-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VnmlqGfeHdbwOhTRIBsbkgpC6TNElJrXnj91oNBTZr663m2LgiNVA667ZYD4gpKo kFYWfB2g/PFucHCs7o97Yw== 0000950130-97-003330.txt : 19970730 0000950130-97-003330.hdr.sgml : 19970730 ACCESSION NUMBER: 0000950130-97-003330 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19970729 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NELLCOR PURITAN BENNETT INC CENTRAL INDEX KEY: 0000799290 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 942789249 STATE OF INCORPORATION: DE FISCAL YEAR END: 0706 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-39322 FILM NUMBER: 97646632 BUSINESS ADDRESS: STREET 1: 4280 HACIENDA DRIVE CITY: PLEASANTON STATE: CA ZIP: 94588 BUSINESS PHONE: 5104634000 MAIL ADDRESS: STREET 1: 4280 HACIENDA DRIVE CITY: PLEASANTON STATE: CA ZIP: 94588 FORMER COMPANY: FORMER CONFORMED NAME: NELLCOR DELAWARE INC DATE OF NAME CHANGE: 19860929 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MALLINCKRODT INC /MO CENTRAL INDEX KEY: 0000051396 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 361263901 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 7733 FORSYTH BLVD CITY: ST LOUIS STATE: MO ZIP: 63105-1820 BUSINESS PHONE: 3148545299 MAIL ADDRESS: STREET 1: 7733 FORSYTH BLVD CITY: ST LOUIS STATE: MO ZIP: 63105-1820 FORMER COMPANY: FORMER CONFORMED NAME: MALLINCKRODT INC /MO DATE OF NAME CHANGE: 19970625 FORMER COMPANY: FORMER CONFORMED NAME: MALLINCKRODT GROUP INC DATE OF NAME CHANGE: 19940322 FORMER COMPANY: FORMER CONFORMED NAME: IMCERA GROUP INC DATE OF NAME CHANGE: 19920703 SC 14D1 1 SCHEDULE 14D-1 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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 NELLCOR PURITAN BENNETT INCORPORATED (NAME OF SUBJECT COMPANY) NPB ACQUISITION CORP. (BIDDER) COMMON STOCK, PAR VALUE $.001 PER SHARE (TITLE OF CLASS OF SECURITIES) 640275 10 3 (CUSIP NUMBER OF CLASS OF SECURITIES) ROGER A. KELLER, ESQ. VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL MALLINCKRODT INC. 7733 FORSYTH BOULEVARD ST. LOUIS, MISSOURI 63105-1820 (314) 854-5200 COPY TO: JAMES C. MORPHY, ESQ. SULLIVAN & CROMWELL 125 BROAD STREET NEW YORK, NEW YORK 10004 (212) 558-4000 (NAME, ADDRESS, AND TELEPHONE NUMBERS OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER) CALCULATION OF FILING FEE - --------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE** - --------------------------------------------------------------------------------- $1,887,605,489.28 $377,521.10
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- * For the purpose of calculating the filing fee only. This calculation assumes the purchase of (i) 63,687,307 shares of Common Stock, par value $.001 per share, issued and outstanding as of July 25, 1997, according to the Subject Company, (ii) 7,143,162 options on the Common Stock issued and outstanding as of July 25, 1997 according to the Subject Company, with an average exercise price of $18.81, and (iii) the maximum number of shares of Common Stock issuable under the Subject Company's 1995 Employee Stock Participation Plan, with the purchase price under such plan assumed by the Subject Company to be $15.30. ** 1/50 of 1% of the transaction value. [_]Check box if any part of the fees 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: Not applicable Filing party: Not applicable Form of registration number: Not applicable Date filed: Not applicable - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Page 1 of 4 Pages ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Nellcor Puritan Bennett Incorporated, a Delaware corporation (the "Company"), and the address of its principal executive offices is 4280 Hacienda Drive, Pleasanton, California 94588. (b) The class of securities to which this statement relates is the Common Stock, par value $.001 per share (the "Common Stock"), including the associated rights to purchase Series A Junior Participating Preferred Stock (the "Rights" and together with the Common Stock, the "Shares"), of the Company. The information set forth in the Introductory Section and Section 1 of the Offer to Purchase (the "Offer to Purchase") annexed hereto as Exhibit 1 is incorporated herein by reference. (c) The information set forth in Section 6 of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d); (g) The information set forth in Section 9 of the Offer to Purchase is incorporated herein by reference. The name, business address, present principal occupation or employment, the material occupations, positions, offices or employments for the past five years and citizenship of each director and executive officer of Mallinckrodt Inc., a New York corporation ("Purchaser"), and of NPB Acquisition Corp., a Delaware corporation (the "Merger Sub") and a direct wholly owned subsidiary of Purchaser, and the name, principal business and address of any corporation or other organization in which such occupations, positions, offices and employments are or were carried on are set forth in Schedule A hereto and incorporated herein by reference. (e); (f) During the last five years, neither the Merger Sub nor Purchaser, nor, to the best of Purchaser's knowledge, any of the directors or executive officers of the Merger Sub or Purchaser has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any such person 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 law. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introductory Section and Sections 10 and 11 of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(b) The information set forth in Section 12 of the Offer to Purchase is incorporated herein by reference. See Exhibit 10. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. The information set forth in the Introductory Section and Sections 7 and 11 of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) The information set forth in Sections 9 and 10 of the Offer to Purchase is incorporated herein by reference. Page 2 of 4 Pages ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introductory Section and Sections 9, 10 and 11 of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in Section 16 of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 9 of the Offer to Purchase is incorporated herein by reference. Purchaser is subject to the periodic reporting requirements of Section 13(a) of the Exchange Act. The financial statements of Purchaser set forth in Item 8 of Purchaser's Annual Report on Form 10-K for the year ended June 30, 1996 and in Item 1 of Purchaser's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, are hereby incorporated by reference, which reports may be obtained from the Securities and Exchange Commission in the manner set forth with respect to information concerning the Company in Section 8 of the Offer to Purchase and should also be available for inspection at the New York Stock Exchange, 20 Broad Street, New York, New York 10005. ITEM 10. ADDITIONAL INFORMATION. (a)-(c) The information set forth in Section 15 of the Offer to Purchase is incorporated herein by reference. (d) Not applicable. (e) Not applicable. (f) Not applicable. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(1) Offer to Purchase, dated July 29, 1997. (2) Letter of Transmittal with respect to the Shares. (3) Form of letter, dated July 29, 1997, to brokers, dealers, commercial banks, trust companies and nominees. (4) Form of letter to clients to be used by brokers, dealers, commercial banks, trust companies and nominees. (5)(a) Press Release, dated July 23, 1997. (5)(b) Press Release, dated July 29, 1997. (6) Form of newspaper advertisement, dated July 29, 1997. (7) Notice of Guaranteed Delivery. (8) IRS Guidelines to Substitute Form W-9. (9) Merger Agreement, dated as of July 23, 1997, among the Company, Purchaser and the Merger Sub. (10) Credit Agreement, dated as of July 23, 1997, among Purchaser, the Lenders listed therein, Morgan Guaranty Trust Company of New York, as Administrative Agent, Goldman Sachs Credit Partners L.P., as Syndication Agent, and Citibank, N.A., as Documentation Agent. (11) Confidentiality Agreement, dated June 3, 1997, between Purchaser and the Company.
Page 3 of 4 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 29, 1997 Mallinckrodt Inc. /s/ C. Ray Holman By: _________________________________ Name:C. Ray Holman Title:Chairman and Chief Executive Officer NPB Acquisition Corp. /s/ C. Ray Holman By: _________________________________ Name:C. Ray Holman Title:Chairman and Chief Executive Officer Page 4 of 4 Pages EX-99.1 2 OFFER TO PURCHASE EXHIBIT (1) OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK) OF NELLCOR PURITAN BENNETT INCORPORATED AT $28.50 NET PER SHARE BY NPB ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF MALLINCKRODT INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, AUGUST 25, 1997, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.001 (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK) (COLLECTIVELY, THE "SHARES"), OF NELLCOR PURITAN BENNETT INCORPORATED (THE "COMPANY") REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 13. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. IMPORTANT Any stockholder desiring to tender all or any portion of such stockholder's shares of Common Stock, par value $.001, of the Company (the "Common Stock"), including the associated rights to purchase Series A Junior Participating Preferred Stock (the "Rights" and together with the Common Stock, the "Shares"), should either (1) complete and sign the Letter of Transmittal or a facsimile thereof in accordance with the instructions in the Letter of Transmittal, including any required signature guarantees, and mail or deliver the Letter of Transmittal or such facsimile with such stockholder's certificate(s) for the tendered Shares and any other required documents to the Depositary, (2) follow the procedure for book-entry tender of Shares set forth in Section 3, or (3) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Stockholders having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee are urged to contact such broker, dealer, commercial bank, trust company or other nominee if they desire to tender Shares so registered. Unless the context requires otherwise, all references to Shares herein shall include the associated Rights. The Rights are presently evidenced by the certificates for the Common Stock and a tender by a stockholder of such stockholder's shares of Common Stock will also constitute a tender of the associated Rights. A stockholder who desires to tender Shares and whose certificates for such Shares are not immediately available, or who cannot comply with the procedure for book-entry transfer on a timely basis, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance may be directed to the Information Agent (as defined herein) or to the Dealer Managers (as defined herein) at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Requests for additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. --------------- The Dealer Managers for the Offer are: GOLDMAN, SACHS & CO. The date of this Offer to Purchase is July 29, 1997. TABLE OF CONTENTS
SECTION PAGE ------- ---- Introduction.................................................. 1 1. Terms of the Offer............................................ 2 2. Acceptance for Payment and Payment for Shares................. 4 3. Procedure for Tendering Shares................................ 4 4. Rights of Withdrawal.......................................... 8 5. Certain Federal Income Tax Consequences of the Offer.......... 9 6. Price Range of Shares; Dividends.............................. 9 7. Effect of the Offer on Market for the Shares, Stock Exchange Listing, and Exchange Act Registration....................... 10 8. Certain Information Concerning the Company.................... 11 9. Certain Information Concerning the Purchaser and Merger Sub... 13 10. Background of the Offer; Contacts with the Company............ 15 11. Purpose of the Offer; Plans for the Company; the Merger....... 18 12. Source and Amount of Funds.................................... 26 13. Certain Conditions of the Offer............................... 27 14. Dividends and Distributions................................... 29 15. Certain Legal Matters......................................... 30 16. Fees and Expenses............................................. 32 17. Miscellaneous................................................. 32 Schedule A Information Concerning the Directors and Executive Officers of Purchaser and the Merger Sub. ............................ A-1
i TO THE HOLDERS OF SHARES OF NELLCOR PURITAN BENNETT INCORPORATED: INTRODUCTION NPB Acquisition Corp., a Delaware corporation (the "Merger Sub") and wholly owned subsidiary of Mallinckrodt Inc., a New York corporation ("Purchaser"), hereby offers to purchase all of the outstanding shares of Common Stock, par value $.001 (the "Common Stock"), of Nellcor Puritan Bennett Incorporated, a Delaware corporation (the "Company"), including the associated rights to purchase Series A Junior Participating Preferred Stock (the "Rights") issued pursuant to the Rights Agreement, dated as of September 1, 1992, as amended and restated as of March 8, 1996, as further amended as of July 23, 1997 (the "Rights Agreement"), between the Company and The First National Bank of Boston, as Rights Agent (the Common Stock and the Rights together are referred to herein as the "Shares"), at $28.50 per Share, net to the seller in cash, on the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which collectively, together with any amendments or supplements hereto or thereto, constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Merger Sub pursuant to the Offer. The Merger Sub will pay all charges and expenses of ChaseMellon Shareholder Services, L.L.C. (the "Depositary") and Georgeson & Company Inc. (the "Information Agent"). UNLESS THE CONTEXT REQUIRES OTHERWISE, ALL REFERENCES TO SHARES HEREIN SHALL INCLUDE THE ASSOCIATED RIGHTS, AND ALL REFERENCES TO THE RIGHTS SHALL INCLUDE ALL BENEFITS THAT MAY INURE TO THE HOLDERS OF THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 13. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The Offer is being made pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated as of July 23, 1997, among the Company, Purchaser and the Merger Sub, pursuant to which, after the completion of the Offer, the Merger Sub will be merged with and into the Company (the "Merger") and each issued and outstanding Share (other than Shares owned by Purchaser, the Merger Sub or any other subsidiary of Purchaser (collectively, the "Purchaser Companies") or Shares that are held by stockholders exercising appraisal rights ("Dissenting Stockholders") pursuant to Section 262 of the Delaware General Corporation Law (the "DGCL")) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, without interest, an amount in cash (the "Merger Consideration") equal to $28.50 or such greater amount which may be paid pursuant to the Offer. As a result of the Merger, the Company (sometimes referred to herein as the "Surviving Corporation") will become a wholly owned subsidiary of Purchaser. According to the Company, as of July 25, 1997 there were 63,687,307 Shares outstanding and there were 7,143,162 Shares subject to issuance pursuant to the Company's stock option and incentive plans and 250,000 Shares reserved for issuance under the 1995 Employee Stock Participation Plan. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 1. TERMS OF THE OFFER. On the terms and subject to the conditions set forth in the Offer (including the terms and conditions set forth in Section 13 (the "Offer Conditions") and together with, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Merger Sub will accept for payment, and pay for, any and all Shares validly tendered on or prior to the Expiration Date (as herein defined) and not withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time, on August 25, 1997, unless and until the Merger Sub shall, in its sole discretion, have extended the period for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date on which the Offer, as so extended by the Merger Sub, shall expire. Rights are presently evidenced by the certificates for the Common Stock and the tender by a stockholder of his shares of Common Stock will also constitute a tender of the associated Rights. Pursuant to the Offer, no separate payment will be made by the Merger Sub for the Rights. Pursuant to the Merger Agreement, the Board of Directors of the Company, at its meeting on July 23, 1997, amended the Rights Agreement to provide that (x) the execution of the Merger Agreement or the announcement, commencement or consummation of the transactions contemplated thereby will not cause (i) the Merger Sub and/or Purchaser to become an Acquiring Person (as defined in the Rights Agreement) or (ii) a Distribution Date, a Shares Acquisition Date or a Triggering Event (as such terms are defined in the Rights Agreement) to occur and (y) all outstanding Rights will expire (whether or not tendered and purchased pursuant to the Offer) upon and as of the acceptance (so long as Purchaser or a wholly owned subsidiary thereof thereafter purchases Shares pursuant to the Offer) for payment pursuant to the Offer of a number of Shares sufficient to satisfy the Minimum Condition (as defined in Section 13), and neither the Company, the Merger Sub nor Purchaser nor any of their respective affiliates shall have any obligations under the Rights Agreement to any holder (or former holder) of Rights following consummation of the Offer (such amendment, the "Rights Amendment"). Subject to the terms of the Merger Agreement and applicable rules and regulations of the Securities and Exchange Commission (the "SEC"), the Merger Sub expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder's Shares. See Section 4. Subject to the applicable regulations of the SEC, the Merger Sub also expressly reserves the right, in its sole discretion (subject to the Merger Agreement), at any time or from time to time, (i) to delay acceptance for payment of, or (regardless of whether such Shares were theretofore accepted for payment) payment for, any tendered Shares, or to terminate or amend the Offer as to any Shares not then paid for, on the occurrence of any of the conditions specified in Section 13, and (ii) to waive any condition (other than the Minimum Condition) and to set forth or change any other term and condition of the Offer, by giving oral or written notice of such delay, termination or amendment to the Depositary and by making a public announcement thereof, provided that, unless previously approved by the Company in writing, no provision may be set forth or changed which decreases the price per Share payable in the Offer, changes the form of consideration payable in the Offer (other than by adding consideration), reduces the maximum number of Shares to be purchased in the Offer, or imposes conditions to the Offer in addition to those set forth herein that are materially adverse to holders of the Shares. If the Merger Sub accepts any Shares for payment pursuant to the terms of the Offer, it will accept for payment all Shares validly tendered prior to the Expiration Date and not withdrawn, and, subject to the terms and conditions of the Offer, including but not limited to the Offer Conditions, it will accept for 2 payment and pay for Shares as soon as it is permitted to do so under applicable law, provided that the Merger Sub reserves the right, in its sole discretion, to extend the Offer from time to time notwithstanding the prior satisfaction of the Offer Conditions to a date not beyond the fifth business day following the satisfaction of all of the Offer Conditions if more than 90% of the outstanding Shares (on a fully diluted basis) have not been duly tendered (exclusive of Shares tendered by guaranteed delivery) and not withdrawn. The Merger Sub confirms that its reservation of the right to delay payment for Shares which it has accepted for payment is limited by Rule 14e- 1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which requires that a tender offeror pay the consideration offered or return the tendered securities promptly after the termination or withdrawal of a tender offer. Pursuant to the Merger Agreement, (i) in the event that the Merger Sub would otherwise be entitled to terminate the Offer at any scheduled expiration thereof due to the failure of one or more of the conditions set forth in paragraphs (a), (c), (d) or (f) of Section 13 to be satisfied or waived, the Merger Sub will give the Company notice thereof and, at the request of the Company, extend the Offer until the earlier of (A) such time as such condition is or conditions are satisfied or waived and (B) the date chosen by the Company which shall not be later than (x) September 15, 1997 or (y) the earliest date on which the Company reasonably believes such condition or conditions will be satisfied; provided that, if such condition is not or conditions are not satisfied by any date chosen by the Company in accordance with this clause (i), the Company may request further extensions of the Offer not beyond September 15, 1997; and (ii) the Merger Sub will, at the request of the Company made in writing at least one business day prior to August 25, 1997 (which request may be made by the Company only on one occasion), extend the Offer for up to five business days from August 25, 1997. Any extension, delay, 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 no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that any material change in the information published, sent or given to stockholders in connection with the Offer be promptly disseminated to stockholders in a manner reasonably designed to inform stockholders of such change) and without limiting the manner in which the Merger Sub may choose to make any public announcement, the Merger Sub shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release or other announcement. The Merger Sub confirms that if it 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, the Merger Sub will extend the Offer to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. If, prior to the Expiration Date, the Merger Sub, if previously approved by the Company in writing, shall decrease the percentage of Shares being sought or the consideration offered to holders of Shares, such decrease shall be applicable to all holders whose Shares are accepted for payment pursuant to the Offer and, if at the time notice of any increase or decrease is first published, sent or given to holders of Shares, the Offer is scheduled to expire at any time earlier than the tenth business day from and including the date that such notice is first so published, sent or given, the Offer will be extended until the expiration of such ten business day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York City time. The Offer is being mailed to holders of Shares from a list provided to the Merger Sub by the Company. 3 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. On the terms and subject to the terms and conditions set forth in the Offer (including the Offer Conditions and together with, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Merger Sub will accept for payment, and will pay for, Shares validly tendered and not withdrawn as soon as it is permitted to do so under applicable law after the later of (i) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations thereunder (the "HSR Act") applicable to purchase of Shares pursuant to the Offer, and any similar waiting periods under any foreign statutes or regulations that are applicable to the Offer and the Merger, and any filings or consents, registrations, approvals, permits or authorizations as may be required under the laws of Germany, Ireland, Canada, Belgium, Hungary and Mexico (collectively, the "Regulatory Approvals") applicable to the Offer or the Merger have been have been obtained on terms satisfactory to the Purchaser in its reasonable judgment and (ii) the Expiration Date, if at the time of the later of the occurrence of (i) and (ii) above, the Minimum Condition has been satisfied or waived, provided that the Merger Sub reserves the right, in its sole discretion, to extend the Offer from time to time notwithstanding the prior satisfaction of the Offer Conditions to a date not beyond the fifth business day following the satisfaction of all of the Offer Conditions if more than 90% of the outstanding Shares (on a fully diluted basis) have not been duly tendered (exclusive of Shares tendered by guaranteed delivery) and not withdrawn. See Sections 13 and 15. In addition, subject to applicable rules of the SEC, the Merger Sub expressly reserves the right to delay acceptance for payment of or payment for Shares in order to comply, in whole or in part, with any applicable law. See Section 13. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (collectively, "Depository Institutions")), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other required documents. For purposes of the Offer, the Merger Sub will be deemed to have accepted for payment Shares validly tendered and not withdrawn as, if and when the Merger Sub gives oral or written notice to the Depositary of its acceptance for payment of such Shares pursuant to the Offer. