public or private third party required to be
obtained or made by Parent, the Offeror or the Company or any of their
subsidiaries in connection with the Offer and the Merger or the taking of any
action contemplated thereby or by the Merger Agreement, except that no party
need waive any substantial rights or agree to any substantial limitation on its
operations or to dispose of any assets.
22
<PAGE>
The Merger. The Merger Agreement provides that, upon the terms and subject to
the conditions of the Merger Agreement, and in accordance with the DGCL, the
Offeror shall be merged with and into the Company at the Effective Time.
Following the Merger, the separate corporate existence of the Offeror shall
cease and the Company shall continue as the Surviving Corporation and shall
succeed to and assume all the rights and obligations of the Offeror and the
Company in accordance with the DGCL. At the Effective Time, the Charter and the
By-laws of the Company (the "By-laws") shall be the Charter and By-laws of the
Surviving Corporation, and the directors of the Offeror shall become the
directors of the Surviving Corporation and the officers of the Company shall
become the officers of the Surviving Corporation.
Conversion of Securities. As of the Effective Time, by virtue of the Merger
and without any action on the part of the Offeror, the Company or the holders
of any securities of the Offeror or the Company, each Share (other than Shares
owned by the Company, any subsidiary of the Company, Holdings, Parent, the
Offeror, any other subsidiary of Parent or by stockholders, if any, who are
entitled to and who properly exercise dissenter's rights under the DGCL) shall
be converted into the right to receive from the Surviving Corporation, in cash,
without interest, the Offer Price. Each share of stock of the Offeror issued
and outstanding immediately prior to the Effective Time shall, at the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of stock of the Offeror, be converted into and become one fully
paid and nonassessable share of common stock, $.0001 par value, of the
Surviving Corporation.
Representations and Warranties. In the Merger Agreement, the Company has made
customary representations and warranties to Parent and the Offeror. The
representations and warranties of the Company relate, among other things, to
its organization, good standing and corporate power; capital structure;
authority to enter into the Merger Agreement and to consummate the transactions
contemplated thereby; required consents and approvals and no violations;
filings made by the Company with the Commission under the Securities Act and
the Exchange Act (including financial statements included in the documents
filed by the Company under these acts); information supplied by the Company;
the absence of certain events since September 30, 1998; permits and compliance
with laws; tax matters; actions and proceedings; certain agreements; benefit
plans and employees and employment practices; compliance with worker safety
laws; liabilities; products; certain labor matters; intellectual property
matters and Year 2000 compliance; title to assets; state takeover statutes; the
Rights Agreement; required votes; accounts receivable; inventories;
environmental matters; suppliers and employees; insurance; transactions with
affiliates; and brokers.
The Offeror and Parent have also made customary representations and
warranties to the Company. Representations and warranties of the Offeror and
Parent relate, among other things, to: their organization, good standing and
authority to enter into the Merger Agreement and the Stockholder Agreements and
to consummate the transactions contemplated thereby; required consents and
approvals and no violations; information supplied; ownership of shares;
operations of the Offeror; brokers; and financing.
Rights Agreement. The Merger Agreement provides that the Company and the
Rights Agent shall have executed an amendment to the Rights Agreement rendering
the Rights Agreement inapplicable to the Offer, the Merger and the transactions
contemplated thereby. In accordance with such requirement, immediately prior to
the execution of the Merger Agreement, the Company and the Rights Agent
executed the Second Amendment dated as of July 25, 1999 to Rights Agreement
dated as of December 6, 1996, as amended, between the Company and the Rights
Agent.
Covenants Relating to the Conduct of Business. During the period from the
date of the Merger Agreement to the Effective Time, the Company has agreed as
to itself and its subsidiaries that, except as otherwise expressly contemplated
or permitted by the Merger Agreement or except to the extent Parent shall
otherwise consent in writing:
(a) the Company shall, and shall cause each of its subsidiaries to, in
all material respects carry on its business in the ordinary course of its
business as currently conducted and, to the extent consistent therewith,
use reasonable best efforts to preserve intact its current business
organizations, keep available
23
<PAGE>
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing business shall be
unimpaired at the Effective Time;
(b) the Company shall not, and shall not permit any of its subsidiaries
to, (i) other than dividends paid by wholly-owned subsidiaries, declare,
set aside or pay any dividends on, or make any other actual, constructive
or deemed distributions in respect of, any of its capital stock, or
otherwise make any payments to its stockholders in their capacity as such,
(ii) other than in the case of any subsidiary, split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(c) the Company shall not, and shall not permit any of its subsidiaries
to, issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options (including options under the Company Stock Option Plan) to acquire
any such shares, voting securities, equity equivalent or convertible
securities, other than (i) the issuance of Shares upon the exercise of
Company Stock Options outstanding on the date of the Merger Agreement in
accordance with their current terms, (ii) the issuance of Shares upon
exercise of the Warrants, and (iii) the grant of purchase rights or
issuance of shares under the Stock Purchase Plan in accordance with Section
6.5 of the Merger Agreement;
(d) the Company shall not, and shall not permit any of its subsidiaries
to, amend its or their charters or by-laws;
(e) the Company shall not, and shall not permit any of its subsidiaries
to, acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, limited liability company,
partnership, association or other business organization or division thereof
or otherwise acquire or agree to acquire any assets;
(f) the Company shall not, and shall not permit any of its subsidiaries
to, sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets with a fair market value in excess
of $10,000, other than sales of inventory that are in the ordinary course
of business consistent with past practice;
(g) the Company shall not, and shall not permit any of its subsidiaries
to, incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other person, other than (i) in the ordinary
course of business consistent with past practices and, in the case of
indebtedness and guarantees, in an amount not to exceed $100,000 and (ii)
indebtedness, loans, advances, capital contributions and investments
between the Company and any of its wholly-owned subsidiaries or between any
of such wholly-owned subsidiaries, in each case in the ordinary course of
business consistent with past practices;
(h) the Company shall not, and shall not permit any of its subsidiaries
to, alter (through merger, liquidation, reorganization, restructuring or in
any other fashion) the corporate structure or ownership of the Company or
any subsidiary;
(i) except as otherwise disclosed by the Company to Parent on the date of
the Merger Agreement, the Company shall not, and shall not permit any of
its subsidiaries to, enter into or adopt any, or amend any existing,
severance plan, agreement or arrangement or enter into or amend any Company
Plan (as defined in the Merger Agreement) or employment or consulting
agreement;
(j) except as otherwise disclosed by the Company to Parent on the date of
the Merger Agreement, the Company shall not, and shall not permit any of
its subsidiaries to, increase the compensation payable or to become payable
to its directors, officers or employees (except for increases in the
ordinary course of business consistent with past practice in salaries or
wages of employees of the Company or any of its subsidiaries who are not
officers of the Company or any of its subsidiaries) or grant any severance
or
24
<PAGE>
termination pay to, or enter into any employment or severance agreement
with, any director or officer of the Company or any of its subsidiaries, or
establish, adopt, enter into, or, except as may be required to comply with
applicable law, amend in any material respect or take action to enhance in
any material respect or accelerate any rights or benefits under, any labor,
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee;
(k) the Company shall not, and shall not permit any of its subsidiaries
to, knowingly violate or knowingly fail to perform any obligation or duty
imposed upon it or any subsidiary by any applicable material federal, state
or local law, rule, regulation, guideline or ordinance;
(l) the Company shall not, and shall not permit any of its subsidiaries
to, make any change to accounting policies or procedures (other than
actions required to be taken by generally accepted accounting principles);
(m) the Company shall not, and shall not permit any of its subsidiaries
to, prepare or file any tax return inconsistent with past practice or, on
any such tax return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made or methods
used in preparing or filing similar tax returns in prior periods;
(n) the Company shall not, and shall not permit any of its subsidiaries
to, settle or compromise any Tax liability in excess of $100,000;
(o) the Company shall not, and shall not permit any of its subsidiaries
to, settle or compromise any claims or litigation in excess of $100,000 or
commence any litigation or proceedings;
(p) the Company shall not, and shall not permit any of its subsidiaries
to, enter into or amend any agreement or contract (i) having a term in
excess of 12 months and which is not terminable by the Company or a
subsidiary without penalty or premium by notice of 60 days or less or (ii)
which involves or is expected to involve future payments of $100,000 or
more during the term thereof (provided that in the case of agreements or
contracts with any customer, the margins anticipated from any such
agreement or contract shall be consistent in all material respects with
historical margins); enter into or amend any other agreement or contract
material to the Company and its subsidiaries, taken as a whole; or purchase
any real property, or make or agree to make any new capital expenditure or
expenditures (other than the purchase of real property) which in the
aggregate are in excess of $100,000;
(q) the Company shall not, and shall not permit any of its subsidiaries
to, pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of any such claims, liabilities
or obligations, in the ordinary course of business consistent with past
practice or in accordance with their terms; and
(r) the Company shall not, and shall not permit any of its subsidiaries
to, authorize, recommend, propose or announce an intention to do any of the
foregoing, or enter into any contract, agreement, commitment or arrangement
to do any of the foregoing.
No Solicitation. The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer, director or
employee of or any financial advisor, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, (i) solicit,
initiate or encourage the submission of, any Takeover Proposal (as defined
below), (ii) enter into any agreement with respect to or approve or recommend
any Takeover Proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to the Company
or any subsidiary in connection with, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal; provided, however, that prior to
the acceptance for payment of Shares pursuant to the Offer, if the Board of
Directors of the Company reasonably determines that a Takeover Proposal
constitutes a Superior Proposal (as defined below), then, to the extent
required by the fiduciary obligations of the Board of Directors of the Company,
as determined in good faith by a majority thereof after
25
<PAGE>
consultation with independent counsel, the Company may, in response to an
unsolicited request therefor, and subject to compliance with the Merger
Agreement, furnish information with respect to the Company and its subsidiaries
to any person pursuant to a customary confidentiality statement (as determined
by the Company's independent counsel) and participate in discussions or
negotiations with such person. For purposes of the Merger Agreement, "Takeover
Proposal" means any proposal for (i) a merger or other business combination
involving the Company or any of its subsidiaries, (ii) any proposal or offer to
acquire in any manner, directly or indirectly, an equity interest in or any
voting securities of the Company representing 15% or more of the Shares or of
the total voting securities of the Company outstanding or (iii) an offer to
acquire in any manner, directly or indirectly, a substantial portion of the
assets of the Company or any of its subsidiaries, other than the transactions
contemplated by the Merger Agreement, and "Superior Proposal" means a bona fide
proposal made by a third party to acquire the Company pursuant to a tender or
exchange offer, a merger, a sale of all or substantially all of the Company's
assets or otherwise on terms which a majority of the disinterested members of
the Board of Directors of the Company determines, at a duly constituted meeting
of the Board of Directors or by unanimous written consent, in its reasonable
good faith judgment to be more favorable to the Company's stockholders than the
Merger (based on the advice of the Company's independent financial advisor that
the value of the consideration provided for in such proposal exceeds the value
of the consideration provided for in the Merger) and for which financing, to
the extent required, is then committed or which, in the reasonable good faith
judgment of a majority of such disinterested members, as expressed in a
resolution adopted at a duly constituted meeting of such members (based on the
advice of the Company's independent financial advisor), is reasonably capable
of being obtained by such third party.
The Merger Agreement provides further that, the Company must advise Parent
orally and in writing of (i) any Takeover Proposal or any inquiry with respect
to or which could lead to any Takeover Proposal received by any officer or
director of the Company or, to the knowledge of the Company, any financial
advisor, attorney or other advisor or representative of the Company, (ii) the
material terms of such Takeover Proposal (including a copy of any written
proposal), and (iii) the identity of the person making any such Takeover
Proposal or inquiry no later than 48 hours following receipt of such Takeover
Proposal or inquiry. If the Company intends to furnish any person with any
information with respect to any Takeover Proposal, the Company is required to
advise Parent orally and in writing of such intention not less than two
business days in advance of providing such information. The Company is further
required to keep Parent fully informed of the status and material terms of any
such Takeover Proposal or inquiry.
Third Party Standstill Agreements. During the period from the date of the
Merger Agreement through the Effective Time, the Company has agreed not to
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of its subsidiaries is a party
(other than any involving Parent). The Company has also agreed to enforce, to
the fullest extent permitted under applicable law, the provisions of any such
agreements, including, but not limited to, obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States or any state thereof
having jurisdiction.
Stock Based Compensation. Prior to the consummation of the Offer, the Board
of Directors of the Company (or, if appropriate, any committee thereof) shall
adopt appropriate resolutions and take all other actions necessary or
appropriate to cause each option to purchase Shares that was outstanding as of
the consummation of the Offer to vest in full and to become exercisable
immediately prior to the consummation of the Offer with respect to all of the
shares of the Company's Common Stock at the time subject to such option to
purchase Shares. Each option to purchase Shares that is outstanding upon the
consummation of the Offer shall be canceled as of the consummation of the
Offer, in consideration for which, each holder of an option to purchase Shares
will be entitled to receive from the Company an amount equal to (A) the product
of (1) the number of Shares subject to such option and (2) the excess, if any,
of the Offer Price over the exercise price per share for the purchase of Shares
subject to such option, minus (B) all applicable federal, state and local taxes
required to be withheld in respect of such payment. The amounts payable
pursuant to the Merger Agreement (as described in the second sentence of this
paragraph) will be paid as soon as reasonably
26
<PAGE>
practicable following the acceptance for payment by the Offeror pursuant to the
Offer. The surrender of an option in exchange for the consideration
contemplated in the Merger Agreement (as described in the second sentence of
this paragraph) shall be deemed a release of any and all rights the holder of
the option had or may have had in respect thereof.
Pursuant to the Merger Agreement, the Company will take all actions necessary
to ensure that the Purchase Period (as defined in the Stock Purchase Plan)
applicable to the options outstanding under the Stock Purchase Plan is
shortened so as to have a Purchase Date (as defined in the Stock Purchase Plan)
that occurs before the acceptance for payment by the Offeror of Shares pursuant
to the Offer; and no current holder of an option to purchase Shares under the
Stock Purchase Plan is permitted to increase his or her rate of payroll
deduction under the Stock Purchase Plan from and after the date of the Merger
Agreement.
The Company has also agreed to take all actions necessary to provide that,
effective as of acceptance for payment by the Offeror of Shares pursuant to the
Offer, the Company Stock Option Plan and any similar plan or agreement of the
Company will be terminated, any rights under any other plan, program, agreement
or arrangement relating to the issuance or grant of any other interest in
respect of the capital stock of the Company or any of its subsidiaries will be
terminated, and no holder of an option to purchase Shares will have any right
to receive any shares of capital stock of the Company or, if applicable, the
Surviving Corporation, upon exercise of any Company Stock Option.
Warrants. Prior to the consummation of the Offer, the Company will take all
actions necessary or appropriate to cause the Pilla Warrant and the Chiabrera
Warrant to, after the Effective Time of the Merger, represent the right to
receive an amount equal to (A) the product of (1) the number of shares of the
Company's Common Stock subject to such Warrant and (2) the excess, if any, of
the Merger Consideration over the Exercise Price (as defined in such Warrant)
per share for the purchase of the Company's Common Stock subject to such
Warrant, minus (B) all applicable federal, state and local Taxes required to be
withheld in respect of such payment.
Indemnification. Pursuant to the Merger Agreement, Parent and the Offeror
agreed that from and after the Effective Time, Parent will cause the Surviving
Corporation to indemnify and hold harmless all past and present officers and
directors of the Company and of its subsidiaries to the same extent and in the
same manner such persons are indemnified as of the date of the Merger Agreement
by the Company pursuant to the DGCL, the Charter or the Company's By-laws for
acts or omissions occurring at or prior to the Effective Time.
Parent has also agreed to cause the Surviving Corporation to provide, for a
period of not less than six years from the Effective Time, the Company's
current directors and officers an insurance and indemnification policy that
provides coverage for events occurring prior to the Effective Time that is
substantially similar to the Company's existing policy or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
provided, however, that the Surviving Corporation will not be required to pay
an annual premium for the director's and officer's insurance in excess of 150%
of the last annual premium paid prior to the date of the Merger Agreement but
in such case will purchase as much coverage as possible for such amount.
Board Representation. The Merger Agreement provides that promptly after such
time as the Offeror acquires Shares pursuant to the Offer, the Offeror will be
entitled to designate at its option up to that number of directors of the
Company's Board of Directors, subject to compliance with Section 14(f) of the
Exchange Act, as will make the percentage of the Company's directors designated
by the Offeror equal to the percentage of the aggregate voting power of the
Shares held by Parent or any of its subsidiaries, and the Company shall at such
time cause the Offeror's designees to be so elected by its existing Board of
Directors. However, in the event that the Offeror's designees are elected to
the Board of Directors of the Company, until the Effective Time, such Board of
Directors shall have at least three directors who are directors on the date of
the Merger Agreement and who are not officers of the Company (the "Independent
Directors"). If the number of Independent Directors shall be reduced below
three for any reason whatsoever, the remaining Independent
27
<PAGE>
Directors shall designate a person or persons to fill such vacancy each of whom
shall be deemed to be an Independent Director for purposes of the Merger
Agreement or, if no Independent Directors then remain, the other directors of
the Company as of the date of the Merger Agreement shall designate three
persons to fill such vacancies who shall not be officers or affiliates of the
Company or any of its subsidiaries, or officers or affiliates of Parent or any
of its subsidiaries, and such persons shall be deemed to be Independent
Directors for purposes of the Merger Agreement. In connection with the
foregoing, the Company will promptly, at the option of Parent, either increase
the size of the Company's Board of Directors and/or obtain the resignation of
such number of its current directors as is necessary to enable the Offeror's
designees to be elected or appointed to the Company's Board of Directors as
provided above.
Conditions Precedent. The respective obligations of each party to effect the
Merger shall be subject to the satisfaction (or waiver by each party) prior to
the Effective Time of the following conditions: (i) the Merger Agreement
(including the Merger) shall have been approved and adopted by the affirmative
vote of the stockholders of the Company (unless the vote of stockholders is not
required under the DGCL and the Company's Charter); (ii) any waiting period
(and any extension thereof) applicable to the consummation of the Merger under
the HSR Act or any other waiting periods under any applicable foreign laws
shall have expired or been terminated; (iii) the Offeror shall have previously
accepted for payment and paid for Shares pursuant to the Offer, except that
this condition shall not apply if the Offeror shall have failed to purchase
Shares pursuant to the Offer in breach of its obligations under this Agreement;
and (iv) no court or other Governmental Entity (as defined in the Merger
Agreement) having jurisdiction over the Company or Parent or any of their
respective subsidiaries shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of making the merger illegal.
Termination. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time, whether before or after the approval of the
terms of the Merger Agreement by the stockholders of the Company: (a) by mutual
written consent of Parent and the Company; (b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the conditions to the Offer as
set forth in this Offer to Purchase (see Section 15) the Offer shall have
terminated or expired in accordance with its terms without the Offeror having
accepted for payment any Shares pursuant to the Offer or (y) the Offeror shall
not have accepted for payment any Shares pursuant to the Offer prior to October
31, 1999 (provided that the right to terminate the Merger Agreement pursuant to
this clause (b)(i) shall not be available to any party whose failure to perform
any of its obligations under the Merger Agreement results in the failure of any
such condition to the Offer or if the failure of such condition results from
facts or circumstances that constitute a breach of any representation or
warranty under the Merger Agreement by such party) or (ii) if any Governmental
Entity shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance for
payment of, or payment for, Shares pursuant to the Offer and such order, decree
or ruling or other action shall have become final and nonappealable; (c) by
Parent or the Offeror prior to the purchase of Shares pursuant to the Offer in
the event of a breach by the Company of any representation, warranty, covenant
or other agreement contained in the Merger Agreement which (i) would give rise
to the failure of condition (e) or (f) described below in Section 15 and (ii)
cannot be or has not been cured within 30 days after the giving of written
notice to the Company; (d) by Parent or the Offeror if either Parent or the
Offeror is entitled to terminate the Offer as a result of the occurrence of any
event set forth in paragraph (d) described below in Section 15; (e) by the
Company if the Board of Directors of the Company reasonably determines that a
Takeover Proposal constitutes a Superior Proposal and a majority of the Board
of Directors of the Company determines in its reasonable good faith judgment,
after consultation with outside counsel, that failing to terminate the Merger
Agreement would constitute a breach of its fiduciary duties under applicable
law; provided, that it has complied with the notice and other provisions of the
Merger Agreement and it complies with requirements of the Merger Agreement
relating to payment of Expenses and the Termination Fee (each as defined below
under "Fees and Expenses"); and provided further that the Company may not
terminate the Merger Agreement pursuant to this clause (e) unless and until 72
hours have elapsed following the delivery to Parent of a written notice of such
determination by the Board of Directors of the Company; (f) by the
28
<PAGE>
Company, if (i) any of the representations or warranties of Parent or the
Offeror set forth in the Merger Agreement that are qualified as to materiality
shall not be true and correct in any respect or any such representations or
warranties that are not so qualified shall not be true and correct in any
material respect or (ii) Parent or the Offeror shall have failed to perform in
any material respect any material obligation or to comply in any material
respect with any material agreement or covenant of Parent or the Offeror to be
performed or complied with by it under the Merger Agreement and such untruth,
incorrectness or failure cannot be or has not been cured within 30 days after
the giving of written notice to Parent or the Offeror, as applicable; or (g) by
the Company, if the Offer has not been timely commenced. In the event of a
termination of the Merger Agreement by either the Company or Parent, the Merger
Agreement shall become void (except for certain specified provisions, including
those pertaining to the payment of certain expenses and fees and except for
certain confidentiality obligations of the parties) and there shall be no
liability or obligation on the part of Parent, the Offeror or the Company or
their respective officers or directors, other than for liability for any breach
of a representation or warranty contained in the Merger Agreement, the breach
of any covenant contained in the Merger Agreement or for fraud.
Fees and Expenses. Except as provided in the Merger Agreement, whether or not
the Merger is consummated, all costs and expenses incurred in connection with
the Offer, the Merger and the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such costs and
expenses.
The Merger Agreement provides that the Company will pay, or cause to be paid,
in same day funds to Parent the following amounts under the circumstances and
at the times set forth as follows: (i) if Parent or the Offeror terminates the
Merger Agreement in accordance with the provisions described in clause (d)
under "Termination" above, the Company shall pay the Expenses of Parent and a
$2.5 million termination fee (the "Termination Fee") upon demand; or (ii) if
the Company terminates the Merger Agreement in accordance with the provision
described in clause (e) under "Termination" above, the Company shall pay the
Termination Fee within one business day following such termination and the
Expenses of Parent upon demand.
For purposes of the Merger Agreement, "Expenses" means, documented out-of-
pocket fees and expenses incurred or paid by or on behalf of Parent, in
connection with the Offer, the Merger or the consummation of any of the
transactions contemplated by the Merger Agreement, including all fees and
expenses of law firms, commercial banks, investment banking firms, accountants,
experts and consultants to Parent.
The Stockholder Agreements
Pursuant to the Stockholder Agreements, each Tendering Stockholder has agreed
that, (a) such Tendering Stockholder shall vote the Shares held by such
Tendering Stockholder in favor of the Merger and the Merger Agreement; (b) such
Tendering Stockholder shall vote his Shares against (i) any other merger
agreement or merger, consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of or
by the Company or any other Takeover Proposal or (ii) any amendment of the
Company's Charter or By-laws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify the
Merger, the Merger Agreement or any of the other transactions contemplated by
the Merger Agreement; (c) such Tendering Stockholder shall not (i) sell,
transfer, pledge, assign or otherwise dispose of, or enter into any contract,
option or other arrangement (including any profit sharing arrangement) with
respect to the sale, transfer, pledge, assignment or other disposition of,
their Shares to any person other than the Offeror or the Offeror's designee or
(ii) enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection, directly or indirectly, with any Takeover Proposal;
(d) such Tendering Stockholder shall not, and shall not permit any investment
banker, attorney or other adviser or representative of such Tendering
Stockholder to, (i) directly or indirectly solicit, initiate or encourage the
submission of, any Takeover Proposal or (ii) directly or indirectly participate
in any discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any
29
<PAGE>
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal; and (e) the Tendering Stockholder shall tender pursuant to
the Offer and not withdraw the Shares owned by such Tendering Stockholders. The
Stockholder Agreements terminate upon the earlier of (i) the Effective Time and
(ii) the termination of the Merger Agreement in accordance with its terms.
14. Dividends and Distributions.
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, among other things, from the date of the Merger Agreement
through the Effective Time, (x) declare, set aside or pay any dividends on, or
make any other actual, constructive or deemed distributions in respect of any
of its capital stock, or otherwise make any payments to its stockholders in
their capacity as such other than dividends paid by a wholly owned subsidiary
of the Company, (y) other than in the case of any subsidiary, split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (z) purchase, redeem or otherwise acquire any shares of its
capital stock or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities.