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for the tendering stockholders for the purpose of receiving payments from the Merger Sub and transmitting such payments to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. If any tendered Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased Shares will be returned, without expense to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer of such Shares into the Depositary's account at a Depository Institution pursuant to the procedures set forth in Section 3, such Shares will be credited to an account maintained with such Depository Institution), as soon as practicable following expiration or termination of the Offer. The Merger Sub reserves the right to transfer or assign in whole or in part from time to time to one or more direct or indirect subsidiaries of Purchaser the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Merger Sub of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURE FOR TENDERING SHARES. Valid Tender. To tender Shares pursuant to the Offer, either (a) a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) in accordance with the instructions of the Letter 4 of Transmittal, with any required signature guarantees, certificates for Shares to be tendered, and any other documents required by the Letter of Transmittal, must be received by the Depositary prior to the Expiration Date at one of its addresses set forth on the back cover of this Offer to Purchase, (b) such Shares must be delivered pursuant to the procedures for book-entry transfer described below (and a confirmation of such delivery received by the Depositary, including an Agent's Message if the tendering stockholder has not delivered a Letter of Transmittal), prior to the Expiration Date, or (c) the tendering stockholder must comply with the guaranteed delivery procedures set forth below. The term "Agent's Message" means a message, transmitted by a Book-Entry Transfer Facility (as defined herein) 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 and, if applicable, Rights which are the subject of such book-entry confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Merger Sub may enforce such agreement against the participant. Pursuant to the Rights Agreement, until the close of business on the Distribution Date, the Rights will be transferred with and only with the certificates for Shares and the surrender for transfer of any certificates for Common Stock will also constitute the transfer of the Rights associated with the Shares represented by such certificate. Pursuant to the Rights Amendment, no Distribution Date will occur by reason of the commencement or the consummation of the Offer or any of the transactions contemplated by the Merger Agreement. If separate certificates representing the Rights are issued to holders of Shares prior to the time a holder's Shares are tendered pursuant to the Offer, certificates representing a number of Rights equal to the number of shares of Common Stock tendered must be delivered to the Depositary, or, if available, a Book-Entry Confirmation (as defined herein) received by the Depositary with respect thereto, in order for such shares of Common Stock to be validly tendered. If the Distribution Date occurs and separate certificates representing the Rights are not distributed prior to the time Shares are tendered pursuant to the Offer, Rights may be tendered prior to a stockholder receiving the certificates for Rights by use of the guaranteed delivery procedure described below. A tender of shares of Common Stock constitutes an agreement by the tendering stockholder to deliver certificates representing all Rights formerly associated with the number of shares of Common Stock tendered pursuant to the Offer to the Depositary prior to expiration of the period permitted by such guaranteed delivery procedures for delivery of certificates for, or a Book-Entry Confirmation with respect to, Rights (the "Rights Delivery Period"). However, after expiration of the Rights Delivery Period, the Merger Sub may elect to reject as invalid a tender of shares of Common Stock with respect to which certificates for, or a Book-Entry Confirmation with respect to, the number of Rights required to be tendered with such Common Stock have not been received by the Depositary. Nevertheless, the Merger Sub will be entitled to accept for payment shares of Common Stock tendered by a stockholder prior to receipt of the certificates for the Rights required to be tendered with such shares of Common Stock, or a Book-Entry Confirmation with respect to such Rights, and either (a) subject to complying with applicable rules and regulations of the SEC, withhold payment for such shares of Common Stock pending receipt of the certificates for, or a Book- Entry Confirmation with respect to, such Rights or (b) make payment for shares of Common Stock accepted for payment pending receipt of the certificates for, or a Book-Entry Confirmation with respect to, such Rights in reliance upon the agreement of a tendering stockholder to deliver Rights and such guaranteed delivery procedures. Any determination by the Merger Sub to make payment for shares of Common Stock in reliance upon such agreement and such guaranteed delivery procedures or, after expiration of the Rights Delivery Period, to reject a tender as invalid will be made in the sole and absolute discretion of the Merger Sub. Book-Entry Delivery. The Depositary will establish accounts with respect to the Shares at the Depository Institutions (each a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry 5 Transfer Facilities") for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in any of the Book-Entry Transfer Facilities' systems may make a book-entry transfer of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with such Book-Entry Transfer Facility's procedures for such transfer. Although delivery of Shares may be effected through book-entry transfer, either the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be transmitted to and received by the Depositary by the Expiration Date at one of its addresses set forth on the back cover of this Offer to Purchase, or the tendering stockholder must comply with the guaranteed delivery procedures described below. If the Distribution Date occurs, the Depositary will also make a request to establish an account with respect to the Rights at each of the Book-Entry Transfer Facilities, but no assurance can be given that book-entry transfer of Rights will be available. If book-entry transfer of Rights is available, the foregoing book-entry transfer procedures will also apply to Rights. If book-entry transfer of Rights is not available and the Distribution Date occurs, a tendering stockholder will be required to tender Rights by means of physical delivery to the Depositary of certificates for Rights (in which event references in this Offer to Purchase to Book-Entry Confirmations with respect to Rights will be inapplicable). The confirmation of a book-entry transfer of Shares or Rights into the Depositary's account at a Book-Entry Transfer Facility as described above is referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. THE METHOD OF DELIVERY OF SHARES, RIGHTS, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Signature Guarantees. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed (a) if the Letter of Transmittal is signed by the registered holders (which term, for purposes of this section, includes any participant in any of the Book-Entry Transfer Facilities' systems whose name appears on a security position listing as the owner of the Shares or Rights) of Shares (or Rights, if applicable) and such registered holder has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal, or (b) if such Shares and Rights are tendered for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. If the certificates for Shares or Rights are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made or certificates for Shares or Rights not tendered or not accepted for payment are to be returned to a person other than the registered holder of the certificates surrendered, then the tendered certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holders or owners appear on the certificates, with the signatures on the certificates or stock powers guaranteed as described above. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. A stockholder who desires to tender Shares (or Rights, if applicable) pursuant to the Offer and whose certificates for Shares (or Rights, if applicable) are not immediately 6 available (including because certificates for Rights have not yet been distributed by the Rights Agent), or who cannot comply with the procedure for book-entry transfer on a timely basis, or who cannot deliver all required documents to the Depositary prior to the Expiration Date, may tender such Shares (and/or Rights, if applicable) by following all of the procedures set forth below: (i)such tender is made by or through an Eligible Institution; (ii)a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Merger Sub, is received by the Depositary (as provided below) prior to the Expiration Date; and (iii) the certificates for all tendered Shares and/or Rights, in proper form for transfer (or a Book-Entry Confirmation with respect to all such Shares and/or Rights), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal), and any other required documents, are received by the Depositary (a) in the case of Shares, within three trading days after the date of execution of such Notice of Guaranteed Delivery or (b) in the case of Rights, within a period ending on the later of (1) three trading days after the date of execution of such Notice of Guaranteed Delivery or (2) three trading days after the date certificates for Rights are distributed to stockholders by the Rights Agent. A "trading day" is any day on which the New York Stock Exchange (the "NYSE") is open for business. The Notice of Guaranteed Delivery may be delivered by hand to the Depositary or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. Other Requirements. Notwithstanding any provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry Confirmation with respect to) such Shares and, if the Distribution Date occurs, certificates for (or a timely Book-Entry Confirmation, if available, with respect to) the associated Rights, unless the Merger Sub elects to make payment for such shares of Common Stock pending receipt of the certificates for, or a Book-Entry Confirmation with respect to, such Rights as described above, (b) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal), and (c) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when certificates for Shares (or Rights, if applicable) or Book-Entry Confirmations with respect to Shares (or Rights, if available) are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE OF THE SHARES BE PAID BY THE MERGER SUB, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. Tender Constitutes an Agreement. The valid tender of Shares and, if applicable, Rights pursuant to one of the procedures described above will constitute a binding agreement between the tendering stockholder and the Merger Sub on the terms and subject to the conditions of the Offer. Appointment. By executing a Letter of Transmittal as set forth above, the tendering stockholder irrevocably appoints designees of the Merger Sub as such stockholder's proxies, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Merger Sub and with respect to any and all cash dividends, distributions, rights, 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 proxies will be considered coupled with 7 an interest in the tendered Shares, including the associated Rights. Such appointment is effective when, and only to the extent that, the Merger Sub deposits the payment for such Shares with the Depositary. Upon the effectiveness of such appointment, all prior powers of attorney, proxies and consents given by such stockholder will be revoked, and no subsequent powers of attorney, proxies and consents may be given (and, if given, will not be deemed effective). The Merger Sub's designees will, with respect to the Shares for which the appointment is effective, be empowered to exercise all voting and other rights of such stockholder as they, in their sole discretion, may deem proper at any annual, special or adjourned meeting of the stockholders of the Company, by written consent in lieu of any such meeting or otherwise. The Merger Sub reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Merger Sub's payment for such Shares, the Merger Sub must be able to exercise full voting rights with respect to such Shares. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any tender of Shares or Rights will be determined by the Merger Sub in its sole discretion, which determination will be final and binding. The Merger Sub reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of the Merger Sub's counsel, be unlawful. The Merger Sub also reserves the absolute right to waive any defect or irregularity in the tender of any Shares or Rights of any particular stockholder whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares or Rights will be deemed to have been validly made until all defects and irregularities relating thereto have been cured or waived. None of the Merger Sub, the Depositary, the Information Agent, the Dealer Managers or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Merger Sub's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and Instructions thereto) will be final and binding. Backup Withholding. In order to avoid "backup withholding" of Federal income tax on payments of cash pursuant to the Offer, a stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on a Substitute Form W-9 and certify under penalties of perjury that such TIN is correct and that such stockholder is not subject to backup withholding. If a stockholder does not provide such stockholder's correct TIN or fails to provide the certifications described above, the Internal Revenue Service (the "IRS") may impose a penalty on such stockholder and payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 31%. All stockholders surrendering Shares pursuant to the Offer should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the Merger Sub and the Depositary). Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Non- corporate foreign stockholders should complete and sign the main signature form and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See Instruction 9 to the Letter of Transmittal. 4. RIGHTS OF WITHDRAWAL. 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 by the Merger Sub pursuant to the Offer, may also be withdrawn at any time after September 29, 1997. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back 8 cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the names in which the certificate(s) evidencing the Shares to be withdrawn are registered, if different from that of the person who tendered such Shares. The signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of any Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry tender as set forth in Section 3, any notice of withdrawal must specify the name and number of the account at the Depository Institution to be credited with the withdrawn 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 name of the registered holder and the serial numbers shown on such certificates must also be furnished to the Depositary as aforesaid prior to the physical release of such certificates. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Merger Sub, in its sole discretion, which determination shall be final and binding. None of Purchaser, the Merger Sub, the Dealer Managers, the Depositary, the Information Agent, 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 such notification. Withdrawals of tenders of Shares may not be rescinded, and any Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by following one of the procedures described in Section 3 at any time prior to the Expiration Date. If the Merger Sub extends the Offer, is delayed in its acceptance for payment of Shares, or is unable to accept for payment Shares pursuant to the Offer, for any reason, then, without prejudice to the Merger Sub's rights under this Offer, the Depositary may, nevertheless, on behalf of the Merger Sub, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as set forth in this Section 4. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER. Sales of Shares pursuant to the Offer and the exchange of Shares for cash pursuant to the Merger will be taxable transactions for Federal income tax purposes and may also be taxable under applicable state, local and other tax laws. For Federal income tax purposes, a stockholder whose Shares are purchased pursuant to the Offer or who receives cash as a result of the Merger will realize gain or loss equal to the difference between the adjusted basis of the Shares sold or exchanged and the amount of cash received therefor. Such gain or loss will be capital gain or loss if the Shares are held as capital assets by the stockholder and generally will be long-term capital gain or loss for stock held for more than one year. THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL SITUATIONS SUCH AS STOCKHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS WHO ARE NOT UNITED STATES PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX LAWS. 6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are traded on The Nasdaq Stock Market's National Market (the "Nasdaq National Market") under the symbol "NELL." The Company does not pay cash dividends on the Shares. The 9 following table sets forth, based upon public sources, for the calendar quarters indicated, the high and low quoted bid prices for the Shares on the Nasdaq National Market:
BID QUOTES SHARES --------------- HIGH LOW ------- ------- CALENDAR YEAR 1995: First Quarter.......................................... $19.625 $16.125 Second Quarter......................................... 23.625 18.250 Third Quarter.......................................... 27.875 22.344 Fourth Quarter......................................... 31.000 23.875 1996: First Quarter.......................................... 36.375 27.750 Second Quarter......................................... 34.750 23.875 Third Quarter.......................................... 27.500 21.250 Fourth Quarter......................................... 23.375 18.125 1997: First Quarter.......................................... 24.750 15.875 Second Quarter......................................... 21.500 14.625 Third Quarter (through July 25, 1997).................. 28.094 18.000
The Rights trade together with the Common Stock. On July 23, 1997, the last full trading day prior to the public announcement of the terms of the Offer and the Merger, the quoted closing bid price on the Nasdaq National Market was $20.936 per Share. On July 28, 1997, the last full trading day prior to commencement of the Offer, the quoted closing bid price on the Nasdaq National Market was $28.078 per Share. Stockholders are urged to obtain a current market quotation for the Shares. 7. EFFECT OF THE OFFER ON MARKET FOR THE SHARES, STOCK EXCHANGELISTING, AND EXCHANGE ACT REGISTRATION. Market for Shares. The purchase of Shares by the Merger Sub pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and may reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by the public. Stock Quotation. The Shares are quoted on the Nasdaq National Market. According to published guidelines of the Nasdaq National Market, the Shares would no longer be quoted on the Nasdaq National Market if, among other things, the number of publicly held Shares (excluding Shares held directly or indirectly by officers, directors and any person who is a beneficial owner of more than 10% of the Shares) were less than 200,000, the aggregate market value of publicly held Shares were less than $1,000,000 or there were fewer than 400 holders of the Shares or 300 holders in round lots. If these standards were not met, quotations might continue to be published in the over- the-counter "additional list" or one of the "local lists" unless, as set forth in published guidelines of the Nasdaq National Market, the number of publicly held Shares was less than 100,000, or there were fewer than 300 holders in total. According to information furnished to Purchaser by the Company, as of the close of business on July 25, 1997, there were 2,521 holders of record of shares of Common Stock not including beneficial holders of Common Stock held in street name, and there were 63,687,307 Shares outstanding. If the Common Stock were to cease to be included in the Nasdaq National Market, the associated Rights would be delisted as well. If the Shares were to cease to be quoted on the Nasdaq National Market, the market for the Shares could therefor be adversely affected. It is possible that the Shares would be traded or quoted on other securities exchanges or in the over-the-counter market, and that price quotations would be 10 reported by such exchanges, or other sources. The extent of the public market for the shares of Common Stock and associated Rights and the availability of such quotations would, however, depend upon the number of stockholders and/or the aggregate market value of the shares of Common Stock and associated Rights remaining at such time, the interest in maintaining a market in the shares of Common Stock and associated Rights on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act and other factors. Margin Regulations. The shares of Common Stock are presently "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 of Common Stock. Depending upon factors similar to those described above regarding listing and market quotations, the shares of Common Stock might no longer constitute "margin securities" for the purposes of the Federal Reserve Board's margin regulations in which event the shares of Common Stock would be ineligible as collateral for margin loans made by brokers. Exchange Act Registration. The shares of Common Stock and associated Rights are currently registered under the Exchange Act. Such registration may be terminated by the Company upon application to the SEC if the outstanding shares of Common Stock and associated Rights are not listed on a national securities exchange and if there are fewer than 300 holders of record of shares of Common Stock and associated Rights. Termination of registration of the shares of Common Stock and associated Rights under the Exchange Act would reduce the information required to be furnished by the Company to its stockholders and to the SEC and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) and the requirement of furnishing a proxy statement in connection with stockholders' meetings pursuant to Section 14(a) and the related requirement of furnishing an annual report to stockholders, no longer applicable with respect to the shares of Common Stock and Rights. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 under the Securities Act of 1933, as amended, may be impaired or eliminated. If registration of the shares of Common Stock under the Exchange Act were terminated, the shares of Common Stock would no longer be eligible for quotation on the Nasdaq National Market or for continued inclusion on the Federal Reserve Board's list of "margin securities." The Merger Sub intends to seek to cause the Company to apply for termination of registration of the shares of Common Stock and associated Rights as soon as possible after consummation of the Offer if the requirements for termination of registration are met. 8. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a Delaware corporation with its principal executive offices located at 4280 Hacienda Drive, Pleasanton, California 94588; telephone number (510) 463-4000. The Company has described its business in publicly available information in the manner set forth below. The Company, until the acquisition of Puritan-Bennett Corporation ("Puritan- Bennett") in August 1995, operated under the name Nellcor Incorporated. The Company designs, manufactures and markets a comprehensive line of products for the monitoring, diagnosis and treatment of respiratory-impaired patients across the spectrum of acute, alternate and home care. The Company's product lines include pulse oximetry monitors and sensors, critical care and portable ventilators, home oxygen therapy products such as liquid oxygen systems and oxygen concentrators, sleep apnea diagnostic and therapy products and medical gas products and distribution systems. The Company's products are sold worldwide, principally through a direct sales force, assisted by clinical consultants and specialists, corporation account managers and independent distributors. Set forth below is certain summary consolidated financial information for each of the Company's three fiscal years in the period ended July 7, 1996 and for the nine months ended April 6, 1997 and 11 March 31, 1996. The Company acquired Aequitron Medical, Inc. ("Aequitron") on December 5, 1996, in a stock for stock merger accounted for as a pooling of interests. Accordingly, the consolidated financial information presented below, combines the historical financial results of the Company and Aequitron for all periods. Historical financial information for the three fiscal years ended July 7, 1996 reported in the Company's 1996 Annual Report on Form 10-K was combined with financial information for each of the three fiscal years ended April 30, 1996 reported in Aequitron's 1996 Annual Report on Form 10-K. Historical unaudited financial information for the nine months ended April 6, 1997 and March 31, 1996 was reported in the Company's Quarterly Report on Form 10-Q for the third quarter ended April 6, 1997. More comprehensive financial information is included in such report (including management's discussion and analysis of financial condition and results of operation) and other documents filed by the Company with the SEC, and the following summary is qualified in its entirety by reference to such report and other documents and all of the financial information and notes contained therein. Copies of such report and other documents may be examined at or obtained from the SEC and NASDAQ in the manner set forth below. THE COMPANY SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED FISCAL YEAR ENDED ----------------- --------------------------- APRIL 6, MARCH JULY 7, JULY 2, JULY 3, 1997(1) 31, 1996 1996(3) 1995 1994(4) -------- -------- -------- -------- -------- STATEMENT OF OPERATIONS DATA Net revenue.................... $566,267 $535,008 $744,609 $653,868 $590,442 Cost of goods sold............. 298,938 260,287 363,244 326,853 297,178 -------- -------- -------- -------- -------- Gross profit................. 267,329 274,721 381,365 327,015 293,264 -------- -------- -------- -------- -------- Operating expenses............. 225,130 287,277 377,757 250,925 284,278 Net income (loss)............ 27,088 (18,787) (6,949) 49,970 (8,412) Net income (loss) per common share......................... 0.42 (0.30) (0.11) 0.82 (0.14) Weighted average common and common equivalent shares...... 63,888 63,612 61,595 60,736 59,441 BALANCE SHEET DATA Current assets................. $454,621 $384,187 $414,882 $405,705 $352,812 Total assets................. 659,457 581,214 610,922 620,333 542,887 Current liabilities............ 178,232 143,251 160,900 129,358 120,824 Long-term debt, less current maturities.................... 5,970 8,473 8,394 54,492 38,742 Total liabilities............ 201,640 171,264 188,855 214,112 187,370 Stockholders' equity........... 659,457 409,950 422,067 406,221 355,517
- -------- (1) In connection with the Company's acquisition of Aequitron, one-time merger and related costs of $21.7 million were recorded during the nine months ended April 6, 1997. (2) In connection with the Company's acquisition of Puritan-Bennett, one-time merger and related costs of $92.6 million were recorded during the nine months ended March 21, 1996. (3) In connection with the Company's acquisition of Puritan-Bennett and Infrasonics, one-time merger and related costs of $108.9 million were recorded during the fiscal year ended July 7, 1996. (4) The Company accrued restructuring charges totalling approximately $43.2 million and recorded litigation settlements of approximately $13.0 million during the fiscal year ended July 3, 1994. Except as otherwise set forth herein, the information concerning the Company contained in this Offer to Purchase has been taken from or based upon publicly available documents and records on file with the SEC and other public sources and is qualified in its entirety by reference thereto. Although 12 Purchaser, the Merger Sub, the Information Agent and the Dealer Managers have no knowledge that would indicate that any statements contained herein based on such documents and records are untrue, Purchaser, the Merger Sub, the Information Agent and the Dealer Managers cannot take responsibility for the accuracy or completeness of the information contained in such documents and records, 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 Purchaser, the Merger Sub, the Information Agent or the Dealer Managers. The Company is subject to the information and reporting requirements of the Exchange Act and in accordance therewith is obligated to file reports and other information with the SEC relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities, any material interests of such persons in transactions with the Company and other matters is required to be disclosed in proxy statements distributed to the Company's stockholders and filed with the SEC. Such reports, proxy statements and other information should be available for inspection at the public reference room at the SEC's offices at 450 Fifth Street, N.W., Washington, D.C. 20549 and also should be available for inspection and copying at the regional offices of the SEC 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 may be obtained, by mail, upon payment of the SEC's customary charges, by writing to its principal office at 450 Fifth Street, N.W., Washington, DC 20549 and can be obtained electronically on the SEC's Website at http://www.sec.gov. Such material should also be available for inspection at the offices of NASDAQ Operations, 1735 K Street, N.W., Washington, DC 20006. 9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND MERGER SUB. The Merger Sub is a Delaware corporation and to date has engaged in no activities other than those incident to its formation and the commencement of the Offer. The Merger Sub is a direct wholly owned subsidiary of Purchaser. The principal executive offices of Purchaser and the Merger Sub are located at 7733 Forsyth Blvd., St. Louis, Missouri 63105; telephone number (314) 854- 5200. Purchaser is an international company serving specialty markets in human healthcare and chemicals. Purchaser was incorporated in New York in 1909 under the name International Agricultural Corporation. Additional information concerning Purchaser is set forth in Purchaser's Annual Report on Form 10-K for the year ended June 30, 1996 and subsequent Quarterly Reports on Form 10-Q, which reports may be obtained from the SEC in the manner set forth with respect to information concerning the Company in Section 8 and should also be available for inspection at the NYSE, 20 Broad Street, New York, New York 10005. 13 Set forth below is certain consolidated financial information of Purchaser: PURCHASER SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN MILLIONS, EXCEPT PER SHARE DATA)
UNAUDITED ----------------- YEARS ENDED NINE MONTHS ENDED JUNE 30, MARCH 31, -------------------------- ----------------- 1996(A) 1995(A) 1994(A) 1997 1996(A) -------- -------- -------- -------- -------- STATEMENT OF OPERATIONS DATA Net sales......................... $1,754.4 $1,588.3 $1,348.4 $1,364.8 $1,263.6 Operating costs and expenses...... 1,459.2 1,320.4 1,187.9 1,147.9 1,057.6 Operating earnings................ 295.2 267.9 160.5 216.9 206.0 Earnings from continuing operations before income taxes... 243.7 218.6 125.5 195.8 165.3 Earnings from continuing operations....................... 153.7 136.7 79.2 125.3 103.6 Net earnings...................... 211.9 180.3 103.8 127.5 144.9 Earnings per common share: Continuing operations........... $ 2.01 $ 1.76 $ 1.01 $ 1.66 $ 1.35 Discontinued operations......... .76 .56 .32 .03 .54 Net earnings.................... $ 2.77 $ 2.32 $ 1.33 $ 1.69 $ 1.89 Weighted average common and common equivalent shares................ 76.3 77.5 77.6 75.4 76.7
UNAUDITED --------- JUNE 30, JUNE 30, JUNE 30, MARCH 31, 1996(A) 1995 1994 1997 -------- -------- -------- --------- BALANCE SHEET DATA Current assets............................. $1,252.5 $ 979.0 $ 932.0 $1,184.5 Total assets............................... 3,088.4 2,677.4 2,433.5 2,917.3 Current liabilities........................ 893.4 707.1 670.7 559.1 Long-term debt, less current maturities.... 558.0 501.5 522.0 550.3 Total liabilities.......................... 1,856.2 1,505.9 1,417.6 1,661.2 Shareholders' equity....................... 1,232.2 1,171.5 1,015.9 1,256.1
- -------- (a) Restated for divestitures of Fries & Fries, Inc. and its 50% interest in Tastemaker, and the animal health segment. 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 Purchaser and the Merger Sub are set forth in Schedule A to this Offer to Purchase. Neither Purchaser nor the Merger Sub, nor, to the best of their knowledge, any of the persons listed in Schedule A hereto nor any associate or majority- owned subsidiary of any of the foregoing, beneficially owns or has a right to acquire any equity securities of the Company. Neither Purchaser nor the Merger Sub, nor, to the best of their knowledge, any of the persons or entities referred to above, nor any director, executive officer or subsidiary of any of the foregoing, has effected any transaction in such equity securities during the past 60 days. Neither Purchaser nor the Merger Sub nor, to the best of their knowledge, any of the persons listed in Schedule A 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, 14 joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. There have been no contacts, negotiations or transactions since July 4, 1994 between Purchaser or the Merger Sub, or, to the best of their knowledge, any of the persons listed in Schedule A 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. Neither Purchaser nor the Merger Sub, nor, to the best of their knowledge, any of the persons listed in Schedule A hereto, has since July 4, 1994 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 SEC applicable to the Offer. 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. By virtue of their respective activities with the Health Industries Manufacturers Association and contact at industry trade shows and similar events, C. Ray Holman, Chairman and Chief Executive Officer of Purchaser, and C. Ray Larkin, President and Chief Executive Officer of the Company, have been acquainted with one another for a number of years and have had, from time to time, informal discussions concerning the respective businesses and strategies of their two companies. In January 1997, Mr. Holman and Mr. Larkin had dinner during which Mr. Holman mentioned that he would be interested in exploring the possibility of some type of strategic combination between the two companies. Mr. Holman requested a subsequent meeting and Mr. Larkin agreed. On January 29, 1997, Mr. Holman and Mr. Larkin met and discussed the general business strategies of each of their companies. Mr. Holman also reiterated Purchaser's interest in pursuing some type of strategic business combination with the Company on a friendly basis. Mr. Larkin indicated that the Company was committed to carrying out its existing strategy as an independent company. However, he indicated that the Company's Board of Directors would, of course, have to consider any firm proposal that was presented to it in the exercise of the Board's obligation to the Company's stockholders. Mr. Holman suggested that, to further facilitate discussions, the Company provide Purchaser with additional information concerning the Company. Mr. Larkin indicated that he would discuss the matter with the Company's Board. In late March, the Company engaged Morgan Stanley & Co. Incorporated ("Morgan Stanley") to act as its financial advisor for certain stockholder relations matters, including the provision of financial advisory services in connection with evaluating any acquisition or business combination proposals that might arise. Morgan Stanley and the Company executed an engagement letter with respect to such services on May 8, 1997. At the March 27, 1997 regularly scheduled meeting of the Company's Board, Mr. Larkin updated the Board on his discussions with Mr. Holman. The Board authorized Mr. Larkin to continue those discussions and for the Company to exchange information with Purchaser subject to the execution of a confidentiality/standstill agreement between the parties. Mr. Larkin talked to Mr. Holman following the March 27, 1997 Board meeting and informed him that any further discussions would be subject to the execution of a confidentiality and standstill agreement between the parties. In early April 1997, Mr. Holman called Mr. Larkin and informed him that, while Purchaser was still interested in pursuing discussions, those discussions would need to be postponed for several weeks pending Purchaser's proposed disposition of its animal-health business. On May 31, 1997, Mr. Holman called Mr. Larkin to schedule a meeting to resume the discussions between the parties. On June 3, 1997, Messrs. Holman and Larkin, Michael P. Downey, Executive Vice President and Chief Financial Officer of the Company and Michael A. Rocca, Senior Vice President and Chief Financial Officer of Purchaser, met to exchange information related to the markets, operations, historical financial performance and strategic direction of the two companies. On 15 the day prior to the meeting, the Company and Purchaser had entered into a confidentiality agreement which contained, among other things, a standstill agreement prohibiting either company from acquiring securities of the other party for three years without the prior consent of such other company's Board. On June 12, 1997, at a meeting of the Company's Board of Directors, management and representatives of Morgan Stanley updated the Board concerning the discussions with Purchaser. The Board of Directors authorized the Company's management to further pursue the possibility of a business combination with Purchaser. Also at this meeting representatives of Morgan Stanley made a presentation to the Board concerning its preliminary conclusions about the valuation of the Company as a stand-alone entity. On June 18, 1997, the Board of Directors of Purchaser met, at which meeting Mr. Holman updated the Board concerning the discussions with the Company, and Purchaser's legal and financial advisors advised the Board concerning a potential business combination between Purchaser and the Company. On various dates between June 12 and June 26, 1997, representatives of Morgan Stanley and Goldman, Sachs & Co., ("Goldman Sachs") had several telephone conversations in which the Goldman Sachs representatives reiterated Purchaser's strong interest in pursuing a possible business combination with the Company based on the due diligence done to date. The representatives of Morgan Stanley indicated that Purchaser would have to make a proposal with acceptable terms and conditions, including price, before the Company would consider further pursuing a potential business combination with Purchaser. On June 26, 1997, financial advisors for Purchaser and the Company held a meeting in which representatives of Goldman Sachs presented Purchaser's proposal that Purchaser and the Company enter into a merger agreement pursuant to which Purchaser would purchase all of the outstanding Shares for cash at a price of $26.00 per Share, contingent upon the completion of due diligence and the negotiation and completion of a definitive merger agreement. The representatives of Morgan Stanley at the meeting indicated that, based upon its discussions with the Company's management and Board of Directors, they believed that a price of $26.00 per Share was below what the Company's management and Board would deem acceptable. On July 7, 1997 the financial advisors for Purchaser and the Company had a telephone conversation during which representatives of Goldman Sachs indicated that Purchaser would be prepared to increase its offer to $27.00 per Share, contingent upon the completion of due diligence and the negotiation and completion of a definitive merger agreement and that Mr. Holman would be prepared to meet with Mr. Larkin to complete price negotiations. The representatives of Morgan Stanley indicated that Mr. Larkin would not be prepared to meet with Mr. Holman based upon an offer of $27.00 per Share and that Mr. Larkin was of the view that the proposal did not sufficiently take into account certain operational benefits created by the potential business combination. On July 8, 1997, after a number of discussions with Mr. Larkin and the Company's management, representatives of Morgan Stanley telephoned representatives of Goldman Sachs and indicated that they believed that the Company's Board would be receptive to an offer of $29.00 per Share, assuming that all of the other terms and conditions of the merger agreement were acceptable to the Company. On July 9, 1997, Messrs. Larkin and Holman had a telephone conversation in which Mr. Holman indicated he would be prepared to seek his Board's approval of a transaction of $28.00 per Share but not at $29.00 per Share. Mr. Larkin responded that he did not believe his Board would be receptive to a transaction at that price. Mr. Larkin also indicated that the Company's Board would be meeting during the afternoon of July 12, 1997 to discuss the impasse between the parties on the valuation issue. 16 On July 10, 1997, at a special meeting of the Company's Board of Directors, Mr. Larkin updated the Board on the status of the negotiations with the Purchaser. The Board discussed with Mr. Larkin and other members of management the current status of the Company's business and its growth and profitability prospects as reflected in management's strategic plan as well as the relative benefits to the Company's stockholders represented by continuing to pursue the Company's strategy as a stand-alone entity as compared to a transaction with Purchaser at $28.00 per Share. The Board instructed Mr. Larkin to continue to pursue a transaction with Purchaser but to seek a price in the range of $29.00 per Share. On July 11, 1997, the financial advisors for Purchaser and the Company had a telephone conversation during which representatives of Goldman Sachs reiterated that Purchaser was not prepared to increase its offer to $29.00 per Share. The representatives of the respective financial advisors for the Company and Purchaser agreed that, based upon the disagreement regarding price, discussions regarding the potential business combination would likely be suspended. On July 12, 1997, the Company's Board of Directors held a special meeting to discuss the status of the negotiations with Purchaser. Shortly before the meeting, Mr. Holman called Mr. Larkin to communicate a revised offer of $28.50 per Share, which Mr. Holman characterized as Purchaser's final offer. Contemporaneously with Mr. Holman's call, the representatives of Goldman Sachs called representatives of Morgan Stanley and confirmed that the $28.50 offer was Purchaser's best and final offer. Mr. Larkin informed the Board of the negotiations that had taken place since the Board's July 10th meeting and his belief, supported by his discussions with representatives of Morgan Stanley, that $28.50 per Share represented the highest offer Purchaser was willing to make. The Board again discussed with members of management alternatives for maximizing stockholder value, including remaining an independent company. At the end of the meeting, the Board authorized Mr. Larkin and the Company's financial advisor to communicate to Purchaser that the Board would be receptive to a proposal by Purchaser to acquire the Company at $28.50 per Share, subject to negotiation of an acceptable definitive merger agreement. On the evening of July 12, 1997, Mr. Larkin telephoned Mr. Holman and indicated that he would be prepared to present Mr. Holman's proposal for consideration by the Company's Board of Directors, contingent upon the completion of due diligence and the negotiation and completion of an acceptable definitive merger agreement. On July 14, 1997, the Board of Directors of the Company met by telephone, at which meeting Mr. Larkin updated the Board concerning the discussions with Purchaser and the Company's legal and financial advisors advised the Board concerning the proposed structure for potential business combination. On July 15, 1997, the Board of Directors of Purchaser met by telephone, at which meeting Mr. Holman updated Purchaser's Board of Directors concerning the status of the proposed transaction. Between July 15, 1997 and July 23, 1997, officers and employees of Purchaser completed their due diligence review of the Company's business and affairs. On July 17, 1997, Purchaser's counsel delivered to the Company's counsel a draft merger agreement, and from July 17, 1997 through July 23, 1997, representatives of Purchaser and the Company and their respective counsel met in person and by telephone to negotiate the terms of the Merger Agreement, including the amount of the termination fee and the circumstances in which it would be payable to Purchaser. All remaining issues under discussion were resolved by telephone on the morning of July 23, 1997. On July 23, 1997, the Board of Directors of Purchaser met, at which meeting Mr. Holman and other officers of Purchaser updated the Board concerning the discussions with the Company. Purchaser's counsel advised the Board concerning the proposed Merger Agreement; and Purchaser's financial advisors advised the Board concerning the proposed transaction. Purchaser's Board of Directors unanimously approved and adopted the Merger Agreement. 17 Following the meeting of Purchaser's Board of Directors, the Board of Directors of the Company met, at which meeting Mr. Larkin and other officers of the Company updated the Board on the negotiations with Purchaser concerning the definitive merger agreement. The Company's counsel advised the Board concerning the proposed Merger Agreement and the Board's fiduciary duties under Delaware law in connection with a "change of control" transaction of the type represented by the Merger Agreement. In addition, representatives of Morgan Stanley advised the Board concerning the proposed transaction and rendered Morgan Stanley's opinion, subsequently confirmed in writing, that, as of the date of such opinion, the term of the Offer and the Merger were fair to the stockholders of the Company from a financial point of view. The Company's Board of Directors unanimously determined that the Offer and the Merger Agreement to be fair to and in the best interests of the Company and its stockholders, unanimously approved the Offer and the Merger Agreement, and unanimously recommended that the Company's stockholders accept the Offer and tender their Shares pursuant to the Offer. Following the approval and adoption of the Merger Agreement by the Company's Board of Directors, Purchaser, the Company and the Merger Sub executed and delivered the Merger Agreement on July 23, 1997. The terms of the Merger Agreement are set forth in Section 11. A copy of the Merger Agreement has been filed as Exhibit 9 hereto. 11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER. Purpose. The purpose of the Offer is to acquire for cash as many outstanding Shares as possible as a first step in acquiring the entire equity interest in the Company. If the Merger Sub acquires 50% of the outstanding Shares pursuant to the Offer, it will have the vote necessary under the DGCL to approve the Merger. Under the DGCL, if the Merger Sub owns at least 90% of the outstanding Shares, the Merger may be effected without the vote of the Company's stockholders. Therefore, if 57,318,577 Shares (or such greater number as may be necessary if options are exercised) are acquired pursuant to the Offer or otherwise, the Merger Sub will be able to and intends to effect the Merger without a meeting of holders of Shares. The Merger Agreement provides that, promptly after expiration of the Offer and receipt of any required approval by the Company's stockholders of the Merger Agreement and the satisfaction or waiver of certain other conditions the Merger Sub will be merged into the Company. Upon consummation of the Merger, each then outstanding Share not owned by Purchaser Companies (other than Shares held by Dissenting Stockholders), will be converted into the right to receive the Merger Consideration. The respective obligations of the Company, Purchaser and the Merger Sub to consummate the Merger are subject to the fulfillment of certain conditions set forth in the Merger Agreement, any or all of which may be waived in whole or in part by Purchaser or the Merger Sub, as the case may be, to the extent permitted by applicable law, including (i) if required by the DGCL, the approval of the Merger Agreement by the holders of a majority of the Shares in accordance with applicable law and the certificate of incorporation and bylaws of the Company, (ii) the purchase by Merger Sub (or one of the Purchaser Companies) of Shares pursuant to the Offer, (iii) there being no statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) enacted, issued, promulgated, enforced or entered by any United States or state court or other Governmental Entity (as defined in the Merger Agreement) of competent jurisdiction in effect which prohibits consummation of the transactions contemplated by the Merger Agreement (collectively, an "Order"), and (iv) the Company's representations and warranties concerning the Rights Amendment remaining true and correct and the Company having performed its obligations set forth in the Merger Agreement concerning, among other things, taking all action to provide for the cash-out immediately prior to the Effective Time of employee stock options granted prior to July 22, 1997; provided that this last condition shall be deemed satisfied if Purchaser's designees to the Company's Board of Directors 18 constitute a majority of the members of the Company's Board and take any action to reverse, modify or amend any action taken by the Company's Board prior to such designees constituting a majority of the Company's Board. Termination Provisions. According to its terms, the Merger Agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the Effective Time, before or after approval by holders of Shares: (a) by the mutual consent of Purchaser and the Company, by action of their respective Boards of Directors; or (b) by action of the Board of Directors of either Purchaser or the Company if (i) the Merger Sub, or any Purchaser Company, shall have terminated the Offer without purchasing any Shares pursuant thereto; or (ii) the Merger shall not have been consummated by December 31, 1997, whether or not such date is before or after the approval by holders of Shares; or (iii) if required, the stockholders of the Company shall not have approved the Merger Agreement at a meeting duly convened therefor; or (iv) any court of competent jurisdiction or other governmental body located or having jurisdiction within the United States or any country or economic region in which either the Company or Purchaser, directly or indirectly, has material assets or operations, shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Offer or the Merger and such order, decree, ruling or other action is or shall have become final and nonappealable; or (c) by action of the Board of Directors of Purchaser if: (i)The Company shall have breached or failed to perform in any material respect any of the covenants or agreements contained in the Merger Agreement to be complied with or performed by the Company prior to such date of termination which breach or failure shall not have been cured prior to the earlier of (A) ten business days following the giving of written notice to the Company of such breach or failure and, if applicable, (B) the date on which the Offer is then scheduled to expire, or any representation or warranty of the Company set forth in the Merger Agreement shall have been inaccurate or incomplete when made except for such failures to be complete or accurate that, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or could prevent or materially delay the transactions contemplated by the Merger Agreement or impair the ability of Purchaser, Merger Sub, the Company or any of their respective affiliates, following consummation of the Offer or the Merger, to conduct any material business or operations in any jurisdiction where they are now being conducted; or (ii)The Board of Directors of the Company (or a special committee thereof) shall have amended, modified or withdrawn in a manner adverse to Purchaser or Merger Sub its approval or recommendation of the Offer, the Merger Agreement or the Merger or the Board of Directors of the Company, upon request by Purchaser, shall have failed to publicly reaffirm such approval or recommendation within ten business days of such request by Purchaser or shall have endorsed, approved or recommended any other Acquisition Proposal (as defined under "Acquisition Proposals" below) or shall have resolved to do any of the foregoing; or (iii) The Company shall have entered into any agreement, letter of intent or agreement in principle with respect to any other Acquisition Proposal; or (d) by action of the Board of Directors of the Company, among other things, if: (i) Purchaser or the Merger Sub (or another Purchaser Company) shall have breached or failed to perform in any material respect any of the covenants or agreements contained in the Merger Agreement to be complied with or performed by Purchaser or the Merger Sub prior to such date of termination which breach or failure shall not have been cured prior to the earlier of (A) ten business days following the giving of written notice to the Purchaser of such breach or failure, and, if applicable, (B) the date on which the Offer is then scheduled to expire; or (ii) (w) the Company is not in material breach of any of the terms of the Merger Agreement, (x) the Board of Directors of the Company authorizes the Company, subject to complying with the terms of the Merger Agreement, to enter into a definitive written acquisition agreement concerning an Acquisition Transaction (as defined under "Acquisition Proposals" below) (such an agreement, an "Alternative Acquisition Agreement") and five business days elapse after delivery to Purchaser of a written notice that the Board of Directors of the Company has so authorized the Company to enter into such Alternative Acquisition Agreement, attaching the most current version of 19 such agreement (which shall include all of the material terms, including the price proposed to be paid for Shares pursuant thereto) to such notice, (y) Purchaser does not make, within five business days of receipt of such written notice from the Company, an offer that the Board of Directors of the Company determines, in good faith after consultation with its financial advisors, is at least as favorable, from a financial point of view, to the stockholders of the Company as the offer set forth in the Alternative Acquisition Agreement that the Company has indicated that it intends to enter into following the end of such five business day period, and (z) the Company, prior to such termination, pays to Purchaser, in immediately available funds, the fees described in the next paragraph. The Merger Agreement provides that if (i) (x) the Offer shall have remained open for a minimum of at least 25 business days, (y) after the date of the Merger Agreement any corporation, partnership, person, other entity or group (as defined in Section 13(d)(3) of the Exchange Act) other than Purchaser or the Merger Sub or any of their respective subsidiaries or affiliates (collectively, a "Person") shall have become the beneficial owner of 15% or more of the outstanding Shares or shall have publicly announced a proposal or intention to make an Acquisition Proposal or any Person shall have commenced, or shall have publicly announced an intention to commence, a tender offer or exchange offer for 15% or more of the outstanding Shares, and (z) the Minimum Condition shall not have been satisfied and the Offer is terminated without the purchase of any Shares thereunder, or (ii) Purchaser shall have terminated the Merger Agreement in accordance with clause (c)(ii) or (c)(iii) of the previous paragraph, or (iii) the Company shall have terminated the Merger Agreement in accordance with clause (d)(ii) of the previous paragraph, then the Company shall promptly, but in no event later than two days after the date of such termination (except as otherwise expressly provided in accordance with clause (d)(ii)(z) requiring an earlier payment), pay Purchaser a fee of $45,000,000 (the "Termination Fee") and shall reimburse Purchaser and the Merger Sub (not later than one business day after submission of statements therefor) for (i) an amount equal to all of the actual documented out-of- pocket charges and expenses incurred by Purchaser and the Merger Sub in connection with the Merger Agreement and the transactions contemplated thereby up to a maximum amount of $3,500,000, plus (ii) an amount equal to all of the actual documented financing fees paid by Purchaser in connection with the Credit Facility (as defined in Section 12) up to a maximum amount of $4,000,000 (such charges, expenses and financing fees referred to in clauses (i) and (ii) collectively, the "Purchaser Expenses"), in each case payable by wire transfer in same day funds. If the Merger Agreement is terminated by Purchaser in accordance with clause (c)(i) of the previous paragraph, then the Company shall promptly pay to Purchaser the Purchaser Expenses and, if within 18 months of the date of such termination, the Company shall enter into any agreement with respect to an Acquisition Transaction, the Company shall, promptly, but in no event later than two days after the entry into such agreement, pay Purchaser the Termination Fee. If the Company fails to promptly pay the Termination Fee or Purchaser Expenses when due, and, in order to obtain such payment, Purchaser or the Merger Sub commences a suit which results in a judgment against the Company for the fee set forth in this paragraph, the Company shall pay to Purchaser or the Merger Sub its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the amount of the fee at the prime rate of Morgan Guaranty Trust Company of New York on the date such payment was required to be made. The Merger Agreement provides that if the Merger Agreement is terminated by the Company in accordance with clause (d)(i) of the previous paragraph or by the Company or Purchaser in accordance with clause (b)(i) of the previous paragraph in the event the Merger Sub or Purchaser shall have terminated the Offer in violation of the terms of the Offer, then Purchaser shall promptly reimburse the Company (not later than one business day after submission of statements therefor) for an amount equal to the Company's actual documented out-of-pocket expenses incurred in connection with the transactions contemplated by the Merger Agreement in an amount not to exceed $3,500,000. Amendment. Subject to the applicable provisions of the DGCL, at any time prior to the Effective Time, the parties to the Merger Agreement may modify or amend the Merger Agreement by written agreement executed and delivered by duly authorized officers of the respective parties. 