15. Certain Conditions to the Offeror's Obligations.
Notwithstanding any other term of the Offer or the Merger Agreement, the
Offeror shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to the Offeror's obligation to pay for or
return tendered Shares after the termination or withdrawal of the Offer), to
pay for any Shares tendered pursuant to the Offer unless (i) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares that, together with the Shares then owned by Holdings and
Parent and its subsidiaries, would constitute at least a majority of the Shares
that in the aggregate are outstanding determined on a fully diluted basis
(assuming the exercise of all options to purchase common stock of the Company
(other than the Parent Option), and the conversion or exchange of all
securities convertible or exchangeable into, Shares outstanding upon the
expiration of the Offer) (the "Minimum Condition") and (ii) any waiting period
under the HSR Act and any other waiting periods under any foreign laws
applicable to the purchase of Shares pursuant to the Offer shall have expired
or been terminated prior to the expiration date of the Offer (the "HSR
Condition"). Furthermore, notwithstanding any other term of the Offer or this
Agreement, the Offeror shall not be required to accept for payment or, subject
as aforesaid, to pay for any Shares not theretofore accepted for payment or
paid for, and may terminate the Offer if, at any time on or after the date of
the Merger Agreement and before the acceptance of such Shares for payment or
the payment therefor, any of the following conditions exists (other than as a
result of any action or inaction of Parent or any of its subsidiaries that
constitutes a breach of the Merger Agreement):
(a) there shall be threatened or pending by any Governmental Entity any
suit, action or proceeding (i) challenging the acquisition by Parent or the
Offeror of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any
of the other transactions contemplated by the Merger Agreement or the
Stockholder Agreements (including the voting provisions thereunder), or
seeking to obtain from the Company, Parent or the Offeror any damages that
are material in relation to the Company and its subsidiaries taken as a
whole, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective subsidiaries of
a material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, or to compel the Company or Parent to dispose of or hold separate
any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, as a result of the Offer or any of the other transactions
contemplated by the Merger Agreement or the Stockholder Agreements, (iii)
seeking to impose material limitations on the ability of Parent or the
Offeror to acquire or hold, or exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Offer, including the
right to vote
30
<PAGE>
such Shares on all matters properly presented to the stockholders of the
Company, (iv) seeking to prohibit Parent or any of its subsidiaries from
effectively controlling in any material respect any material portion of the
business or operations of the Company or its subsidiaries or (v) which
otherwise is reasonably likely to have a Material Adverse Effect on the
Company, or there shall be pending by any other person any suit, action or
proceeding which would have a Material Adverse Effect on the Company;
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any Governmental Entity any
statute, rule, regulation, judgment, order or injunction, other than the
application to the Offer or the Merger of applicable waiting periods under
the HSR Act or any other applicable waiting periods under any foreign laws
enacted as of the date of the Merger Agreement, that is reasonably likely
to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any Material Adverse Change (as defined in
the Merger Agreement) with respect to the Company other than a Material
Adverse Change primarily caused by the loss of employees of the Company as
a result of the Offer or the announcement thereof;
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Offeror its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any Takeover Proposal or (ii)
the Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct in each case at the date of
the Merger Agreement and at the scheduled or extended expiration of the
Offer unless the inaccuracies (without giving effect to any materiality or
Material Adverse Effect qualifications or exceptions contained therein)
under such representations and warranties, taking all the inaccuracies
under such representations and warranties together in their entirety, do
not, individually or in the aggregate, result in a Material Adverse Effect
on the Company;
(f) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant of the Company to be performed or complied
with by it under the Merger Agreement other than any failures, which would
not have, either individually or in the aggregate, a Material Adverse
Effect on the Company;
(g) any person or "group" (as defined in Section 13(d)(3) of the Exchange
Act), other than Parent, the Offeror or their affiliates or any group of
which any of them is a member, shall have acquired or announced its
intention to acquire beneficial ownership (as determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of 15% or more of the Shares;
(h) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on a
national securities exchange in the United States (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States or
(iii) any limitation (whether or not mandatory) by any Governmental Entity
on, or other event that materially adversely affects, the extension of
credit by banks or other lending institutions, (iv) a commencement of a war
or armed hostilities or other national or international calamity directly
or indirectly involving the United States which in any case is reasonably
expected to have a Material Adverse Effect on the Company or to materially
adversely affect Parent's or the Offeror's ability to complete the Offer
and/or the Merger or materially delay the consummation of the Offer and/or
the Merger, or (v) from the date of this Agreement through the date of
termination or expiration, a decline of at least 25% in either the Dow
Jones Industrial Average or the Standard & Poor's 500 Index; or
(i) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and the Offeror
and may, subject to the terms of the Merger Agreement, be waived by Parent and
the Offeror in whole or in part at any time and from time to
31
<PAGE>
time in their sole discretion. The failure by Parent or the Offeror at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
16. Certain Legal Matters.
Except as set forth in this Section, the Offeror is not aware of any approval
or other action by any governmental or administrative agency which would be
required for the acquisition or ownership of Shares by the Offeror as
contemplated herein. Should any such approval or other action be required, it
will be sought, but the Offeror has no current intention to delay the purchase
of Shares tendered pursuant to the Offer pending the outcome of any such
matter, subject, however, to the Offeror's right to decline to purchase Shares
if any of the conditions specified in Section 15 shall have occurred. There can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions, or that adverse
consequences might not result to the Company's business or that certain parts
of the Company's business might not have to be disposed of if any such
approvals were not obtained or other action taken.
U.S. Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a 15-day waiting period following the filing by Parent of a
Premerger Notification and Report Form with respect to the Offer, unless Parent
receives a request for additional information or documentary material from the
Department of Justice, Antitrust Division (the "Antitrust Division") or the
Federal Trade Commission ("FTC") or unless early termination of the waiting
period is granted. Parent expects to make such a filing on July 30, 1999. If,
within the initial 15-day waiting period, either the Antitrust Division or the
FTC requests additional information or documentary material concerning the
Offer, the waiting period will be extended through the tenth day after the date
of substantial compliance by all parties receiving such requests. Complying
with a request for additional information or documentary material can take a
significant amount of time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition
of the Company. At any time before or after the Offeror's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Offeror or the divestiture of substantial assets of the Company
or its subsidiaries or Parent or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer, the consummation of the
Merger or the agreements set forth in the Stockholder Agreements on antitrust
grounds will not be made, or, if such a challenge is made, of the result
thereof.
If any applicable waiting period under the HSR Act applicable to the Offer
has not expired or been terminated prior to the Expiration Date, the Offeror
will not be obligated to proceed with the Offer or the purchase of any Shares
not theretofore purchased pursuant to the Offer. See Section 15.
State Takeover Laws. The Company is incorporated under the laws of the State
of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents an
"interested stockholder" (including a person who owns or has the right to
acquire 15% or more of the outstanding voting shares of a corporation) from
engaging in a "business combination" (defined to include mergers and certain
other actions) with a Delaware corporation for a period of three years
following the date such person became an interested stockholder unless, among
other things, the "business combination" is approved by the Board of Directors
of such corporation prior to such date. The Company's Board of Directors has
approved the Offer and the Merger. Accordingly, Section 203 is inapplicable to
the Offer and the Merger.
32
<PAGE>
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. The Offeror does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, the Offeror will take
such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Offeror might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Offeror might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer and the Merger. In such event,
the Offeror may not be obligated to accept for payment any Shares tendered. See
Section 15.
Certain Foreign Laws. The Company and certain of its subsidiaries conduct
business in several foreign countries where regulatory filings or approvals may
be required or desirable in connection with the consummation of the Offer. The
Company and S&N plan to make a filing in Germany in order to consummate the
transactions contemplated by the Offer and the Merger, and if necessary or
desirable, may make similar filings in Australia, Japan and possibly other
countries. Certain of such filings or approvals, if required or desirable, may
not be made or obtained prior to the expiration of the Offer. The Offeror is
seeking further information regarding the applicability of any such laws and
currently intends to take such action as may be required or desirable. If any
foreign Governmental Entity takes any action prior to the completion of the
Offer that might have certain adverse effects, the Offeror will not be
obligated to accept for payment or pay for any Shares tendered. See Section 15.
17. Fees and Expenses.
Except as set forth below, neither the Offeror nor Parent, nor any officer,
director, stockholder, agent or other representative of the Offeror or Parent
will pay any fees or commissions to any broker, dealer or other person for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers,
commercial banks and trust companies and other nominees will, upon request, be
reimbursed by the Offeror for customary mailing and handling expenses incurred
by them in forwarding materials to their customers.
Parent and the Offeror have engaged Chase as Dealer Manager in connection
with the Offer and as financial advisor to Parent in connection with the effort
to acquire the Company. Parent has agreed to pay Chase (in its capacity as
Dealer Manager and financial advisor) a fee of $1.05 million, $1 million of
which is contingent upon the consummation of the Offer. In addition, Parent has
agreed to reimburse Chase for its out-of-pocket expenses related to its
engagement, including fees and expenses of its counsel, and has agreed to
indemnify Chase against certain liabilities and expenses, including under
federal securities laws.
The Offeror has retained ChaseMellon Shareholder Services, L.L.C. as
Information Agent and Registrar and Transfer Company as Depositary in
connection with the Offer. The Dealer Manager, the Information Agent and the
Depositary will receive reasonable and customary compensation for their
services hereunder and reimbursement for their reasonable out-of-pocket
expenses. The Depositary will also be indemnified by the Offeror against
certain liabilities in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telex, telegraph and personal interviews and
may request brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners of Shares.
18. Miscellaneous.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making
or acceptance thereof would not be in compliance with the securities, blue sky
or other laws of such jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Offeror by one or
more registered brokers or dealers licensed under the laws of such
jurisdiction.
33
<PAGE>
No person has been authorized to give any information or make any
representation on behalf of the Offeror other than as contained in this Offer
to Purchase or in the Letter of Transmittal and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by the Offeror or Parent.
The Offeror, Parent and S&N have filed with the Commission the Schedule 14D-
1, pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3 promulgated
thereunder, furnishing certain information with respect to the Offer. The
Schedule 14D-1 and any amendments thereto, including exhibits, may be examined
and copies may be obtained at the same places and in the same manner as set
forth with respect to the Company in Section 8 (except that they will not be
available at the regional offices of the Commission).
Smith & Nephew Acquisition, Inc.
July 30, 1999
34
<PAGE>
ANNEX I
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF S&N, PARENT AND THE OFFEROR
Directors and Executive Officers of S&N. Set forth below are the name,
current business address, citizenship and present principal occupation and
employment history (covering a period of not less than five years) of each
executive officer and Director of S&N. Unless otherwise indicated, each such
person's business address is 2 Temple Place, Victoria Embankment, London,
England WC2R 3BP. Each person is a citizen of England, except for Dr. Stomberg,
who is a citizen of Germany and Messrs. Papasan and Sparks, who are citizens of
the United States. Mr. Huntley is also a citizen of Australia.
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment and Material Positions Held
Name Business Address During Past Five Years
- ---- ---------------- --------------------------------------
<S> <C> <C>
John H. Robinson........ Chairman since 1997. Mr. Robinson joined
S&N in 1979 and served as Chief
Executive from 1990 to 1997. He is
Chairman of Low & Bonar plc and RJB
Mining plc and Deputy Chairman of
George Wimpey plc.
Christopher J. Chief Executive since 1997. Mr.
O'Donnell.............. O'Donnell joined S&N in February 1988
as Managing Director of S&N's Medical
Division. He was appointed a director
of the main board in 1992. He was
appointed Deputy Chief Executive in
July 1996 and Chief Executive in July
1997.
Alan R. Fryer........... Smith & Nephew Europe Deputy Chief Executive since 1998,
Alum Rock Road responsible for Consumer, ENT, Casting
Birmingham, England & Bandaging and Rehabilitation
B8 3DZ Businesses. He previously served as
Group Director--UK, Europe and Africa
from 1990 to 1998. Mr. Fryer joined S&N
in 1969. He is Chairman of Oxoid
Holdings, Ltd.
Peter Hooley............ Finance Director since 1991. Mr. Hooley
joined S&N and was appointed director
in 1991. He has been a non-executive
director of Powell Duffryn plc since
1997.
Sir Anthony Cleaver..... AEA Technology plc Non-Executive Director since 1993. Sir
2 Temple Place Anthony has served as Chairman of AEA
Victoria Embankment Technology plc since 1996, UK AEA from
London, England 1993 to 1996, the Medical Research
WC2R 3BP Council since 1998 and the Strategic
Partnership Limited since 1996. He is
also Chairman of Baxi Partnership
Limited and IX Holdings Limited, both
since July 1999.
Sir Timothy Lankester... School of Oriental and Non-Executive Director since June 1996.
African Studies Sir Timothy has also served as Director
Thornbough Street of the School of Oriental and African
Russel Square Studies at the University of London
London, England since 1996, prior to which he served as
WC1H 0XG Joint Permanent Secretary for the
Department of Education in 1995,
Permanent Secretary for the Department
of Education from 1994 to 1995 and
Permanent Secretary for Overseas
Development Administration from 1989 to
1994.
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment and Material Positions Held
Name Business Address During Past Five Years
- ---- ---------------- --------------------------------------
<S> <C> <C>
Dr. Nancy Lane.......... Dept. of Zoology, Non-Executive Director since 1991. Dr.
University of Cambridge Lane has served as Chairman of S&N's
Downing Street Scientific Advisory Panel since 1992.
Cambridge, England She has been a cell biologist at
CB23EJ Cambridge University since 1968 and an
official fellow at Girton College since
1970.
Sir Brian Pearse........ Non-Executive Director since 1993. Sir
Brian has served as Deputy Chairman of
Britannic plc since 1998, as Deputy
Chairman of Lucas Industries plc from
1994 and as a member of the Board of
Banking Supervision since 1998.
Dr. Rolf Stomberg....... 22 Hill Street Non-Executive Director since January
Mayfair 1998. Dr. Stomberg was appointed Chief
London, England Executive Officer of BP Oil Europe in
1990 and Chairman of BP Europe in 1994.
In 1995, he was appointed Chief
Executive Officer of BP Oil, and a
Managing Director of The British
Petroleum Company plc, retiring from
the main board of BP at the end of
1997. Dr. Stomberg also has served as
Chairman of John Mowlem & Company plc
and Unipoly SA since January 1999.
Michael G. Parson....... Company Secretary since 1991.
Paul M. Williams........ Group Director--Human Resources since
December 1998, prior to which Mr.
Williams served as Human Resources
Director of Rolls Royce from 1996 to
1998, and as Group Human Resources
Director for Glaxo from 1991 to 1996.
Peter W. Huntley........ Group Director--Business Development
since 1998, prior to which Mr. Huntley
served as Business Development Director
of Matthew Clark plc from 1991 to 1998.
</TABLE>
Directors and Executive Officers of Parent. Set forth below are the name,
current business address, citizenship and present principal occupation and
employment history (covering a period of not less than five years) of each
executive officer and director of Parent. Unless otherwise indicated, each such
person's business address is 1450 Brooks Road, Memphis, TN 38116. All persons
listed below are citizens of the United States of America, except for Mr.
Lomax, who is a citizen of England.
<TABLE>
<CAPTION>
Present Principal Occupation or
Business Employment and Material Positions Held
Name Address During Past Five Years
- ---- -------- --------------------------------------
<S> <C> <C>
Larry W. Papasan.......... Chairman of the Board and President of
Parent since 1998. Mr. Papasan has also
served as President--Orthopaedic
Division of Parent and its predecessors
since 1991 and is President of Offeror.
James A. Ralston.......... Director and Senior Vice President,
Secretary and General Counsel of Parent
since January 1999. Before joining
Parent, Mr. Ralston spent 19 years at
Eagle-Pitcher Industries, Inc., where
his final title was Vice President,
General Counsel and Secretary.
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or
Business Employment and Material Positions Held
Name Address During Past Five Years
- ---- -------- --------------------------------------
<S> <C> <C>
Clifford K. Lomax......... Director and Treasurer of Parent since
1998, prior to which Mr. Lomax served
as Finance Director--Smith & Nephew
Asia and Australia from 1996 to 1998.
He also served as Group Financial
Controller from 1984 to 1996.
Jerry Dowdy............... President--Ear, Nose and Throat Division
since 1997. Mr. Dowdy also held the
following positions in the Ear, Nose
and Throat Division of Parent and its
predecessors: Senior Vice
President/General Manager in 1997,
Interim President and Vice President,
Operations from 1996 to 1997 and Vice
President, Operations from 1991 to
1996.
Ronald M. Sparks.......... President--Endoscopy Division since
1998. Mr. Sparks also served as
President--Wound Management Division
from 1995 to 1998 and as Vice President
and Treasurer of Smith & Nephew
Richards, Inc., North America Division
from 1991 to 1995.
James McHargue............ President--Rehabilitation Division since
1998. Mr. McHargue also served as
Senior Vice President, US Business
Operations--Rehabilitation Division
from 1995 to 1998 and as Senior Vice
President, Human Resources--S&N North
America (MPG) from 1991 to 1995.
Rod Skaggs................ President--Wound Management Division
since 1998. Mr. Skaggs also served as
Vice President--Sales of the Wound
Management Division of Parent and its
predecessors from 1992 to 1998.
A. Bruce Parker........... President--Casting Division since 1996.
Mr. Parker also served as President of
A. Bruce Parker, Inc., the general
partner of Parker Medical Associates,
L.P. from 1986 to 1996.
</TABLE>
37
<PAGE>
Directors and Executive Officers of Offeror. Set forth below are the name,
current business address, citizenship and present principal occupation and
employment history (covering a period of not less than five years) of each
executive officer and director of the Offeror. Unless otherwise indicated, each
such person's business address is 1450 Brooks Road, Memphis, TN 38116. All
persons listed below are citizens of the United States of America except for
Mr. Lomax, who is a citizen of England.
<TABLE>
<CAPTION>
Present Principal Occupation or
Business Employment and Material Positions Held
Name Address During Past Five Years
- ---- -------- --------------------------------------
<S> <C> <C>
Clifford K. Lomax......... Chairman of the Board of Offeror. Mr.
Lomax has also served as a director and
as Treasurer of Parent since 1998,
prior to which Mr. Lomax served as
Finance Director--Smith & Nephew Asia
and Australia from 1996 to 1998 and as
Group Financial Controller from 1984 to
1996.
Larry Papasan............. President of Offeror. Mr. Papasan has
also served as Chairman of the Board
and President of Parent since 1998 and
as President--Orthopaedic Division of
Parent and its predecessors since 1991.
Daniel Lewis.............. Treasurer of Offeror. Mr. Lewis has also
served as Senior Vice President--
Finance and Tactical Marketing
Support--Orthopaedic Division of Parent
since 1998, prior to which he served as
Finance Director--Residential Products
of Carrier Corporation from 1988 to
1997.
James A. Ralston.......... Secretary of Offeror. Mr. Ralston has
also served as Director and Senior Vice
President, Secretary and General
Counsel of Parent since January 1999.
Before joining Parent, Mr. Ralston
spent 19 years at Eagle-Pitcher
Industries, Inc., where his final title
was Vice President, General Counsel and
Secretary.
Robert Lucas.............. Assistant Secretary of Offeror. Mr.
Lucas has also served as Associate
General Counsel of Parent since January
1999, prior to which he served as
Senior Corporate Counsel of Parent and
its predecessors since 1993.
</TABLE>
38
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates for Shares and any other required documents should
be sent or delivered by each stockholder of the Company or such stockholder's
broker, dealer, commercial bank, trust company or other nominee to the
Depositary at one of the addresses set forth below:
The Depositary for the Offer is:
REGISTRAR AND TRANSFER COMPANY
By Mail or Overnight Delivery:
By Hand:
Registrar and Transfer Company c/o The Depository Trust Company
10 Commerce Drive Transfer Agent Drop
Cranford, New Jersey 07016 55 Water Street, First Floor
Attn: Reorganization Department New York, New York 10041-0099
By facsimile transmission:
(908) 497-2311
Confirm by telephone:
(800) 368-5948
If you require additional information, please call Registrar and Transfer
Company at
(800) 368-5948
Any questions or requests for assistance or additional copies of the Offer to
Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery may be
directed to the Information Agent at its telephone number and location listed
below. Stockholders may also contact their broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
450 West 33rd Street, Fourteenth Floor
New York, New York 10001
(800) 684-8823
Banks and Brokers, please call:
(212) 273-8083
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 Park Avenue, Tenth Floor
New York, New York 10017
(212) 270-3722
<PAGE>
EXHIBIT (a)(2)
Letter of Transmittal
To Tender Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
EXOGEN, INC.
Pursuant to the Offer to Purchase
Dated July 30, 1999
by
SMITH & NEPHEW ACQUISITON, INC.
a wholly owned subsidiary of
SMITH & NEPHEW, INC.
and
an indirect wholly owned subsidiary of
SMITH & NEPHEW PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 26, 1999,UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
REGISTRAR AND TRANSFER COMPANY
By Mail or Overnight Delivery: By Hand:
Registrar and Transfer Company c/o The Depository Trust Co.
10 Commerce Drive Transfer Agent Drop
Cranford, New Jersey 07016 55 Water Street, First Floor
Attn: Reorganization Department New York, New York 10041-0099
By facsimile transmission: (908) 497-2311
Confirm by telephone: (800) 368-5948
If you require additional information, please call Registrar and Transfer
Company at
(800) 368-5948
---------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE
SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders of Exogen,
Inc., a Delaware corporation (the "Company"), if certificates for Shares (as
defined below) are to be forwarded herewith or, unless an Agent's Message (as
defined in the Offer to Purchase dated July 30, 1999 (the "Offer to Purchase"))
is utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by Registrar and Transfer Company (the "Depositary") at The
Depositary Trust Company ("DTC") (the "Book-Entry Transfer Facility") pursuant
to the procedures set forth in Section 3 of the Offer to Purchase. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Depositary.
<PAGE>
This Letter of Transmittal is to be completed by stockholders of Exogen,
Inc., a Delaware corporation (the "Company"), if certificates for Shares (as
defined below) are to be forwarded herewith or, unless an Agent's Message (as
defined in the Offer to Purchase dated July 30, 1999 (the "Offer to
Purchase")) is utilized, if delivery of Shares is to be made by book-entry
transfer to an account maintained by Registrar and Transfer Company (the
"Depositary") at The Depositary Trust Company ("DTC") (the "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Delivery of documents to the Book-Entry Transfer Facility
does not constitute delivery to the Depositary.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their Shares and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in the Offer to Purchase),
or who cannot comply with the book-entry transfer procedures on a timely
basis, must tender their Shares pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase. See Instruction 2.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Account No. ________________________________________________________________
Transaction Code No. _______________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Stockholder(s) ________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Window Ticket Number (if any) ______________________________________________
Name of Institution which Guaranteed Delivery ______________________________
If delivery is by book-entry transfer, please check this box: [_]
Name of Tendering Institution _____________________________________________
Account No. _______________________________________________________________
Transaction Code No. _______________________________________________________
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Smith & Nephew Acquisition, Inc. (the
"Offeror"), a Delaware corporation, a wholly owned subsidiary of Smith &
Nephew, Inc., a Delaware corporation (the "Parent"), and an indirect wholly
owned subsidiary of Smith & Nephew plc, a corporation organized under the laws
of England and Wales ("S&N"), the above-described shares of common stock,
$.0001 par value (together with the Rights (as defined in the Offer to
Purchase), the "Shares"), of Exogen, Inc., a Delaware corporation (the
"Company"), pursuant to the Offeror's offer to purchase all of the outstanding
Shares at a purchase price of $5.15 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase, receipt of which is hereby acknowledged, and in this Letter
of Transmittal (which, together with the Offer to Purchase, and any amendments
or supplements hereto or thereto, collectively constitute the "Offer"). The
Offer is being made in connection with the Agreement and Plan of Merger, dated
as of July 25, 1999 (the "Merger Agreement"), among the Parent, the Offeror and
the Company.
Subject to and effective upon acceptance for payment of and payment for the
Shares tendered herewith, the undersigned hereby sells, assigns and transfers
to or upon the order of the Offeror all right, title and interest in and to all
the Shares that are being tendered hereby (and any and all other Shares or
other securities issued or issuable in respect thereof) and appoints the
Depositary the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares (and all such other Shares or securities), with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Shares (and all such other Shares or securities), or transfer ownership of
such Shares (and all such other Shares or securities) on the account books
maintained by the Book-Entry Transfer Facility, together, in any such case,
with all accompanying evidences of transfer and authenticity, to or upon the
order of the Offeror, (b) present such Shares (and all such other Shares or
securities) for transfer on the books of the Company and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and all such other Shares or securities), all in accordance with the
terms of the Offer.
The undersigned hereby irrevocably appoints each designee of the Offeror as
the agent, attorney-in-fact and proxy of the undersigned, each with full power
of substitution, to exercise all voting and other rights of the undersigned in
such manner as each such attorney and proxy or his substitute shall in his sole
judgment deem proper, with respect to all of the Shares tendered hereby which
have been accepted for payment by the Offeror prior to the time of any vote or
other action (and any and all other Shares or other securities or rights issued
or issuable in respect of such Shares) at any meeting of stockholders of the
Company (whether annual or special and whether or not an adjourned meeting),
any actions by written consent in lieu of any such meeting or otherwise. This
proxy is irrevocable, is coupled with an interest in the Shares and is granted
in consideration of, and is effective upon, the acceptance for payment of such
Shares by the Offeror in accordance with the terms of the Offer. Such
acceptance for payment shall revoke any other power of attorney, proxy or
written consent granted by the undersigned at any time with respect to such
Shares (and all such other Shares or other securities or rights), and no
subsequent powers of attorney or proxies will be given or written consents will
be executed by the undersigned (and if given or executed, will not be deemed
effective). The undersigned understands that in order for Shares to be deemed
validly tendered, immediately upon the acceptance for payment of such Shares,
the Offeror or its designee must be able to exercise full voting rights with
respect to such Shares and other securities, including voting at any meeting of
stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares) and that when the same are accepted for
payment by the Offeror, the Offeror will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claims. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or the
Offeror to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby (and all such other Shares or other
securities or rights).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
3
<PAGE>
The undersigned understands that tenders of Shares pursuant to any one of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and
the Offeror upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions," please issue
the check for the purchase price of any Shares accepted for payment, and return
any Shares not tendered or not accepted for payment, in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of any Shares
accepted for payment and return any certificates for Shares not tendered or not
accepted for payment (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). In the
event that both "Special Payment Instructions" and "Special Delivery
Instructions" are completed, please issue the check for the purchase price of
any Shares purchased and return any Shares not tendered or not purchased in the
name(s) of, and deliver said check and any certificates to, the person(s) so
indicated. Stockholders tendering Shares by book-entry transfer may request
that any Shares not accepted for payment be returned by crediting such account
maintained at the Book-Entry Transfer Facility as such shareholder may
designate by making an appropriate entry under "Special Payment Instructions."