20 Treatment of Options. The Merger Agreement provides that except in accordance with the next sentence, the Company shall take such actions as may be necessary such that immediately prior to the Effective Time of the Merger each stock option outstanding pursuant to the Company's stock option plans listed in the Merger Agreement (each, an "Option"), whether or not then exercisable, shall be canceled and only entitle the holder thereof, upon surrender thereof, to receive an amount in cash from the Company equal to the result of multiplying the number of Shares previously subject to such Option by the difference between the Merger Consideration and the per Share exercise price of such Option. Notwithstanding anything contained in the Merger Agreement to the contrary, all Options granted after July 21, 1997 shall, at the Effective Time, be assumed by Purchaser in accordance with the terms of the applicable Stock Plan and the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each post July 21, 1997 Option may be exercised solely for shares of Purchaser common stock, (ii) the number of shares of Purchaser common stock subject to such Option shall be equal to the result (rounded down to the nearest whole share) of multiplying the number of Shares subject to such Option immediately prior to the Effective Time by a fraction (the "Conversion Fraction"), the numerator of which is the Merger Consideration and the denominator of which is the average of the closing prices of one share of Purchaser common stock on the NYSE for the five business days immediately prior to the Effective Time and (iii) the per share exercise price under each such Option shall be equal to the result (rounded up to the nearest whole cent) of dividing the per share exercise price under each such Option immediately prior to the Effective Time by the Conversion Fraction, provided, however, that with respect to any Option which is an "incentive stock option," within the meaning of Section 422 of the United States Internal Revenue Code of 1986, as amended (the "Code"), the adjustments provided in the Merger Agreement shall, if applicable, be modified in a manner so that the adjustments are consistent with requirements of Section 424(a) of the Code. Pursuant to the cancellation of options, based upon the options outstanding at July 25,1997 and a $28.50 offer price, a total of approximately $69.2 million would be paid to optionees, including $20,053,939.50 to executive officers and $6,360,516.00 to non-employee directors of the Company. The Merger Agreement provides that the Company will take such actions as may be necessary so that each employee participating in the Company's 1995 Employee Stock Participation Plan, as amended (the "1995 ESPP") immediately prior to the Effective Time shall only be entitled to receive an amount in cash equal to the result of multiplying (i) the Merger Consideration by (ii) a fraction, the numerator of which is the accumulated payroll deductions in the employee's account under the 1995 ESPP at the Effective Time, and the denominator of which is the purchase price for the "Offering" for the "Purchase Period" (as such terms are defined in the 1995 ESPP) in effect immediately prior to the Effective Time. The Company agrees to take such actions as may be necessary to cease as of the Effective Time all further offerings and payroll deductions under the 1995 ESPP. All restrictions on the retention of shares of restricted stock granted to employees under the Company's 1994 Equity Incentive Plan, as amended, shall lapse immediately prior to the Effective Time. Indemnification of Officers and Directors. The Merger Agreement provides that from and after the Effective Time, Purchaser will to the fullest extent that the Company would have been permitted under Delaware law and the Company's certificate of incorporation and bylaws, and cause the Surviving Corporation, to the fullest extent permitted under Delaware law, to indemnify and hold harmless each present and former director and officer of the Company, determined as of the Effective Time, against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time. The Merger Agreement also provides that Purchaser shall cause the Surviving Corporation either (i) to maintain the Company's existing officers' and directors' liability insurance (or equivalent thereof) ("D&O Insurance") for a period of six years after the Effective Time, so long as the annual premium therefor 21 is not in excess of an amount (the "D&O Premium") equal to 150% of the last annual premium paid prior to the date of the Merger Agreement; provided, however, that if the existing D&O Insurance expires, is terminated or canceled during such six year period, the Surviving Corporation will use its best efforts to obtain as much D&O Insurance as can be obtained for the remainder of such period for a premium not in excess (on an annualized basis) of the D&O Premium, or (ii) purchase tail insurance in respect of the existing D&O Insurance for six years for a premium not to exceed $1,000,000. Treatment of Employees. The Merger Agreement provides that during the period commencing at the Effective Time and ending on the second anniversary thereof, the employees of the Company will continue to be provided with benefits under employee benefit plans (other than stock options or other plans involving the issuance of securities of the Company or Purchaser) which in the aggregate are substantially comparable to those currently provided by the Company to such employees; provided, however, that employees covered by collective bargaining agreements need not be provided with such benefits. Purchaser will cause each employee benefit plan of Purchaser in which employees of the Company are eligible to participate to take into account for purposes of eligibility and vesting thereunder the service of such employees with the Company as if such service were with Purchaser, to the same extent that such service was credited under a comparable plan of the Company. Purchaser will, and will cause the Surviving Corporation to, honor in accordance with their terms (i) all employee benefit obligations to current and former employees of the Company accrued as of the Effective Time and (ii) to the extent set forth in the disclosure letter delivered in connection with the Merger Agreement, all employee severance plans in existence on the date of the Merger Agreement and all employment or severance agreements entered into prior to the date of the Merger Agreement. Chief Executive Officer Agreement. Prior to entering into the Merger Agreement, Mr. Larkin and Purchaser orally agreed that Mr. Larkin's employment by the Company shall cease as of the Effective Time. At such time, Mr. Larkin will be entitled to receive approximately $2.7 million pursuant to his severance agreement with the Company. At the Effective Time, Mr. Larkin will enter into an employment agreement with Purchaser with a one year term, to serve as Executive Vice President of Purchaser and pursuant to which he will also serve as President and Chief Executive Officer of Company. Mr. Larkin will receive a base salary equal to the salary currently being paid to him by the Company, plus an annual bonus of $250,000 to $500,000, depending on the achievement of specific performance criteria to be mutually agreed upon by Mr. Larkin and Purchaser. Mr. Larkin will be entitled to a stock appreciation rights award which will provide him a cash payment in an amount equal to the price of Purchaser's Common Stock one year after the Effective Time minus the price at the Effective Time times 25,000. Mr. Larkin will receive vacation and sick leave in accordance with the Company's policy prior to the Effective Time and will be entitled to participate in the Company's employee benefit plans. Composition of the Board of Directors. The Merger Agreement provides that, if requested by Purchaser, the Company will, subject to compliance with applicable law and promptly following the purchase by the Merger Sub of such number of Shares pursuant to the Offer as satisfies the Minimum Condition, take all actions necessary to cause persons designated by Purchaser to become directors of the Company so that the total number of such persons equals not less than the product of the total number of directors on the Board (giving effect to the directors elected in accordance with this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Merger Sub or any affiliate of the Merger Sub bears to the total number of Shares then outstanding. In furtherance thereof, the Company has agreed to increase the size of its Board of Directors, or use its reasonable efforts to secure the resignation of directors, or both, as is necessary to permit Purchaser's designees to be elected to the Company's Board of Directors, provided that at all times prior to the Effective Time, the Company's Board of Directors shall consist of at least two members who are neither officers, stockholders, designees nor affiliates of Purchaser ("Purchaser Representatives"). The Company's obligations to appoint designees to the Company's Board of Directors are subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. 22 Acquisition Proposals. Pursuant to the Merger Agreement, the Company agreed that it, its affiliates and its and their respective officers, directors, employees, representatives and agents (including, without limitation, any investment banker, attorney or accountant retained by the Company or any of its subsidiaries) would immediately cease any existing discussions or negotiations, if any, with any parties conducted theretofore with respect to any acquisition or exchange of all or any material portion of the assets of, or more than 15% of the equity interest in, the Company or (except for the Company's Aero division) any of its subsidiaries (by direct purchase from the Company, tender or exchange offer or otherwise) or any business combination, merger or similar transaction (including an exchange of stock or assets) with or involving the Company or any subsidiary or division of the Company (an "Acquisition Transaction"). The Merger Agreement provides that, except as set forth therein, neither the Company nor any of its affiliates, nor any of its or their respective officers, directors, employees, representatives or agents, will, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Purchaser and the Merger Sub, any affiliate or associate of Purchaser and the Merger Sub or any designees of Purchaser and the Merger Sub) with respect to any inquiries or the making of any offer or proposal (including, without limitation, any offer or proposal to the stockholders of the Company) concerning an Acquisition Transaction (an "Acquisition Proposal"); provided, however, that the Company may directly or indirectly, furnish information and access pursuant to an appropriate confidentiality agreement, in each case only in response to a request for information or access, to any person making a written Acquisition Proposal to the Board of Directors of the Company made after the date of the Merger Agreement which was not encouraged, solicited or initiated by the Company or any of its affiliates or any of its or their respective officers, directors, employees, representatives or agents on or after the date of the Merger Agreement and may participate in discussions and negotiate with such person concerning any such Acquisition Proposal, if and only if the Board of Directors of the Company determines in good faith, based upon the advice of outside counsel to the Company, that failing to provide such information or access or to participate in such discussions or negotiations would constitute a breach of the Board's fiduciary duty under applicable law and provided, further, that nothing in the Merger Agreement shall prevent the Board from taking, and disclosing to the Company's stockholders, a position contemplated by Rules 14d-9 and 14e-2 under the Exchange Act with regard to any tender offer, and provided, further, that the Board shall not recommend that the stockholders of the Company tender their Shares in connection with any such tender offer unless the Board shall have determined in good faith, based upon the advice of outside counsel to the Company, that failing to take such action would constitute a breach of the Board's fiduciary duty under applicable law. The Merger Agreement provides that the Company's Board of Directors will notify Purchaser immediately if any such written Acquisition Proposal is made and shall in such notice indicate the identity of the offeror and the terms and conditions of any such proposal. The Company has agreed not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which the Company is a party, unless the Company's Board of Directors shall have determined in good faith, based upon the advice of outside counsel to the Company, that failing to release such third party or waive such provisions would constitute a breach of the Board's fiduciary duties under applicable law. Covenants. The Merger Agreement also contains certain other restrictions as to the conduct of business by the Company pending the Merger, as well as representations and warranties of each of the parties customary in transactions of this kind. Appraisal Rights. No appraisal rights are available in connection with the Offer. However, if the Merger is consummated, each stockholder of the Company who has neither voted in favor of the Merger nor consented thereto in writing will be entitled to an appraisal by the Delaware Court of Chancery of the fair value of his Shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with a fair rate of interest, if any, to be paid. In determining such fair value, the Court may consider all relevant factors. The value so determined could 23 be more or less than the consideration to be paid in the Offer and the Merger. Any judicial determination of the fair value could be based upon considerations other than or in addition to the market value of the Shares, including, among other things, assets values and earning capacity. Rule 13e-3. Rule 13e-3 under the Exchange Act, which Purchaser does not believe would be applicable to the Merger, would require, 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 stockholders of the Company therein, be filed with the SEC and disclosed to stockholders of the Company prior to consummation of the transaction. Rights Agreement. Set forth below is a summary description of the Rights as filed with the Company's Registration Statement on Form 8-A dated March 14, 1996, relating to the Rights, as amended by the Rights Amendment. On June 11, 1991, the Board of Directors of the Company declared a dividend of one Right for each outstanding share of Common Stock pursuant to the terms of a Rights Agreement, dated June 11, 1991. The dividend was paid on June 26, 1991 (the "Record Date") to the stockholders of record on that date. Rights have also been issued with respect to each share of Common Stock issued or delivered after the Record Date. The Rights Agreement was first amended as of September 1, 1992 with The First National Bank of Boston becoming the Rights Agent (the "Rights Agent"). The Rights Agreement as so amended is referred to as the "Original Rights Agreement." On March 8, 1996, the Company and the Rights Agent entered into an Amended and Restated Rights Agreement. On July 23, 1997, the Company and ChaseMellon Shareholder Services, L.L.C., as successor Rights Agent, entered into the Rights Amendment. Each Right entitles the registered holder to purchase from the Company one two-hundredth of a share of Series A Junior Participating Preferred Stock, par value $.001 per share (the "Preferred Shares"), of the Company at a price of $160 per one two-hundredth of a Preferred Share (the "Purchase Price"), subject to adjustment. Initially, the Rights are evidenced by the stock certificates representing the Common Stock, and no separate Rights certificates have been or will be distributed until the earlier to occur of (i) 10 days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") have acquired beneficial ownership of 15% or more of the outstanding Common Stock or (ii) 10 business days (or such later date as may be determined by action of the Board of Directors prior to such time as any person or group of affiliated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer (other than the Offer) or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the outstanding Common Stock (the earlier of such dates being called the "Distribution Date"). Pursuant to the Rights Amendment, neither Purchaser nor the Merger Sub will become an Acquiring Person as a result of the transactions contemplated by the Merger Agreement. Until the Distribution Date (or earlier redemption, exchange or expiration of the Rights), the Rights will be transferred with and only with the Common Stock. Until the Distribution Date (or the earlier redemption, exchange or expiration of the Rights), new Common Stock certificates issued after the Record Date upon transfer or new issuance of Common Stock have contained and will contain a notation incorporating the current version of the Rights Agreement by reference. Until the Distribution Date (or earlier redemption, exchange or expiration of the Rights) the surrender for transfer of any certificates for Common Stock outstanding as of the Record Date, even without such notation or a copy of this or other Summary of Rights being attached thereto, will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date, and such separate Right Certificates alone will evidence the Rights. 24 The Rights will expire on March 8, 2006 (the "Final Expiration Date"), unless the Final Expiration Date is extended or unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described below. Pursuant to the Rights Amendment, all outstanding Rights will expire (whether or not tendered and purchased pursuant to the Offer) upon and as of the acceptance (so long as Purchaser or a wholly owned subsidiary thereof thereafter purchases Shares pursuant to the Offer) for payment pursuant to the Offer of Shares that, together with any Shares owned by Purchaser or the Merger Sub, constitutes more than 50% of the voting power (determined on a fully-diluted basis) of all the securities of the Company entitled to vote generally in the election of directors or in connection with the Merger upon consummation of the Offer. The Rights are not exercisable until the Distribution Date and thereafter are exercisable for a period of 60 days; provided that the Rights are not exercisable if a person becomes an Acquiring Person pursuant to a tender or exchange offer for all outstanding Common Stock at a price and on terms determined by the Board of Directors (including a majority of the incumbent Board) to be fair to the stockholders of the Company after taking into account all factors deemed relevant and otherwise in the best interest of the Company and its stockholders. At its meeting on July 23, 1997, the Board of Directors made such determination with respect to the Offer. In addition, the Rights are not exercisable until the Company's right of redemption (as described below) has expired. The Purchase Price payable, and the number of Preferred Shares or other securities or property issuable, upon exercise of the Rights are subject to adjustment pursuant to customary antidilution provisions. Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each Preferred Share will be entitled to a minimum preferential quarterly dividend payment of $1.00 per share but will be entitled to an aggregate dividend of 100 times the dividend declared per Common Stock. In the event of liquidation, the holders of the Preferred Shares will be entitled to a minimum preferential liquidation payment of $100 per share but will be entitled to an aggregate payment of 100 times the payment made per Common Stock. Each Preferred Share will have 100 votes, voting together with the Common Stock. Finally, in the event of any merger, consolidation or other transaction in which shares of Common Stock are exchanged, each Preferred Share will be entitled to receive 100 times the amount received per Common Share. These rights are protected by customary antidilution provisions. Because of the nature of the Preferred Shares' dividend, liquidation and voting rights, the value of the one one-hundredth interest in a Preferred Share purchasable upon exercise of each Right should approximate the value of one share of Common Stock. The Preferred Shares rank junior to all other series of the Company's preferred stock. In the event that the Company is acquired in a merger or other business combination transaction (other than the Merger) or 50% or more of its consolidated assets or earning power is sold, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, such number of shares of common stock of the acquiring company as at the time of such transaction will have a market value of two times the exercise price of the Right. In the event that any person or group of affiliated or associated persons becomes an Acquiring Person, proper provision shall be made so that each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have the right to receive upon exercise that number of shares of Common Stock having a market value of two times the exercise price of the Right (or, if such number of shares of Common Stock is not authorized, the Company may issue cash, debt, stock or a combination thereof in exchange for the Rights). At any time after any Person becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding Common Stock, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such person or group which will have 25 become void), in whole or in part, at an exchange ratio of one Common Share, or one two-hundredth of a Preferred Share (or of a share of a class or series of the Company's preferred stock having equivalent rights, preferences and privileges or the Company may issue cash, debt or other property or any combination thereof), per Right (subject to adjustment). At any time until ten days following the date on which a person becomes an Acquiring Person, the Company's Board of Directors may redeem the Rights in whole, but not in part, at a price of $0.01 per Right. Under certain circumstances, the decision to redeem shall require the concurrence of a majority of the Incumbent Board (as defined in the Rights Agreement). The redemption of the Rights may be made effective at such time and upon such conditions as the Company's Board of Directors in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the redemption price. The terms of the Rights may be amended by the Company's Board of Directors without the consent of the holders of the Rights, including an amendment to lower the 15% beneficial ownership threshold described above with respect to an Acquiring Person to any percentage which is (i) greater than the largest percentage of the outstanding Common Stock then known to the Company to be beneficially owned by any person or group of affiliated or associated persons (other than the Company, any subsidiary of the Company, employee benefit plans of the Company or any subsidiary, or any entity holding Common Stock pursuant to the terms of any such plan) and (ii) not less than 10%, except that from and after such time as any person or group of affiliated or associated persons becomes an Acquiring Person, no amendment may adversely affect the interests of the holders of the Rights (other than an Acquiring Person). After a person becomes an Acquiring Person and under certain other circumstances, amendments to the Amended Rights Agreement require the concurrence of a majority of the Incumbent Board. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. Pursuant to the Merger Agreement, the Company has taken all action necessary to provide that (x) the execution of the Merger Agreement and the announcement, commencement and consummation of the transactions contemplated thereby will not cause (i) Purchaser and/or the Merger Sub to become an Acquiring Person or (ii) a Distribution Date, a Share Acquisition Date or a Triggering Event to occur, and (y) all outstanding Rights will expire (whether or not tendered and purchased pursuant to the Offer) upon and as of the acceptance for payment pursuant to the Offer (so long as Purchaser or a wholly-owned subsidiary thereof thereafter purchases Shares accepted for payment pursuant to the Offer) Shares that, together with any Shares owned by Purchaser or the Merger Sub, constitutes more than 50% of the voting power (determined on a fully-diluted basis) of all the securities entitled to vote generally in the election of directors or in connection with the Merger upon consummation of the Offer, and neither the Company, Purchaser nor Merger Sub nor any of their respective affiliates shall have any obligations under the Rights Agreement to any holder (or former holder) of Rights following consummation of the Offer. 12. SOURCE AND AMOUNT OF FUNDS. The Merger Sub estimates that the total amount of funds required to purchase all of the outstanding Shares pursuant to the Offer and the Merger and to pay related fees and expenses will be approximately $1,900,000,000. The Merger Sub expects to obtain these funds from capital contributions or advances made by Purchaser. Purchaser plans to obtain the funds for such capital contributions or advances from a combination of its working capital and borrowings under a Credit Agreement, dated July 23, 1997 (the "Credit Facility"), which provides a $1,600,00,000 five-year senior unsecured revolving credit facility and a $400,000,000 two-year senior unsecured term loan facility. At present, there is no outstanding indebtedness under the Credit Facility. The Credit Facility is provided 26 by a group of lenders comprised of Morgan Guaranty Trust Company of New York, as Administrative Agent, Goldman Sachs Credit Partners L.P., as Syndication Agent, and Citibank, N.A. as Documentation Agent (collectively, the "Lenders"). Under the Credit Agreement, Purchaser may request that the Lenders make loans which bear interest by reference to the Base Rate, the Adjusted CD Rate or the London Interbank Offered Rate (as each such term is defined in the Credit Agreement) plus an amount ranging from 0.30% to 0.875%, in the case of loans made by reference to the Adjusted CD Rate, and 0.175% to 0.75%, in the case of the loans made by reference to the London Interbank Offered Rate, in each case dependent on Purchaser's senior debt rating. Purchaser also has the right under the Credit Facility to solicit the Lenders to make certain money market loans to Purchaser, which are loans to Purchaser at interest rates bid by those Lenders that have offered to make money market loans to Purchaser. Purchaser has agreed to pay a periodic facility fee to each Lender and an annual administrative fee to the Administrative Agent. The covenants in the Credit Facility restrict or limit, among other things, (i) the incurrence of certain debt by Purchaser's subsidiaries, (ii) liens on the assets of Purchaser and its subsidiaries, (iii) certain mergers, consolidations and sales of assets by Purchaser and its subsidiaries, (iv) certain transactions with affiliates of Purchaser, (v) the use of proceeds of the loans made under the Credit Facility and (vi) restrictions on covenants the company may agree to in connection with certain other debt instruments. In addition, the Credit Facility requires that Purchaser and its restricted subsidiaries, on a consolidated basis, satisfy an interest coverage test and a debt-to-capital test. The foregoing description is qualified in its entirety by reference to the Credit Facility, which is incorporated herein by reference and a copy of which has been filed with the SEC as an exhibit to Purchaser's Tender Offer Statement on Schedule 14D-1. The Credit Facility may be examined and copies may be obtained at the place and in the manner set forth in Section 9. It is anticipated that the indebtedness incurred by Purchaser in connection with the Offer and the Merger will be paid from funds generated internally by Purchaser and its subsidiaries (including, after the Merger, if consummated, dividends paid by the Company and its subsidiaries), through additional borrowings, through application of proceeds of dispositions or through combination of two or more such sources. No final decisions have been made, however, concerning the method Purchaser will employ to repay such indebtedness. Such decisions, when made will be based on Purchaser's review from time to time of the advisability of particular actions, as well as on prevailing interest rates and financial and other economic conditions. 13. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer, the Merger 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 the Merger Sub's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, or may delay the acceptance for payment of or payment for, any tendered Shares, or may, in its sole discretion (subject to the Merger Agreement), terminate or amend the Offer as to any Shares not then paid for if, (i) prior to the expiration of the Offer, (x) a number of Shares which, together with any Shares owned by Purchaser or the Merger Sub, constitutes more than 50% of the voting power (determined on a fully-diluted basis) of all the securities of the Company entitled to vote generally in the election of directors or in connection with a merger shall not have been validly tendered and not withdrawn prior to the expiration of the Offer (the "Minimum Condition") or (y) any waiting periods under the HSR Act applicable to the purchase of Shares pursuant to the Offer, and any similar waiting periods under any foreign statutes or regulations that are applicable to the Offer or the Merger shall not have expired or been terminated, or any regulatory approvals applicable to the Offer and the Merger shall not have been obtained on terms satisfactory to the Purchaser in its reasonable judgment, or (ii) on or after July 23, 1997, and at or before the Expiration Date any of the following events shall occur: 27 (a) there shall have occurred and be continuing (i) any general suspension of, or limitation on prices for, trading in securities on the NYSE or in the over-the-counter market, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any material limitation (whether or not mandatory) by any Governmental Entity on, or any other event that could reasonably be expected to materially adversely affect, the extension of credit by banks or other lending institutions, (iv) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof, or (v) any material adverse change in the relevant financial markets that could reasonably be expected to materially and adversely affect the syndication of the Credit Facility; (b) the Company shall have breached or failed to perform in any material respect any of the covenants or agreements contained in the Merger Agreement to be complied with or performed by the Company prior to the date of termination of the Merger Agreement which breach or failure shall not have been cured prior to the earlier of (i) ten business days following the giving of written notice to the Company of such breach or failure and, (ii) the date on which the Offer is then scheduled to expire, or any representation or warranty of the Company set forth in the Merger Agreement shall have been inaccurate or incomplete when made or, except for those representations or warranties that address matters only as of a particular date, thereafter shall become inaccurate or incomplete and except for changes specifically permitted in the Merger Agreement and the failure of any such representations and warranties to be complete and accurate that, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or could prevent or materially delay the transactions contemplated by the Merger Agreement or impair the ability of Purchaser, the Merger Sub, the Company or any of their respective affiliates, following consummation of the Offer or the Merger, to conduct any material business or operations in any jurisdiction where they are now being conducted; (c) there shall be instituted or pending any action, litigation, proceeding, investigation or other application (hereinafter, an "Action") before any court or other Governmental Entity by any Governmental Entity: (i) challenging the acquisition by Purchaser or the Merger Sub of Shares, seeking to restrain or prohibit the consummation of the transactions contemplated by the Offer or the Merger, seeking to obtain any material damages or otherwise directly or indirectly relating to the transactions contemplated by the Offer or the Merger; (ii) seeking to prohibit, or impose any material limitations on, Purchaser's or the Merger Sub's ownership or operation of all or any portion of their or the Company's business or assets (including the business or assets of their respective affiliates and subsidiaries), or to compel Purchaser or Merger Sub to dispose of or hold separate all or any portion of Purchaser's or the Merger Sub's or the Company's business or assets (including the business or assets of their respective affiliates and subsidiaries) as a result of the transactions contemplated by the Offer or the Merger; (iii) seeking to make the acceptance for payment, purchase of, or payment for, some or all of the Shares illegal or render the Merger Sub unable to, or result in a material delay in, or restrict, the ability of the Merger Sub to, accept for payment, purchase or pay for some or all of the Shares; (iv) seeking to impose material limitations on the ability of Purchaser or the Merger Sub effectively to acquire or hold or to exercise full rights of ownership of the Shares including, without limitation, the right to vote the Shares purchased by them on an equal basis with all other Shares on all matters properly presented to the stockholders; or (v) that, in any event, is reasonably likely to have a material adverse effect on the financial condition, properties, business or operations of the Company or Purchaser or the Merger Sub (or any of their respective affiliates or subsidiaries) or the value of the Shares to Purchaser or the Merger Sub or the benefits expected to be derived by Purchaser or the Merger Sub as a result of consummation of the transactions contemplated by the Offer and the Merger; 28 (d) any statute, rule, regulation, order or injunction shall be enacted, promulgated, entered, enforced or deemed or become applicable to the Offer or the Merger, or any Action shall be instituted or pending brought by any person not on behalf of a Governmental Entity or other action shall have been taken by any court or other Governmental Entity other than the application to the Offer or the Merger of waiting periods under the HSR Act, that, in the reasonable judgment of Purchaser, could be expected to, directly or indirectly, result in any of the effects of, or have any of the consequences sought to be obtained or achieved in, any Action referred to in clauses (i) through (v) of paragraph (c) above; (e) a tender or exchange offer for 15% or more of the outstanding Shares shall have been commenced or publicly proposed to be made by another Person (including the Company or its subsidiaries), or it shall have been publicly disclosed or the Purchaser shall have learned that any Person (including the Company or its subsidiaries), shall have become the beneficial owner (as defined in Section 13(d) of the Exchange Act and the rules promulgated thereunder) of more than 15% of any class or series of capital stock of the Company (including the Shares) (other than for bona fide arbitrage purposes); (f) any change or development shall have occurred that has had, or is reasonably likely to have, a material adverse effect on the financial condition, properties, businesses or results of operations of the Company and its subsidiaries taken as a whole; (g) the Board of Directors of the Company (or a special committee thereof) shall have amended, modified or withdrawn in a manner adverse to Purchaser or the Merger Sub its approval or recommendation of the Offer, the Merger Agreement or the Merger, or the Board of Directors of the Company, upon request by Purchaser, shall have failed to publicly reaffirm such approval or recommendation within ten business days of such request by Purchaser, or shall have endorsed, approved or recommended any other Acquisition Proposal, or shall have resolved to do any of the foregoing; or (h) the Merger Agreement shall have been terminated by the Company or Purchaser or the Merger Sub in accordance with its terms or Purchaser or Merger Sub shall have reached an agreement or understanding in writing with the Company providing for termination or amendment of the Offer or delay in payment for the Shares; which, in the sole judgment of Purchaser and the Merger Sub, in any such case, and regardless of the circumstances (including any action or inaction by Purchaser or the Merger Sub) giving rise to any such conditions, makes it inadvisable to proceed with the Offer and/or with such acceptance for payment of or payment for Shares. The foregoing conditions are for the sole benefit of Purchaser and the Merger Sub and may be asserted by Purchaser or the Merger Sub regardless of the circumstances (including any action or inaction by Purchaser or the Merger Sub) giving rise to such condition or may be waived by Purchaser or the Merger Sub, by express and specific action to that effect, in whole or in part at any time and from time to time in its sole discretion. Any determination by Purchaser and the Merger Sub concerning any event described in this section shall be final and binding upon all parties. The failure by the Merger 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 other 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. A public announcement shall be made of a material change in, or waiver of, such conditions, and the Offer may, in certain circumstances, be extended in connection with any such change or waiver. 14. DIVIDENDS AND DISTRIBUTIONS. If, on or after July 29, 1997, the Company should split, combine or otherwise change the Shares or its capitalization, or shall disclose that it has taken any such action, then the Merger Sub, in its 29 discretion, may make such adjustments in the Offer consideration and other terms of the Offer as it deems appropriate to reflect such split, combination or other change. If, on or after July 29, 1997, the Company should declare or pay any cash or stock dividend or other distribution on or issue any rights with respect to the shares of Common Stock, payable or distributable to stockholders of record on a date occurring on or after July 29, 1997 and prior to the transfer to the name of the Merger Sub or its nominees or transferees on the Company's stock transfer records of the shares of Common Stock purchased pursuant to the Offer, then, without prejudice to the Merger Sub's rights under Section 13, (i) the price payable by the Merger Sub pursuant to the Offer will be reduced by the amount of any such cash dividend or distribution and (ii) the whole of any non-cash dividend or distribution (including additional shares of Common Stock or rights as aforesaid) received by a tendering stockholder shall be required to be promptly remitted and transferred by the tendering stockholder to the Depositary for the account of the Merger Sub, accompanied by appropriate documentation of transfer. Pending such remittance or appropriate assurance thereof, the Merger Sub will be, subject to applicable law, entitled to all rights and privileges as owner of any such non-cash dividend, distribution or right and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Merger Sub in its sole discretion. 15. CERTAIN LEGAL MATTERS. General. Except as otherwise disclosed herein, based upon an examination of publicly available filings with respect to the Company, Purchaser and the Merger Sub are not aware of any licenses or other regulatory permits which appear to be material to the business of the Company and which might be adversely affected by the acquisition of Shares by the Merger Sub pursuant to the Offer or of any approval or other action by any governmental, administrative or regulatory agency or authority which would be required for the acquisition or ownership of Shares by the Merger Sub pursuant to the Offer. Should any such approval or other action be required, it is currently contemplated that such approval or action would be sought or taken. There can be no assurance that any such approval or action, if needed, would be obtained or, if obtained, that it will be obtained without substantial conditions or that adverse consequences might not result to the Company's or Purchaser's business or that certain parts of the Company's or Purchaser's business might not have to be disposed of in the event that such approvals were not obtained or such other actions were not taken, any of which could cause the Merger Sub to elect to terminate the Offer without the purchase of the Shares thereunder. The Merger Sub's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See Section 13. Antitrust Compliance. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Justice Department (the "Antitrust Division") and the FTC and certain waiting period requirements have been satisfied. The acquisition of Shares by the Merger Sub is subject to these requirements. See Section 2 of this Offer to Purchase as to the effect of the HSR Act on the timing of the Merger Sub's obligation to accept Shares for payment. Purchaser intends, as soon as reasonably practicable following the date hereof, to file with the FTC and the Antitrust Division a Premerger Notification and Report Form in connection with the purchase of Shares pursuant to the Offer. Under the provisions of the HSR Act applicable to the purchase of Shares pursuant to the Offer, such purchases may not be made until the expiration of a 15-calendar day waiting period following the filing by Purchaser. Pursuant to the HSR Act, Purchaser intends to request early termination of the waiting period applicable to the Offer. There can be no assurances given, however, that the 15-day HSR Act waiting period will be terminated early. If either the FTC or the Antitrust Division were to request additional information or documentary material from Purchaser, the waiting period would expire at 11:59 p.m., New York City time, on the tenth calendar 30 day after the date of substantial compliance by Purchaser with such request. Thereafter, the waiting period could be extended only by agreement or by court order. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the purchase of and payment for Shares will be deferred until 10 days after the request is substantially complied with unless the waiting period is sooner terminated by the FTC or the Antitrust Division. See Section 2. Only one extension of such waiting period pursuant to a request for additional information is authorized by the rules promulgated under the HSR Act, except by agreement or by court order. Any such extension of the waiting period will not give rise to any withdrawal rights not otherwise provided for by applicable law. See Section 4. Although the Company is required to file certain information and documentary material with the Antitrust Division and the FTC in connection with the Offer, neither the Company's failure to make such filings nor a request from the Antitrust Division or the FTC for additional information or documentary material made to the Company will extend the waiting period. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Shares by the Merger Sub pursuant to the Offer. At any time before or after the Merger Sub's purchase of Shares, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Shares pursuant to the Offer or seeking divestiture of Shares acquired by the Merger Sub or the divestiture of substantial assets of Purchaser, the Company or any of their respective 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 on antitrust grounds will not be made or, if a challenge is made, what the result will be. See Section 13 of this Offer to Purchase for certain conditions to the Offer that could become applicable in the event of such a challenge. Foreign Approvals. The Company owns property or conducts business in various foreign countries and jurisdictions. In connection with the acquisition of the Shares pursuant to the Offer, the laws of certain of those foreign countries and jurisdictions may require the filing of information with, or the obtaining of the approval of, governmental authorities in such countries and jurisdictions, including the Regulatory Approvals. The governments in such countries and jurisdictions might attempt to impose additional conditions on the Company's operations conducted in such countries and jurisdictions as a result of the acquisition of the Shares pursuant to the Offer. There can be no assurance that Purchaser will be able to cause the Company or its subsidiaries to satisfy or comply with such laws or that compliance or non-compliance will not have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or impair Purchaser, the Merger Sub or the Company or any of their respective affiliates, following consummation of the Offer or Merger, to conduct any material business or operations in any jurisdiction where they are now being conducted. See Section 13. State Takeover Laws. A number of states have adopted laws and regulations applicable to offers to acquire securities of corporations which are incorporated in such states and/or which have substantial assets, stockholders, principal executive offices or principal places of business therein. In Edgar v. MITE Corporation, the Supreme Court of the United States held that the Illinois Business Takeover Statute, which made the takeover of certain corporations more difficult, imposed a substantial burden on interstate commerce and was therefore unconstitutional. In CTS Corporation v. Dynamics Corporation of America, the Supreme Court held that as a matter of corporate law, and in particular, those laws concerning corporate governance, a state may constitutionally disqualify an acquiror of "Control Shares" (ones representing ownership in excess of certain voting power thresholds e.g. 20%, 33 1/3% or 50%) of a corporation incorporated in its state and meeting certain other jurisdictional requirements from exercising voting power with respect to those shares without the approval of a majority of the disinterested stockholders. 31 The Merger Sub does not believe that any state takeover laws apply to the Offer and it has not complied with any state takeover laws. See Section 11. Should any government official or third party seek to apply any state takeover law to the Offer, the Merger Sub will take such action as then appears desirable. If it is asserted that one or more state takeover laws applies to the Offer and it is not determined by an appropriate court that such act or acts do not apply or are invalid as applied to the Offer, the Merger Sub might be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, if enjoined, the Merger Sub might be unable to accept for payment any Shares tendered pursuant to the Offer, or be delayed in consummating the Offer. In such case, the Merger Sub may not be obligated to accept for payment any Shares tendered. See Section 13. Federal Reserve Board Regulations. Regulations G, T, U and X (the "Margin Regulations") promulgated by the Federal Board place restrictions on the amount of credit that may be extended for the purpose of purchasing margin stock (including the Shares) if such credit is secured directly or indirectly by margin stock. Purchaser and the Merger Sub will attempt to ensure that the financing of the acquisition of the Shares will be in compliance with the Margin Regulations. 16. FEES AND EXPENSES. Goldman Sachs are acting as Dealer Managers in connection with the Offer and have provided certain financial advisory services in connection with the acquisition of the Company. Purchaser has agreed to pay Goldman Sachs a fee of $10,000,000 in the event that Purchaser acquires at least 50% of the Shares or assets of the Company. If the Merger Agreement is terminated and the Company is required to pay a Termination Fee to Purchaser, Purchaser has agreed to pay to Goldman Sachs, upon payment of the Termination Fee, an amount equal to 75% of the fee that would have been payable to Goldman Sachs had Purchaser acquired at least 50% of the Shares. Purchaser has also agreed to reimburse Goldman Sachs for all reasonable out-of-pocket expenses incurred by Goldman Sachs, including the reasonable fees and expenses of legal counsel, and to indemnify Goldman Sachs against liabilities and expenses in connection with its engagement, including certain liabilities under the federal securities laws. The Merger Sub has also retained Georgeson & Company Inc. to act as the Information Agent in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, 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. The Information Agent will receive $10,000 for such services, plus reimbursement of out-of-pocket expenses and the Merger Sub will indemnify the Information Agent against certain liabilities and expenses in connection with the Offer, including liabilities under the federal securities laws. The Merger Sub will pay the Depositary reasonable and customary compensation for its services in connection with the Offer, plus reimbursement for out-of- pocket expenses, and will indemnify the Depositary against certain liabilities and expenses in connection therewith, including liabilities under the federal securities laws. Brokers, dealers, commercial banks and trust companies will be reimbursed by the Merger Sub for customary mailing and handling expenses incurred by them in forwarding material to their customers. 17. MISCELLANEOUS. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in 32 compliance with the laws of such jurisdiction. However, the Merger Sub may, in its sole discretion, take such action as it may deem necessary to make the Offer in any such jurisdiction and extend the Offer to holders of Shares in such jurisdiction. Neither the Purchaser nor the Merger Sub is aware of any jurisdiction in which the making of the Offer or the acceptance of Shares in connection therewith would not be in compliance with the laws of such jurisdiction. The Purchaser and the Merger Sub have filed with the SEC a Statement on Schedule 14D-1 pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, furnishing certain additional information with respect to the Offer, and may file amendments thereto. Such Statement and any amendments thereto, including exhibits, may be examined and copies may be obtained from the principal office of the SEC in Washington, D.C. No person has been authorized to give any information or make any representation on behalf of Purchaser or the Merger Sub not contained in this Offer to Purchase or in the Letter of Transmittal and, if given or made, such information or representation must not be relied upon as having been authorized. NPB ACQUISITION CORP. July 29, 1997 33 SCHEDULE A INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND THE MERGER SUB The following tables set forth the name, business address, present principal occupation and material positions held within the past five years of each director and executive officer of Purchaser and the Merger Sub. Unless otherwise specified, each person listed below is a citizen of the United States and has his or her principal business address at 7733 Forsyth Boulevard, St. Louis, Missouri 63105-1820. PURCHASER
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL NAME AND BUSINESS ADDRESS POSITIONS HELD DURING THE PAST FIVE YEARS ------------------------- ------------------------------------------------------- C. Ray Holman.................... Director since 1992. Chairman and Chief Executive Officer, Mallinckrodt Inc. Chairman, Mallinckrodt Inc. since 1994. Chief Executive Officer, Mallinckrodt Inc. since 1992. President, Mallinckrodt Inc. from 1992 to 1995. Raymond F. Bentele............... Director since 1990. Retired. Prior thereto, President and Chief Executive Officer of Mallinckrodt Inc. from 1981 to 1992. Gareth C.C. Chang................ Director since 1996. President, Hughes International Hughes Electronics and Corporate Senior Vice President, Hughes Electronics 7200 Hughes Terrace since 1993. Prior thereto, Corporate Vice President and Los Angeles, CA 90045-0066 Head, Asia/Pacific, McDonnell Douglas Corporation from 1988 to 1993. William L. Davis III............. Director since 1995. Chairman and Chief Executive R.R. Donnelley and Sons Company Officer, R.R. Donnelley and Sons Company since 1997. The R.R. Donnelley Building Prior thereto, Senior Executive Vice President of 77 West Wacker Drive Emerson Electric Co. from 1993 to 1997. Prior thereto, Chicago, IL 60601-1696 Executive Vice President of Emerson Electric Co. from 1988 to 1993. Ronald G. Evens, M.D. ........... Director since 1990. Director, Mallinckrodt Institute Mallinckrodt Institute of of Radiology at Washington University since 1971. Radiology 510 South Kingshighway St. Louis, MO 63110 Roberta S. Karmel................ Director since 1980. Professor of Law and Co-Director, Kelley, Drye & Warren Center for the Study of International Business Law, 101 Park Avenue Brooklyn Law School since 1985 and Of counsel, Kelley, New York, NY 10178 Drye & Warren since 1995. Prior thereto, Partner, Kelley, Drye & Warren from 1987 to 1994. Claudine B. Malone............... Director since 1994. President, Financial and Financial & Management Management Consulting. Consulting 7570 Potomac Fall Road McLean, VA 22101
A-1 Morton Moskin.................... Director since 1973. Retired. Prior thereto, Partner, White & Case White & Case from 1962 to 1994. 1155 Avenue of the Americas New York, NY 10036 Mack G. Nichols.................. Director since 1995. President and Chief Operating Officer, Mallinckrodt Inc. since 1995. Prior thereto, Senior Vice President, Mallinckrodt Inc. from 1993 to 1995. Prior thereto, Vice President, Mallinckrodt Inc. from 1990 to 1993. Brian M. Rushton, Ph.D. ......... Director since 1994. Retired. Prior thereto, Senior Vice President, Research and Development, Air Products and Chemicals, Inc. from 1992 to 1993. Prior thereto, Vice President, Research and Development, Air Products and Chemicals, Inc. from 1981 to 1993. Daniel R. Toll................... Director since 1985. Retired. Anthony Viscusi.................. Director since 1995. President, Chief Executive Officer Vasomedical, Inc. and Director, Vasomedical, Inc. since 1994. Prior 180 Linden Avenue thereto, Senior Vice President, AgVet Division, Merck & Westbury, NY 11590 Co., Inc. from 1987 to 1993. Barbara A. Abbett................ Vice President, Mallinckrodt Inc. since 1994. Prior thereto, Vice President and Senior Partner, Fleishman- Hillard, Inc. from 1979 to 1994. James C. Carlile................. Vice President, Mallinckrodt Inc. and President, Mallinckrodt Inc. Imaging Division since 1995. Prior thereto, Senior Vice 675 McDonnell Boulevard President, Mallinckrodt Medical, Inc. from 1994 to St. Louis, MO 63042 1995. Prior thereto, Group Vice President, Imaging, Mallinckrodt Medical, Inc. from 1992 to 1994. Ashok Chawla..................... Vice President, Strategic Management since 1991. Charles R. Clark III............. Vice President, Mallinckrodt, Inc. since 1995. Prior Mallinckrodt Inc. thereto, Group Vice President, Mallinckrodt Medical, 675 McDonnell Boulevard Inc. from 1994 to 1995. Prior thereto, Vice President St. Louis, MO 63042 and General Manager, Anesthesiology, Mallinckrodt Medical, Inc. from 1988 to 1994. Michael J. Collins............... Vice President, Mallinckrodt Inc. and President, Mallinckrodt Inc. Pharmaceutical Specialties Division since 1995. Prior 16305 Swingley Ridge Drive thereto, Group Vice President, Mallinckrodt Chemical, Chesterfield, MO 63017 Inc. from 1992 to 1995. Bruce K. Crockett................ Vice President, Human Resources, Mallinckrodt Inc. since 1995. Prior thereto, Vice President, Organization and Development, Eastern Enterprises from 1990 to 1995. J. Eugene Fox, Ph.D.............. Vice President, Science and Technology, Mallinckrodt Inc. since 1995. Prior thereto, Senior Vice President, Mallinckrodt Medical, Inc. from 1992 to 1995. Roger A. Keller.................. Vice President, Secretary and General Counsel, Mallinckrodt Inc. since 1993. Prior thereto, Senior Vice President and General Counsel, Mallinckrodt Medical, Inc. from 1992 to 1993. Prior thereto, Vice President and General Counsel, Mallinckrodt Medical, Inc. from 1989 to 1992.