The undersigned recognizes that the Offeror has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Shares from the name of the
registered holder(s) thereof if the Offeror does not accept for payment any of
the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 5 and 7)
To be completed ONLY if the check
To be completed ONLY if the check for the purchase price of Shares
for the purchase price of Shares purchased or certificates for
purchased or certificates for Shares not tendered or not
Shares not tendered or not purchased are to be mailed to
purchased are to be issued in the someone other than the undersigned
name of someone other than the or to the undersigned at an address
undersigned or if Shares tendered other than that shown below the
hereby and delivered by book-entry undersigned's signature(s).
transfer which are not accepted for
payment are to be returned by Mail check and/or certificates to:
credit to an account at the Book-
Entry Transfer Facility other than
designated above.
Name _______________________________
(Please Print)
Address ____________________________
Issue [_] Check [_] Certificate to: ------------------------------------
(Zip Code)
Name _______________________________ ------------------------------------
(Please Print) (Taxpayer Identification or Social
Security No.)
(See Substitute Form W-9)
Address ____________________________
------------------------------------
(Zip Code)
------------------------------------
(Taxpayer Identification or Social
Security No.)
(See Substitute Form W-9)
[_]Credit Shares delivered by book-
entry transfer and not purchased
to the account set forth below
4
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, signatures on
all Letters of Transmittal must be guaranteed by a firm that is a bank, broker,
dealer, credit union, savings association or other entity which is a member in
good standing of the Securities Transfer Agents Medallion Program or by any
other bank, broker, dealer, credit union, savings association or other entity
which is an "eligible guarantor institution," as such term is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended (each of the
foregoing constituting an "Eligible Institution"), unless the Shares tendered
thereby are tendered (i) by a registered holder of Shares who has not completed
either the box labeled "Special Payment Instructions" or the box labeled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. See Instruction 5. If the certificates are
registered in the name of a person or persons other than the signer of this
Letter of Transmittal, or if payment is to be made or delivered to, or
certificates evidencing unpurchased Shares are to be issued or returned to, a
person other than the registered owner or owners, then the tendered
certificates must be endorsed or accompanied by duly executed stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the certificates or stock powers, with the signatures on the
certificates or stock powers guaranteed by an Eligible Institution as provided
herein. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, if the
delivery of Shares is to be made by book-entry transfer pursuant to the
procedures set forth in Section 3 of the Offer to Purchase. Certificates for
all physically delivered Shares, or a confirmation of a book-entry transfer
into the Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) and any other documents required
by this Letter of Transmittal, or an Agent's Message in the case of a book-
entry delivery, must be received by the Depositary at one of its addresses set
forth on the front page of this Letter of Transmittal prior to the Expiration
Date. Stockholders who cannot deliver their Shares and all other required
documents to the Depositary prior to the Expiration Date must tender their
Shares pursuant to the guaranteed delivery procedures set forth in Section 3 of
the Offer to Purchase. Pursuant to such procedures: (a) such tender must be
made by or through an Eligible Institution; (b) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Offeror, must be received by the Depositary prior to the Expiration Date;
and (c) the certificates for all tendered Shares, in proper form for tender, or
a confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, as well as
a properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in Section 3
of the Offer to Purchase. The term "trading day" is any day on which the Nasdaq
Stock Market is open for business.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents, including delivery through the Book-Entry Transfer
Facility, is at the option and risk of the tendering stockholder. Shares will
be deemed delivered only when actually received by the Depositary (including,
in the case of a book-entry transfer, by a confirmation of a book-entry
transfer). If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal
(or a facsimile thereof), the tendering stockholder waives any right to receive
any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. Partial Tenders (not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares Tendered." In
such case, a new certificate for the remainder of the Shares represented by the
old certificate will be sent to the person(s) signing this Letter of
Transmittal unless otherwise provided in
5
<PAGE>
the appropriate box marked "Special Payment Instructions" and/or "Special
Delivery Instructions" on this Letter of Transmittal, as promptly as
practicable following the Expiration Date. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered or not purchased are to be returned, in the name of any
person other than the registered holder(s), in which case the certificate(s)
for such Shares tendered hereby must be endorsed, or accompanied by,
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the certificate for such Shares. Signatures
on any such certificates or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the registered
holder(s) of the Shares tendered hereby, the certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on the certificates for such
Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Offeror of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. The Offeror will pay or cause to be paid any stock
transfer taxes with respect to the sale and transfer of any Shares to it or its
order pursuant to the Offer. If, however, payment of the purchase price is to
be made to, or Shares not tendered or not purchased are to be returned in the
name of, any person other than the registered holder(s), then the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment of
such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instruction. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or
not purchased are to be returned, in the name of a person other than the
person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Stockholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account at the Book-Entry
Transfer Facility as such stockholder may designate under "Special Payment
Instructions." If no such instructions are given, any such Shares not purchased
will be returned by crediting the account at the Book-Entry Transfer Facility
designated above.
8. Substitute Form W-9. Under U.S. Federal income tax law, a tendering
shareholder whose Shares are accepted for payment is required to provide the
Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9, which is provided below, unless an exemption
applies. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to a $50 penalty and to 31% federal income
tax backup withholding on the payment of the purchase price for the Shares.
6
<PAGE>
9. Foreign Holders. Foreign holders must submit a completed IRS Form W-8 to
avoid 31% backup withholding. IRS Form W-8 may be obtained by contacting the
Depositary at one of the addresses on the face of this Letter of Transmittal.
10. Requests for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase and this Letter of Transmittal may
be obtained from the Information Agent at its address or telephone number set
forth below.
11. Waiver of Conditions. The conditions of the Offer may be waived by the
Offeror (subject to certain limitations in the Merger Agreement), in whole or
in part, at any time or from time to time, in the Offeror's sole discretion.
12. Lost, Destroyed, Mutilated, or Stolen Certificates. If any certificate(s)
representing Shares has been lost, destroyed, mutilated, or stolen, the
stockholder should promptly notify the Depositary. The stockholder will then be
instructed as to the steps to be taken in order to replace the certificate(s).
This Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed, mutilated or stolen certificates have
been followed.
Important: This Letter of Transmittal or a facsimile copy hereof (together
with certificates or confirmation of book-entry transfer and all other required
documents) or a Notice of Guaranteed Delivery must be received by the
Depositary prior to the Expiration Date (as defined in the Offer to Purchase).
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on the Substitute Form W-9. If such stockholder is an
individual, the TIN is such stockholder's Social Security Number. If the
Depositary is not provided with the correct TIN, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. All exempt recipients (including foreign persons
wishing to qualify as exempt recipients) should see the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained.
Purpose of Substitute Form W-9
To prevent backup federal income tax withholding on payments that are made to
a stockholder with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the form certifying that the TIN provided on the Substitute
Form W-9 is correct.
What Number to Give the Depositary
The stockholder is required to give the Depositary the Social Security Number
or Employer Identification Number of the record owner of the Shares. If the
Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidelines on which number to
report.
7
<PAGE>
SIGN HERE
(Complete Substitute Form W-9 below)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Signature(s) of Owner(s)
Name(s) ______________________________________________________________________
------------------------------------------------------------------------------
Capacity (full title) ________________________________________________________
Address ______________________________________________________________________
------------------------------------------------------------------------------
------------------------------------------------------------------------------
(Include Zip Code)
------------------------------------------------------------------------------
Area Code and Telephone Number _______________________________________________
Taxpayer Identification or Social Security Number ____________________________
(See Substitute Form W-9)
Dated: _______________________________________________________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full title
and see Instruction 5).
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized signature(s) ______________________________________________________
Name _________________________________________________________________________
Name of Firm _________________________________________________________________
Address ______________________________________________________________________
------------------------------------------------------------------------------
(Include Zip Code)
------------------------------------------------------------------------------
Area Code and Telephone Number _______________________________________________
Dated: _______________________________________________________________________
8
<PAGE>
PAYER'S NAME: [ ]
- -------------------------------------------------------------------------------
SUBSTITUTE Part I -- PLEASE TIN: _____________________
Form W-9 PROVIDE YOUR TIN IN Social Security Number or
Department of the THE BOX AT RIGHT AND Employer Identification
Treasury, CERTIFY BY SIGNING Number
AND DATING BELOW
Internal Revenue ---------------------------------------------------------
Service Part II -- For Payees exempt from backup
Payer's Request withholding, see the enclosed Guidelines for
for Certification of Taxpayer Identification Number on
Taxpayer Substitute Form W-9 and complete as instructed
Identification therein.
Number ("TIN")
and Certification ---------------------------------------------------------
Certification -- Under penalties of
perjury, I certify that:
(1) The number shown on this form is my correct TIN
(or I am waiting for a number to be issued to
me); and
(2) I am not subject to backup withholding because
(a) I am exempt from backup withholding or (b) I
have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
---------------------------------------------------------
SIGNATURE: DATE: ____
Certification Instructions -- You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because of
under reporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you were no longer subject to
backup withholding, do not cross out item (2). (Also see the instructions in
the enclosed Guidelines.)
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR
TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to me,
and either (1) I have mailed or delivered an application to receive a TIN to
the appropriate IRS Center or Social Security Administration Officer or (2) I
intend to mail or deliver an application in the near future. I understand
that if I do not provide a TIN by the time of payment, 31% of all payments
pursuant to the Offer made to me thereafter will be withheld until I provide
a number.
SIGNATURE: _________________________________________________ DATE: __________
9
<PAGE>
The Information Agent for the Offer is:
450 West 33rd Street, Fourteenth Floor
New York, New York 10001
(800) 684-8823
Banks and Brokers, please call:
(212) 273-8083
The Dealer Manager for the Offer is:
CHASE SECURITIES, INC.
270 Park Avenue
New York, New York 10017
(212) 270-3722
10
<PAGE>
Exhibit (a)(3)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
EXOGEN, INC.
at
$5.15 Net Per Share
by
SMITH & NEPHEW ACQUISITION, INC.
a wholly owned subsidiary of
SMITH & NEPHEW, INC.
and
an indirect wholly owned subsidiary of
SMITH & NEPHEW PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 26, 1999, UNLESS THE OFFER IS EXTENDED.
July 30, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Smith & Nephew Acquisition, Inc., a Delaware
corporation (the "Offeror"), a wholly owned subsidiary of Smith & Nephew, Inc.,
a Delaware corporation ("Parent"), and an indirect wholly owned subsidiary of
Smith & Nephew plc, a corporation organized under the laws of England and Wales
("S&N"), to act as Information Agent in connection with the Offeror's offer to
purchase all outstanding shares of common stock, $.0001 par value (together
with the Rights (as defined in the Offer to Purchase), the "Shares"), of
Exogen, Inc., a Delaware corporation (the "Company"), at a purchase price of
$5.15 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated July
30, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") enclosed herewith. The Offer is being made in
connection with the Agreement and Plan of Merger, dated as of July 25, 1999,
among Parent, the Offeror and the Company (the "Merger Agreement"). Holders of
Shares whose certificates for such Shares (the "Certificates") are not
immediately available or who cannot deliver their Certificates and all other
required documents to Registrar and Transfer Company (the "Depositary") or
complete the procedures for book-entry transfer prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) must tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated July 30, 1999.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
<PAGE>
3. A letter to stockholders of the Company from Patrick A. McBrayer, the
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to the
stockholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Certificates and all other required documents are not immediately
available or cannot be delivered to the Depositary prior to the Expiration
Date or if the procedure for book-entry transfer cannot be completed prior
to the Expiration Date.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name, with space provided for
obtaining such clients' instructions with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 26, 1999,
UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $5.15 per Share, net to the seller in cash without
interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Thursday, August 26, 1999, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer such number
of Shares that, together with the Shares currently owned by an affiliate of
the Offeror, would constitute at least a majority of the Shares that are
outstanding determined on a fully diluted basis.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
In order to accept the Offer, (i) a duly executed and properly completed
Letter of Transmittal (or facsimile thereof) and any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase) or other required documents should be sent to
the Depositary and (ii) Certificates representing the tendered Shares on a
timely Book-Entry Confirmation (as defined in the Offer to Purchase) should be
delivered to the Depositary in accordance with the instructions set forth in
the Offer.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender must
be effected by following the guaranteed delivery procedures specified in
Section 3 of the Offer to Purchase.
Neither the Offeror, Parent, S&N nor any officer, director, stockholder,
agent or other representative of any of them will pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer. The Offeror will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of
the enclosed materials to your clients. The Offeror will pay or cause to be
paid any transfer taxes payable on the transfer of Shares to it, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to
ChaseMellon Shareholder Services, L.L.C., the Information Agent for the Offer,
450 West 33rd Street, 14th Floor, New York, New York 10001 (212-273-8083) or
Chase Securities Inc., the Dealer Manager for the Offer, 270 Park Avenue, New
York, New York 10017 (212-270-3722).
Requests for copies of the enclosed materials may be directed to the
Information Agent at the above address and telephone number.
Very truly yours,
Chase Securities Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF S&N, PARENT, THE OFFEROR, THE DEPOSITARY, THE
INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
Exhibit (a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
EXOGEN, INC.
at
$5.15 Net Per Share
by
SMITH & NEPHEW ACQUISITION, INC.
a wholly owned subsidiary of
SMITH & NEPHEW, INC.
and
an indirect wholly owned subsidiary of
SMITH & NEPHEW PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 26, 1999, UNLESS THE OFFER IS EXTENDED.
July 30, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated July 30,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") relating to an offer by Smith & Nephew Acquisition, Inc., a
Delaware corporation (the "Offeror"), a wholly owned subsidiary of Smith &
Nephew, Inc., a Delaware corporation (the "Parent"), and an indirect wholly
owned subsidiary of Smith & Nephew plc, a corporation organized under the laws
of England and Wales, to purchase all outstanding shares of common stock,
$.0001 par value (together with the Rights (as defined in the Offer to
Purchase), the "Shares"), of Exogen, Inc., a Delaware corporation (the
"Company"), at a purchase price of $5.15 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer. The Offer is being made in connection with the Agreement and Plan of
Merger, dated as of July 25, 1999, among Parent, the Offeror and the Company
(the "Merger Agreement"). This material is being forwarded to you as the
beneficial owner of Shares carried by us in your account but not registered in
your name.
We are the holder of record of Shares held by us for your account. A tender
of such Shares can be made only by us as the holder of record and pursuant to
your instructions. The Letter of Transmittal is furnished to you for your
information only and cannot be used by you to tender Shares held by us for your
account.
Accordingly, we request instructions as to whether you wish to tender any or
all of the Shares held by us for your account, upon the terms and conditions
set forth in the Offer.
Please note the following:
1. The tender price is $5.15 per Share, net to you in cash without
interest.
<PAGE>
2. The Board of Directors of the Company unanimously has determined that
the Offer and the Merger (as defined in the Offer to Purchase), are fair to
and in the best interests of, the Company's stockholders, has approved the
Offer and adopted the Merger Agreement and recommends acceptance of the
Offer by the Company's stockholders.
3. The Offer is being made for all of the outstanding Shares.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Thursday, August 26, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer such number
of Shares that, together with the Shares currently owned by an affiliate of
the Offeror, would constitute at least a majority of the Shares that are
outstanding determined on a fully diluted basis.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
If you wish to have us tender any or all of the Shares, please so instruct us
by completing, executing, detaching and returning to us the instruction form
contained in this letter. An envelope to return your instruction to us is
enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise indicated in such instruction form. Please forward
your instructions to us as soon as possible to allow us ample time to tender
your Shares on your behalf prior to the expiration of the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making of the Offer or acceptance
thereof would not be in compliance with the securities laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Offeror by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
EXOGEN, INC.
BY
SMITH & NEPHEW ACQUISITION, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated July 30, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"), in connection with the offer by
Smith & Nephew Acquisition, Inc., a Delaware corporation (the "Offeror"), a
wholly owned subsidiary of Smith & Nephew, Inc., a Delaware corporation, and an
indirect wholly owned subsidiary of Smith & Nephew plc, a corporation organized
under the laws of England and Wales, to purchase all outstanding shares of
common stock, $.0001 par value (together with the Rights (as defined in the
Offer to Purchase), the "Shares"), of Exogen, Inc., a Delaware corporation (the
"Company").
This will instruct you to tender to the Offeror the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to be Tendered:*__
SIGN HERE
-------------------------------------
-------------------------------------
Signature(s)
Account Number: ___________________ -------------------------------------
Date: _____________________________ -------------------------------------
(Print Name(s))
-------------------------------------
-------------------------------------
(Print Address(es))
-------------------------------------
(Area Code and Telephone Number(s))
-------------------------------------
(Taxpayer Identification or
Social Security Number(s))
- --------
*Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
Exhibit (a)(5)
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
EXOGEN, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 26, 1999, UNLESS THE OFFER IS EXTENDED
This form, or one substantially equivalent hereto, must be used to accept the
Offer (as defined below) if certificates for shares of common stock, $.0001 par
value (together with the Rights (as defined in the Offer to Purchase), the
"Shares"), of Exogen, Inc., a Delaware corporation (the "Company"), are not
immediately available or if the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date (as defined in the Offer to
Purchase). Such form may be delivered by hand, facsimile transmission or mail
to the Depositary. See Section 3 of the Offer to Purchase, dated July 30, 1999
(the "Offer to Purchase").
The Depositary for the Offer is:
REGISTRAR AND TRANSFER COMPANY
By Mail or Overnight Delivery: By Hand:
Registrar and Transfer Company c/o The Depository Trust Company
10 Commerce Drive Transfer Agent Drop
Cranford, New Jersey 07016 55 Water Street, First Floor
Attn: Reorganization Department New York, New York 10041-0099
By facsimile transmission:
(908) 497-2311
Confirm by telephone:
(800) 368-5948
If you require additional information, please call Registrar and Transfer
Company at
(800) 368-5948
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR TRANSMISSION
OF INSTRUMENTS VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE, DOES NOT
CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures.
If a signature on a Letter of Transmittal is required to be guaranteed by an
"Eligible Institution" (as defined in the Offer to Purchase) under the
instructions thereto, such signature guarantee must appear in the applicable
space provided in the signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message and certificates for Shares to the Depositary within the time
period shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Smith & Nephew Acquisition, Inc., a
Delaware corporation, upon the terms and subject to the conditions set forth in
the Offer to Purchase, and the related Letter of Transmittal, receipt of which
are hereby acknowledged, the number of Shares of the Company indicated below,
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase.
Number of Shares: ___________________ SIGN HERE
Name(s) of Record Holder(s):
Certificate No(s) (if available):
-------------------------------------
- -------------------------------------
-------------------------------------
- ------------------------------------- (Please Print)
Address(es): ________________________
If Securities will be tendered by
book-entry transfer: ________________ -------------------------------------
(Zip Code)
Name of Tendering Institution:
Area Code and Telephone No(s):
- -------------------------------------
-------------------------------------
Account No.: _____________________ at
Signature(s): _______________________
Dated: ______________________________
-------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended, guarantees the delivery to the Depositary of the Shares tendered
hereby, together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile(s) thereof) and any other required
documents, or an Agent's Message (as defined in the Offer to Purchase) in the
case of a book-entry delivery of Shares, all within three trading days of the
date hereof. A "trading day" is any day on which the Nasdaq Stock Market is
open for business.
Name of Firm: _______________________ Title: ______________________________
- ------------------------------------- Name: _______________________________
(Authorized Signature) (Please Print or Type)
Address: ____________________________ Area Code and Telephone No.: ________
- ------------------------------------- Dated: ______________________________
(zip code)
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM --CERTIFICATES SHOULD BE
SENT WITH THE LETTER OF TRANSMITTAL.
2
<PAGE>
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of--
- ------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if
joint funds, the
first individual
on the account(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult, or if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor
guardian or committee for a or incompetent
designated ward, minor or person(3)
incompetent person
7. a. A revocable savings The grantor-
trust account (in which trustee(1)
grantor is also
trustee)
b. Any "trust" account that The actual
is not a legal or valid owner(1)
trust under State law
8. Sole proprietorship The owner(4)
account
</TABLE>
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of --
--------
<S> <C>
9. A valid trust, estate or The legal entity
pension trust (Do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local governmental school
district or prison) that
receives agricultural
program payments
</TABLE>
---------------------------------------
(1) List first and circle the name of the person whose number you furnish.
- ---------------------------------------
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Card, or Form SS-
4, Application for Employer Identification Number (for businesses and all
other entities), or Form W-7 for Individual Taxpayer Identification Number
(for alien individuals required to file U.S. tax returns), at an office of the
Social Security Administration or the Internal Revenue Service.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on all payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a)
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident alien partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup with-
holding. For details, see the regulations under sections 6041, 6041A(a), 6045,
and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividend, inter-
est, or other payments to give taxpayer identification numbers to payers who
must report the payments to the IRS. The IRS uses the numbers for identifica-
tion purposes and to help verify the accuracy of your tax return. Payers must
be given the numbers whether or not recipients are required to file tax re-
turns. Payers must generally withhold 31% of taxable interest, dividend and
certain other payments to a payee who does not furnish a taxpayer identifica-
tion number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibit (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell these securities. The Offer is made only by the Offer to Purchase
and the related Letter of Transmittal and is not being made to (nor will tenders
be accepted from) holders of Shares in any jurisdiction in which the Offer or
the acceptance thereof would not be in compliance with the securities laws of
such jurisdiction. In those jurisdictions where securities laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Offeror by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Exogen, Inc.
at $5.15 per Share
by
SMITH & NEPHEW ACQUISITION, INC.
a Wholly Owned Subsidiary of
SMITH & NEPHEW, INC.
and
an indirect majority owned subsidiary of
SMITH & NEPHEW PLC
Smith & Nephew Acquisition, Inc., a Delaware corporation (the "Offeror"), a
wholly owned subsidiary of Smith & Nephew, Inc., a Delaware corporation
("Parent"), and an indirect majority owned subsidiary of Smith & Nephew plc, a
corporation organized under the laws of England and Wales ("S&N"), hereby offers
to purchase all of the shares of common stock, $.0001 par value (the "Shares"),
of Exogen, Inc., a Delaware corporation (the "Company"), including the Preferred
Stock Purchase Rights associated with the Shares (the "Rights") issued pursuant
to the Rights Agreement, dated as of December 6, 1996, as amended, between the
Company and Registrar and Transfer Company, as rights agent, for $5.15 per
Share, net to the seller in cash without interest, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated July 30, 1999 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE ON 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, AUGUST 26, 1999,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares that, together with the Shares currently owned by Smith & Nephew
Holdings, Inc., an affiliate of the Offeror ("Holdings"), would constitute at
least a majority of the Shares that are outstanding determined on a fully
diluted basis, (ii) any waiting period under the HSR Act (as defined in the
Offer to Purchase) and any waiting periods under any foreign laws applicable to
the purchase of Shares pursuant to the Offer having expired or having been
terminated prior to the expiration of the Offer, and (iii) the satisfaction of
certain other terms and conditions.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of July 25, 1999 (the "Merger Agreement") among Parent, the Offeror and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer
<PAGE>
and the satisfaction of the other conditions set forth in the Merger Agreement
and in accordance with relevant provisions of the Delaware General Corporation
Law, as amended (the "DGCL"), the Offeror will be merged with and into the
Company (the "Merger"). At the effective time of the Merger (the "Effective
Time"), each Share issued and outstanding immediately prior to the Effective
Time (other than Shares held in the treasury of the Company, Shares held by
Parent, the Offeror or any other wholly owned subsidiary of Parent or Holdings
or Shares which are held by stockholders, if any, who properly exercise their
appraisal rights under the DGCL) will be cancelled and converted into the right
to receive $5.15 in cash, or any higher price that is paid in the Offer, without
interest.
In connection with the Merger Agreement, Parent and the Offeror entered
into Stockholder Agreements dated July 25, 1999 (the "Stockholder Agreements")
with each of the directors of the Company who currently beneficially hold
786,972 Shares, representing approximately 5.6% of the issued and outstanding
Shares. Pursuant to the Stockholder Agreements, the directors have agreed, among
other things, to tender all of their Shares pursuant to the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND ADOPTED
THE MERGER AGREEMENT, APPROVED THE OFFER AND THE MERGER, AND DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER ALL THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn, if
and when the Offeror gives oral or written notice to Registrar and Transfer
Company (the "Depositary") of the Offeror's acceptance of such Shares for
payment. In all cases, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price with the Depositary, which shall act as
agent for tendering stockholders for the purpose of receiving payment from the
Offeror and transmitting payment to the tendering stockholders. Payment for
Shares accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for such Shares or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase) pursuant to the procedures set forth in the Offer to Purchase, (ii) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message (as defined in the Offer to Purchase) and
(iii) any other documents required by the Letter of Transmittal. Under no
circumstances will interest be paid by the Offeror on the purchase price of the
Shares, regardless of any extension of the Offer or any delay in making such
payment.