A-2 Terry D. Meier................... Vice President and Controller, Mallinckrodt Inc. since 1996. Prior thereto, Senior Vice President, Finance and Administration, Mallinckrodt Chemical, Inc. from 1991 to 1996. Michael K. Milosovich............ Vice President, Mallinckrodt Inc. and President, Mallinckrodt Inc. Pharmaceutical Chemicals Division, Mallinckrodt Inc. 16305 Swingley Ridge Drive since 1995. Prior thereto, Vice President, Mallinckrodt Chesterfield, MO 63017 Chemical, Inc. from 1992 to 1995. David Morra...................... Vice President, Mallinckrodt Inc. and President, Mallinckrodt Inc. Nuclear Medicine Division, since 1995. Prior thereto, 675 McDonnell Boulevard President, Nuclear Medicine Division, Mallinckrodt Inc. St. Louis, MO 63042 since 1995. Prior thereto, Senior Vice President, Mallinckrodt Veterinary, Inc., 1995. Prior thereto, Group Vice President, Mallinckrodt Veterinary, Inc. from 1994 to 1995. Prior thereto, Vice President and General Manager, Mallinckrodt Medical, Inc. from 1991 to 1994. Daniel B. Mulholland............. Vice President, Mallinckrodt Inc. and President, Mallinckrodt Baker Inc. Mallinckrodt Baker since 1996. Prior thereto, President 222 Red School Lane and General Manager, Mallinckrodt Baker from 1995 to Phillipsburg, NJ 08865 1996. Prior thereto, President, J.T. Baker from 1992 to 1995. Adeoye Y. Olukotun............... Vice President, Mallinckrodt Inc. since 1996. Prior Mallinckrodt Inc. thereto, Vice President, Bristol-Myers Squibb Co. from 675 McDonnell Boulevard 1991 to 1996. St. Louis, MO 63042 Michael A. Rocca................. Senior Vice President and Chief Financial Officer, Mallinckrodt Inc. since 1994. Prior thereto, Corporate Vice President and Treasurer of Honeywell Inc. from 1992 to 1994. Prior thereto, Vice President, Finance, Honeywell Europe from 1990 to 1992. William B. Stone................. Vice President, Information Technology, Mallinckrodt Mallinckrodt Inc. Inc. since 1996. Prior thereto, Vice President and 16305 Swingley Ridge Drive Controller, Mallinckrodt Inc. from 1990 to 1996. St. Louis, MO 63017 Thomas R. Trotter................ Vice President, Mallinckrodt Inc. and President, Mallinckrodt Inc. Critical Care Division, Mallinckrodt Inc. since 1995. 675 McDonnell Boulevard Prior thereto, Senior Vice President, Mallinckrodt St. Louis, MO 63042 Medical, Inc. from 1994 to 1995. Prior thereto, Group Vice President, Mallinckrodt Medical, Inc. from 1992 to 1994. Daniel E. Woods, Jr.............. Vice President, Mallinckrodt Inc. and Vice President, Mallinckrodt Inc. Mallinckrodt Catalysts and Chemical Additives, 16305 Swingley Ridge Drive Mallinckrodt Inc. since 1996. Prior thereto, President, Chesterfield, MO 63017 Industrial Specialties Division, Mallinckrodt Inc. since 1995. Prior thereto, Group Vice President, Mallinckrodt Chemical, Inc., Mallinckrodt Inc. from 1991 to 1995.
A-3 THE MERGER SUB
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL NAME AND BUSINESS ADDRESS POSITIONS HELD DURING THE PAST FIVE YEARS ------------------------- ------------------------------------------------------- C. Ray Holman.................... Director since 1997. Chairman and Chief Executive Officer since 1997. Chairman and Chief Executive Officer, Mallinckrodt Inc. Chairman, Mallinckrodt Inc. since 1994. Chief Executive Officer, Mallinckrodt Inc. since 1992. President, Mallinckrodt Inc. from 1992 to 1995. Michael A. Rocca................. Director since 1997. Senior Vice President and Chief Financial Officer since 1997. Senior Vice President and Chief Financial Officer, Mallinckrodt Inc. since 1994. Prior thereto, Corporate Vice President and Treasurer of Honey Well Inc. from 1992 to 1994. Prior thereto, Vice President, Finance, Honeywell Europe from 1990 to 1992. Roger A. Keller.................. Director since 1997. Vice President, Secretary and General Counsel since 1997. Vice President, Secretary and General Counsel, Mallinckrodt Inc. since 1993. Prior thereto, Senior Vice President and General Counsel, Mallinckrodt Medical, Inc. from 1992 to 1993. Prior thereto, Vice President and General Counsel, Mallinckrodt Medical, Inc. from 1989 to 1992.
A-4 Facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal, certificates for the Shares and any other required documents should be sent by each stockholder of the Company or his broker-dealer, commercial bank, trust company or other nominee to the Depositary as follows: The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Overnight Courier: By Hand: Reorganization Department Reorganization Department Reorganization Department P.O. Box 3305 85 Challenger Road, Mail 120 Broadway South Hackensack, NJ Drop-Reorg 13th Floor 07606 Ridgefield Park, NJ 07660 New York, NY 10271 By Facsimile Transmission (For Eligible Institutions Only): (201) 329-8936 Confirm Receipt of Facsimile by Telephone Only: (201) 296-4860 Any questions or requests for assistance or additional copies of the Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent or the Dealer Managers at their respective telephone numbers and locations listed below. You may also contact your broker, dealer, commercial bank or trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: GEORGESON & COMPANY, INC. --------------- Wall Street Plaza New York, New York 10005 Banks and Brokers Call Collect: (212) 440-9800 All Others Call Toll-Free: (800) 223-2064 The Dealer Managers for the Offer are: GOLDMAN, SACHS & CO. 85 Broad Street New York, NY 10004 (800) 323-5678 (Toll Free) EX-99.2 3 LETTER OF TRANSMITTAL EXHIBIT (2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK) OF NELLCOR PURITAN BENNETT INCORPORATED AT $28.50 NET PER SHARE BY NPB ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF MALLINCKRODT INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, AUGUST 25, 1997, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Overnight Courier: By Hand: By Mail: Reorganization Department 120 Broadway Reorganization Department 85 Challenger Road, Mail 13th Floor PO Box 3305 Drop-Reorg New York, NY 10271 South Hackensack, NJ Ridgefield Park, NJ 07660 07606 By Facsimile Transmission (For Eligible Institutions Only): (201) 329-8936 Confirm Receipt of Facsimile by Telephone Only: (201) 296-4860 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. 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 used either if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Section 3 of the Offer to Purchase (as defined below)) is utilized, if delivery of Shares is to be made by book-entry transfer to an account maintained by the Depositary at a Book-Entry Transfer Facility, as defined in and pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Stockholders who deliver Shares by book-entry transfer are referred to herein as "Book-Entry Stockholders" and other stockholders are referred to herein as "Certificate Stockholders." Stockholders whose certificates for Shares are not immediately available or who cannot comply with the procedure for book-entry transfer on a timely basis, or who cannot deliver all required documents to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), may tender their Shares in accordance with the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK- ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. DESCRIPTION OF SHARES TENDERED - -------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) (PLEASE FILL IN IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARES TENDERED CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY) - ---------------------------------------------------------------------------------------------------------- TOTAL NUMBER OF SHARES NUMBER CERTIFICATE REPRESENTED BY OF SHARES NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2) -------------------------------------------------------- -------------------------------------------------------- -------------------------------------------------------- -------------------------------------------------------- -------------------------------------------------------- -------------------------------------------------------- TOTAL SHARES
- ------------------------------------------------------------------------------- (1) Need not be completed by Book-Entry Stockholders. (2) Unless otherwise indicated, it will be assumed that all Shares described above are being tendered. See Instruction 4. [_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS THAT ARE PARTICIPANTS IN THE SYSTEM OF ANY BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution_____________________________________________ Check Box of Book-Entry Transfer Facility: [_] The Depository Trust Company [_] Philadelphia Depository Trust Company Account Number____________________________________________________________ Transaction Code Number___________________________________________________ [_] 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 Registered Owner(s)____________________________________________ Date of Execution of Notice of Guaranteed Delivery________________________ Name of Institution which Guaranteed Delivery_____________________________ If delivered by book-entry transfer, check box: [_] The Depository Trust Company [_] Philadelphia Depository Trust Company Account Number____________________________________________________________ Transaction Code Number___________________________________________________ NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to NPB Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly owned subsidiary of Mallinckrodt Inc., a New York corporation ("Purchaser"), the above-described shares, par value $.001 per share (the "Common Stock"), including the associated rights to purchase Series A Junior Participating Preferred Stock (the "Rights" and, together with the Common Stock, the "Shares"), of Nellcor Puritan Bennett Incorporated, a Delaware corporation (the "Company"), pursuant to the Offer to Purchase, dated July 29, 1997 (the "Offer to Purchase"), all of the outstanding Shares at a price of $28.50 per Share, net to the seller in cash, 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, constitute the "Offer"). The undersigned understands that the Merger Sub reserves the right to transfer or assign, from time to time, in whole or in part, to one or more of its affiliates, the right to purchase the Shares tendered herewith. On the terms and subject to the conditions of the Offer (including the Offer Conditions and together with, if the Offer is extended or amended, the terms and conditions of such extension or amendment), subject to, and effective upon, acceptance for payment of, and payment for, the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Merger Sub, all right, title and interest in and to all of the Shares being tendered hereby and any and all cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect of such Shares on or after July 29, 1997 (collectively, "Distributions"), and appoints ChaseMellon Shareholder Services, L.L.C. (the "Depositary") the true and lawful agent and attorney-in- fact of the undersigned with respect to such Shares (and any Distributions) with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to the fullest extent of such stockholder's rights with respect to such Shares (and any Distributions) (a) to deliver such Share Certificates (as defined herein) (and any Distributions) or transfer ownership of such Shares (and any Distributions) on the account books maintained by a Book-Entry Transfer Facility, together in either such case with all accompanying evidences of transfer and authenticity, to or upon the order of the Merger Sub, (b) to present such Shares (and any Distributions) for transfer on the books of the Company and (c) to receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any Distributions), all in accordance with the terms and the conditions of the Offer. The undersigned hereby irrevocably appoints the designees of the Merger Sub, and each of them, the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered hereby which have been accepted for payment and with respect to any Distributions. The designees of the Merger Sub will, with respect to the Shares (and any associated Distributions) for which the appointment is effective, be empowered to exercise all voting and any other rights of such stockholder, as they, in their sole discretion, may deem proper at any annual, special or adjourned meeting of the Company's stockholders, by written consent in lieu of any such meeting or otherwise. This proxy and power of attorney shall be irrevocable and coupled with an interest in the tendered Shares. Such appointment is effective when, and only to the extent that, the Merger Sub deposits the payment for such Shares with the Depositary. Upon the effectiveness of such appointment, without further action, all prior powers of attorney, proxies and consents given by the undersigned with respect to such Shares (and any associated Distributions) will be revoked, and no subsequent powers of attorney, proxies, consents or revocations may be given (and, if given, will not be deemed effective). The Merger Sub reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Merger Sub's acceptance for payment of such Shares, the Merger Sub must be able to exercise full voting rights with respect to such Shares (and any associated Distributions), 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 (and any Distributions) tendered hereby and, when the same are accepted for payment by the Merger Sub, the Merger Sub will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Merger Sub to be necessary or desirable to complete the sale, assignment and transfer of the Shares (and any Distributions) tendered hereby. In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Merger Sub any and all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer; and, pending such remittance or appropriate assurance thereof, the Merger Sub shall be entitled to all rights and privileges as owner of any such Distributions and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Merger Sub in its sole discretion. All authority conferred or agreed to be conferred pursuant to this Letter of Transmittal shall not be affected by, and 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 to Purchase, this tender is irrevocable. The undersigned understands that the valid tender of Shares pursuant to one of the procedures described in Section 3 of the Offer to Purchase will constitute a binding agreement between the undersigned and the Merger Sub upon the terms and subject to the conditions of the Offer. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or return any certificates for Shares not tendered or accepted for payment in the name(s) of the registered owner(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and/or return any certificates for Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered owner(s) appearing under "Description of Shares Tendered." In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or issue any certificates for Shares not tendered or accepted for payment (and any accompanying documents, as appropriate) in the name of, and deliver such check and/or return such certificates (and any accompanying documents, as appropriate) to, the person or persons so indicated. The undersigned recognizes that the Merger Sub has no obligation pursuant to the Special Payment Instructions to transfer any Shares from the name of the registered owner thereof if the Merger Sub does not accept for payment any of the Shares so tendered. SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 5 AND 7) To be completed ONLY if certifi- To be completed ONLY if certifi- cate(s) for Shares not tendered cate(s) for Shares not tendered or not accepted for payment or not accepted for payment and/or the check for the purchase and/or the check for the purchase price of Shares accepted for pay- price of Shares accepted for pay- ment are to be issued in the name ment are to be sent to someone of someone other than the under- other than the undersigned, or to signed. the undersigned at an address other than that shown above. Issue: [_] Check [_] Certificate(s) to: Deliver: [_]Check [_] Certificate(s) to: Name: ____________________________ Name: ____________________________ (PLEASE PRINT) (PLEASE PRINT) Address: _________________________ Address: _________________________ __________________________________ __________________________________ (INCLUDE ZIP CODE) (INCLUDE ZIP CODE) __________________________________ (TAX IDENTIFICATION OR SOCIAL SECURITY NO.) IMPORTANT SIGN HERE (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW) (Signature(s) of Holder(s))............................................. ........................................................................ Dated: ......... ,1997 (Must be signed by registered owner(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered owner(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.) Name(s)................................................................. (PLEASE PRINT) Capacity (Full Title)................................................... Address................................................................. ........................................................................ ........................................................................ ........................................................................ (INCLUDING ZIP CODE) .................................... ................................ AREA CODE AND TELEPHONE NO. TAX IDENTIFICATION OR SOCIAL SECURITY NO. GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature.................................................... Name.................................................................... (PLEASE TYPE OR PRINT) Address................................................................. ................................................................. (INCLUDE ZIP CODE) Name of Firm............................................................ Dated: ......... ,1997 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including most commercial banks, savings and loan associations and brokerage houses) which is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered owners (which term, for purposes of this document, includes any participant in any of the Book-Entry Transfer Facilities' systems whose name appears on a security position listing as the owner of the Shares) of Shares tendered herewith and such registered owner has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5 of this Letter of Transmittal. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY CONFIRMATIONS. This Letter of Transmittal is to be used either if certificates are to be forwarded herewith or if tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Certificates for all physically tendered Shares ("Share Certificates"), or confirmation of any book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of Shares tendered by book-entry transfer, as well as this Letter of Transmittal properly completed and duly executed with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein on or prior to the Expiration Date (as defined in the Offer to Purchase). Stockholders whose certificates for Shares are not immediately available or who cannot deliver all other required documents to the Depositary on or prior to the Expiration Date or who cannot comply with the procedures for book-entry transfer on a timely basis may nevertheless tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Purchaser must be received by the Depositary prior to the Expiration Date; and (iii) Share Certificates or confirmation of any book-entry transfer into the Depositary's account at a Depository Institution of Shares tendered by book-entry transfer, as well as a Letter of Transmittal, properly completed and duly executed with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and all other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. If Share Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE 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 SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal (or facsimile thereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer than all the Shares evidenced by any certificate submitted 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 cases, new certificate(s) for the remainder of the Shares that were evidenced by the old certificate(s) will be sent to the registered owner, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after 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 owners of the Shares tendered hereby, the signature must correspond with the names as written on the face of the certificates without alteration, enlargement or any other change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several 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 or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-at-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Purchaser of their authority so to act must be submitted. If this Letter of Transmittal is signed by the registered owner(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made to, or certificates for Shares not tendered or accepted for payment are to be issued in the name of, a person other than the registered owner(s). Signatures on 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 owner of the certificates(s) listed, the certificate(s) must be endorsed or accompanied by the appropriate stock powers, in either case signed exactly as the name or names of the registered owner or holders appears on the certificate(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. 6. STOCK TRANSFER TAXES. The Merger Sub will pay any stock transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or (in the circumstances permitted hereby) if certificates for Shares not tendered or accepted for payment are to be registered in the name of, any person other than the registered owner, or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered owner or such person) payable on account of the transfer to such person will be deducted from the purchase price if satisfactory evidence of the payment of such taxes, or exemption therefrom, is not 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 INSTRUCTIONS. If a check is to be issued in the name of, and/or certificates for Shares not tendered or accepted for payment are to be issued or returned to, a person other than the signer of this Letter of Transmittal or if a check and/or such certificates are to be mailed to a person other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. 8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses set forth below or from your broker, dealer, commercial bank or trust company. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be obtained from the Information Agent. 9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN"), generally the stockholder's social security or federal employer identification number, on Substitute Form W-9 below. Failure to provide the information on the form may subject the tendering stockholder to 31% federal income tax backup withholding on the payment of the purchase price. The box in Part 3 of the form may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% of all payments of the purchase price thereafter until a TIN is provided to the Depositary. IMPORTANT: THIS LETTER OF TRANSMITTAL (TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Under the federal income tax law, a stockholder whose tendered Shares are accepted for purchase is required by law to provide the Depositary (as payer) with such stockholder's correct TIN on Substitute Form W-9 below and to certify that such TIN is correct (or that such stockholder is awaiting a TIN) or otherwise establish a basis for exemption from backup withholding. If such stockholder is an individual, the TIN is his or her social security number. If a stockholder fails to provide a TIN to the Depositary, such 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 of 31% (see below). 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 generally submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the stockholder or payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder or other payee must also complete the Certification of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. If a stockholder's TIN is provided to the Depositary within 60 days of the date of the Substitute Form W-9, payment will be made to such stockholder without the imposition of backup withholding. If a stockholder's TIN is not provided to the Depositary within such 60-day period, the Depositary will make such payment, subject to backup withholding. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments made to a stockholder whose tendered Shares are accepted for purchase, the stockholder is required to notify the Depositary of its correct TIN by completing Substitute Form W-9 certifying that the TIN provided on such Form is correct (or that such stockholder is awaiting a TIN, in which case the stockholder should check the box in Part 3 of the Substitute Form W- 9) and that (A) such stockholder is exempt from backup withholding, (B) such stockholder has not been notified by the Internal Revenue Service that such stockholder is subject to backup withholding as a result of failure to report all interest or dividends or (C) the Internal Revenue Service has notified the stockholder that the stockholder is no longer subject to backup withholding. The stockholder must sign and date the Substitute Form W-9 where indicated, certifying that the information on such Form is correct. Alternatively, a stockholder that qualifies as an exempt recipient (other than a stockholder required to complete Form W-8 as described above) should write "Exempt" in Part 1 of the Substitute Form W-9, enter its correct TIN and sign and date such Form where indicated. 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 or of the last transferee appearing on the transfers attached to, or endorsed on, 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 guidance on which number to report. TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS (SEE INSTRUCTION 9) PAYER: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. PART 1--PLEASE PROVIDE Social security number YOUR TIN IN THE BOX AT OR Employer RIGHT AND CERTIFY BY identification number SIGNING AND DATING BELOW. SUBSTITUTE FORM W-9 DEPARTMENT OF --------------------- THE TREASURY ------------------------------------------------------- INTERNAL PART 2--CERTIFICATION--UNDER PENALTIES OF PERJURY, I REVENUE CERTIFY THAT: SERVICE (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me); and (2) I am not subject to backup withholding because (i) I am exempt from backup withholding, (ii) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has notified me that I am no longer subject to backup withholding. PAYOR'S REQUEST FOR PART 3 -- TAXPAYER IDENTIFICATION NUMBER (TIN) Certification Instructions--You must Awaiting cross out item (2) in Part 2 above TIN [_] if you have been notified by the IRS that you are subject to backup with- holding because of under-reporting interest or dividends on your tax return. However, if after being no- tified by the IRS that you were sub- ject to backup withholding you re- ceived another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2). ------------------------------------------------------- SIGNATURE _____________ DATE ______ NAME (Please Print) _________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (i) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (ii) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within 60 days, 31% of all reportable payments made to me thereafter will be withheld until I provide a taxpayer identification number to the Depositary. __________________________________ __________________________________ Signature Date __________________________________ Name (Please Print) The Information Agent for the Offer is: GEORGESON & COMPANY INC. -------------- Wall Street Plaza New York, New York 10005 Bankers and Brokers Call Collect (212) 440-9800 All others Call Toll Free (800) 223-2064 The Dealer Managers for the Offer are: GOLDMAN, SACHS & CO. 85 Broad Street New York, New York 10004 Call Toll Free (800) 323-5678 July 29, 1997 EX-99.3 4 LETTER TO BROKERS AND DEALERS EXHIBIT (3) OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK) OF NELLCOR PURITAN BENNETT INCORPORATED AT $28.50 NET PER SHARE BY NPB ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF MALLINCKRODT INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, AUGUST 25, 1997, UNLESS THE OFFER IS EXTENDED. July 29, 1997 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been engaged by NPB Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly owned subsidiary of Mallinckrodt Inc., a New York corporation ("Purchaser"), to act as Dealer Managers in connection with the Merger Sub's offer to purchase all outstanding shares of Common Stock, par value $.001 per share (the "Common Stock"), including the associated rights to purchase Series A Junior Participating Preferred Stock (the "Rights" and, together with the Common Stock, the "Shares"), of Nellcor Puritan Bennett Incorporated, a Delaware corporation (the "Company"), at $28.50 per Share, net to the seller in cash, on the terms and subject to the conditions set forth in the Offer to Purchase, dated July 29, 1997, and the related Letter of Transmittal (which together constitute the "Offer"). Please furnish copies of the enclosed materials to those of your clients for whom you hold Shares registered in your name or in the name of your nominee. Enclosed herewith are the following documents: 1. Offer to Purchase, dated July 29, 1997; 2. Letter of Transmittal to be used by stockholders of the Company in accepting the Offer; 3. Letter to Stockholders of the Company from the President and Chief Executive Officer of the Company, accompanied by the Company's Solicitation/Recommendation Statement on Schedule 14D-9; 4. A printed form of letter that may be sent to your clients for whose account you hold Shares in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 5. Notice of Guaranteed Delivery; 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 7. Return envelope addressed to ChaseMellon Shareholder Services, L.L.C., the Depositary. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 13 OF THE OFFER TO PURCHASE. WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, AUGUST 25, 1997 UNLESS THE OFFER IS EXTENDED. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The Offer is being made pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated as of July 23, 1997, among the Company, Purchaser and the Merger Sub, pursuant to which, after the completion of the Offer, the Merger Sub will be merged with and into the Company (the "Merger") and each issued and outstanding Share not owned by Purchaser, the Merger Sub or any other subsidiary of Purchaser or held by stockholders exercising appraisal rights pursuant to Section 262 of the Delaware General Corporation Law will be converted into the right to receive, without interest, $28.50 in cash. As a result of the Merger, the Company will become a wholly owned subsidiary of Purchaser. The Merger Agreement is more fully described in the Offer to Purchase. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares or timely confirmation of the 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 Section 3 of the Offer to Purchase), (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, 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 such Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT PURSUANT TO THE OFFER. Neither Purchaser nor the Merger Sub will pay any fees or commissions to any broker or dealer or other person (other than the Dealer Managers, as disclosed in the Offer to Purchase) in connection with the solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed upon request for customary mailing and handling expenses incurred by you in forwarding the enclosed offering materials to your clients. Questions and requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective addresses and telephone numbers set forth on the back cover of the enclosed Offer to Purchase. Requests for additional copies of the enclosed materials may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. Very truly yours, GOLDMAN, SACHS & CO. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY OTHER PERSON THE AGENT OF PURCHASER, THE MERGER SUB, THE DEALER MANAGERS, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL. EX-99.4 5 LETTER TO CLIENTS EXHIBIT (4) OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK) OF NELLCOR PURITAN BENNETT INCORPORATED AT $28.50 NET PER SHARE BY NPB ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF MALLINCKRODT INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, AUGUST 25, 1997, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration is an Offer to Purchase, dated July 29, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer") relating to the offer by NPB Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly owned subsidiary of Mallinckrodt Inc., a New York corporation ("Purchaser"), to purchase for cash, all of the outstanding shares of Common Stock, par value $.001 per share (the "Common Stock"), including the associated rights to purchase Series A Junior Participating Preferred Stock (the "Rights"), of Nellcor Puritan Bennett Incorporated, a Delaware corporation (the "Company") (the Common Stock and the Rights together are referred to herein as the "Shares"), on the terms and subject to the conditions set forth in the Offer (together with, if the Offer is extended or amended, the terms of such extension or amendment). Also enclosed is the letter to stockholders of the Company from the President and Chief Executive Officer of the Company accompanied by the Company's Solicitation/Recommendation Statement on Schedule 14D-9. 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 TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to tender any of or all the Shares held by us for your account, pursuant to the terms and conditions set forth in the Offer. Your attention is directed to the following: 1. The Offer price is $28.50 per Share, net to the Seller in cash, without interest thereon, upon the terms and subject to the conditions of the Offer. 2. The Offer is being made for all of the outstanding Shares. 3. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER (AS DEFINED BELOW) ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT (AS DEFINED BELOW) AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. 4. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares representing at least a majority of the outstanding Shares on a fully diluted basis. The Offer is also subject to certain other conditions described in Section 13 of the Offer to Purchase. 5. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, AUGUST 25, 1997, UNLESS THE OFFER IS EXTENDED BY THE MERGER SUB (THE "EXPIRATION DATE"). 6. The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of July 23, 1997 (the "Merger Agreement"), among the Company, Purchaser and the Merger Sub, pursuant to which, after the completion of the Offer, the Merger Sub will be merged with and into the Company (the "Merger") and each outstanding Share, not owned by Purchaser, the Merger Sub or any other subsidiary of Purchaser (or held by stockholders exercising appraisal rights pursuant to Section 262 of the Delaware General Corporation Law) will be converted into the right to receive, without interest, an amount in cash equal to $28.50 or such greater amount which may be paid pursuant to the Offer. As a result of the Merger, the Company will become a wholly owned subsidiary of Purchaser. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase. 7. Any stock transfer taxes applicable to a sale of Shares to the Merger Sub will be borne by the Merger Sub, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Your instructions to us should be forwarded promptly to permit us to submit a tender on your behalf prior to the Expiration Date. If you wish to have us tender any of or all of the Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form on the detachable part hereof. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the Expiration Date. Payment for Shares accepted for payment pursuant to the Offer will be in all cases made only after timely receipt by ChaseMellon Shareholder Services, L.L.C. (the "Depositary"), of (a) certificates for (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter of Transmittal, properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer effected pursuant to the procedure set forth in Section 3 of the Offer to Purchase, an Agent's Message, and (c) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when certificates for Shares or Book-Entry Confirmations with respect to Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT PURSUANT TO THE OFFER. The Offer is not being made to, nor will tenders be accepted from, or on behalf of, holders of Shares in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities or blue sky laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed made on behalf of the Merger Sub by Goldman, Sachs & Co., the Dealer Managers for the Offer, or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. An envelope in which to return your instructions 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 Shares on your behalf prior to the expiration of the Offer. 2 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF COMMON STOCK (including the associated rights to purchase series A Junior Participating Preferred Stock) of NELLCOR PURITAN BENNETT INCORPORATED The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase, dated July 29, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal relating to shares of Common Stock, par value $.001 per share (the "Common Stock"), including the associated rights to purchase Series A Junior Participating Preferred Stock (the "Rights"), of Nellcor Puritan Bennett Incorporated, a Delaware corporation. The Common Stock and the Rights together are referred to herein as the "Shares." This will instruct you to tender the number of Shares indicated below held by you for the account of the undersigned, on the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal. Number of Shares to be Tendered:* SIGN HERE Shares ---------- ------------------------------------- Daytime Area Code and Telephone No. _______________ ------------------------------------- Taxpayer Identification Signature(s) No. or Social Security No. ______ Dated:______________________,1997 ------------------------------------- ------------------------------------- (Please print name(s) and address(es)) - -------- * Unless otherwise indicated, it will be assumed that all your Shares are to be tendered. 3 EX-99.5(A) 6 PRESS RELEASE, DATED JULY 23, 1997 EXHIBIT (5)(a) LOGO MALLINCKRODT - ---------------------------------- Improving Healthcare and Chemistry News Release Mallinckrodt Inc. 7733 Forsyth Boulevard St. Louis, Missouri 63105 Telephone (314) 854-5200 Facsimile (314) 854-5381 FOR IMMEDIATE RELEASE - --------------------- For more information: Media Contacts: Peter Faur, (314) 854-5234 Barbara Abbett, (314) 854-5230 E-mail: Communications@mkg.com Investor Contacts: Doug McKinney, (314) 854-5264 Scott Johnsen, (314) 854-5295 E-mail: Invest@mkg.com MALLINCKRODT ANNOUNCES DEFINITIVE AGREEMENT TO ACQUIRE NELLCOR PURITAN BENNETT FOR $1.9 BILLION COMBINED COMPANIES WILL BE PREMIER SUPPLIER TO HEALTHCARE PROVIDERS WORLDWIDE ST. LOUIS, Mo., July 23, 1997-In an action designed to create one of the world's premier medical products suppliers, Mallinckrodt Inc. (NYSE:MKG) and Nellcor Puritan Bennett Incorporated (NASDAQ:NELL) today announced the execution of a definitive agreement whereby Mallinckrodt would purchase for cash all outstanding shares of Nellcor Puritan Bennett common stock for $28.50 per share. This represents a 36 percent premium to today's Nellcor closing price of $20.94. Mallinckrodt's stock closed today at $39.75 a share. Under the terms of the merger agreement, unanimously approved today by the boards of both of the companies, Mallinckrodt will initiate a tender offer for all of the outstanding shares of Nellcor Puritan Bennett to commence within five business days. Once initiated, the offer will be open for 20 business days unless further extended. Mallinckrodt's tender offer is conditioned upon, among other things, there being validly tendered and not withdrawn a number of shares that equals at least a majority of the outstanding shares of Nellcor Puritan Bennett. After the consummation of the tender offer, Mallinckrodt has agreed to acquire any of the remaining outstanding shares of Nellcor pursuant to a second-step merger in which holders of such shares will receive $28.50 a share. It is anticipated that the proposed merger will be accounted for using purchase accounting. -more- ADD ONE/Mallinckrodt-Nellcor Puritan Bennett Nellcor Puritan Bennett is the world leader in providing products that monitor, diagnose and treat the respiratory-impaired patient in every setting from the hospital to the home. Products include devices that aid in sleep diagnosis, oxygen monitoring, apnea monitors, critical care ventilators, oxygen concentrators, and anesthetic gases. Mallinckrodt holds leading market positions worldwide in numerous hospital product lines, including x-ray contrast media, radiopharmaceuticals and devices for diagnostic imaging; endotracheal and tracheostomy tubes; and temperature management systems. Mallinckrodt also is the world's leading producer of acetaminophen and narcotic analgesics. The combined companies will have revenues of approximately $2.4 billion for the year ended June 30, 1997. Mallinckrodt will have three attractive growth platforms in healthcare - A $1.1 billion critical care business serving the respiratory impaired patient, a $900 million medical imaging business, and a $400 million specialty pharmaceutical business. Both companies have fiscal years ending in the second calendar quarter. In a joint statement, C. Ray Holman and C. Raymond Larkin, Jr., Mallinckrodt and Nellcor's chief executive officers, respectively, noted that the benefits of the proposed merger offer meaningful opportunities for growth and achievement of global leadership in a rapidly changing healthcare environment. "Nellcor Puritan Bennett is an excellent strategic fit with Mallinckrodt's critical care business," said Holman. "Nellcor's world leadership positions in oxygen monitoring, critical care ventilation and other respiratory products combine with Mallinckrodt's world leadership positions in airway management disposables and other critical care products to form by far the largest organization in this field of medicine. The combined company represents an even more significant supplier that meets essential healthcare needs medical diagnosis, management of patients in critical care settings, and management of pain. Mallinckrodt and Nellcor will be well positioned to provide innovative, cost-effective products for our healthcare customers." Larkin said, "We have great respect for Mallinckrodt and its long history of serving healthcare markets. It was only two years ago that Nellcor and Puritan-Bennett came together to create one of the world's 15 largest medical device companies. We have gained significant advantages together. We believe our businesses will be strengthened even more through the addition of the Mallinckrodt critical care unit." Larkin will become executive vice president of Mallinckrodt and will be president and chief executive officer of the Nellcor Puritan Bennett subsidiary, taking responsibility for the combined critical care unit and reporting directly to Holman. -more- ADD TWO/Mallinckrodt-Nellcor Puritan Bennett Holman said the acquisition of Nellcor represents the culmination of a significant effort by Mallinckrodt to expand its core medical products business during a period of industry consolidation. "Mallinckrodt expects to benefit from the merger through enhanced revenue growth and through consolidation synergies, cost reductions and other benefits to be implemented during the balance of fiscal 1998. Based on our expectations for revenues and synergies, we would expect the transaction to be accretive to earnings per share in fiscal year 1999." In the past fiscal year, Mallinckrodt divested its animal health business and sold its interest in tile Tastemaker flavors joint venture. Proceeds from those transactions, along with borrowings of approximately $1.6 billion under a credit agreement entered into with J.P. Morgan, Goldman, Sachs & Co. and Citibank in connection with the transaction are being used for the tender offer. The previously announced share repurchase program continues in effect. Goldman, Sachs & Co. advised Mallinckrodt, provided a fairness opinion to the Board of Directors, and is acting as dealer manager for the tender offer. Morgan Stanley & Co. Incorporated advised Nellcor Puritan Bennett and provided a fairness opinion to the Board of Directors of Nellcor Puritan Bennett. Nellcor Puritan Bennett is the worldwide leader in providing products for monitoring, diagnosing and treating the respiratory-impaired patient across the continuum of care. The company's web site address is . Mallinckrodt Inc. serves healthcare and specialty chemicals markets worldwide. The company is a major producer of diagnostic imaging agents, medical devices, analgesic pharmaceuticals, catalysts, and laboratory and microelectronic chemicals. The St. Louis, Missouri-based company, with fiscal 1996 adjusted net sales of $1.75 billion, sells more than 1,000 products in more than 100 countries. The Mallinckrodt web site address is . ### This news release contains forward-looking statements, including statements concerning the projected impact of the proposed merger on Mallinckrodt's earnings results and sales growth. These statements are based on current expectations; actual results may differ materially. Among the factors that could cause actual results to differ materially are the following: the effect of business and economic conditions; the impact of competitive products and continued pressure on prices realized by Mallinckrodt for its products; market acceptance issues, including the failure of new products to generate anticipated sales levels; difficulties or delays in receiving required governmental or regulatory approvals; the cost and effect of legal and administrative proceedings; and the other risk factors reported from time to time in Mallinckrodt's filings with the Securities and Exchange Commission. EX-99.5(B) 7 PRESS RELEASE, DATED JULY 29, 1997 EXHIBIT (5)(b) [Letterhead of Mallinckrodt] FOR IMMEDIATE RELEASE - --------------------- For more information: Media Contacts: Peter Faur, (314) 854-5234 Barbara Abbett, (314) 854-5230 E-mail: Communications@mkg.com Investor Contacts: Doug McKinney, (314) 854-5264 Scott Johnson, (314) 854-5295 E-mail: Invest@mkg.com MALLINCKRODT COMMENCES TENDER OFFER FOR NELLCOR PURITAN BENNETT ST. LOUIS, MO, July 29, 1997 -- Mallinckrodt Inc. (NYSE: MKG) today commenced its previously announced cash tender offer for all of the outstanding common shares of Nellcor Puritan Bennett Incorporated (NASDAQ: NELL) at a price of $28.50 per share, net to the seller, in cash. The tender offer is scheduled to expire at midnight Eastern time on Monday, August 25, unless extended. The complete terms and conditions of the offer are set forth in the Offer to Purchase, copies of which are available by contacting the information agent, Georgeson & Company Inc. at (800) 223-2064. Mallinckrodt also said it will file today a Premerger and Report Form with the Federal Trade Commission and the Antitrust Division of the Department of Justice under the Hart-Scott-Rodino Act. Goldman, Sachs & Co. are the Dealer Managers for the Offer. Mallinckrodt serves healthcare and specialty chemicals markets worldwide. The company is a major producer of diagnostic imaging agents, medical devices, analgesic pharmaceuticals, catalysts and laboratory and microelectronic chemicals. The St. Louis, Missouri-based company, with fiscal 1996 adjusted net sales of $1.75 billion, sells more than 1,000 products in more than 100 countries. The Mallinckrodt web site address is . EX-99.6 8 FORM OF NEWSPAPER ADVERTISEMENT, DTD JULY 29, 1997 EXHIBIT (6) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely by the Offer to Purchase, dated July 29, 1997, and the related Letter of Transmittal and any amendments or supplements thereto, and is being made to all holders of Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the 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 Purchaser (as defined below) by Goldman, Sachs & Co. or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All of the Outstanding Shares of Common Stock (including the Associated Rights to Purchase Series A Junior Participating Preferred Stock) of Nellcor Puritan Bennett Incorporated at $28.50 Net Per Share by NPB Acquisition Corp. a wholly owned subsidiary of Mallinckrodt Inc. NPB Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly owned subsidiary of Mallinckrodt Inc., a New York corporation ("Purchaser"), is offering to purchase all of the outstanding shares of Common Stock, par value $.001 per share (the "Common Stock"), of Nellcor Puritan Bennett Incorporated, a Delaware corporation (the "Company"), including the associated rights to purchase Series A Junior Participating Preferred Stock (the "Rights" and, together with the Common Stock, the "Shares"), at $28.50 per Share, net to the seller in cash, on the terms and subject to the conditions set forth in the Offer to Purchase, dated July 29, 1997 (together with any amendments or supplements thereto, the "Offer to Purchase"), and in the related Letter of Transmittal (which collectively, together with any amendments or supplements thereto, constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Merger Sub pursuant to the Offer. The purpose of the Offer is to acquire for cash as many outstanding Shares as possible as a first step in acquiring the entire equity interest in the Company. Following the consummation of the Offer, Purchaser intends to effect the Merger described below. - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, AUGUST 25, 1997, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 13 OF THE OFFER TO PURCHASE. The Offer is being made pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated as of July 23, 1997, among the Company, Purchaser and the Merger Sub, pursuant to which, after the completion of the Offer, the Merger Sub will be merged with and into the Company (the "Merger") and each issued and outstanding Share (other than Shares owned by Purchaser, the Merger Sub or any other subsidiary of Purchaser or Shares that are held by stockholders exercising appraisal rights pursuant to Section 262 of the Delaware General Corporation Law) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, without interest, an amount in cash equal to $28.50 or such greater amount which may be paid pursuant to the Offer. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. For purposes of the Offer, the Merger Sub will be deemed to have accepted for payment Shares validly tendered and not withdrawn as, if and when the Merger Sub gives oral or written notice to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") of its acceptance for payment of such Shares pursuant to the Offer. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for the tendering stockholders for the purpose of receiving payments from the Merger Sub and transmitting such payments to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares or a confirmation of the book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message (as defined in Section 3 of the Offer to Purchase) in lieu of the Letter of Transmittal), and (iii) any other documents required by the Letter of Transmittal. Subject to the terms of the Merger Agreement and the applicable rules and regulations of the Securities and Exchange Commission, the Merger Sub expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary. Any such extension will be followed as promptly as practicable by public announcement thereof, such announcement to be issued no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled expiration date of the Offer. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder's Shares. 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 of the Offer and, unless theretofore accepted for payment by the Merger Sub pursuant to the Offer, may also be withdrawn at any time after September 29, 1997. For a withdrawal to be effective, a written, telegraphic, telex 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 having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the names in which the certificate(s) evidencing the Shares to be withdrawn are registered, if different from that of the person who tendered such Shares. The signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase), unless such Shares have been tendered for the account of any Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry tender as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Depository Institution (as defined in Section 2 of the Offer to Purchase) to be credited with the withdrawn 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 name of the registered holder and the serial numbers shown on such certificates must also be furnished to the Depositary as aforesaid prior to the physical release of such certificates. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Merger Sub, in its sole discretion, which determination shall be final and binding. None of Purchaser, the Merger Sub, the Dealer Manager, the Depositary, the Information Agent, 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 such notification. Withdrawals of tenders of Shares may not be rescinded, and any Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by following one of the procedures described in Section 3 of the Offer to Purchase at any time prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6 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 the Merger Sub with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the Letter of Transmittal and, if required, other relevant materials, will be mailed by the Merger Sub to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's 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. THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance may be directed to the Information Agent or to the Dealer Managers at their respective addresses and telephone numbers set forth below. Requests for additional copies of the Offer to Purchase, the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. Such additional copies will be furnished at the Merger Sub's expense. The Merger Sub will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Managers) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: GEORGESON & Company Inc. -------------- Wall Street Plaza New York, New York 10005 Banks and Brokers call collect (212) 440-9800 Call Toll-Free: 1-800-223-2064 The Dealer Managers for the Offer are: GOLDMAN, SACHS & CO. 85 Broad Street New York, New York 10004 (800) 323-5678 July 29, 1997 1 EX-99.7 9 NOTICE OF GUARANTEED DELIVERY EXHIBIT (7) NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK) OF NELLCOR PURITAN BENNETT INCORPORATED As set forth in Section 3 of the Offer to Purchase (as defined below), this form or one substantially equivalent may be used to accept the Offer (as defined below) if certificates for shares of Common Stock, par value $.001 per share (the "Common Stock"), including the associated rights to purchase Series A Junior Participating Preferred Stock (the "Rights" and, collectively with the Common Stock, the "Shares"), of Nellcor Puritan Bennett Incorporated, a Delaware corporation (the "Company"), are not immediately available, or if the procedure for book-entry transfer cannot be complied with on a timely basis, or all required documents cannot be delivered to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). This form may be delivered by hand to the Depositary or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution (as defined in Section 3 of the Offer to Purchase). See Section 3 of the Offer to Purchase. The Depositary: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Overnight Courier: By Hand: Reorganization Department 85 Challenger Road, Mail Reorganization Department PO Box 3305 Drop-Reorg 120 Broadway South Hackensack, NJ 07606 Ridgefield Park, NJ 07660 13th Floor New York, NY 10271 By Facsimile Transmission (For Eligible Institutions Only): (201) 329-8936 Confirm Receipt of Facsimile by Telephone Only: (201) 296-4860 --------------- DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to NPB Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly owned subsidiary of Mallinckrodt Inc., a New York corporation, on the terms and subject to the conditions set forth in the Offer to Purchase, dated July 29, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together constitute the "Offer"), receipt of which is hereby acknowledged, the number of Shares set forth below, all pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Number of Shares: ___________________ Name(s) of Record Holder(s): ________ Certificate Nos. _____________________________________ (if available): _____________________ _____________________________________ _____________________________________ Please Print _____________________________________ Address(es): ________________________ (CHECK ONE BOX IF SHARES _____________________________________ Zip Code WILL BE TENDERED BY BOOK-ENTRY TRANSFER) [_]The Depository Trust Company Daytime Area Code and Tel. No.: _______________________ [_]Philadelphia Depository Trust Company Account Number: _____________________ Signature(s): _______________________ Dated: ______________________________ _____________________________________ GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program, hereby guarantees to deliver to the Depositary either the certificates representing the Shares tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to such Shares, in any such case together with a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase), and any other required documents, within THREE trading days after the date hereof. The Eligible Institution that completes this form must communicate this guarantee to the Depositary and must deliver the Letter of Transmittal 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. Name of Firm: _______________________ _____________________________________ Authorized Signature Address: ____________________________ Zip Code Name: _______________________________ Please Print _____________________________________ Title: ______________________________ Area Code and Tel. No.: _____________ Dated: ______________________________ NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.8 10 FORM W-9 EXHIBIT (8) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER NAME AND 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 name and number to give the payer. - ------------------------------------- -------------------------------------
GIVE THE NAME AND SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT NUMBER OF-- - ------------------------------------------- 1.An individual's The individual account 2. Two or more The actual owner individuals (joint of the account account) or, if combined funds, any one of the individuals(1) 3. Custodian account of The minor(2) a minor (Uniform Gift to Minors Act) 4.a. The usual The grantor- revocable savings trustee(1) trust account (grantor is also trustee) b. So-called trust The actual account that is not owner(1) a legal or valid trust under State law 5. Sole proprietorship The owner(3) account