If any of the conditions set forth in the Offer to Purchase that relate to
the Offeror's obligations to purchase the Shares are not satisfied by 12:00
Midnight, New York City time, on Thursday, August 26, 1999 (or any other time
then set as the Expiration Date), the Offeror may, subject to the terms of the
Merger Agreement, (i) extend the Offer and, subject to applicable withdrawal
rights, retain all tendered Shares until the expiration of the Offer as so
extended, (ii) subject to complying with applicable rules and regulations of the
Securities and Exchange Commission, accept for payment all Shares so tendered
and not extend the Offer, or (iii) terminate the Offer and not accept for
payment any Shares and return all tendered Shares to tendering stockholders. The
term "Expiration Date" shall mean 12:00 Midnight, New York City time, on
Thursday, August 26, 1999, unless the Offeror shall have extended the period of
time for which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Offeror, shall expire.
-2-
<PAGE>
Subject to the limitations set forth in the Offer and the Merger Agreement,
the Offeror reserves the right (but will not be obligated), at any time or from
time to time in its sole discretion, to extend the period during which the Offer
is open by giving oral or written notice of such extension to the Depositary and
by making a public announcement of such extension. There can be no assurance
that the Offeror will exercise its right to extend the Offer. Any extension of
the period during which the Offer is open will be followed, as promptly as
practicable, by public announcement thereof, such announcement to be issued not
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the rights of a tendering stockholder to withdraw such stockholder's Shares.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders
of Shares made pursuant to the Offer are irrevocable, except that Shares
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date, and, unless theretofore accepted for payment, may also be
withdrawn at any time after September 27, 1999. For a withdrawal to be
effective, a written or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the back
cover of the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holder if different from the name
of the person who tendered the Shares. If certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then
prior to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and, unless such Shares
have been tendered for the account of an Eligible Institution (as defined in the
Offer to Purchase), the signature on the notice of withdrawal must be guaranteed
by an Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase, the notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with withdrawn
Shares, in which case a notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in this paragraph. All
questions as to the form and validity (including time of receipt) of a notice of
withdrawal will be determined by the Offeror, in its sole discretion, and its
determination shall be final and binding on all parties.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided to the Offeror its lists of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
related materials are being mailed to record holders of Shares and will be
mailed to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read before any decision is made with
respect to the Offer.
Any questions or requests for assistance or for copies of the Offer to
Purchase and the related Letter of Transmittal and other tender offer materials
may be directed to the Information Agent as set forth below, and copies will be
furnished promptly at the Offeror's expense. No fees or commissions will be
payable to brokers, dealers or other persons for soliciting tenders of Shares
pursuant to the Offer.
-3-
<PAGE>
The Information Agent for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES
450 West 33rd Street, Fourteenth Floor
New York, New York 10001
(800) 684-8823
Banks and Brokers, please call:
(212) 273-8083
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 Park Avenue, Tenth Floor
New York, New York 10017
(212) 270-6000
July 30, 1999
-4-
<PAGE>
Exhibit (a)(8)
[Smith & Nephew letterhead]
Exogen, Inc. Smith & Nephew, Inc.
Patrick A. McBrayer, CEO Larry Papasan, President
Or Richard H. Reisner, CFO Orthopedic Division
732-981-0990 901-399-6023
Betty Cole
Group Communications Manager
901-399-6166
SMITH & NEPHEW TO ACQUIRE EXOGEN IN CASH TENDER OFFER
London, England and Piscataway, NJ - July 26, 1999 - Smith & Nephew plc (London
Stock Exchange: SN), the worldwide healthcare group, and Exogen, Inc. (NASDAQ:
EXGN), a leading supplier of non-invasive ultrasound devices for accelerated
healing of bone fractures, today jointly announced that Smith & Nephew, Inc. of
Memphis, Tenn., a subsidiary of Smith & Nephew plc, has signed a definitive
agreement to acquire all of the outstanding shares of common stock of Exogen for
a cash price of $5.15 per share. The transaction values Exogen at approximately
$68 million. The board of directors of each company has approved the
transaction.
Tender Offer
- ------------
Under the terms of the transaction, a subsidiary of Smith & Nephew, Inc. will
commence a tender offer for all of Exogen's outstanding common stock no later
than July 30, 1999. The acquisition is expected to close in September 1999, at
which time the subsidiary of Smith & Nephew, Inc. will be merged into Exogen.
Smith & Nephew will consummate the transaction from its existing cash resources.
The tender offer is contingent upon customary conditions, including the tender
of that number of shares that, together with the 6.4% of shares already owned by
subsidiaries of Smith & Nephew, constitute at least a majority of Exogen's
outstanding stock on a fully diluted basis.
Exogen's directors have each agreed to support the transaction and to tender
their respective shares. U.S. Bancorp Piper Jaffray acted as Exogen's financial
advisor and has rendered a fairness opinion to the Exogen Board of Directors.
Chase Securities Inc. acted as Smith & Nephew's financial advisor and will act
as dealer manager.
<PAGE>
Exogen
- ------
Exogen designs, develops, manufactures and markets medical devices for the non-
invasive treatment of musculoskeletal injury and disease. Exogen's proprietary
ultrasound and mechanical stress technologies are based on the well-established
principle that bone growth is stimulated by mechanical force.
In August 1998, Exogen entered into an exclusive sales representative agreement
with Smith & Nephew, for its ultrasound accelerated fresh fracture healing
devices in the United States, with rights for Smith & Nephew to extend this to
worldwide distribution, excluding Japan. At the same time, Smith & Nephew
acquired its existing stake in Exogen.
Smith & Nephew
- --------------
Smith & Nephew is a global healthcare company with operations in 36 countries.
The company markets technologically advanced products principally in
Orthopedics, Endoscopy and Wound Management. Smith & Nephew announced in
December 1998 that, as part of its group strategy, it would prioritize
investment in these three divisions. The acquisition of Exogen, with its
innovative bone healing technology, will further develop Smith & Nephew's
portfolio of next generation orthopedic products.
The transition of Exogen's sales activities to the Smith & Nephew sales force
has already been completed in the United States as part of the sales
representative agreement. Following the merger, Exogen's operations will be
integrated with the Orthopedic business of Smith & Nephew.
Commentary
- ----------
Patrick McBrayer, Chief Executive Officer of Exogen, said "Since forming our
marketing alliance for the United States almost one year ago, it has been clear
that the combination of Exogen's ultrasound fracture healing technology and
Smith & Nephew's distribution strength deliver a formidable market presence.
Our merger can only serve to strengthen our opportunity for worldwide market
leadership in non-invasive fracture repair. Further, Smith & Nephew's worldwide
presence in healthcare provides an ideal platform to launch Exogen's products
currently in development for cartilage repair and osteoporosis treatment."
Chris O'Donnell, Chief Executive of Smith & Nephew plc, said "The acquisition of
Exogen, with its innovative ultrasound healing technology, will strengthen our
Orthopedic business in this important emerging field."
Larry Papasan, President of Smith & Nephew's Orthopedic Division, said "We have
worked closely with Exogen since commencing U.S. sales of its ultrasound bone
healing device last year. The acquisition will allow further investment in
developing this technology, plus further investment in Exogen's exciting
portfolio of research and development projects.
<PAGE>
As these two businesses are merged, the expertise of the Exogen team combined
with Smith & Nephew's global distribution network will enable us to continue our
aggressive efforts in expanding the ultrasound business worldwide and developing
additional technologies."
Chase Mellon Shareholder Services LLC. will act as information agent for the
offer. Any questions or requests for assistance, or for additional copies of
the Offer to Purchase, the Letter of Transmittal, or the Notice of Guaranteed
Delivery related to the offer, may be directed to the information agent at
1-800-684-8823 or the dealer manager at 1-212-270-3722.
This press release contains forward-looking statements regarding future events
or the future financial performance of Exogen. Such statements are only
predictions, and actual events or results may differ materially. All forward-
looking statements involve risks and uncertainties. The factors that could
cause actual results to differ materially from those in the forward-looking
statements contained herein are detailed in Exogen's filings and reports with
the Securities and Exchange Commission, including its most recent filings on
Form 10-K and Form 10-Q.
* * * * *
<PAGE>
[Smith & Nephew logo] Exhibit (a)(9)
FOR IMMEDIATE RELEASE
---------------------
July 30, 1999
Smith & Nephew Commences Tender Offer
For Exogen, Inc.
Memphis, Tennessee - July 30, 1999 - Smith & Nephew, Inc., today announced that
one of its wholly-owned subsidiaries has commenced its previously announced
tender offer for all of the outstanding shares of common stock, $.0001 par
value, of Exogen, Inc. (NASDAQ: EXGN) at $5.15 per share, net to the seller, in
cash.
Exogen, headquartered in Piscataway, New Jersey, designs, develops,
manufactures, and markets medical devices for the non-invasive treatment of
musculoskeletal injury and disease. Exogen's proprietary ultrasound and
mechanical stress technologies are based on the well-established principle that
bone growth is stimulated by mechanical force. Exogen markets and sells its
Sonic Accelerated Fracture Healing System device primarily in the United States,
Europe and Japan.
The tender offer is being made pursuant to an Agreement and Plan of Merger dated
as of July 25, 1999. The tender offer will expire at 12:00 midnight, New York
City time (EDT), on Thursday, August 26, 1999, unless extended.
The offer is conditioned upon, among other things, there being validly tendered
and not withdrawn a number of shares that together with the shares currently
owned by an affiliate of Smith & Nephew equals at least a majority of the
outstanding shares on a fully diluted basis.
Registrar and Transfer Company is the depositary for the tender offer.
ChaseMellon Shareholder Services, L.L.C. is the information agent. Chase
Securities Inc. is the Dealer Manager.
Smith & Nephew plc is a global healthcare company that markets a wide range of
technologically advanced products principally in the areas of orthopaedics,
endoscopy and wound management. The Company and its affiliates have
approximately 12,000 employees in 36 countries, including about 3,500 in the
U.S.
Any questions or requests for assistance, or for additional copies of the Offer
to Purchase, the Letter of Transmittal, or the Notice of Guaranteed Delivery
related to the offer, may be directed to the information agent at 1-800-684-8823
or the dealer manager at 1-212-270-3722.
# # #
<PAGE>
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
SMITH & NEPHEW, INC.
SMITH & NEPHEW ACQUISITION, INC.
AND
EXOGEN, INC.
Dated as of July 25, 1999
<PAGE>
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
THE OFFER...................................................................... 2
Section 1.1 The Offer......................................................... 2
Section 1.2 Company Actions................................................... 3
ARTICLE II.......................................................................... 4
THE MERGER..................................................................... 4
Section 2.1 The Merger........................................................ 4
Section 2.2 Effective Time.................................................... 5
Section 2.3 Effects of the Merger............................................. 5
Section 2.4 Charter and Bylaws; Directors and Officers........................ 5
Section 2.5 Conversion of Securities.......................................... 5
Section 2.6 Exchange of Certificates.......................................... 6
Section 2.7 Merger Without Meeting of Stockholders............................ 8
Section 2.8 Further Assurances................................................ 8
Section 2.9 Closing........................................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB............................... 9
Section 3.1 Organization...................................................... 9
Section 3.2 Authority......................................................... 9
Section 3.3 Consents and Approvals; No Violations.............................10
Section 3.4 Information Supplied..............................................11
Section 3.5 Ownership of Shares...............................................11
Section 3.6 Interim Operations of Sub.........................................11
Section 3.7 Brokers...........................................................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization, Standing and Power..................................12
Section 4.2 Capital Structure.................................................12
Section 4.3 Authority.........................................................14
Section 4.4 Consents and Approvals; No Violation..............................14
Section 4.5 SEC Documents and Other Reports...................................15
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 4.6 Information Supplied.............................................16
Section 4.7 Absence of Certain Changes or Events.............................16
Section 4.8 Permits and Compliance...........................................17
Section 4.9 Tax Matters......................................................18
Section 4.10 Actions and Proceedings..........................................19
Section 4.11 Certain Agreements...............................................20
Section 4.12 ERISA............................................................20
Section 4.13 Compliance with Worker Safety Laws...............................22
Section 4.14 Liabilities; Products............................................22
Section 4.15 Labor Matters....................................................23
Section 4.16 Intellectual Property; Year 2000.................................23
Section 4.17 Title to Assets..................................................24
Section 4.18 State Takeover Statutes; Rights Agreement........................25
Section 4.19 Required Vote of Company Stockholders............................25
Section 4.20 Accounts Receivable..............................................25
Section 4.21 Inventories......................................................25
Section 4.22 Environmental Matters............................................26
Section 4.23 Suppliers, Customers and Employees...............................27
Section 4.24 Insurance........................................................27
Section 4.25 Transactions with Affiliates.....................................28
Section 4.26 Brokers..........................................................28
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 Conduct of Business by the Company Pending the Merger............29
Section 5.2 No Solicitation..................................................31
Section 5.3 Third Party Standstill Agreements................................32
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Stockholder Meeting..............................................32
Section 6.2 Access to Information............................................33
Section 6.3 Directors........................................................33
Section 6.4 Fees and Expenses................................................34
Section 6.5 Company Stock Options............................................35
Section 6.6 Warrants.........................................................35
Section 6.7 Reasonable Best Efforts..........................................36
Section 6.8 Public Announcements.............................................36
Section 6.9 State Takeover Laws..............................................37
Section 6.10 Indemnification; Directors and Officers Insurance................37
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 6.11 Notification of Certain Matters..................................37
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger........38
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination.......................................................38
Section 8.2 Effect of Termination.............................................40
Section 8.3 Amendment.........................................................40
Section 8.4 Waiver............................................................40
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties....................40
Section 9.2 Notices...........................................................40
Section 9.3 Interpretation; Certain Definitions...............................41
Section 9.4 Counterparts......................................................43
Section 9.5 Entire Agreement; No Third-Party Beneficiaries....................43
Section 9.6 Governing Law.....................................................44
Section 9.7 Assignment........................................................44
Section 9.8 Severability......................................................44
Section 9.9 Enforcement of this Agreement.....................................44
EXHIBITS
- --------
A Stockholder Agreement
B Conditions of the Offer
C Second Amendment to Rights Agreement
</TABLE>
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of July 25, 1999 (this
"Agreement"), among Smith & Nephew, Inc., a Delaware corporation ("Parent"),
Smith & Nephew Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Sub"), and Exogen, Inc., a Delaware corporation (the
"Company") (Sub and the Company being hereinafter collectively referred to as
the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase the shares of Common Stock, par
value $.0001 per share, of the Company (the "Company Common Stock"; the shares
of Company Common Stock, together with the Rights (as defined in Section 4.2)
associated therewith, being hereinafter collectively referred to as the
"Shares") at a purchase price of $5.15 per Share (the "Offer Price"), net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in this Agreement; and the Board of Directors of the
Company has adopted resolutions approving the Offer and the Merger (as defined
below) and recommending that holders of Shares accept the Offer and that the
Company's stockholders approve this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved and declared advisable the merger of Sub and the Company
(the "Merger"), upon the terms and subject to the conditions set forth herein,
whereby each issued and outstanding Share not owned directly or indirectly by
Parent, Smith & Nephew Holdings, Inc., a Delaware corporation ("Holdings"), or
the Company will be converted into the right to receive the price per share paid
in the Offer and the respective Boards of Directors of Sub and the Company have
approved and adopted this Agreement; and
WHEREAS, in order to induce Parent and Sub to enter into this
Agreement, concurrently herewith Parent and certain of the stockholders of the
Company are entering into Stockholder Agreements dated as of the date hereof
(the "Stockholder Agreements") in the forms of the attached Exhibit A.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
<PAGE>
ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than July 30, 1999,
Sub shall, and Parent shall cause Sub to, commence, within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (together with the
rules and regulations thereunder, the "Exchange Act"), the Offer. The obligation
of Sub to, and of Parent to cause Sub to, commence the Offer and accept for
payment, and pay for, any Shares tendered pursuant to the Offer shall be subject
only to the conditions set forth in the attached Exhibit B (the "Offer
Conditions") (any of which may be waived in whole or in part by Sub in its sole
discretion, except that Sub shall not waive the Minimum Condition (as defined in
Exhibit B) without the consent of the Company) and subject to the rights of
Parent and Sub to terminate this Agreement as provided in Section 8.1. Sub
expressly reserves the right to modify the terms of the Offer, except that,
without the consent of the Company, Sub shall not (i) reduce the number of
Shares subject to the Offer, (ii) reduce the Offer Price, (iii) impose any other
conditions to the Offer other than the Offer Conditions or modify the Offer
Conditions (other than to waive any Offer Conditions to the extent permitted by
this Agreement), (iv) except as provided in the next sentence, extend the Offer
or (v) change the form of consideration payable in the Offer. Notwithstanding
the foregoing, Sub may, without the consent of the Company, (i) extend the
Offer, if at the scheduled or extended expiration date of the Offer any of the
Offer Conditions shall not be satisfied or waived, until such time as such
conditions are satisfied or waived, (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer
and (iii) extend the Offer for any reason on one or more occasions for an
aggregate period of not more than 15 business days beyond the latest expiration
date that would otherwise be permitted under clause (i) or (ii) of this
sentence, in each case subject to the right of Parent, Sub or the Company to
terminate this Agreement pursuant to the terms hereof. Parent and Sub agree that
if at any scheduled expiration date of the Offer, the Minimum Condition, the HSR
Condition (as defined in Exhibit B) or either of the conditions set forth in
paragraphs (e) or (f) of Exhibit B shall not have been satisfied, but at such
scheduled expiration date all the conditions set forth in paragraphs (a), (b),
(c), (d), (g) and (h) of Exhibit B shall then be satisfied, at the request of
the Company (confirmed in writing), Sub shall extend the Offer from time to
time, subject to the right of Parent, Sub or the Company to terminate this
Agreement pursuant to the terms hereof. Subject to the terms and conditions of
the Offer and this Agreement, Sub shall, and Parent shall cause Sub to, accept
for payment, and pay for, all Shares validly tendered and not withdrawn pursuant
to the Offer that Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer as soon as practicable after the expiration of the Offer,
and in any event in compliance with the obligations respecting prompt payment
pursuant to Rule 14e-1(c) under the Exchange Act.
-2-
<PAGE>
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-
1") with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and summary advertisement (such Schedule 14D-1 and
the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents"), and
Parent and Sub shall cause to be disseminated the Offer Documents to holders of
Shares as and to the extent required by applicable Federal securities laws.
Parent, Sub 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 such
information shall have become false or misleading in any material respect, and
Parent and Sub further agree to take all steps necessary to cause the Schedule
14D-1 as so corrected to be filed with the SEC and the other Offer Documents as
so corrected 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 reasonable opportunity to review and comment upon the
Offer Documents prior to their filing with the SEC or dissemination to the
stockholders of the Company. Parent and Sub agree to provide the Company and its
counsel any comments Parent, Sub or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments and to cooperate with the Company and its counsel in responding to any
such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any Shares that
Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer.
(d) Parent or Sub shall engage an information agent in connection
with the Offer.
Section 1.2 Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Board of Directors of
the Company, at a meeting duly called and held, at which all directors were
present (in person or by telephone), duly and unanimously adopted resolutions
approving and adopting this Agreement, approving the Offer and the Merger,
taking all action necessary to render the provisions of Section 203 of the DGCL
(as defined below) inapplicable to the Offer, the Merger and the Stockholder
Agreements, determining that the terms of the Offer and the Merger are fair to,
and in the best interests of, the Company's stockholders and recommending that
holders of Shares accept the Offer and that the Company's stockholders approve
this Agreement and the Merger. The Company represents and warrants that its
Board of Directors has received the opinion of U.S. Bancorp Piper Jaffray Inc.
that the proposed consideration to be received by holders of Shares pursuant to
the Offer and the Merger is fair to such holders from a financial point of view,
and a complete and correct signed copy of such opinion has been delivered by the
Company to Parent. The Company has been advised by each of its directors and
executive officers that each such person intends to tender all Shares owned by
such person pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to
-3-
<PAGE>
the Offer (such Schedule 14D-9, as amended from time to time, the "Schedule 14D-
9") containing the recommendation described in paragraph (a), and the Company
shall cause to be disseminated the Schedule 14D-9 to holders of Shares as and to
the extent required by applicable Federal securities laws. Each of the Company,
Parent and Sub agrees promptly to correct any information provided by it for use
in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9 as so amended or supplemented to be filed with the
SEC and disseminated to holders of Shares, in each case as and to the extent
required by applicable Federal securities laws. Parent and its counsel shall be
given reasonable opportunity to review and comment upon the Schedule 14D-9 prior
to its filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and to cooperate with Parent, Sub
and their counsel in responding to any such comments.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent or agents to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control, to the extent reasonably available to the Company,
regarding the beneficial owners of Shares and any securities convertible into
Shares, and shall furnish to Sub such information and assistance (including
updated lists of stockholders, security position listings and computer files) as
Parent may reasonably request in communicating the Offer to the Company's
stockholders. 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, Parent and Sub and their agents
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, upon request, deliver,
and will use their best efforts to cause their agents to deliver, to the Company
all copies of such information then in their possession or control.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the General Corporation Law of the State of
Delaware, as amended (the "DGCL"), Sub shall be merged with and into the Company
at the Effective Time (as hereinafter defined). Following the Merger, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation") and shall
-4-
<PAGE>
succeed to and assume all the rights and obligations of Sub in accordance with
the DGCL. Notwithstanding anything to the contrary herein, at the election of
Parent, any direct wholly-owned Subsidiary (as hereinafter defined) of Parent
may be substituted for Sub as a constituent corporation in the Merger. In such
event, the parties agree to execute an appropriate amendment to this Agreement,
in form and substance reasonably satisfactory to Parent and the Company, in
order to reflect such substitution.
Section 2.2 Effective Time. The Merger shall become effective when
the certificate of merger or, if applicable, the certificate of ownership and
merger (each, the "Certificate of Merger"), executed in accordance with the
relevant provisions of the DGCL, is filed with the Secretary of State of the
State of Delaware; provided, however, that, upon mutual consent of the
Constituent Corporations, the Certificate of Merger may provide for a later date
of effectiveness of the Merger not more than three (3) business days after the
date the Certificate of Merger is filed. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the Certificate of Merger
is accepted for record or such later time established by the Certificate of
Merger. The filing of the Certificate of Merger shall be made on the date of the
Closing (as defined in Section 2.9).
Section 2.3 Effects of the Merger. The Merger shall have the
effects set forth in the DGCL.
Section 2.4 Charter and Bylaws; Directors and Officers. (a) At the
Effective Time, the Second Restated and Amended Certificate of Incorporation, as
amended, of the Company (the "Company Charter") shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law. At the Effective Time, the Amended and
Restated Bylaws of the Company, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or by the Company Charter.
(b) The directors of Sub at the Effective Time shall be the directors
of the Surviving Corporation, until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be. The officers of the Company at the Effective Time shall be the officers
of the Surviving Corporation, until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be.
Section 2.5 Conversion of Securities. (a) As of the Effective Time,
by virtue of the Merger and without any action on the part of Sub, the Company
or the holders of any securities of the Constituent Corporations:
(i) Each issued and outstanding share of common stock, par value $.01
per share, of Sub shall be converted into one validly issued, fully paid
and nonassessable share of common stock of the Surviving Corporation.
-5-
<PAGE>
(ii) All Shares that are held in the treasury of the Company or by
any wholly-owned Subsidiary of the Company and any Shares owned by Parent,
any wholly-owned Subsidiary of Parent or Holdings shall be canceled and no
capital stock of Parent or other consideration shall be delivered in
exchange therefor.
(iii) Subject to the provisions of Section 2.5(a)(iv), each Share
issued and outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 2.5(a)(ii) and other than
Dissenting Shares (as defined in Section 2.5(a)(iv)) shall be converted
into the right to receive from the Surviving Corporation in cash, without
interest, the per share price paid in the Offer (the "Merger
Consideration"). All such Shares, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and each holder
of a certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration.
(iv) Notwithstanding any provision of this Agreement to the contrary,
if required by the DGCL but only to the extent required thereby, Shares
which are issued and outstanding immediately prior to the Effective Time
and which are held by holders who have properly exercised appraisal rights
with respect thereto in accordance with Section 262 of the DGCL (the
"Dissenting Shares") will not be exchangeable for the right to receive the
Merger Consideration, and holders of such Shares will be entitled to
receive payment of the appraised value of such Shares in accordance with
the provisions of such Section 262 unless and until such holders fail to
perfect or effectively withdraw or lose their rights to appraisal and
payment under the DGCL. If, after the Effective Time, any such holder fails
to perfect or effectively withdraws or loses such right, such Shares will
thereupon be treated as if they had been converted into and have become
exchangeable for, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon. The Company will give Parent
prompt notice of any demands received by the Company for appraisals of
Shares. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal or offer
to settle or settle any such demands.
(b) Each Company Stock Option (as hereinafter defined) shall be treated in
accordance with Section 6.5 of this Agreement.
Section 2.6 Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate a bank or trust company (or such other
person or persons as shall be reasonably acceptable to Parent and the Company)
to act as paying agent in the Merger (the "Paying Agent"), and, from time to
time on, prior to or after the Effective Time, Parent shall make available, or
cause the Surviving Corporation to make available, to the Paying Agent cash in
amounts and at the times necessary for the payment of the Merger Consideration
upon surrender of certificates representing Shares as part of the Merger
pursuant to Section 2.5. Any and all
-6-
<PAGE>
interest earned on funds made available to the Paying Agent pursuant to this
Agreement shall be paid over to Parent.
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of cash into which the Shares theretofore
represented by such Certificate shall have been converted pursuant to Section
2.5, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.6, each Certificate (other than Certificates
representing Dissenting Shares) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 2.5. No interest will
be paid or will accrue on the cash payable upon the surrender of any
Certificate. Parent or the Paying Agent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of Shares such amounts as Parent or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under the Code
(as hereinafter defined) or under any provisions of state, local or foreign tax
law. To the extent that amounts are so withheld by Parent or the Paying Agent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the person in respect of which such deduction or withholding
was made by the Parent or the Paying Agent.
(c) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article II shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
Shares theretofore represented by such Certificates. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective
-7-
<PAGE>
Time, Certificates are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and exchanged as provided in this
Article II.
(d) Termination of Payment Fund. Any portion of the funds made
available to the Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Shares for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of Shares who have
not theretofore complied with this Article II and the instructions set forth in
the letter of transmittal mailed to such holders after the Effective Time shall
thereafter look only to Parent for payment of the Merger Consideration to which
they are entitled.
(e) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to seven years after
the Effective Time (or immediately prior to such earlier date on which any
payment pursuant to this Article II would otherwise escheat to or become the
property of any Governmental Entity (as hereinafter defined)), the cash payment
in respect of such Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interests of any person previously entitled thereto.
(f) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or the Paying Agent, the posting by such person of a bond, in such
reasonable amount as Parent or the Paying Agent may direct as indemnity against
any claim that may be made against them with respect to such Certificate, the
Paying Agent will pay in exchange for such lost, stolen or destroyed Certificate
the amount of cash to which the holders thereof are entitled pursuant to Section
2.5.
Section 2.7 Merger Without Meeting of Stockholders. Notwithstanding
the foregoing, if Sub, or any other direct or indirect subsidiary of Parent,
shall acquire at least 90 percent of the outstanding Shares, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after expiration of the Offer without a meeting
of stockholders of the Company, in accordance with Section 253 of the DGCL.
Section 2.8 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) 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, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper
-8-
<PAGE>
to vest, perfect or confirm the Surviving Corporation's right, title or interest
in, to or under any of the rights, privileges, powers, franchises, properties or
assets of such Constituent Corporation and otherwise to carry out the purposes
of this Agreement.
Section 2.9 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") and all actions specified in this Agreement to
occur at the Closing shall take place at the offices of Sidley & Austin, One
First National Plaza, Chicago, Illinois 60603, at 10:00 a.m., local time, no
later than the second business day following the day on which the last of the
conditions set forth in Article VII shall have been fulfilled or waived (if
permissible) or at such other time and place as Parent and the Company shall
agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
------------------------------------------------
Parent and Sub represent and warrant to the Company as follows:
Section 3.1 Organization. Each of Parent and Sub 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 carry on its business as now being conducted. Each of Parent and
Sub is duly qualified to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not, individually or in the aggregate, have
a Material Adverse Effect on Parent.
Section 3.2 Authority. On or prior to the date of this Agreement, the
Boards of Directors of Parent and Sub have declared the Merger advisable and the
Board of Directors of Sub has approved and adopted this Agreement in accordance
with the DGCL. Each of Parent and Sub has all requisite corporate power and
authority to execute and deliver this Agreement and the Stockholder Agreements,
and each of Parent and Sub has all requisite corporate power and authority to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Parent and Sub of this Agreement and the Stockholder
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action (including
Board action) on the part of Parent and Sub subject, in the case of this
Agreement, to the filing of the Certificate of Merger as required by the DGCL.
This Agreement and the Stockholder Agreements have been duly executed and
delivered by Parent and Sub and (assuming the valid authorization, execution and
delivery of this Agreement by the Company, the valid authorization, execution
and delivery of the Stockholder Agreements by the stockholders who are parties
thereto and the validity and binding effect hereof and thereof on the Company
and such stockholders), this Agreement and the Stockholder Agreements constitute
the valid and binding obligation of each of Parent and Sub enforceable against
them in accordance with their respective terms.
-9-
<PAGE>
Section 3.3 Consents and Approvals; No Violations. Assuming that all
consents, approvals, authorizations and other actions described in this Section
3.3 have been obtained and all filings and obligations described in this Section
3.3 have been made, the execution and delivery of this Agreement and the
Stockholder Agreements do not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions hereof and
thereof will not, result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give to others a right of termination,
cancellation or acceleration of any obligation or result in the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Parent
or any of its Subsidiaries under, any provision of (i) the Certificate of
Incorporation or the By-Laws of Parent, each as amended to date, (ii) any
provision of the comparable charter or organization documents of any of Parent's
Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or any of its Subsidiaries or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent, materially impair the ability of Parent or Sub to perform their
respective obligations hereunder or under the Stockholder Agreements or prevent
the consummation of any of the transactions contemplated hereby or thereby. No
filing or registration with, or authorization, consent or approval of, any
domestic (federal and state), foreign or supranational court, commission,
governmental body, regulatory agency, authority or tribunal (a "Governmental
Entity") is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the Stockholder
Agreements by Parent or Sub or is necessary for the consummation of the Offer,
the Merger and the other transactions contemplated by this Agreement or the
Stockholder Agreements, except for (i) in connection, or in compliance, with the
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), any foreign pre-merger filing obligations and the
Exchange Act, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company or any of its Subsidiaries is
qualified to do business, (iii) such filings and consents as may be required
under any environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Offer, the Merger
or by the transactions contemplated by this Agreement or the Stockholder
Agreements, (iv) such filings, authorizations, orders and approvals as may be
required by state takeover laws (the "State Takeover Approvals"), (v) such
filings as may be required in connection with the taxes described in Section
6.8, (vi) applicable requirements, if any, of state securities or "blue sky"
laws ("Blue Sky Laws"), (vii) as may be required under foreign laws and (viii)
such other consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, have a Material Adverse Effect on Parent, materially
-10-
<PAGE>
impair the ability of Parent or Sub to perform its obligations hereunder or
under the Stockholder Agreements or prevent the consummation of any of the
transactions contemplated hereby or thereby.
Section 3.4 Information Supplied. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or
(iv) the proxy statement (together with any amendments or supplements thereto,
the "Proxy Statement") relating to the Stockholder Meeting (as defined in
Section 6.1) will (a) in the case of the Offer Documents, the Schedule 14D-9 and
the Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9 and the Information Statement are filed with the SEC or first
published, sent or given to the Company's stockholders, or (b) in the case of
the Proxy Statement, at the time the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Stockholder Meeting, 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 requirements
of the Exchange Act, except that no representation or warranty is made by Parent
or Sub with respect to statements made or incorporated by reference therein
based on information supplied by the Company specifically for inclusion or
incorporation by reference therein.
Section 3.5 Ownership of Shares. As of the date of this Agreement,
Parent or its affiliates beneficially own 820,000 Shares.
Section 3.6 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
Section 3.7 Brokers. No broker, investment banker, financial advisor
or other person, other than Chase Securities, Inc., the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
Section 3.8 Financing. Prior to the consummation of the Offer, Parent
and Sub will have available to them all funds necessary to purchase and pay for
all of the Shares tendered pursuant to the Offer by stockholders of the Company.
-11-
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows:
Section 4.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. A list of all Subsidiaries of the Company, together with the
jurisdiction of incorporation of each Subsidiary, the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each other
Subsidiary and the name of any person other than the Company or another
Subsidiary that owns capital stock of the Subsidiary, is set forth in Section
4.1 of the letter dated the date hereof and delivered on the date hereof by the
Company to Parent, which relates to this Agreement and is designated therein as
the Company Letter (the "Company Letter").
Section 4.2 Capital Structure. (a) As of the date hereof, the
authorized capital stock of the Company consists of 27,000,000 Shares and
3,000,000 shares of Preferred Stock, par value $.0001 per share ("Company
Preferred Stock"), of which 140,000 shares have been designated as "Series A
Participating Preferred Stock" (the "Series A Preferred Stock").
(b) At the close of business on July 23, 1999:
(i) 12,752,855 Shares were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive rights;
(ii) no shares of Company Preferred Stock were issued and
outstanding;
(iii) no Shares were held in the treasury of the Company or by
Subsidiaries of the Company;
-12-
<PAGE>
(iv) 422,085 Shares were reserved for issuance upon the exercise of
outstanding vested and exercisable stock options issued under the Company's
1995 Stock Option/Stock Issuance Plan, as amended (the "Company Stock
Option Plan");
(v) 667,779 Shares were reserved for issuance upon the exercise of
outstanding unvested stock options issued under the Company Stock Option
Plan;
(vi) 159,632 Shares were reserved for issuance and unissued pursuant
to the Company's Employee Stock Purchase Plan, as amended (the "Company
Stock Purchase Plan");
(vii) 80,000 Shares were reserved for issuance upon the exercise of
the Warrant dated September 30, 1998 issued to Arthur A. Pilla (the "Pilla
Warrant"); and
(viii) 45,000 Shares were reserved for issuance upon the exercise of
the Warrant dated September 30, 1998 issued to Alessandro Chiabera (the
"Chiabera Warrant" and, together with the Pilla Warrant, the "Warrants").
(c) Section 4.2 of the Company Letter contains a correct and complete
list as of the date of this Agreement of each outstanding option to purchase
Shares issued under the Company Stock Option Plan (collectively, the "Company
Stock Options"), including the holder, date of grant, exercise price and number
of shares of Company Common Stock subject thereto and whether the option is
vested and exercisable.
(d) Except for the Company Stock Options, the Company Stock Purchase
Plan, the Warrants, the rights to purchase shares of the Series A Preferred
Stock (the "Rights") issued pursuant to the Rights Agreement dated as of
December 6, 1996, as amended October 22, 1998 (as so amended, the "Rights
Agreement"), between the Company and Registrar and Transfer Company, as Rights
Agent, and the rights (the "Company Option") of Parent under the Master
Agreement dated August 10, 1998, as amended December 21, 1998, between Parent
and the Company, there are no options, warrants, calls, rights or agreements to
which the Company or any of its Subsidiaries is a party or by which any of them
is bound obligating the Company or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of the Company or any of its Subsidiaries or obligating the Company or any
of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, right or agreement, and there are no outstanding contractual rights to
which the Company or any of its Subsidiaries is a party the value of which is
based on the value of Shares. Except as set forth in Section 4.2 of the Company
Letter, there are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any shares of Company
Common Stock or any capital stock of or any equity interests in any Subsidiary.
(e) Each outstanding share of capital stock of each Subsidiary of the
Company is duly authorized, validly issued, fully paid and nonassessable and,
except as set forth in Section 4.2
-13-
<PAGE>
of the Company Letter, each such share is owned by the Company or another
Subsidiary of the Company, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
voting rights, charges and other encumbrances of any nature whatsoever.
(f) The Company does not have any outstanding bonds, debentures, notes
or other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter.
Section 4.3 Authority. On or prior to the date of this Agreement,
the Board of Directors of the Company has unanimously approved the Offer and
declared the Merger advisable and fair to and in the best interest of the
Company and its stockholders, approved and adopted this Agreement and the
transactions contemplated hereby in accordance with the DGCL, resolved to
recommend the acceptance of the Offer by the Company's stockholders and directed
that this Agreement be submitted to the Company's stockholders for approval.
The Company has all requisite corporate power and authority to enter into this
Agreement and, subject to approval by the stockholders of the Company of this
Agreement, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action (including Board action) on the part of the Company,
subject to (x) approval and adoption of this Agreement by the stockholders of
the Company and (y) the filing of the Certificate of Merger as required by the
DGCL. This Agreement has been duly executed and delivered by the Company and
(assuming the valid authorization, execution and delivery of this Agreement by
Parent and Sub and the validity and binding effect of this Agreement on Parent
and Sub) constitutes the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
Section 4.4 Consents and Approvals; No Violation. Assuming that all
consents, approvals, authorizations and other actions described in this Section
4.4 have been obtained and all filings and obligations described in this Section
4.4 have been made, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give to others a right of
termination, cancellation or acceleration of any obligation or result in the
loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Company or any of its Subsidiaries under, any provision of (i) the Company
Charter or the Amended and Restated Bylaws of the Company, (ii) any provision of
the comparable charter or organization documents of any of the Company's
Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its Subsidiaries or (iv) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries or any of their respective properties
or assets, other than, in
-14-
<PAGE>
the case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby. No
filing or registration with, or authorization, consent or approval of, any
Governmental Entity is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or is necessary for the consummation of the Offer, the Merger and
the other transactions contemplated by this Agreement, except for (i) in
connection, or in compliance, with the provisions of the HSR Act, any foreign
pre-merger filing obligation and the Exchange Act, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company or any of its Subsidiaries is qualified to do business, (iii) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Offer, the Merger or the transactions contemplated by
this Agreement, (iv) such filings, authorizations, orders and approvals as may
be required to obtain the State Takeover Approvals, (v) such filings as may be
required in connection with the taxes described in Section 6.8, (vi) applicable
requirements, if any, of Blue Sky Laws or the Nasdaq National Market, (vii) as
may be required under foreign laws and (viii) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, materially impair the ability of the Company to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby.
Section 4.5 SEC Documents and Other Reports. The Company has filed
all required documents (including proxy statements) with the SEC since October
1, 1996 (the "Company SEC Documents"). As of their respective dates, the Company
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and, at the respective times they were filed, none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Company included in the Company SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with United States generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the Company SEC Documents
-15-
<PAGE>
or as required by generally accepted accounting principles, the Company has not,
since October 1, 1996, made any change in the accounting practices or policies
applied in the preparation of financial statements.
Section 4.6 Information Supplied. None of the information supplied or
to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement, will (a) in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or (b) in the case of the Proxy Statement, at the time
the Proxy Statement is first mailed to the Company's stockholders or at the time
of the Stockholder Meeting, 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 Schedule 14D-9, the Information Statement and
the Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act, except that no representation or warranty is
made by the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub specifically for
inclusion or incorporation by reference therein.
Section 4.7 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed with the SEC prior to the date of this
Agreement or as set forth in the Company Letter, since September 30, 1998, (A)
the Company and its Subsidiaries have not incurred any material liability or
obligation (indirect, direct or contingent), or entered into any material oral
or written agreement or other transaction, that is not in the ordinary course of
business or that would result in a Material Adverse Effect on the Company, (B)
the Company and its Subsidiaries have not sustained any loss or interference
with their business or properties from fire, flood, windstorm, accident or other
calamity (whether or not covered by insurance) that has had a Material Adverse
Effect on the Company, (C) there has been no change in the capital stock of the
Company except for the issuance of shares of the Company Common Stock pursuant
to Company Stock Options or the Company Stock Purchase Plan and no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its stock, (D) there has not been (v) any adoption of a new Company Plan (as
hereinafter defined), (w) any amendment to a Company Plan materially increasing
benefits thereunder, (x) any granting by the Company or any of its Subsidiaries
to any executive officer or other key employee of the Company or any of its
Subsidiaries of any increase in compensation, except in the ordinary course of
business consistent with prior practice or as was required under employment
agreements in effect as of the date of the most recent audited financial
statements included in the Company SEC Documents filed prior to the date hereof,
(y) any granting by the Company or any of its Subsidiaries to any such executive
officer or other key employee of any increase in severance or termination
agreements in effect as of the date of the most recent audited financial
statements included in the Company SEC Documents filed prior to the date hereof
or (z) any entry by the Company or any of its Subsidiaries into any employment,
severance or termination agreement with any such executive
-16-
<PAGE>
officer or other key employee, (E) there has not been any material changes in
the amount or terms of the indebtedness of the Company and its Subsidiaries from
that described in the Company SEC Documents filed prior to the date hereof and
(F) there has been no event causing a Material Adverse Effect on the Company,
nor any development that would, individually or in the aggregate, result in a
Material Adverse Effect on the Company.
Section 4.8 Permits and Compliance. (a) Each of the Company and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
of its Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company and, other than as set
forth in the succeeding sentence, except for permits and authorizations for the
manufacture, sale or distribution of or reimbursement for medical devices
("Regulatory Permits"). The Regulatory Permits held by the Company (the
"Company Regulatory Permits") are set forth in Section 4.8 of the Company
Letter. No suspension or cancellation of any of the Company Permits or the
Company Regulatory Permits is pending or, to the Knowledge of the Company (as
hereinafter defined), threatened, except where the suspension or cancellation of
any of the Company Permits or the Company Regulatory Permits would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The Company has obtained certification to ISO 9000 Series standards of its SAFHS
(as hereinafter defined) devices. All existing products sold, marketed or
distributed by the Company in Europe have CE Marking authorization under the
European Medical Device Directive, as audited and approved by a European
Notified Body. Neither the Company nor any of its Subsidiaries is in violation
of (A) its charter, by-laws or other organizational documents, (B) any law,
ordinance, administrative or governmental rule or regulation, including any
consumer protection, equal opportunity, health, health care industry regulation
and third-party reimbursement laws including under any Federal Health Care
Program (as defined in Section 1128B(f) of the U.S. Federal Social Security Act
(together with all regulations promulgated thereunder, the "SSA")), or (C) any
order, decree or judgment of any Governmental Entity having jurisdiction over
the Company or any of its Subsidiaries, except, in the case of clauses (B) and
(C), for any violations that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. Without limiting the foregoing, the
Company and each Subsidiary is in compliance in all material respects with all
current applicable statutes, rules, regulations or orders administered or issued
by the United States Food and Drug Administration (the "FDA") or comparable
foreign Governmental Entity; the Company does not have knowledge of any facts
which furnish any reasonable basis for any warning letters from the FDA, Section
305 notices, or other similar communications from the FDA or comparable foreign
entity; and since September 30, 1996, there have been no recalls, field
notifications, alerts or seizures requested or threatened relating to the
products of the Company or its Subsidiaries, except as set forth in Section 4.8
of the Company Letter. The Sonic Accelerated Fracture Healing System ("SAFHS")
devices marketed by the Company in the United States are being marketed in the
United States under valid 510(k) or Pre-Market Approval Applications. To the
Knowledge of the Company, there is
-17-
<PAGE>
no false information or significant omission in any product application or
product-related submission made by the Company or any of its Subsidiaries to the
FDA or comparable foreign Governmental Entity. The Company and its Subsidiaries
have obtained all necessary regulatory approvals from any foreign regulatory
agencies related to the distribution and sale of SAFHS devices by the Company
and its Subsidiaries in the respective foreign jurisdictions in which such SAFHS
devices are distributed and sold. Neither the Company nor any Subsidiary, nor
the officers, directors, managing employees or agents (as those terms are
defined in 42 C.F.R. (S)1001.1001) of the Company or any Subsidiary: (i) have
engaged in any activities which are prohibited under, or are cause for civil
penalties or mandatory or permissive exclusion from, any Federal Health Care
Program under Sections 1128, 1128A, 1128B, or 1877 of SSA or related state or
local statutes, including knowingly and willfully offering, paying, soliciting
or receiving any remuneration (including any kickback, bribe or rebate),
directly or indirectly, overtly or covertly, in cash or in kind in return for,
or to induce, the purchase, lease, or order, or the arranging for or
recommending of the purchase, lease or order, of any item or service for which
payment may be made in whole or in part under any such program; (ii) have had a
civil monetary penalty assessed against them under Section 1128A of SSA; (iii)
have been excluded from participation under any Federal Health Care Program; or
(iv) have been convicted (as defined in 42 C.F.R. (S) 1001.2) of any of the
categories of offenses described in Sections 1128(a) or 1128(b)(1), (b)(2), or
(b)(3) of SSA.
(b) Except as disclosed in the Company SEC Documents filed prior to
the date of this Agreement, there are no contracts or agreements of the Company
or its Subsidiaries having terms or conditions which would have a Material
Adverse Effect on the Company or having covenants not to compete that materially
impair the ability of the Company to conduct its business as currently conducted
or purport to bind any stockholder or any Affiliated Person of any stockholder
of the Company after the Effective Time. Except as set forth in the Company SEC
Documents filed prior to the date of this Agreement, no event of default or
event that, but for the giving of notice or the lapse of time or both, would
constitute an event of default exists or, upon the consummation by the Company
of the transactions contemplated by this Agreement, will exist under any
indenture, mortgage, loan agreement, note or other agreement or instrument for
borrowed money, any guarantee of any agreement or instrument for borrowed money
or any lease, contractual license or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any
such Subsidiary is bound or to which any of the properties, assets or operations
of the Company or any such Subsidiary is subject, other than any defaults that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
Section 4.9 Tax Matters. Except as otherwise set forth in Section
4.9 of the Company Letter, (i) the Company and each of its Subsidiaries have
filed all Tax Returns (as hereinafter defined) required to have been filed, and
such Tax Returns are correct and complete and disclose all Taxes (as hereinafter
defined) required to be paid by the Company and its Subsidiaries for the periods
covered thereby, except to the extent that any failure to so file or any failure
to be correct and complete or to disclose all Taxes required to be paid would
not, individually or in the aggregate have a Material Adverse Effect on the
Company; (ii) all Taxes shown to be due on such Tax Returns have been timely
paid or extensions for payment have been
-18-
<PAGE>
properly obtained, or such Taxes are being contested; (iii) the Company and each
of its Subsidiaries have complied with all rules and regulations relating to the
withholding of Taxes and the remittance of withheld Taxes, except to the extent
that any failure to comply with such rules and regulations would not,
individually or in the aggregate have a Material Adverse Effect on the Company;
(iv) neither the Company nor any of its Subsidiaries has waived any statute of
limitations in respect of its Taxes; (v) any Tax Returns required to have been
filed by or with respect to the Company and each of its Subsidiaries relating to
federal and state income Taxes have been examined by the Internal Revenue
Service ("IRS") or the appropriate foreign or state taxing authority or the
period for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired; (vi) to the Knowledge of the Company, no
issues that have been raised by the relevant taxing authority in connection with
the examination of Tax Returns required to have been filed by or with respect to
the Company and each of its Subsidiaries which are currently pending; (vii) all
deficiencies asserted or assessments made as a result of any examination of such
Tax Returns by any taxing authority have been paid in full or properly reflected
on the books of the Company; and (viii) there is no action, suit, investigation,
audit, claim or assessment pending or, to the Knowledge of the Company, proposed
or threatened in writing with respect to Taxes of the Company or any Subsidiary;
(ix) there are no liens for Taxes upon the assets of the Company or any
Subsidiary except liens relating to current Taxes not yet due; (x) none of the
Company or any Subsidiary has been a member of any group of corporations filing
Tax Returns on a consolidated, combined, unitary or similar basis other than
each such group of which it is currently a member; (xi) no transaction
contemplated by this Agreement is subject to withholding under Section 1445 of
the Code (relating to "FIRPTA") and no stock transfer Taxes, sales Taxes, use
Taxes, real estate transfer Taxes, or other similar Taxes will be imposed on the
transactions contemplated by this Agreement; (xii) except as may be limited by
the transactions contemplated by this Agreement, the "regular" and, if
applicable, "alternative minimum tax" net operating loss carry forwards of the
Company and its Subsidiaries for each of the taxable years ended on or prior to
September 30, 1998 (collectively, the "NOLs") are set forth (for each year) in
Section 4.9 of the Company Letter and are each available to the Company or the
applicable Subsidiary) for the period set forth in Section 172(b)(A) of the Code
as in effect for the taxable year in which the applicable NOL was incurred; and
(xiii) except as may be limited as a result of the transactions contemplated by
this Agreement, immediately prior to the Effective Time, none of the NOLs will
constitute separate return limitation year (SRLY) losses, consolidated return
change of ownership (CRCO) losses or "dual consolidated losses" and none of the
NOLs will be limited by sections 382 or 384 of the Code and the regulations
thereunder.
Section 4.10 Actions and Proceedings. There are no outstanding
orders, judgments, injunctions, awards or decrees of any Governmental Entity
against or involving the Company or any of its Subsidiaries, or against or
involving any of the present or former directors, officers, employees,
consultants, agents or stockholders of the Company or any of its Subsidiaries
with respect to the Company or any of its Subsidiaries, any of the properties,
assets or business of the Company or any of its Subsidiaries or any Company Plan
that, individually or in the aggregate, would have a Material Adverse Effect on
the Company or materially impair the ability of the Company to perform its
obligations hereunder. Except as set forth in Section 4.10 of the Company
Letter, there are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations (including claims for workers'
compensation) pending or, to the
-19-
<PAGE>
Knowledge of the Company, threatened against or involving the Company or any of
its Subsidiaries or any of its or their present or former directors, officers,
employees, consultants, agents or stockholders with respect to the Company or
any of its Subsidiaries, or any of the properties, assets or business of the
Company or any of its Subsidiaries or any Company Plan that, individually or in
the aggregate, would have a Material Adverse Effect on the Company or materially
impair the ability of the Company to perform its obligations hereunder. There
are no actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations pending or, to the
Knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any of its or their present or former officers, directors,
employees, consultants, agents or stockholders with respect to the Company or
its Subsidiaries, or any of the properties, assets or business of the Company or
any of its Subsidiaries relating to the transactions contemplated by this
Agreement.
Section 4.11 Certain Agreements. Except as set forth in Section 4.11
of the Company Letter, neither the Company nor any of its Subsidiaries is a
party to any oral or written agreement or plan, including any employment
agreement, severance agreement, stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan (collectively, the
"Compensation Agreements"), pension plan (as defined in Section 3(2) of ERISA)
or welfare plan (as defined in Section 3(1) of ERISA) any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement. Except as set
forth in Section 4.11 of the Company Letter, no holder of any option to purchase
Shares, or Shares granted in connection with the performance of services for the
Company or its Subsidiaries, is or will be entitled to receive cash from the
Company or any Subsidiary in lieu of or in exchange for such option or shares as
a result of the transactions contemplated by this Agreement. Section 4.11 of
the Company Letter sets forth (i) for each officer, director or employee who is
a party to, or will receive benefits under, any Compensation Agreement as a
result of the transactions contemplated herein, the total amount that each such
person may receive, or is eligible to receive, assuming that the transactions
contemplated by this Agreement are consummated on the date hereof, and (ii) the
total amount of indebtedness owed to the Company or its Subsidiaries from each
officer, director or employee of the Company and its Subsidiaries.
Section 4.12 ERISA. (a) Each Company Plan is listed in Section
4.12(a) of the Company Letter. With respect to each Company Plan, the Company
has made available to Parent a true and correct copy of (i) the three most
recent annual reports (Form 5500) filed with the IRS, if applicable, (ii) each
such Company Plan that has been reduced to writing and all amendments thereto,
(iii) each trust agreement, insurance contract or administration agreement
relating to each such Company Plan, (iv) a written summary of each unwritten
Company Plan, (v) the most recent summary plan description or other written
explanation of each Company Plan provided to participants, (vi) the most recent
determination letter and request therefor, if any, issued by the IRS with
respect to any Company Plan intended to be qualified under Section 401(a) of the
Code, (vii) any request for a determination currently pending before the IRS and
(viii) all correspondence with the IRS, the Department of Labor, or the SEC
relating to any outstanding controversy. Except as would not have a Material
Adverse Effect on the Company, each
-20-
<PAGE>
Company Plan complies in all respects with ERISA, the Code and all other
applicable statutes and governmental rules and regulations. Neither the Company
nor any ERISA Affiliate currently maintains, contributes to or has any liability
under, or at any time during the past six years has maintained or contributed
to, any pension plan which is subject to Section 412 of the Code or Section 302
of ERISA or Title IV of ERISA. Neither the Company nor any ERISA Affiliate
currently maintains, contributes to or has any liability under, or at any time
during the past six years has maintained or contributed to, any Company
Multiemployer Plan.
(b) Except as listed in Section 4.12(b) of the Company Letter, with
respect to the Company Plans, to the Knowledge of the Company, no event has
occurred and there exists no condition or set of circumstances in connection
with which the Company or any Subsidiary or ERISA Affiliate or Company Plan
fiduciary could be subject to any liability under the terms of such Company
Plans, ERISA, the Code or any other applicable law which would have a Material
Adverse Effect on the Company. All Company Plans that are intended to be
qualified under Section 401(a) of the Code have been determined by the IRS to be
so qualified, or a timely application for such determination is now pending and
the Company is not aware of any reason why any such Company Plan is not so
qualified in operation. Except as disclosed in Section 4.12(b) of the Company
Letter, neither the Company nor any of its Subsidiaries or ERISA Affiliates has
any liability or obligation under any welfare plan to provide benefits after
termination of employment to any employee or dependent other than as required by
Section 4980B of the Code.
(c) As used herein, (i) "Company Plan" means a "pension plan" (as
defined in Section 3(2) of ERISA (other than a Company Multiemployer Plan)), a
"welfare plan" (as defined in Section 3(1) of ERISA), or any other written or
oral bonus, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, restricted stock, stock
appreciation right, holiday pay, vacation, severance, medical, dental, vision,
disability, death benefit, sick leave, fringe benefit, personnel policy,
insurance or other plan, arrangement or understanding, in each case established
or maintained by the Company or any of its Subsidiaries or any ERISA Affiliate
or as to which the Company or any of its Subsidiaries or any ERISA Affiliate has
contributed or otherwise may have any liability, (ii) "Company Multiemployer
Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which the Company or any of its Subsidiaries or any ERISA Affiliate is or has
been obligated to contribute or otherwise may have any liability, and (iii)
"ERISA Affiliate" means any trade or business (whether or not incorporated)
which would be considered a single employer with the Company or any of its
Subsidiaries pursuant to Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated under those sections or pursuant to Section 4001(b) of
ERISA and the regulations promulgated thereunder.
(d) Section 4.12(d) of the Company Letter contains a list of all (i)
severance and employment agreements with employees of the Company and each of
its Subsidiaries, (ii) severance programs and policies of the Company and each
of its Subsidiaries with or relating to its employees and (iii) plans, programs,
agreements and other arrangements of the Company and each of its Subsidiaries
with or relating to its employees containing change of control or similar
provisions.
-21-
<PAGE>
(e) Except as set forth in Section 4.12(e) of the Company Letter,
neither the Company nor any of its Subsidiaries is a party to any agreement,
contract or arrangement that could result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
(f) Except as set forth in Section 4.12(f) of the Company Letter, no
Company Plan is subject to laws outside of the United States.
Section 4.13 Compliance with Worker Safety Laws. The properties,
assets and operations of the Company and its Subsidiaries are in compliance with
all applicable federal, state, local and foreign laws, rules and regulations,
orders, decrees, judgments, permits and licenses relating to public and worker
health and safety (collectively, "Worker Safety Laws"), except for any
violations that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. With respect to such properties, assets and
operations, including any previously owned, leased or operated properties,
assets or operations, there are no past, present or reasonably anticipated
future events, conditions, circumstances, activities, practices, incidents,
actions or plans of the Company or any of its Subsidiaries that may interfere
with or prevent compliance or continued compliance with applicable Worker Safety
Laws, other than any such interference or prevention as would not, individually
or in the aggregate with any such other interference or prevention, have a
Material Adverse Effect on the Company.
Section 4.14 Liabilities; Products. (a) Except as fully reflected
or reserved against in the financial statements included in the Company SEC
Documents filed prior to the date hereof, or disclosed in the footnotes thereto,
since September 30, 1998 the Company and its Subsidiaries have incurred no
liabilities (including Tax liabilities) or obligations of any nature, absolute
or contingent, other than liabilities or obligations that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or that would be required by Generally Accepted Accounting Principles ("GAAP")
to be reflected or reserved in the financial statements of the Company or in the
footnotes thereto, prepared in accordance with GAAP consistent with past
practices, other than in the ordinary course of business and consistent with
past practices. As of the date hereof, the indebtedness for borrowed money of
the Company and its Subsidiaries (other than advances from the Company to such
Subsidiaries) does not exceed $1 million.
(b) Except as set forth in Section 4.14(b) of the Company Letter,
since September 30, 1996, neither the Company nor any Subsidiary has received a
claim for or based upon breach of product warranty (other than warranty service
and repair claims in the ordinary course of business not material in amount or
significance), strict liability in tort, negligent manufacture of product,
negligent provision of services or any other allegation of liability, including
or resulting in product recalls, arising from the materials, design, testing,
manufacture, packaging, labeling (including instructions for use), or sale of
its products or from the provision of services; and, to the Knowledge of the
Company, there is no basis for any such claim which, if asserted, would likely
have a Material Adverse Effect on the Company. No product sold or delivered or
service rendered by the Company or any Subsidiary is subject to any guaranty,
warranty or other indemnity beyond the applicable standard terms and conditions
of sale for products delivered and
-22-
<PAGE>
services rendered by the Company or any Subsidiary, copies of which have
previously been delivered to Parent.
(c) The Company has provided to Parent a schedule of products in
development and planned introductions, a copy of which is attached to the
Company Letter.
Section 4.15 Labor Matters. Except as set forth in Section 4.15 of
the Company Letter, neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement or labor contract. Neither the Company
nor any of its Subsidiaries has engaged in any unfair labor practice with
respect to any persons employed by or otherwise performing services primarily
for the Company or any of its Subsidiaries (the "Company Business Personnel"),
and there is no unfair labor practice complaint or grievance against the Company
or any of its Subsidiaries by any person pursuant to the National Labor
Relations Act or any comparable state or foreign law pending or threatened in
writing with respect to the Company Business Personnel, except where such unfair
labor practice, complaint or grievance would not have a Material Adverse Effect
on the Company. There is no labor strike, dispute, slowdown or stoppage pending
or, to the Knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries which may interfere with the respective business
activities of the Company or any of its Subsidiaries, except where such dispute,
strike or work stoppage would not have a Material Adverse Effect on the Company.
Section 4.16 Intellectual Property; Year 2000. (a) As used herein,
"Company Intellectual Property" means all trademarks, trademark registrations,
trademark rights and renewals thereof, trade names, trade name rights, patents,
patent rights, patent applications, industrial models, inventions, invention
disclosures, designs, utility models, inventor rights, software, computer
programs, computer systems, modules and related data and materials, copyrights,
copyright registrations and renewals thereof, servicemarks, servicemark
registrations and renewals thereof, servicemark rights, trade secrets,
applications for trademark and servicemark registrations, know-how, confidential
information and other proprietary rights, and any data and information of any
nature or form used or held for use in connection with the businesses of the
Company and/or the Subsidiaries as currently conducted or as currently
contemplated by the Company, together with all applications currently pending or
in process for any of the foregoing; and "Year 2000 Compliant" means the ability
of computers, computer software and computerized devices to process (including
calculate, compare, sequence, display or store), transmit or receive date data
from, into and between the twentieth and twenty-first centuries, and the years
1999 and 2000, and leap year calculations without error or malfunction.
(b) Except as disclosed in the Company SEC Documents filed with the
SEC prior to the date hereof, the Company and the Subsidiaries own, or possess
adequate licenses or other valid rights to use (including the right to
sublicense to customers, suppliers or others as needed), all of the material
Company Intellectual Property that is necessary for the conduct or contemplated
conduct of the Company's or Subsidiaries' businesses. Section 4.16 of the
Company Letter lists each material license or other agreement pursuant to which
the Company or any Subsidiary has the right to use Company Intellectual Property
utilized in connection with any product of, or service provided by, the Company
and the Subsidiaries, the cancellation or
-23-
<PAGE>
expiration of which would have a Material Adverse Effect on the Company (the
"Company Licenses"). There are no pending, or, to the Knowledge of the Company,
threatened interferences, re-examinations, oppositions or cancellation
proceedings involving any patents or patent rights, trademarks or trademark
rights, or applications therefor, of the Company or any Subsidiary, except such
as would not, individually or in the aggregate, have a Material Adverse Effect
on the Company. There is no breach or violation by the Company or by any
Subsidiary under, and, to the Knowledge of the Company, there is no breach or
violation by any other party to, any Company License that is reasonably likely
to give rise to any termination or any loss of rights thereunder. To the
Knowledge of the Company, there has been no unauthorized disclosure or use of
confidential information, trade secret rights, processes and formulas, research
and development results and other know-how of the Company or any Subsidiary,
except where such disclosure or use of such information would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. To the
Knowledge of the Company, the conduct of the business of the Company and the
Subsidiaries as currently conducted or contemplated does not and will not
infringe upon or conflict with, in any way, any license, trademark, trademark
right, trade name, trade name right, patent issued as of the date hereof, patent
right, industrial model, invention, service mark, service mark right, copyright
or trade secret of any third party that, individually or in the aggregate, would
have a Material Adverse Effect on the Company. Except as disclosed in the
Company SEC Documents filed with the SEC prior to the date hereof, to the
Knowledge of the Company, there are no infringements of, or conflicts with, any
Company Intellectual Property which, individually or in the aggregate, would
have a Material Adverse Effect on the Company. Except as set forth in Section
4.16 of the Company Letter, neither the Company nor any Subsidiary has licensed
or otherwise permitted the use by any third party of any proprietary information
or Company Intellectual Property on terms or in a manner which, individually or
in the aggregate, would have a Material Adverse Effect on the Company.
(c) Except as set forth in Section 4.16 of the Company Letter, the
current and previously sold products of the Company and its Subsidiaries and
software, operations, systems and processes (including, to the Knowledge of the
Company, software, operations, systems and processes obtained from third
parties) used in the conduct of the business of the Company and its
Subsidiaries, are Year 2000 Compliant except where the failure to be Year 2000
Compliant would not, individually or in the aggregate, have a Material Adverse
Effect on the Company and the Company has delivered to Parent true and correct
copies of any consultant or other third-party reports prepared on behalf of the
Company with respect to such compliance.
Section 4.17 Title to Assets. (a) As of the date hereof, the Company
and the Subsidiaries own, and as of the Effective Time the Company and the
Subsidiaries will own, good and marketable title to all of their assets material
to their business (excluding, for purposes of this sentence, assets held under
leases or assets covered under Section 4.16 hereof), free and clear of any and
all mortgages, liens, encumbrances, charges, claims, restrictions, pledges,
security interests or impositions, except as set forth in the Company SEC
Documents filed with the SEC prior to the date hereof, or Section 4.17 of the
Company Letter.
(b) Neither the Company nor any of its Subsidiaries owns any Real
Estate. The leases to all Real Estate occupied by the Company and the
Subsidiaries which are material to the
-24-
<PAGE>
operation of the businesses of the Company are in full force and effect and no
event has occurred which with the passage of time, the giving of notice, or
both, would constitute a default or event of default by the Company or any
Subsidiary or, to the Knowledge of the Company, any other person who is a party
signatory thereto, other than such defaults or events of default which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
Section 4.18 State Takeover Statutes; Rights Agreement. (a) The Board
of Directors of the Company has, to the extent such statutes are applicable,
taken all action so to render the provisions of Section 203 of the DGCL
inapplicable to the Offer, the Merger and the Stockholder Agreements and the
consummation of the transactions contemplated by this Agreement and the
Stockholder Agreements. As of the date hereof, no other state takeover statute
or similar charter or bylaw provisions are applicable to the Offer, the Merger,
this Agreement, the Stockholder Agreements and the transactions contemplated
hereby and thereby.
(b) The amendment to the Rights Agreement in the form of Exhibit C
has been duly approved by the Company's Board of Directors and duly executed and
delivered by the Company.
Section 4.19 Required Vote of Company Stockholders. The affirmative
vote of the holders of at least a majority of Shares entitled to vote is
required to adopt this Agreement. No other vote of the security holders of the
Company is required by law, the Company Charter or the Amended and Restated
Bylaws of the Company or otherwise in order for the Company to consummate the
Merger and the transactions contemplated hereby.
Section 4.20 Accounts Receivable. All of the accounts and notes
receivable of the Company and its Subsidiaries set forth on the books and
records of the Company (net of the applicable reserves reflected on the books
and records of the Company and in the financial statements included in the
Company SEC Documents) (i) represent sales actually made or transactions
actually effected in the ordinary course of business for goods or services
delivered or rendered to unaffiliated customers in bona fide arm's length
transactions, (ii) constitute valid claims, and (iii) are good and collectible
at the aggregate recorded amounts thereof (net of such reserves) without right
of recourse, defense, deduction, return of goods, counterclaim, or offset and
have been or will be collected in the ordinary course of business and consistent
with past experience, except where the failure to collect such receivables in
such manner would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
Section 4.21 Inventories. Except as set forth in Section 4.21 of the
Company Letter, all inventories of the Company and its Subsidiaries (net of the
obsolescence reserves therefor shown in the financial statements included in the
Company SEC Documents and determined in the ordinary course of business
consistent with past practice) consist of items of merchantable quality and
quantity usable or salable in the ordinary course of business, are salable at
prevailing market prices that are not less than the book value amounts thereof
or the price customarily charged by the Company or the applicable Subsidiary
therefor, conform to the specifications established therefor, and have been
manufactured in accordance with applicable regulatory requirements, except to
the extent that the failure of such inventories so to consist, be
-25-
<PAGE>
saleable, conform, or be manufactured would not have a Material Adverse Effect
on the Company.
Section 4.22 Environmental Matters. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i) "Hazardous
Substances" means (A) petroleum and petroleum products, by-products or breakdown
products, radioactive materials, asbestos-containing materials and
polychlorinated biphenyls, and (B) any other chemicals, materials or substances
regulated as toxic or hazardous or as a pollutant, contaminant or waste or for
which liability or standards of care are imposed under any applicable
Environmental Law; (ii) "Environmental Law" means any law, past, present or
future and as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, or common law, relating to pollution or protection of the environment,
health or safety or natural resources, including those relating to the use,
handling, transportation, treatment, storage, disposal, release or discharge of
Hazardous Substances; and (iii) "Environmental Permit" means any permit,
approval, identification number, license or other authorization required under
any applicable Environmental Law.
(b) Except as disclosed in Section 4.22 of the Company Letter, the
Company and the Subsidiaries are and have been in compliance with all applicable
Environmental Laws, have obtained all Environmental Permits and are in
compliance with their requirements, and have resolved all past non-compliance
with Environmental Laws and Environmental Permits without any pending, on-going
or future obligation, cost or liability, except in each case for the notices set
forth in Section 4.22 of the Company Letter or where such non-compliance would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
(c) Except as disclosed in Section 4.22 of the Company Letter,
neither the Company nor any of the Subsidiaries has (i) placed, held, located,
released, transported or disposed of any Hazardous Substances on, under, from or
at any of the Company's or any of the Subsidiaries' properties or any other
properties, nor caused any facts or conditions that could give rise to an
environmental claim, other than in a manner that would not, in all such cases
taken individually or in the aggregate, result in a Material Adverse Effect on
the Company, (ii) any Knowledge or reason to know of the presence of any
Hazardous Substances on, under, emanating from, or at any of the Company's or
any of the Subsidiaries' properties or any other property but arising from the
Company's or any of the Subsidiaries' current or former properties or
operations, other than in a manner that would not result in a Material Adverse
Effect on the Company, or (iii) any Knowledge, nor has it received any written
notice since October 1, 1996 (A) of any violation of or liability under any
Environmental Laws, (B) of the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation or liability, (C) requiring the
investigation of, response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of the Subsidiaries' current or former
properties or operations or any other properties, (D) alleging noncompliance by
the Company or any of the Subsidiaries with the terms of any Environmental
-26-
<PAGE>
Permit in any manner reasonably likely to require material expenditures or to
result in material liability or (E) demanding payment for response to or
remediation of Hazardous Substances at or arising from any of the Company's or
any of the Subsidiaries' current or former properties or operations or any other
properties, except in each case for the notices set forth in Section 4.22 of the
Company Letter or where such violation, liability, action, noncompliance or
payment would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(d) Except as disclosed in Section 4.22 of the Company Letter, no
Environmental Law imposes any obligation upon the Company or any of the
Subsidiaries arising out of or as a condition to any transaction contemplated by
this Agreement, including any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with any
Governmental Entity, the placement of any notice, acknowledgment or covenant in
any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree.
(e) The Company and the Subsidiaries have provided Parent with copies
of any Environmental assessment or audit report or other similar studies or
analyses currently in the possession of or available to the Company or any of
the Subsidiaries relating to any real property currently or formerly owned,
leased or occupied by the Company or any of the Subsidiaries.
Section 4.23 Suppliers, and Employees. Except as set forth in Section
4.23 of the Company Letter, neither the Company nor any Subsidiary has received
any notice or has any reason to believe that (a) any significant supplier will
not sell raw materials, supplies, merchandise and other goods to the Company or
any Subsidiary at any time after the Effective Time on terms and conditions
substantially similar to those used in its current sales to the Company and the
Subsidiaries, subject only to general and customary price increases, unless
comparable raw materials, supplies, merchandise or other goods are readily
available from other sources on comparable terms and conditions, or (b) any
employee or group of employees significant to Company, any of its Subsidiaries
or any of their operations intends to terminate or has terminated his or their
employment with the Company or any Subsidiary.
Section 4.24 Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by the Company or any of its Subsidiaries
are with reputable insurance carriers, provide full and adequate coverage for
all normal risks incident to the business of the Company and the Subsidiaries
and their respective properties and assets, and are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards, except for any such failures
to maintain insurance policies that, individually or in the aggregate, would not
have a Material Adverse Effect on the Company. The Company and each Subsidiary
have made any and all payments required to maintain such policies in full force
and effect. Except as set forth in Section 4.24 of the Company Letter, neither
the Company nor any Subsidiary has received notice of default under any such
policy, and has not received written notice or, to the Knowledge of the Company,
oral notice of any pending or threatened termination or cancellation, coverage
limitation or reduction or material premium increase with respect to such
policy.
-27-
<PAGE>
Section 4.25 Transactions with Affiliates. (a) For purposes of this
Agreement, "Affiliated Person" means (i) any holder of 2% or more of the Company
Common Stock, (ii) any director, officer or senior executive of the Company or
any Subsidiary, (iii) any person, firm or corporation that directly or
indirectly controls, is controlled by, or is under common control with, any of
the Company or any Subsidiary or (iv) any member of the immediate family or any
of such persons, in each case other than Holdings or Parent or its Subsidiaries.
(b) Except as set forth in Section 4.25 of the Company Letter or in
the Company SEC Documents filed with the SEC prior to the date hereof, to the
Knowledge of the Company, since September 30, 1998, the Company and the
Subsidiaries have not, in the ordinary course of business or otherwise, (i)
purchased, leased or otherwise acquired any material property or assets or
obtained any material services from, (ii) sold, leased or otherwise disposed of
any material property or assets or provided any material services to (except
with respect to remuneration for services rendered in the ordinary course of
business as director, officer or employee of the Company or any Subsidiary),
(iii) entered into or modified in any manner any contract with, or (iv) borrowed
any money from, or made or forgiven any loan or other advance (other than
expenses or similar advances made in the ordinary course of business) to, any
Affiliated Person other than Parent.
(c) Except as set forth in Section 4.25 of the Company Letter or in
the Company SEC Documents filed with the SEC prior to the date hereof, to the
Knowledge of the Company, (i) the contracts of the Company and the Subsidiaries
do not include any material obligation or commitment between the Company or any
Subsidiary and any Affiliated Person, (ii) the assets of the Company or any
Subsidiary do not include any receivable or other obligation or commitment from
an Affiliated Person to the Company or any Subsidiary and (iii) the liabilities
of the Company and the Subsidiaries do not include any payable or other
obligation or commitment from the Company or any Subsidiary to any Affiliated
Person.
(d) To the Knowledge of the Company and except as set forth in
Section 4.25 of the Company Letter or in the Company SEC Documents filed with
the SEC prior to the date hereof, no Affiliated Person of any of the Company or
any Subsidiary is a party to any contract with any supplier of the Company or
any Subsidiary that affects in any material manner the business, financial
condition or results of operation of the Company or any Subsidiary.
Section 4.26 Brokers. No broker, investment banker or other person,
other than U.S. Bancorp Piper Jaffray Inc. the fees and expenses of which will
be paid by the Company (as reflected in an agreement between U.S. Bancorp Piper
Jaffray Inc. and the Company, a copy of which has been furnished to Parent), is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
-28-
<PAGE>
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 5.1 Conduct of Business by the Company Pending the Merger.
Except as expressly permitted by clauses (i) through (xvii) of this Section 5.1,
during the period from the date of this Agreement through the Effective Time,
the Company shall, and shall cause each of its Subsidiaries to, in all material
respects carry on its business in the ordinary course of its business as
currently conducted and, to the extent consistent therewith, use reasonable best
efforts to preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement or as set forth in the
Company Letter (with specific reference to the applicable subsection below), the
Company shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of Parent:
(i) (A) other than dividends paid by wholly-owned Subsidiaries,
declare, set aside or pay any dividends on, or make any other actual,
constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to its stockholders in their capacity
as such, (B) other than in the case of any Subsidiary, split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options (including options under the Company Stock Option Plans) to acquire
any such shares, voting securities, equity equivalent or convertible
securities, other than (A) the issuance of shares of Company Common Stock
upon the exercise of Company Stock Options outstanding on the date of this
Agreement in accordance with their current terms, (B) the issuance of
shares of Company Common Stock upon exercise of the Warrants, and (C) the
grant of purchase rights or issuance of Shares pursuant to the Company
Stock Purchase Plan in accordance with Section 6.5 of this Agreement;
(iii) amend its charter or by-laws;
(iv) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by
any other manner, any business or any corporation, limited liability
company, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets;
-29-
<PAGE>
(v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets with a fair market value in excess
of $10,000, other than sales of inventory that are in the ordinary course
of business consistent with past practice;
(vi) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other person, other than (A) in the ordinary
course of business consistent with past practices and, in the case of
indebtedness and guarantees, in an amount not to exceed $100,000 and (B)
indebtedness, loans, advances, capital contributions and investments
between the Company and any of its wholly-owned Subsidiaries or between any
of such wholly-owned Subsidiaries, in each case in the ordinary course of
business consistent with past practices;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or ownership
of the Company or any Subsidiary;
(viii) except as provided in Section 5.1(viii) of the Company Letter
and Section 6.5, enter into or adopt any, or amend any existing, severance
plan, agreement or arrangement or enter into or amend any Company Plan or
employment or consulting agreement;
(ix) except as provided in Section 5.1(ix) of the Company Letter and
Section 6.5, increase the compensation payable or to become payable to its
directors, officers or employees (except for increases in the ordinary
course of business consistent with past practice in salaries or wages of
employees of the Company or any of its Subsidiaries who are not officers of
the Company or any of its Subsidiaries) or grant any severance or
termination pay to, or enter into any employment or severance agreement
with, any director or officer of the Company or any of its Subsidiaries, or
establish, adopt, enter into, or, except as may be required to comply with
applicable law, amend in any material respect or take action to enhance in
any material respect or accelerate any rights or benefits under, any labor,
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee;
(x) knowingly violate or knowingly fail to perform any obligation
or duty imposed upon it or any Subsidiary by any applicable material
federal, state or local law, rule, regulation, guideline or ordinance;
(xi) make any change to accounting policies or procedures (other than
actions required to be taken by generally accepted accounting principles);
(xii) prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election, or adopt
any method that is inconsistent with positions taken, elections made or
methods used in preparing or filing similar Tax Returns in prior periods;
-30-
<PAGE>
(xiii) settle or compromise any Tax liability in excess of $100,000;
(xiv) settle or compromise any claims or litigation in excess of
$100,000 or commence any litigation or proceedings;
(xv) enter into or amend any agreement or contract (i) having a term
in excess of 12 months and which is not terminable by the Company or a
Subsidiary without penalty or premium by notice of 60 days or less or (ii)
which involves or is expected to involve payments of $100,000 or more
during the term thereof (provided that in the case of agreements or
contracts with any customer, the margins anticipated from any such
agreement or contract shall be consistent in all material respects with
historical margins); enter into or amend any other agreement or contract
material to the Company and its Subsidiaries, taken as a whole; or purchase
any real property, or make or agree to make any new capital expenditure or
expenditures (other than the purchase of real property) which in the
aggregate are in excess of $100,000;
(xvi) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any such
claims, liabilities or obligations in the ordinary course of business
consistent with past practice or in accordance with their terms; or
(xvii) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 5.2 No Solicitation. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other advisor or
representative of, the Company or any of its Subsidiaries to, (i) solicit,
initiate or encourage the submission of, any Takeover Proposal, (ii) enter into
any agreement with respect to or approve or recommend any Takeover Proposal or
(iii) participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to the Company or any Subsidiary in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal; provided, however, that nothing contained in this
Section 5.2(a) shall prohibit the Company or its directors from (i) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to a tender or
exchange offer or (ii) referring a third party to this Section 5.2(a) or making
a copy of this Section 5.2(a) available to any third party; and provided,
further, that prior to the acceptance for payment of Shares pursuant to the
Offer, if the Board of Directors of the Company reasonably determines that a
Takeover Proposal constitutes a Superior Proposal, then, to the extent required
by the fiduciary obligations of the Board of Directors of the Company, as
determined in good faith by a majority thereof after consultation with
independent counsel (who may be the Company's regularly engaged independent
counsel), the Company may, in response to an unsolicited request therefor, and
subject to compliance with Section 5.2(b), furnish information with respect to
the Company and its Subsidiaries to any person pursuant to a customary
confidentiality statement (as determined by
-31-
<PAGE>
the Company's independent counsel) and participate in discussions or
negotiations with such person. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding sentence by
any officer or director of the Company or any of its Subsidiaries or any
financial advisor, attorney or other advisor or representative of the Company or
any of its Subsidiaries, whether or not such person is purporting to act on
behalf of the Company or any of its Subsidiaries or otherwise, shall be deemed
to be a breach of this Section 5.2(a) by the Company.
(b) The Company shall advise Parent orally and in writing of (i) any
Takeover Proposal or any inquiry with respect to or which could lead to any
Takeover Proposal received by any officer or director of the Company or, to the
Knowledge of the Company, any financial advisor, attorney or other advisor or
representative of the Company, (ii) the material terms of such Takeover Proposal
(including a copy of any written proposal), and (iii) the identity of the person
making any such Takeover Proposal or inquiry no later than 48 hours following
receipt of such Takeover Proposal or inquiry. If the Company intends to furnish
any Person with any information with respect to any Takeover Proposal in
accordance with Section 5.2(a), the Company shall advise Parent orally and in
writing of such intention not less than two business days in advance of
providing such information. The Company will keep Parent fully informed of the
status and material terms of any such Takeover Proposal or inquiry.
Section 5.3 Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of its Subsidiaries is a party
(other than any involving Parent). During such period, the Company agrees to
enforce, to the fullest extent permitted under applicable law, the provisions of
any such agreements, including, but not limited to, obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court of the United States or any state thereof
having jurisdiction.
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
Section 6.1 Stockholder Meeting. (a) The Company will duly call, give
notice of, convene and hold a meeting of stockholders (the "Stockholder
Meeting") for the purpose of considering the approval of this Agreement and at
such meeting call for a vote and cause proxies to be voted in respect of the
approval and adoption of this Agreement. The Stockholder Meeting shall be held
as soon as practicable following the purchase of Shares pursuant to the Offer,
and the Company will, through its Board of Directors, recommend to its
stockholders the approval of this Agreement, and shall not withdraw or modify
such recommendation. The record date for the Stockholder Meeting shall be a date
subsequent to the date Parent or Sub becomes a record holder of Company Common
Stock purchased pursuant to the Offer.
-32-
<PAGE>
(b) The Company shall, at Parent's request, as soon as practicable
following the expiration of the Offer, prepare and file a preliminary Proxy
Statement with the SEC and shall use its reasonable best efforts to respond to
any comments of the SEC or its staff and to cause the Proxy Statement to be
mailed to the Company's stockholders as promptly as practicable after responding
to all such comments to the satisfaction of the staff. The Company shall notify
Parent promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the Stockholder Meeting there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company shall promptly prepare and mail to its
stockholders such an amendment or supplement. The Company shall not mail any
Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects. Parent shall cooperate with the Company in the preparation
of the Proxy Statement or any amendment or supplement thereto, including the
supply of any information required to be included in the Proxy Statement
regarding Parent or Sub.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer
and all other Shares owned by Parent or any subsidiary of Parent to be voted in
favor of approval of the Merger.
Section 6.2 Access to Information. Subject to currently existing
contractual and legal restrictions applicable to the Company or any of its
Subsidiaries, the Company shall, and shall cause each of its Subsidiaries to,
afford to the accountants, counsel, financial advisors and other representatives
of Parent reasonable access to, and permit them to make such inspections as they
may reasonably require of, during the period from the date of this Agreement
through the Effective Time, all of their respective properties, books,
contracts, commitments and records (including accounting records and Tax Returns
and the work papers of independent accountants, if available and subject to the
consent of such independent accountants) and, during such period, the Company
shall, and shall cause each of its Subsidiaries to (i) furnish promptly to
Parent a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws, (ii) furnish promptly to Parent all other information
concerning its business, properties and personnel as Parent may reasonably
request and (iii) promptly make available to Parent all personnel of the Company
and its Subsidiaries knowledgeable about matters relevant to such inspections.
No investigation pursuant to this Section 6.2 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto. All information obtained by Parent pursuant
to this Section 6.2 shall be kept confidential in accordance with the
Confidentiality Agreement dated June 2, 1999 between Parent and the Company, as
amended (the "Confidentiality Agreement").
Section 6.3 Directors. Promptly after such time as Sub purchases
Shares pursuant to the Offer, Sub shall be entitled, to the fullest extent
permitted by law, to designate at its option up to that number of directors,
rounded to the nearest whole number, of the Company's Board of Directors,
subject to compliance with Section 14(f) of the Exchange Act, as will make the
-33-
<PAGE>
percentage of the Company's directors designated by Sub equal to the percentage
of the aggregate voting power of the shares of Common Stock held by Parent or
any of its Subsidiaries; provided, however, that in the event that Sub's
designees are elected to the Board of Directors of the Company, until the
Effective Time such Board of Directors shall have at least three directors who
are directors on the date of this Agreement and who are not officers of the
Company (the "Independent Directors"); and provided further that, in such event,
if the number of Independent Directors shall be reduced below three for any
reason whatsoever, the remaining Independent Directors or Director shall
designate a person or persons to fill such vacancy or vacancies, each of whom
shall be deemed to be an Independent Director for purposes of this Agreement or,
if no Independent Directors then remain, the other directors shall designate
three persons to fill such vacancies who shall not be officers or affiliates of
the Company or any of its subsidiaries, or officers or affiliates of Parent or
any of its subsidiaries, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. Following the election or appointment
of Sub's designees pursuant to this Section 6.3 and prior to the Effective Time,
any amendment, or waiver of any term or condition, of this Agreement or the
Company Charter or the Amended and Restated 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 Sub or
waiver or assertion of any of the Company's rights hereunder, and any other
consent or action by the Board of Directors of the Company with respect to this
Agreement, will require the concurrence of a majority of the Independent
Directors and no other action by the Company, including any action by any other
director of the Company, shall be required for purposes of this Agreement. To
the fullest extent permitted by applicable law, the Company shall take all
action requested by Parent that is reasonably necessary to effect any such
election, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Parent, to the fullest
extent permitted by law, either increase the size of the Company's Board of
Directors and/or obtain the resignation of such number of its current directors
as is necessary to enable Sub's designees to be elected or appointed to the
Company's Board of Directors as provided above.
Section 6.4 Fees and Expenses. (a) Except as provided in this Section
6.4 and Section 6.8, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including the fees and disbursements of counsel, financial
advisors and accountants, shall be paid by the party incurring such costs and
expenses.
(b) The Company shall pay, or cause to be paid, in same day funds to
Parent the following amounts under the circumstances and at the times set forth
as follows:
(i) if Parent or Sub terminates this Agreement under Section 8.1(d),
the Company shall pay the Expenses of Parent and the Termination Fee upon
demand; or
-34-
<PAGE>
(ii) if the Company terminates this Agreement under Section 8.1(e),
the Company shall pay the Termination Fee within one business day following
such termination and the Expenses of Parent upon demand.
Section 6.5 Company Stock Options. (a) Prior to the consummation of
the Offer, the Board of Directors of the Company (or, if appropriate, any
committee thereof) shall adopt appropriate resolutions and take all other
actions necessary or appropriate to cause each Company Stock Option that is
outstanding as of the consummation of the Offer to vest in full and become
exercisable immediately prior to the consummation of the Offer with respect to
all of the shares of Company Common Stock at the time subject to such Company
Stock Option. Each Company Stock Option that is outstanding upon the
consummation of the Offer shall be canceled as of the consummation of the Offer,
in consideration for which the holder thereof (an "Option Holder") shall be
entitled to receive from the Company an amount equal to (A) the product of (1)
the number of shares of Company Common Stock subject to such Option and (2) the
excess, if any, of the Offer Price over the exercise price per share for the
purchase of the Company Common Stock subject to such Option, minus (B) all
applicable federal, state and local Taxes required to be withheld in respect of
such payment. The amounts payable pursuant to the second sentence of this
Section 6.5 shall be paid as soon as reasonably practicable following the
acceptance for payment by Sub pursuant to the Offer. The surrender of an Option
in exchange for the consideration contemplated by the second sentence of this
Section 6.5 shall be deemed a release of any and all rights the Option Holder
had or may have had in respect thereof.
(b) The Company shall take all actions necessary to ensure that (i)
the Purchase Period (as defined in the Company Stock Purchase Plan) applicable
to the options outstanding under the Company Stock Purchase Plan (each, a
"Purchase Plan Option") is shortened so as to have a Purchase Date (as defined
in the Company Stock Purchase Plan) that occurs before the acceptance for
payment by Sub of Shares pursuant to the Offer; and (ii) no current holder of a
Purchase Plan Option is permitted to increase his or her rate of payroll
deduction under the Company Stock Purchase Plan from and after the date hereof.
(c) The Company shall take all actions necessary to provide that,
effective as of acceptance for payment by Sub of Shares pursuant to the Offer,
(i) the Company Stock Option Plan and any similar plan or agreement of the
Company shall be terminated, (ii) any rights under any other plan, program,
agreement or arrangement relating to the issuance or grant of any other interest
in respect of the capital stock of the Company or any of its Subsidiaries shall
be terminated, and (iii) no Option Holder will have any right to receive any
shares of capital stock of the Company or, if applicable, the Surviving
Corporation, upon exercise of any Company Stock Option.
(d) The Company represents and warrants that it has the power and
authority under the terms of the Company Stock Purchase Plan and the Company
Stock Option Plan to comply with this Section 6.5 without the consent of any
Option Holder.
Section 6.6 Warrants. Prior to the acceptance for payment of any
Shares by Sub pursuant to the Offer, the Company will obtain written
confirmation, in form and substance
-35-
<PAGE>
reasonably satisfactory to Parent, from the holders of each of the Pilla Warrant
and the Chiabera Warrant that after the Effective Time of the Merger such
Warrant will represent the right to receive an amount equal to (A) the product
of (1) the number of shares of Company Common Stock subject to such Warrant and
(2) the excess, if any, of the Merger Consideration over the Exercise Price (as
defined in such Warrant) per share for the purchase of the Company Common Stock
subject to such Warrant, minus (B) all applicable federal, state and local Taxes
required to be withheld in respect of such payment.
Section 6.7 Reasonable Best Efforts. (a) Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to use
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other transactions contemplated by this Agreement, including: (i) the
obtaining of all necessary actions or non-actions, waivers, consents and
approvals from all Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity
(including those in connection with the HSR Act, any other pre-merger filings
and State Takeover Approvals), (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by this Agreement. No party to this Agreement shall consent to any
voluntary delay of the consummation of the Offer or the Merger at the behest of
any Governmental Entity without the consent of the other parties to this
Agreement, which consent shall not be unreasonably withheld.
(b) Each party shall use all reasonable best efforts to not take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement, in connection with any filing or submission required or action to be
taken by either Parent or the Company to effect the Offer, the Merger and to
consummate the other transactions contemplated hereby, the Company shall not,
without Parent's prior written consent, commit to any divestiture transaction,
and neither Parent nor any of its Affiliates shall be required to divest or hold
separate or otherwise take or commit to take any action that limits its freedom
of action with respect to, or its ability to retain, the Company or any of the
businesses, product lines or assets of Parent or any of its Subsidiaries or that
otherwise would have a Material Adverse Effect on Parent.
Section 6.8 Public Announcements. Parent and the Company will not
issue any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to such
transactions without prior consultation with the
-36-
<PAGE>
other party, except as may be required by applicable law or by obligations
pursuant to any listing agreement with any national securities exchange.
Section 6.9 State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby or
the Stockholder Agreements, Parent and the Company and their respective Boards
of Directors shall use their reasonable best efforts to grant such approvals and
take such actions as are necessary so that the transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to minimize the effects of any such statute or regulation on
the transactions contemplated hereby.
Section 6.10 Indemnification; Directors and Officers Insurance. (a)
From and after the Effective Time, Parent shall cause the Surviving Corporation
to indemnify and hold harmless all past and present officers and directors of
the Company and of its Subsidiaries to the same extent and in the same manner
such persons are indemnified as of the date of this Agreement by the Company
pursuant to the DGCL, the Company Charter or the Company's Amended and Restated
Bylaws for acts or omissions occurring at or prior to the Effective Time.
(b) Parent shall cause the Surviving Corporation to provide, for an
aggregate period of not less than six years from the Effective Time, the
Company's current directors and officers an insurance and indemnification policy
that provides coverage for events occurring prior to the Effective Time (the
"D&O Insurance") that is substantially similar to the Company's existing policy
or, if substantially equivalent insurance coverage is unavailable, the best
available coverage; provided, however, that the Surviving Corporation shall not
be required to pay an annual premium for the D&O Insurance in excess of 150% of
the last annual premiums paid prior to the date hereof (which premiums the
Company has disclosed to Parent), but in such case shall purchase as much
coverage as possible for such amount.
Section 6.11 Notification of Certain Matters. Parent shall use its
reasonable best efforts to give prompt notice to the Company, and the Company
shall use its reasonable best efforts to give prompt notice to Parent, of: (i)
the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which it is aware and which would be reasonably likely to cause
(x) any representation or warranty contained in this Agreement and made by it to
be untrue or inaccurate in any material respect or (y) any covenant, condition
or agreement contained in this Agreement and made by it not to be complied with
or satisfied in all material respects, (ii) any failure of Parent or the
Company, as the case may be, to comply in a timely manner with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder or (iii) any change or event which would be reasonably likely to have
a Material Adverse Effect on the Company; provided, however, that the delivery
of any notice pursuant to this Section 6.11 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
-37-
<PAGE>
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER
----------------------------------
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement (including the Merger) shall
have been approved and adopted by the affirmative vote of the stockholders of
the Company (unless the vote of stockholders is not required under the DGCL) as
required by the DGCL and the Company Charter.
(b) HSR Act and Other Pre-Merger Filings. Any waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act or any other waiting periods under applicable foreign laws shall have
expired or been terminated.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer, except that this condition
shall not apply if Sub shall have failed to purchase Shares pursuant to the
Offer in breach of its obligations under this Agreement.
(d) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the Merger illegal.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in accordance
with its terms without Sub having accepted for payment any Shares
pursuant to the Offer or (y) Sub shall not have accepted for payment
any Shares pursuant to the Offer prior to October 31, 1999; provided,
however, that the right to terminate this Agreement pursuant to this
-38-
<PAGE>
Section 8.1(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the
failure of any such condition or if the failure of such condition
results from facts or circumstances that constitute a breach of any
representation or warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, Shares pursuant to the Offer and such order, decree or
ruling or other action shall have become final and nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant to the
Offer in the event of a breach by the Company of any representation,
warranty, covenant or other agreement contained in this Agreement which (i)
would give rise to the failure of a condition set forth in paragraph (e) or
(f) of Exhibit B and (ii) cannot be or has not been cured within 30 days
after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(d) of Exhibit B;
(e) by the Company if the Board of Directors of the Company
reasonably determines that a Takeover Proposal constitutes a Superior
Proposal and a majority of the members of the Board of Directors
determines, in its reasonable good faith judgment, after consultation with
independent counsel, that failing to terminate this Agreement would
constitute a breach of such Board's fiduciary duties under applicable law,
provided that the Company has complied with all provisions of Section 5.2,
including the notice provisions therein, and that it has complied with the
requirements of Section 6.4(b) relating to the payment (including the
timing of any payment) of the Expenses and the Termination Fee to the
extent required by Section 6.4(b); and provided further that the Company
may not terminate this Agreement pursuant to this Section 8.1(e) unless and
until 72 hours have elapsed following delivery to Parent of a written
notice of such determination by the Board of Directors of the Company;
(f) by the Company, if (i) any of the representations or warranties
of Parent or Sub set forth in this Agreement that are qualified as to
materiality shall not be true and correct in any respect or any such
representations or warranties that are not so qualified shall not be true
and correct in any material respect, or (ii) Parent or Sub shall have
failed to perform in any material respect any material obligation or to
comply in any material respect with any material agreement or covenant of
Parent or Sub to be performed or complied with by it under this Agreement
and such untruth, incorrectness or failure cannot be or has not been cured
within 30 days after the giving of written notice to Parent or Sub, as
applicable; or
(g) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.1.
-39-
<PAGE>
The right of any party hereto to terminate this Agreement pursuant to
this Section 8.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 8.2 Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent, Sub or their respective officers or
directors (except for the last sentence of Section 6.2 and the entirety of
Section 6.4, which shall survive the termination); provided, however, that
nothing contained in this Section 8.2 shall relieve any party hereto from any
liability for any breach of a representation or warranty contained in this
Agreement, the breach of any covenant contained in this Agreement or for fraud.
Section 8.3 Amendment. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 8.4 Waiver. At any time prior to the Effective Time, subject
to Section 6.3, the parties hereto may (i) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (iii) waive compliance with any of
the agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a 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.
ARTICLE IX
GENERAL PROVISIONS
------------------
Section 9.1 Non-Survival of Representations and Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
Section 9.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
-40-
<PAGE>
(a) if to Parent or Sub, to:
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, Tennessee 38116
Attention: President, Orthopedic Division
with copies to:
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, Tennessee 38116
Attention: General Counsel
Facsimile No.: 901-396-7824
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz
Facsimile No.: 312-853-7036
(b) if to the Company, to:
Exogen, Inc.
10 Constitution Ave.
Piscataway, New Jersey 08855
Attention: Patrick A. McBrayer
Facsimile No.: 732-981-0648
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway
New York, New York
Attention: Ellen B. Corenswet
Facsimile No.: 212-586-7878
Section 9.3 Interpretation; Certain Definitions. (a) When a
reference is made in this Agreement to a Section, such reference shall be to a
Section of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
-41-
<PAGE>
(b) For purposes of this Agreement, the following terms have the
meaning specified in this Section 9.3:
"Code" means the Internal Revenue Code of 1986, as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Expenses" means documented out-of-pocket fees and expenses incurred
or paid by or on behalf of Parent in connection with the Offer, the Merger or
the consummation of any of the transactions contemplated by this Agreement,
including all fees and expenses of law firms, commercial banks, investment
banking firms, accountants, experts and consultants to Parent.
"Knowledge of the Company" means the actual knowledge of the directors
and executive officers of the Company.
"Material Adverse Change" or "Material Adverse Effect" means, when
used with respect to the Company or Parent, as the case may be, any change or
effect that is or could reasonably be expected (as far as can be foreseen at the
time) to be materially adverse to the business, operations, properties or
results of operations, financial projections or forecasts, or the business
prospects and condition (financial or otherwise), with all such matters being
considered in the aggregate, of the Company and its Subsidiaries, taken as a
whole, or Parent and its Subsidiaries, taken as a whole, as the case may be.
"Real Estate" means, with respect to the Company or any Subsidiary, as
applicable, all of the fee or leasehold ownership right, title and interest of
such person, in and to all real estate and improvement owned or leased by any
such person and which is used by any such person in connection with the
operation of its business.
"Subsidiary" means any corporation, partnership, limited liability
company, joint venture or other legal entity of which Parent or the Company, as
the case may be (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 holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation, partnership,
limited liability company, joint venture or other legal entity.
"Superior Proposal" means a bona fide proposal made by a third party
to acquire the Company pursuant to a tender or exchange offer, a merger, a sale
of all or substantially all of the Company's assets or otherwise on terms which
a majority of the disinterested members of the Board of Directors of the Company
determines, at a duly constituted meeting of the Board of Directors or by
unanimous written consent, in its reasonable good faith judgment to be more
favorable to the Company's stockholders than the Merger (based on the advice of
the Company's
-42-
<PAGE>
independent financial advisor that the value of the consideration provided for
in such proposal exceeds the value of the consideration provided for in the
Merger) and for which financing, to the extent required, is then committed or
which, in the reasonable good faith judgment of a majority of such disinterested
members, as expressed in a resolution adopted at a duly constituted meeting of
such members (based on the advice of the Company's independent financial
advisor), is reasonably capable of being obtained by such third party.
"Takeover Proposal" means any proposal for (i) a merger or other
business combination involving the Company or any of its Subsidiaries, (ii) any
proposal or offer to acquire in any manner, directly or indirectly, an equity
interest in or any voting securities of the Company representing 15% or more of
the Shares or of the total voting securities of the Company outstanding or (iii)
an offer to acquire in any manner, directly or indirectly, a substantial portion
of the assets of the Company or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
"Taxes" means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, value-added, transfer or
excise tax, or other tax, custom, duty, governmental fee or any other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity.
"Tax Return" means any return, report or similar statement (including
the attached schedules) required to be filed with respect to any Tax, including
any information return, claim for refund, amended return or declaration of
estimated Tax.
"Termination Fee" means $2,500,000.
Section 9.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, except as provided in the last sentence of Section 6.2, constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof. This Agreement, except for the provisions of Section 6.10, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 9.6 Governing Law. Except to the extent that the laws of the
State of Delaware are mandatorily applicable to the Merger, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
-43-
<PAGE>
Section 9.7 Assignment. Subject to Section 2.1, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties.
Section 9.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
may be consummated as originally contemplated to the fullest extent possible.
Section 9.9 Enforcement of this Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific wording or
were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof, such
remedy being in addition to any other remedy to which any party is entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the District of Delaware in
any action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
courts (and waives any objection based on forum non conveniens or any other
objection to venue therein). Each party hereto waives any right to a trial by
jury in connection with any such action, suit or proceeding.
-44-
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
SMITH & NEPHEW, INC.
By: /s/ Clifford K. Lomax
----------------------------
Name: Clifford K. Lomax
--------------------------
Title: Treasurer
-------------------------
SMITH & NEPHEW ACQUISITION, INC.
By: /s/ Clifford K. Lomax
----------------------------
Name: Clifford K. Lomax
--------------------------
Title: Chairman
-------------------------
EXOGEN, INC.
By: /s/ Patrick A. McBrayer
----------------------------
Name: Patrick A. McBrayer
--------------------------
Title: President and CEO
-------------------------
-45-
<PAGE>
Exhibit A
---------
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of _____, 1999,
among Smith & Nephew, Inc., a Delaware corporation ("Parent"), Smith & Nephew
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and the undersigned stockholder (the "Stockholder") of Exogen,
Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, Sub and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Sub for any and all shares of Common Stock, par value $.0001 per share, of
the Company (the "Common Stock") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Sub (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of shares of Common Stock appearing on the signature page hereof (such shares,
as they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without
<PAGE>
notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the consummation by the
Stockholder of the transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
------------------------------------------------
(a) Authority. Parent and Sub hereby represent and warrant to the
Stockholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
----------------------------
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the
-2-
<PAGE>
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of the Stockholder, the
heirs, executors and administrators of the Stockholder.
6. Termination. Except as provided otherwise herein, this Agreement
shall terminate upon the earlier of (i) the Effective Time (as defined in the
Merger Agreement) and (ii) the termination of the Merger Agreement in accordance
with its terms.
-3-
<PAGE>
7. General Provisions.
------------------
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the District of
Delaware in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to::
Smith & Nephew, Inc.
c/o Smith & Nephew plc
2 Temple Place
Victoria Embankment
London WC2R 3BP
Attention: Peter Huntley
Facsimile No.: 171-240-1343
with a copy to:
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, Tennessee 38116
Attention: General Counsel
Facsimile No.: 901-396-7824
-4-
<PAGE>
and:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz
Facsimile No.: 312- 853-7036
(ii) if to the Stockholder, to:
with a copy to:
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Sub or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
-5-
<PAGE>
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
-6-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Stockholder has caused
this Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
SMITH & NEPHEW, INC.
By: ___________________________________
Name:
Title:
SMITH & NEPHEW ACQUISITION, INC.
By: ___________________________________
Name:
Title:
STOCKHOLDER
_______________________________________
Number of shares of Common Stock owned by the
Stockholder on the date hereof:
____________
Options to purchase Common Stock held by the
Stockholder on the date hereof:
____________
-7-
<PAGE>
EXHIBIT B
---------
CONDITIONS OF THE OFFER
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that, together with
the Shares then owned by Holdings and Parent and its Subsidiaries, would
constitute at least a majority of the Shares that in the aggregate are
outstanding determined on a fully diluted basis (assuming the exercise of all
options to purchase Company Common Stock (other than the Parent Option), and the
conversion or exchange of all securities convertible or exchangeable into,
Shares outstanding at the expiration date of the Offer) ("Minimum Condition")
and (ii) any waiting period under the HSR Act and any other waiting periods
under any foreign laws applicable to the purchase of Shares pursuant to the
Offer shall have expired or been terminated prior to the expiration date of the
Offer (the "HSR Condition"). Furthermore, notwithstanding any other term of the
Offer or this Agreement, Sub shall not be required to accept for payment or,
subject as aforesaid, to pay for any Shares not theretofore accepted for payment
or paid for, and may terminate the Offer if, at any time on or after the date of
this Agreement and before the acceptance of such Shares for payment or the
payment therefor, any of the following conditions exists (other than as a result
of any action or inaction of Parent or any of its subsidiaries that constitutes
a breach of this Agreement):
(a) there shall be threatened or pending by any Governmental Entity
any suit, action or proceeding (i) challenging the acquisition by Parent or
Sub of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any
of the other transactions contemplated by this Agreement or the Stockholder
Agreements (including the voting provisions thereunder), or seeking to
obtain from the Company, Parent or Sub any damages that are material in
relation to the Company and its subsidiaries taken as a whole, (ii) seeking
to prohibit or materially limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries of a material portion of the
business or assets of the Company and its subsidiaries, taken as a whole,
or Parent and its subsidiaries, taken as a whole, or to compel the Company
or Parent to dispose of or hold separate any material portion of the
business or assets of the Company and its subsidiaries, taken as a whole,
or Parent and its subsidiaries, taken as a whole, as a result of the Offer
or any of the other transactions contemplated by this Agreement or the
Stockholder Agreements, (iii) seeking to impose material limitations on the
ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any Shares to be accepted for payment pursuant to the Offer,
including the right to vote such Shares on all matters properly presented
to the stockholders of the Company, (iv) seeking to prohibit Parent or any
of its subsidiaries
<PAGE>
from effectively controlling in any material respect any material portion
of the business or operations of the Company or its subsidiaries or (v)
which otherwise is reasonably likely to have a Material Adverse Effect on
the Company, or there shall be pending by any other person any suit, action
or proceeding which would have a Material Adverse Effect on the Company.
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any Governmental Entity any
statute, rule, regulation, judgment, order or injunction, other than the
application to the Offer or the Merger of applicable waiting periods under
the HSR Act or any other applicable waiting periods under any foreign laws
enacted as of the date hereof, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) there shall have occurred any Material Adverse Change with
respect to the Company other than a Material Adverse Change primarily
caused by the loss of employees of the Company as a result of the Offer or
the announcement thereof;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Sub its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Takeover Proposal or (ii) the
Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) the representations and warranties of the Company set forth in
this Agreement shall not be true and correct in each case at the date of
this Agreement and at the scheduled or extended expiration of the Offer
unless the inaccuracies (without giving effect to any materiality or
Material Adverse Effect qualifications or exceptions contained therein)
under such representations and warranties, taking all the inaccuracies
under all such representations and warranties together in their entirety,
do not, individually or in the aggregate, result in a Material Adverse
Effect on the Company;
(f) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant of the Company to be performed or
complied with by it under this Agreement other than any failures which
would not have, either individually or in the aggregate, a Material Adverse
Effect on the Company;
(g) any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Sub or their affiliates or any group of
which any of them is a member, shall have acquired or announced its
intention to acquire beneficial ownership (as determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of 15% or more of the Shares;
-2-
<PAGE>
(h) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on a
national securities exchange in the United States (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, (iii)
any limitation (whether or not mandatory) by any Governmental Entity on, or
other event that materially adversely affects, the extension of credit by
banks or other lending institutions, (iv) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States which in any case is reasonably
expected to have a Material Adverse Effect on the Company or to materially
adversely affect Parent's or Sub's ability to complete the Offer and/or the
Merger or materially delay the consummation of the Offer and/or the Merger,
or (v) from the date of this Agreement through the date of termination or
expiration, a decline of at least 25% in either the Dow Jones Industrial
Average or the Standard & Poor's 500 Index; or
(i) this Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Parent and Sub
and may, subject to the terms of this Agreement, be waived by Parent and Sub in
whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
Terms used but not defined herein shall have the meanings assigned to such terms
in the Agreement to which this Exhibit B is a part.
-3-
<PAGE>
Exhibit C
---------
SECOND AMENDMENT TO RIGHTS AGREEMENT
------------------------------------
Second Amendment dated as of July __, 1999 (this "Amendment") to
Rights Agreement dated as of December 6, 1996, as amended (the "Rights
Agreement"), between Exogen, Inc., a Delaware corporation (the "Company"), and
Registrar and Transfer Company (the "Rights Agent").
W I T N E S S E T H :
-------------------
WHEREAS, the Board of Directors of the Company has approved and
adopted an Agreement and Plan of Merger(the "Merger Agreement") among the
Company, Smith & Nephew, Inc., a Delaware corporation ("Parent") and Smith &
Nephew Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary
of Parent ("Sub"), providing for the making of a cash tender offer (as such
offer may be amended from time to time, the "Offer") and the merger (the
"Merger") of Sub with and into the Company;
WHEREAS, the Board of Directors of the Company has determined that the
Offer and the Merger are in furtherance of and consistent with the long-term
business strategy of the Company and are in the best interests of the Company
and its shareholders;
WHEREAS, the willingness of Parent and Sub to enter into the Merger
Agreement is conditioned on, among other things, the amendment of the Rights
Agreement on the terms set forth herein;
WHEREAS, at the date of this Amendment, the Distribution Date has not
occurred and there is no Acquiring Person;
WHEREAS, Section 27 of the Rights Agreement provides that the Company
may from time to time supplement or amend the Rights Agreement in any respect
without the approval of any holders of Rights Certificates, any such supplement
or amendment to be evidenced in a writing signed by the Company and the Rights
Agent; provided, however, that from and after the Distribution Date, the Rights
Agreement may not be amended in any manner which would adversely affect the
interests of the holders of Rights; and
WHEREAS, in compliance with Section 27 of the Rights Agreement, the
Company and the Rights Agent desire to amend the Rights Agreement as hereinafter
set forth and have executed and delivered this Amendment immediately prior to
the execution and delivery of the Merger Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the Rights Agreement and the
premises and mutual agreements herein set forth, the parties hereby agree as
follows:
1. Section 1 of the Rights Agreement is hereby amended by adding the
following definitions thereto:
"Merger" shall mean the merger of Sub with and into the Company as
contemplated by the Merger Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger among
Parent, Sub and the Company, as the same may be amended in accordance with
the terms thereof.
"Parent" shall mean Smith & Nephew, Inc., a Delaware corporation.
"Stockholder Agreements" shall mean the Stockholder Agreements between
Parent and each of ___________________, as the same may be amended in
accordance with the terms thereof.
"Sub" shall mean Smith & Nephew Acquisition, Inc. a Delaware
corporation and a wholly-owned subsidiary of Parent.
2. The definition of Acquiring Person contained in Section 1(a) of
the Rights Agreement is hereby amended by replacing the "." that appears at the
end of clause (iv) of such Section with "; or " and by adding the following
clause thereafter:
"(v) prior to the termination of the Merger Agreement in accordance with
Section 8.1 thereof, Parent, Sub or any of their Affiliates or Associates."
3. Section 1(l) of the Rights Agreement is hereby amended by adding
the following to the end of the second parenthetical phrase in clause (ii) of
such Section:
"and, prior to the termination of the Merger Agreement in accordance with
Section 8.1 thereof, other than Parent, Sub or any other Subsidiary of
Parent"
4. Section 1(q) of the Rights Agreement is hereby amended by
replacing the word "or" that appears immediately prior to the symbol "(iv)" with
a comma and by adding the following to the end of the amended Section 1(q):
", or (iv) the time immediately prior to the Effective Time (as
defined in the Merger Agreement)."
5. The term "Agreement" as used in the Rights Agreement shall be
deemed to refer to the Rights Agreement as amended by this Amendment.
-2-
<PAGE>
6. This Amendment shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State.
7. This Amendment may be executed in two or more counterparts, and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute one and the same instrument.
8. Any capitalized term used herein without definition shall have
the meaning specified in the Rights Agreement.
9. Except as otherwise expressly set forth herein, this Amendment
shall not by implication or otherwise alter, modify, amend or in any other
manner affect any of the terms, conditions, obligations, covenants or agreements
contained in the Rights Agreement, all of which are hereby ratified and
confirmed in all respects and shall continue in full force and effect.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested, all as of the day and year first above written.
EXOGEN, INC.
By: ____________________________
Name:
Title:
Attest:
By: ________________________
Name:
Title:
REGISTRAR AND TRANSFER COMPANY
By: __________________________________
Name:
Title:
Attest:
By: ________________________
Name:
Title:
-4-
<PAGE>
Exhibit (c)(2)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of July 25, 1999,
among Smith & Nephew, Inc., a Delaware corporation ("Parent"), Smith & Nephew
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and the undersigned stockholder (the "Stockholder") of Exogen,
Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, Sub and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Sub for any and all shares of Common Stock, par value $.0001 per share, of
the Company (the "Common Stock") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Sub (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of shares of Common Stock appearing on the signature page hereof (such shares,
as they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without
<PAGE>
notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the consummation by the
Stockholder of the transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Stockholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the
-2-
<PAGE>
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of the Stockholder, the
heirs, executors and administrators of the Stockholder.
6. Termination. Except as provided otherwise herein, this Agreement
shall terminate upon the earlier of (i) the Effective Time (as defined in the
Merger Agreement) and (ii) the termination of the Merger Agreement in accordance
with its terms.
-3-
<PAGE>
7. General Provisions.
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the District of
Delaware in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
Smith & Nephew, Inc.
c/o Smith & Nephew plc
2 Temple Place
Victoria Embankment
London WC2R 3BP
Attention: Peter Huntley
Facsimile No.: 171-240-1343
with a copy to:
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, Tennessee 38116
Attention: General Counsel
Facsimile No.: 901-396-7824
-4-
<PAGE>
and to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz
Facsimile No.: 312-853-7036
(ii) if to the Stockholder, to:
John P. Ryaby
Exogen, Inc.
10 Constitution Avenue
P.O. Box 6860
Piscataway, New Jersey 08855
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway
NewYork, New York
Attention: Ellen B. Corenswet
Facsimile No.: 212-586-7878
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Sub or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
-5-
<PAGE>
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
-6-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Stockholder has caused
this Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
SMITH & NEPHEW, INC.
By: /s/ Cliff Lomax
----------------------------
Name: Cliff Lomax
Title: Treasurer
SMITH & NEPHEW ACQUISITION, INC.
By: /s/ Cliff Lomax
----------------------------
Name: Cliff Lomax
Title: Chairman
STOCKHOLDER
/s/ John P. Ryaby
--------------------------------
Number of shares of Common Stock owned by the
Stockholder on the date hereof:
137,850
-------------
Options to purchase Common Stock held by the
Stockholder on the date hereof:
40,000
-------------
-7-
<PAGE>
Exhibit (c)(3)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of July 25, 1999,
among Smith & Nephew, Inc., a Delaware corporation ("Parent"), Smith & Nephew
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and the undersigned stockholder (the "Stockholder") of Exogen,
Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, Sub and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Sub for any and all shares of Common Stock, par value $.0001 per share, of
the Company (the "Common Stock") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Sub (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of shares of Common Stock appearing on the signature page hereof (such shares,
as they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without
<PAGE>
notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the consummation by the
Stockholder of the transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Stockholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the
-2-
<PAGE>
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of the Stockholder, the
heirs, executors and administrators of the Stockholder.
6. Termination. Except as provided otherwise herein, this Agreement
shall terminate upon the earlier of (i) the Effective Time (as defined in the
Merger Agreement) and (ii) the termination of the Merger Agreement in accordance
with its terms.
-3-
<PAGE>
7. General Provisions.
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the District of
Delaware in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
Smith & Nephew, Inc.
c/o Smith & Nephew plc
2 Temple Place
Victoria Embankment
London WC2R 3BP
Attention: Peter Huntley
Facsimile No.: 171-240-1343
with a copy to:
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, Tennessee 38116
Attention: General Counsel
Facsimile No.: 901-396-7824
-4-
<PAGE>
and to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz
Facsimile No.: 312-853-7036
(ii) if to the Stockholder, to:
Buzz Benson
Piper Jaffray Inc.
222 South Ninth Street
Minneapolis, MN 55402
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway
New York, New York
Attention: Ellen B. Corenswet
Facsimile No.: 212-586-7878
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Sub or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
-5-
<PAGE>
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
-6-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Stockholder has caused
this Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
SMITH & NEPHEW, INC.
By: /s/ Cliff Lomax
--------------------------------
Name: Cliff Lomax
Title: Treasurer
SMITH & NEPHEW ACQUISITION, INC.
By: /s/ Cliff Lomax
-------------------------------
Name: Cliff Lomax
Title: Chairman
STOCKHOLDER
/s/ Buzz Benson
------------------------------------
Number of shares of Common Stock owned by the
Stockholder on the date hereof:
20,025
----------
Options to purchase Common Stock held by the
Stockholder on the date hereof:
5,000
----------
-7-
<PAGE>
Exhibit (c)(4)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of July 25, 1999,
among Smith & Nephew, Inc., a Delaware corporation ("Parent"), Smith & Nephew
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and the undersigned stockholder (the "Stockholder") of Exogen,
Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, Sub and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Sub for any and all shares of Common Stock, par value $.0001 per share, of
the Company (the "Common Stock") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Sub (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of shares of Common Stock appearing on the signature page hereof (such shares,
as they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without
<PAGE>
notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the consummation by the
Stockholder of the transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Stockholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the
-2-
<PAGE>
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of the Stockholder, the
heirs, executors and administrators of the Stockholder.
6. Termination. Except as provided otherwise herein, this Agreement
shall terminate upon the earlier of (i) the Effective Time (as defined in the
Merger Agreement) and (ii) the termination of the Merger Agreement in accordance
with its terms.
-3-
<PAGE>
7. General Provisions.
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the District of
Delaware in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
Smith & Nephew, Inc.
c/o Smith & Nephew plc
2 Temple Place
Victoria Embankment
London WC2R 3BP
Attention: Peter Huntley
Facsimile No.: 171-240-1343
with a copy to:
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, Tennessee 38116
Attention: General Counsel
Facsimile No.: 901-396-7824
-4-
<PAGE>
and to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz
Facsimile No.: 312-853-7036
(ii) if to the Stockholder, to:
Donald J. Lothrop
Delphi Ventures
3000 Sand Hill Road
Bldg. 1, Suuie 135
Menlo Park, CA 94025
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway
NewYork, New York
Attention: Ellen B. Corenswet
Facsimile No.: 212-586-7878
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Sub or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
-5-
<PAGE>
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
-6-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Stockholder has caused
this Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
SMITH & NEPHEW, INC.
By: /s/ Cliff Lomax
------------------------------
Name: Cliff Lomax
Title: Treasurer
SMITH & NEPHEW ACQUISITION, INC.
By: /s/ Cliff Lomax
------------------------------
Name: Cliff Lomax
Title: Chairman
STOCKHOLDER
/s/ Donald J. Lothrop
----------------------------------
Number of shares of Common Stock owned by the
Stockholder on the date hereof:
59,112
------------
Options to purchase Common Stock held by the
Stockholder on the date hereof:
5,000
------------
-7-
<PAGE>
Exhibit (c)(5)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of July 25, 1999,
among Smith & Nephew, Inc., a Delaware corporation ("Parent"), Smith & Nephew
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and the undersigned stockholder (the "Stockholder") of Exogen,
Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, Sub and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Sub for any and all shares of Common Stock, par value $.0001 per share, of
the Company (the "Common Stock") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Sub (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of shares of Common Stock appearing on the signature page hereof (such shares,
as they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without
<PAGE>
notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the consummation by the
Stockholder of the transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Stockholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the
-2-
<PAGE>
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of the Stockholder, the
heirs, executors and administrators of the Stockholder.
6. Termination. Except as provided otherwise herein, this Agreement
shall terminate upon the earlier of (i) the Effective Time (as defined in the
Merger Agreement) and (ii) the termination of the Merger Agreement in accordance
with its terms.
-3-
<PAGE>
7. General Provisions.
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the District of
Delaware in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
Smith & Nephew, Inc.
c/o Smith & Nephew plc
2 Temple Place
Victoria Embankment
London WC2R 3BP
Attention: Peter Huntley
Facsimile No.: 171-240-1343
with a copy to:
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, Tennessee 38116
Attention: General Counsel
Facsimile No.: 901-396-7824
-4-
<PAGE>
and to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz
Facsimile No.: 312-853-7036
(ii) if to the Stockholder, to:
Peter C. Madeja
Genex Services, Inc.
440 East Swedesford Road
Suite 3050
Wayne, PA 19087
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway
NewYork, New York
Attention: Ellen B. Corenswet
Facsimile No.: 212-586-7878
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Sub or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
-5-
<PAGE>
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
-6-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Stockholder has caused
this Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
SMITH & NEPHEW, INC.
By: /s/ Cliff Lomax
-------------------------
Name: Cliff Lomax
Title: Treasurer
SMITH & NEPHEW ACQUISITION, INC.
By: /s/ Cliff Lomax
---------------------------
Name: Cliff Lomax
Title: Chairman
STOCKHOLDER
/s/ Peter C. Madeja
-------------------------------
Number of shares of Common Stock owned by the
Stockholder on the date hereof:
0
------------
Options to purchase Common Stock held by the
Stockholder on the date hereof:
10,000
------------
-7-
<PAGE>
Exhibit (c)(6)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of July 25, 1999,
among Smith & Nephew, Inc., a Delaware corporation ("Parent"), Smith & Nephew
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and the undersigned stockholder (the "Stockholder") of Exogen,
Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, Sub and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Sub for any and all shares of Common Stock, par value $.0001 per share, of
the Company (the "Common Stock") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Sub (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of shares of Common Stock appearing on the signature page hereof (such shares,
as they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without
<PAGE>
notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the consummation by the
Stockholder of the transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Stockholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the
-2-
<PAGE>
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of the Stockholder, the
heirs, executors and administrators of the Stockholder.
6. Termination. Except as provided otherwise herein, this Agreement
shall terminate upon the earlier of (i) the Effective Time (as defined in the
Merger Agreement) and (ii) the termination of the Merger Agreement in accordance
with its terms.
-3-
<PAGE>
7. General Provisions.
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the District of
Delaware in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
Smith & Nephew, Inc.
c/o Smith & Nephew plc
2 Temple Place
Victoria Embankment
London WC2R 3BP
Attention: Peter Huntley
Facsimile No.: 171-240-1343
with a copy to:
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, Tennessee 38116
Attention: General Counsel
Facsimile No.: 901-396-7824
-4-
<PAGE>
and to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz
Facsimile No.: 312-853-7036
(ii) if to the Stockholder, to:
David J. Ottensmeyer, M.D.
102 Crofton Court
Fairhope, AL 36532
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway
New York, New York
Attention: Ellen B. Corenswet
Facsimile No.: 212-586-7878
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Sub or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
-5-
<PAGE>
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
-6-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Stockholder has caused
this Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
SMITH & NEPHEW, INC.
By: /s/ Cliff Lomax
---------------------------
Name: Cliff Lomax
Title: Treasurer
SMITH & NEPHEW ACQUISITION, INC.
By: /s/ Cliff Lomax
---------------------------
Name: Cliff Lomax
Title: Chairman
STOCKHOLDER
/s/ David J. Ottensmeyer
--------------------------------
Number of shares of Common Stock owned by the
Stockholder on the date hereof:
0
------------
Options to purchase Common Stock held by the
Stockholder on the date hereof:
15,000
------------
-7-
<PAGE>
Exhibit (c)(7)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of July 25, 1999,
among Smith & Nephew, Inc., a Delaware corporation ("Parent"), Smith & Nephew
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and the undersigned stockholder (the "Stockholder") of Exogen,
Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, Sub and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Sub for any and all shares of Common Stock, par value $.0001 per share, of
the Company (the "Common Stock") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Sub (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of shares of Common Stock appearing on the signature page hereof (such shares,
as they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without
<PAGE>
notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the consummation by the
Stockholder of the transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Stockholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the
-2-
<PAGE>
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of the Stockholder, the
heirs, executors and administrators of the Stockholder.
6. Termination. Except as provided otherwise herein, this Agreement
shall terminate upon the earlier of (i) the Effective Time (as defined in the
Merger Agreement) and (ii) the termination of the Merger Agreement in accordance
with its terms.
-3-
<PAGE>
7. General Provisions.
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the District of
Delaware in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
Smith & Nephew, Inc.
c/o Smith & Nephew plc
2 Temple Place
Victoria Embankment
London WC2R 3BP
Attention: Peter Huntley
Facsimile No.: 171-240-1343
with a copy to:
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, Tennessee 38116
Attention: General Counsel
Facsimile No.: 901-396-7824
-4-
<PAGE>
and to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz
Facsimile No.: 312-853-7036
(ii) if to the Stockholder, to:
Terence D. Wall
Vital Signs
20 Campus Road
Totowa, New Jersey 07512
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway
New York, New York
Attention: Ellen B. Corenswet
Facsimile No.: 212-586-7878
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Sub or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
-5-
<PAGE>
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
-6-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Stockholder has caused
this Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
SMITH & NEPHEW, INC.
By: /s/ Cliff Lomax
---------------------------
Name: Cliff Lomax
Title: Treasurer
SMITH & NEPHEW ACQUISITION, INC.
By: /s/ Cliff Lomax
---------------------------
Name: Cliff Lomax
Title: Chairman
STOCKHOLDER
/s/ Terence D. Wall
-------------------------------
Number of shares of Common Stock owned by the
Stockholder on the date hereof:
48,485
------------
Options to purchase Common Stock held by the
Stockholder on the date hereof:
5,000
------------
-7-
<PAGE>
Exhibit (c)(8)
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of July 25, 1999,
among Smith & Nephew, Inc., a Delaware corporation ("Parent"), Smith & Nephew
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and the undersigned stockholder (the "Stockholder") of Exogen,
Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, Sub and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
cash tender offer (as such offer may be amended from time to time, the "Offer")
by Sub for any and all shares of Common Stock, par value $.0001 per share, of
the Company (the "Common Stock") at the Offer Price (as defined in the Merger
Agreement) and the merger of the Company and Sub (the "Merger");
WHEREAS, the Stockholder legally and/or beneficially owns that number
of shares of Common Stock appearing on the signature page hereof (such shares,
as they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding obligation
of the Stockholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without
<PAGE>
notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Stockholder or to the Stockholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the consummation by the
Stockholder of the transactions contemplated hereby.
(b) The Shares. The Stockholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Stockholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Stockholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Stockholder. The Stockholder agrees as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the
-2-
<PAGE>
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Stockholder shall not, nor shall the Stockholder permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Stockholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of the Stockholder, the
heirs, executors and administrators of the Stockholder.
6. Termination. Except as provided otherwise herein, this Agreement
shall terminate upon the earlier of (i) the Effective Time (as defined in the
Merger Agreement) and (ii) the termination of the Merger Agreement in accordance
with its terms.
-3-
<PAGE>
7. General Provisions.
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the District of
Delaware in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
Smith & Nephew, Inc.
c/o Smith & Nephew plc
2 Temple Place
Victoria Embankment
London WC2R 3BP
Attention: Peter Huntley
Facsimile No.: 171-240-1343
with a copy to:
Smith & Nephew, Inc.
1450 Brooks Road
Memphis, Tennessee 38116
Attention: General Counsel
Facsimile No.: 901-396-7824
-4-
<PAGE>
and to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Dennis V. Osimitz
Facsimile No.: 312- 853-7036
(ii) if to the Stockholder, to:
Patrick A. McBrayer
Exogen, Inc.
10 Constitution Avenue
P.O. Box 6860
Pisoataway, NJ 08855
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway
NewYork, New York
Attention: Ellen B. Corenswet
Facsimile No.: 212-586-7878
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Sub or the
Stockholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
-5-
<PAGE>
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
-6-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Stockholder has caused
this Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
SMITH & NEPHEW, INC.
By: /s/ Cliff Lomax
-------------------------------
Name: Cliff Lomax
Title: Treasurer
SMITH & NEPHEW ACQUISITION, INC.
By: /s/ Cliff Lomax
--------------------------------
Name: Cliff Lomax
Title: Chairman
STOCKHOLDER
/s/ Patrick A. McBrayer
------------------------------------
Number of shares of Common Stock owned by the
Stockholder on the date hereof:
291,000
---------------
Options to purchase Common Stock held by the
Stockholder on the date hereof:
150,000
---------------
-7-