GIVE THE NAME AND EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT NUMBER OF-- -------------------------------------------------------------- 6. Sole proprietorship account The owner(3) 7. A valid trust, estate, or pension trust The legal entity(4) 8. Corporate account The corporation 9. Association, club, religious, charitable, educational or other tax-exempt organization account The organization 10. Partnership The partnership 11. A broker or registered nominee The broker or nominee 12. Account with the Department of Agriculture in the name of a public entity (such as a State or local The public government, school district, or prison) that receives agricultural program payments entity
------------------------------------- - ------------------------------------- (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) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your Social Security Number or Employer Identification Number. (4) List first and circle the name of the legal trust, estate, or 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.) NOTE: If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed. 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 Number Card (for individuals), or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING The following is a list of payees specifically exempted from backup withholding depending upon the type of payment (see below): (1) A corporation. (2) An organization exempt from tax under section 501(a), or an IRA or a custodial account under section 403 (b) (7). (3) The United States or any agency or instrumentality thereof. (4) A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. (5) A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. (6) An international organization or any agency or instrumentality thereof. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the U.S. or a possession of the U.S. (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664 or described in section 4947. For interest and dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in items (1) through (13) and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 1 OF THE FORM, AND RETURN IT TO THE PAYER. If you are a nonresident alien or a foreign entity not subject to backup withholding, give the payer a completed Form W-8, Certificate of Foreign Status. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) Failure To Furnish Taxpayer Identification Number.--If you fail to furnish your correct taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Civil Penalty For False Information With Respect To Withholding.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) Criminal Penalty For Falsifying Information.--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.9 11 MERGER AGREEMENT, DATED JULY 23, 1997 EXHIBIT (9) AGREEMENT AND PLAN OF MERGER ---------------------------- AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), --------- dated as of July 23, 1997, among Nellcor Puritan Bennett Incorporated, a Delaware corporation (the "Company"), Mallinckrodt Inc., a New York corporation ------- ("Purchaser"), and NPB Acquisition Corp., a Delaware corporation and a wholly- --------- owned subsidiary of Purchaser ("Merger Sub"), the Company and Merger Sub ---------- sometimes being hereinafter collectively referred to as the "Constituent ----------- Corporations." - ------------ RECITALS WHEREAS, the Boards of Directors of Purchaser and the Company each have determined that it is in the best interests of their respective shareholders for Purchaser to acquire the Company upon the terms and subject to the conditions set forth herein; and WHEREAS, the Company, Purchaser and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement. NOW, THEREFORE, in consideration of the premises, and of the representa tion, warranties, covenants and agreements contained herein the parties hereto hereby agree as follows: ARTICLE I THE TENDER OFFER 1.1. Tender Offer. (a) Provided that this Agreement shall not have ------------ been terminated in accordance with Article IX hereof and none of the events set forth in Annex A hereto shall have occurred or be existing, within five business days of the date hereof Purchaser shall cause Merger Sub to commence a tender offer (the "Offer") for all of the outstanding shares of Common Stock, par value ----- $.001 per share, of the Company, including the associated Rights (as defined in Section 6.1(b)) (together, the "Shares") at a price of $28.50 per Share in cash, ------ net to the seller, subject to the terms and conditions set forth in Annex A hereto (the "Offer Conditions"). The initial expiration date (the "Initial ---------------- ------- Expiration Date") shall be the date twenty business days from the date (the - --------------- "Commencement Date") the Offer Documents (as hereinafter defined) are first - ------------------ filed with the Securities and Exchange Commission (the "SEC"), including the --- Commencement Date as the first business day of such period. Purchaser and Merger Sub expressly reserve the right, in their sole discretion, to waive any condition (other than the Minimum Condition, as defined in the Offer Conditions) and to set forth or change any other terms and conditions of the Offer, provided -------- that, unless previously approved by the Company in writing, no provision may be set forth or changed which decreases the price per Share payable in the Offer, changes the form of consideration payable in the Offer (other than by adding consideration), reduces the maximum number of Shares to be purchased in the Offer, or imposes conditions to the Offer in addition to those set forth herein that are materially adverse to holders of the Shares. Merger Sub covenants and agrees that, subject to the terms and conditions of the Offer, including but not limited to the Offer Conditions, it will accept for payment and pay for Shares as soon as it is permitted to do so under applicable law, provided that Merger -------- Sub shall have the right, in its sole discretion, to extend the Offer from time to time notwithstanding the prior satisfaction of the Offer Conditions to a date not beyond the fifth business day following the satisfaction of all of the Offer Conditions if more than 90% of the outstanding Shares (on a fully diluted basis) have not been duly tendered (exclusive of Shares tendered by guaranteed delivery) and not withdrawn. Purchaser agrees that, unless it is permitted to terminate this Agreement pursuant to Article IX, it can terminate the Offer only on a scheduled expiration date. Purchaser further agrees that: (A) in the event that it would otherwise be entitled to terminate the Offer at any scheduled expiration thereof due to the failure of one or more of the conditions set forth in paragraphs (a), (c), (d) or (f) of the Offer Conditions to be satisfied or waived, it shall give the Company notice thereof and, at the request of the Company, extend the Offer until the earlier of (1) such time as such condition is or conditions are satisfied or waived and (2) the date chosen by the Company which shall not be later than (x) September 15, 1997 or (y) the earliest date on which the Company reasonably believes such condition or conditions will be satisfied; provided that, if such condition is not or -------- conditions are not satisfied by any date chosen by the Company pursuant to this clause (y), the Company may request further extensions of the Offer not beyond September 15, 1997; and (B) it shall, at the request of the Company made in writing at least one business day prior to the Initial Expiration Date (which request may be made by the Company only on one occasion), extend the Offer for up to five business days from such Initial Expiration Date. It is agreed that the terms and conditions set forth in the Offer, including but not limited to the Offer Conditions, are for the benefit of Purchaser and Merger Sub and may be asserted by Purchaser and Merger Sub regardless of the circumstances giving rise to any such condition. (b) The Company hereby approves of and consents to the Offer and represents and warrants that: (i) its Board of Directors, at a meeting duly called and held on July 23, 1997, has unanimously (A) determined that this Agreement and the transactions contemplated hereby, including each of the Offer and the Merger (as defined in Section 2.1), are fair to and in the best interests of the holders of Shares, (B) approved this Agreement and the transactions contemplated hereby, including each of the Offer and the Merger, and (C) resolved to recommend that the stockholders of the Company accept the Offer, tender their Shares to Merger Sub thereunder and approve this Agreement and the transactions contemplated hereby; and (ii) Morgan Stanley & Co. Incorporated (the "Financial Advisor") has delivered to the Board of Directors ----------------- of the Company its written opinion that the consideration to be received by holders of Shares, other than Purchaser and Merger Sub, -2- pursuant to each of the Offer and the Merger is fair to such holders from a financial point of view. (c) As soon as reasonably practicable on the date the Offer is commenced, Purchaser shall file a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer with the SEC. The Schedule 14D-1 -------------- shall contain an Offer to Purchase and forms of the related letter of transmittal (which Schedule 14D-1, Offer to Purchase and other related documents, together with any supplements or amendments thereto, are referred to herein collectively as the "Offer Documents"). Not later than the fifth --------------- business day after the date hereof, the Company will file a Solicitation Statement on Schedule 14D-9 (the "Schedule 14D-9") with the SEC. Purchaser -------------- agrees, as to the Offer Documents, and the Company agrees, as to the Schedule 14D-9, that such documents shall, in all material respects, comply with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange Act") and other applicable laws. The ------------ Company and its counsel, as to the Offer Documents, and Purchaser and its counsel, as to the Schedule 14D-9, shall be given an opportunity to review such documents prior to their being filed with the SEC. Purchaser, Merger Sub and the Company each agrees promptly to correct any information provided by it for use in the Offer Documents or the Schedule 14D-9 that shall have become false or misleading in any material respect, and Purchaser and Merger Sub, on the one hand, and the Company, on the other hand, further agree to take all steps necessary to cause the Offer Documents and the Schedule 14D-9, as the case may be, as so corrected 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. (d) In connection with the Offer, the Company will cause its transfer agent to furnish promptly to Merger Sub a list, as of a recent date, of the record holders of Shares and their addresses, as well as mailing labels containing the names and addresses of all record holders of Shares and lists of security positions of Shares held in stock depositories. The Company will furnish Merger Sub with such additional information (including, but not limited to, updated lists of holders of Shares and their addresses, mailing labels and lists of security positions) and such other assistance as Purchaser or Merger Sub or their agents may reasonably request in communicating the Offer to the record and beneficial holders of Shares. Subject to the requirements of law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer and the Merger, Purchaser and each of its affiliates and associates shall hold in confidence the information contained in any of such lists, labels or additional information and, if this Agreement is terminated, shall promptly deliver to the Company all copies of such information then in their possession. -3- ARTICLE II THE MERGER; CLOSING; EFFECTIVE TIME 2.1. The Merger. Subject to the terms and conditions of this ---------- Agreement, at the Effective Time (as defined in Section 2.3) Merger Sub shall be merged with and into the Company and the separate corporate existence of Merger Sub shall thereupon cease (the "Merger"). The Company shall be the surviving ------ corporation in the Merger (sometimes hereinafter referred to as the "Surviving --------- Corporation") and shall continue to be governed by the laws of the State of - ----------- Delaware, and the separate corporate existence of the Company with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger, except as set forth in Section 3.1. The Merger shall have the effects specified in the Delaware General Corporation Law (the "DGCL"). ---- 2.2. Closing. The closing of the Merger (the "Closing") shall take ------- ------- place (i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York at 9:00 a.m. on the first business day on which the last to be fulfilled or waived of the conditions set forth in Article VIII hereof shall be fulfilled or waived in accordance with this Agreement, or (ii) at such other place and time and/or on such other date as the Company and Purchaser may agree. 2.3. Effective Time. As soon as practicable following the Closing, -------------- and provided that this Agreement has not been terminated or abandoned pursuant to Article IX hereof, the Company and Purchaser will cause a Certificate of Merger (the "Delaware Certificate of Merger") to be executed and filed with the ------------------------------ Secretary of State of Delaware as provided in Section 251 of the DGCL. The Merger shall become effective on the date on which the Delaware Certificate of Merger has been duly filed with the Secretary of State of Delaware, and such time is hereinafter referred to as the "Effective Time." -------------- ARTICLE III CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION 3.1. The Certificate of Incorporation. The Restated Certificate of -------------------------------- Incorporation of the Company (the "Certificate") in effect at the Effective Time ----------- shall be the Certificate of Incorporation of the Surviving Corporation, until duly amended in accordance with the terms thereof and the DGCL, except that Article Fourth of the Certificate shall be amended to read in its entirety as follows: -4- "The aggregate number of shares which the Corporation shall have the authority to issue is 1,000 shares of Common Stock, par value $.001 per share." 3.2. The Bylaws. The Bylaws of the Company in effect at the ---------- Effective Time shall be the Bylaws of the Surviving Corporation, until duly amended in accordance with the terms thereof and the DGCL. ARTICLE IV OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION 4.1. Officers and Directors. The directors of Merger Sub and the ---------------------- officers of the Company at the Effective Time shall, from and after the Effective Time, be the directors and officers, respectively, of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Certificate of Incorporation and Bylaws. 4.2. Boards of Directors; Committees. If requested by Purchaser, the ------------------------------- Company will, subject to compliance with applicable law and promptly following the purchase by Merger Sub of such number of Shares pursuant to the Offer as satisfies the Minimum Condition, take all actions necessary to cause persons designated by Purchaser to become directors of the Company so that the total number of such persons equals not less than the product of the total number of directors on the Board (giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Merger Sub or any affiliate of Merger Sub bears to the total number of Shares then outstanding. In furtherance thereof, the Company will increase the size of the Board, or use its reasonable efforts to secure the resignation of directors, or both, as is necessary to permit Purchaser's designees to be elected to the Company's Board of Directors; provided that at -------- all times prior to the Effective Time, the Company's Board of Directors shall consist of at least two members who are neither officers, stockholders, designees nor affiliates of Purchaser ("Purchaser Representatives"). At such ------------------------- time, the Company, if so requested, will use its reasonable efforts to cause persons designated by Purchaser to constitute the same percentage of each committee of such board, each board of directors of each subsidiary of the Company and each committee of each such board (in each case to the extent of the Company's ability to elect such persons). The Company's obligations to appoint designees to the Board of Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to such Section and Rule in order to fulfill its obligations under this Section 4.2 and shall include in the Schedule 14D-9, or in a separate Rule 14f-1 information statement provided -5- to stockholders, such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 4.2. Purchaser and Merger Sub will supply to the Company and will be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. 4.3 Actions by Directors. For purposes of Article IX and Sections -------------------- 10.3 and 10.4, and with respect to any amendment of the Certificate or the Bylaws of the Company, no action taken by the Board of Directors of the Company prior to the Merger shall be effective unless such action is approved by the affirmative vote of at least a majority of the directors of the Company which are not Purchaser Representatives. ARTICLE V CONVERSION OR CANCELLATION OF SHARES IN THE MERGER 5.1. Conversion or Cancellation of Shares. The manner of converting ------------------------------------ or canceling shares of the Company and Merger Sub in the Merger shall be as follows: (a) At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than Shares owned by Purchaser, Merger Sub or any other subsidiary of Purchaser (collectively, the "Purchaser --------- Companies") or Shares that are held by stockholders ("Dissenting Stockholders") - --------- ----------------------- exercising appraisal rights pursuant to Section 262 of the DGCL) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, without interest, an amount in cash (the "Merger Consideration") equal to $28.50 or such greater amount which may be paid -------------------- pursuant to the Offer. All such Shares, by virtue of the Merger and without any action on the part of the holders thereof, shall no longer be outstanding and shall be canceled and retired and shall cease to exist, and each holder of a certificate representing any such Shares shall thereafter cease to have any rights with respect to such Shares, except the right to receive the Merger Consideration for such Shares upon the surrender of such certificate in accordance with Section 5.2 or the right, if any, to receive payment from the Surviving Corporation of the "fair value" of such Shares as determined in accordance with Section 262 of the DGCL. (b) At the Effective Time, each Share issued and outstanding at the Effective Time and owned by any of the Purchaser Companies, and each Share issued and held in the Company's treasury at the Effective Time, shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding, shall be canceled and retired without payment of any consideration therefor and shall cease to exist. -6- (c) At the Effective Time, each share of Common Stock, par value $0.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of Merger Sub or the holders of such shares, be converted into one Share. 5.2. Payment for Shares. Purchaser shall make available or cause to ------------------ be made available to the paying agent appointed by Purchaser with the Company's prior approval (the "Paying Agent") amounts sufficient in the aggregate to ------------ provide all funds necessary for the Paying Agent to make payments pursuant to Section 5.1(a) hereof to holders of Shares issued and outstanding immediately prior to the Effective Time. Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each person who was, at the Effective Time, a holder of record (other than any of the Purchaser Companies) of Shares a form (mutually agreed to by Purchaser and the Company) of letter of transmittal and instructions for use in effecting the surrender of the certificates which, immediately prior to the Effective Time, represented any of such Shares in exchange for payment therefor. Upon surrender to the Paying Agent of such certificates, together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, the Surviving Corporation shall promptly cause to be paid to the persons entitled thereto a check in the amount to which such persons are entitled, after giving effect to any required tax withholdings. No interest will be paid or will accrue on the amount payable upon the surrender of any such certificate. If payment is to be made to a person other than the registered holder of the certificate surrendered, it shall be a condition of such payment that the certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer and that 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 the certificate surrendered or establish to the satisfaction of the Surviving Corporation or the Paying Agent that such tax has been paid or is not applicable. One hundred and eighty days following the Effective Time, the Surviving Corporation shall be entitled to cause the Paying Agent to deliver to it any funds (including any interest received with respect thereto) made available to the Paying Agent which have not been disbursed to holders of certificates formerly representing Shares outstanding on the Effective Time, and thereafter such holders shall be entitled to look to the Surviving Corporation only as general creditors thereof with respect to the cash payable upon due surrender of their certificates. Notwithstanding the foregoing, neither the Paying Agent nor any party hereto shall be liable to any holder of certificates formerly representing Shares for any amount paid to a public official pursuant to any applicable abandoned property, escheat or similar law. The Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of cash for Shares and Purchaser shall reimburse the Surviving Corporation for such charges and expenses. 5.3. Dissenters' Rights. If any Dissenting Stockholder shall be ------------------ entitled to be paid the "fair value" of his or her Shares, as provided in Section 262 of the DGCL, the Company shall give Purchaser notice thereof and Purchaser shall have the right to participate -7- in all negotiations and proceedings with respect to any such demands. Neither the Company nor the Surviving Corporation shall, except with the prior written consent of Purchaser, voluntarily make any payment with respect to, or settle or offer to settle, any such demand for payment. If any Dissenting Stockholder shall fail to perfect or shall have effectively withdrawn or lost the right to dissent, the Shares held by such Dissenting Stockholder shall thereupon be treated as though such Shares had been converted into the Merger Consideration pursuant to Section 5.1. 5.4. Transfer of Shares After the Effective Time. No transfers of ------------------------------------------- Shares shall be made on the stock transfer books of the Surviving Corporation at or after the Effective Time. ARTICLE VI REPRESENTATIONS AND WARRANTIES 6.1. Representations and Warranties of the Company. The Company --------------------------------------------- hereby represents and warrants to Purchaser and Merger Sub that, except (with respect to any particular subsection of this Section 6.1) to the extent specifically disclosed in the corresponding subsection of that certain letter delivered by the Company to the Purchaser on or prior to the date hereof (the "Disclosure Letter"): - ------------------ (a) Corporate Organization and Qualification. Each of the Company and ---------------------------------------- its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization, has all requisite corporate or similar power and authority to carry on its business as presently conducted and is in good standing as a foreign corporation in each jurisdiction where the properties owned, leased or operated, or the business conducted, by it require such qualification, except for any such failure of any of the Company's subsidiaries to be so organized, existing, in good standing or to have such power and authority or to so qualify, which, when taken together with all other such failures, is not reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole. The Company has made available to Purchaser a complete and correct copy of the Certificate and the Company's Bylaws, each as currently in effect. The Certificate and Bylaws so delivered are in full force and effect. The Company has delivered to Purchaser prior to the date hereof a list of the current subsidiaries of the Company which evidences, among other things, the amount of capital stock or other equity interests owned by the Company, directly or indirectly, in such subsidiaries, if such amount is less than 100%. No entity in which the Company owns, directly or indirectly, an equity interest but less than a 50% equity interest is, individually or when taken together with all such other entities, material to the business of the Company and its subsidiaries taken as a whole. -8- (b) Authorized Capital. The authorized capital stock of the Company ------------------ consists of 150,000,000 Shares, of which 63,677,435 Shares were outstanding on July 22, 1997, and 5,000,000 shares of Preferred Stock par value $.001 per share (the "Preferred Shares"), of which no shares were outstanding on July 23, 1997. ---------------- All of the outstanding Shares have been duly authorized and are validly issued, fully paid and nonassessable. As of July 22, 1997, options to purchase an aggregate of 7,412,644 Shares were outstanding (or, in the case of the 1995 ESPP (as defined below) reserved for issuance) pursuant to the Infrasonics 1995 Stock Option Plan (the "Infrasonics 1995 Plan"), the 1995 Merger Stock Incentive Plan --------------------- (the "1995 Plan"), the 1994 Equity Incentive Plan, as amended (the "1994 Plan"), --------- --------- the Infrasonics 1991 Stock Option Plan (the "Infrasonics 1991 Plan"), the 1991 --------------------- Equity Incentive Plan, as amended (the "1991 Plan"), the 1988 Stock Option Plan --------- for Non-Employee Directors, as amended (the "1988 Plan"), the 1985 Equity --------- Incentive Plan (the "1985 Plan"), the Infrasonics 1983 Employee Stock Option --------- Plan (the "Infrasonics 1983 Plan"), the Aequitron Medical, Inc. 1985 Incentive --------------------- Stock Option Plan, the Aequitron Medical, Inc. 1988 Stock Option Plan, the 1986 Employee Stock Participation Plan, as amended (the "1986 ESPP"), which --------- terminated August 1996, and the 1995 Employee Stock Participation Plan (the "1995 ESPP" and collectively with the Plans listed in this sentence, the "Stock - ---------- ----- Plans") and 5,000,000 Preferred Shares were reserved for issuance upon exercise - ----- of the rights (the "Rights") issued pursuant to the Rights Agreement, dated as ------ of September 1, 1992, as amended and restated as of March 8, 1996, between the Company and The First National Bank of Boston (the "Rights Agreement"). Each of ---------------- the outstanding shares of capital stock of each of the Company's subsidiaries (as defined in Rule 1.02(v) of Regulation S-X promulgated pursuant to the Exchange Act) is duly authorized, validly issued, fully paid and nonassessable and is owned, either directly or indirectly, by the Company, free and clear of all liens, pledges, security interests, claims or other encumbrances. Except as set forth above, there are no shares of capital stock of the Company authorized, issued or outstanding and except as set forth above, there are no pre emptive rights nor any outstanding subscriptions, options, warrants, rights, convertible securities or other agreements or commitments of any character relating to the issued or unissued capital stock or other securities of the Company or any of its subsidiaries. Immediately prior to the consummation of the Offer and the Merger, no Preferred Shares or any other securities of the Company will be subject to issuance pursuant to the Rights Agreement as a result of any of the transactions contemplated by this Agreement, no Distribution Date (as defined in the Rights Agreement) shall have occurred as a result of any of the transactions contemplated by this Agreement and, at or after the Effective Time, except as provided in Section 7.8(a), neither the Surviving Corporation nor the Purchaser will have any obligation to issue, transfer or sell any Shares or common stock of the Surviving Corporation or Purchaser pursuant to any Benefit Plan referred to in Section 7.1(d). (c) Corporate Authority. Subject only to approval of this Agreement ------------------- by the holders of a majority of the outstanding Shares, the Company has the requisite corporate power and authority and has taken all corporate action necessary in order to execute and deliver this Agreement and to consummate the transactions contemplated hereby. Assuming -9- the due authorization, execution and delivery hereof by Purchaser and Merger Sub, this Agreement is a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights and to general equitable principles. (d) Governmental Filings; No Violations. (i) Other than the filings ----------------------------------- provided for in Section 2.3, as required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), filings required under the Exchange ------- Act and such filings or consents, registrations, approvals, permits or authorizations as may be required under the laws of Germany, Ireland, Canada, Belgium, Hungary and Mexico (collectively, the "Regulatory Approvals"), no -------------------- notices, reports or other filings are required to be made by the Company with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Company from, any governmental or regulatory authority, agency, commission or other entity, domestic or foreign ("Governmental Entity"), in connection with the execution and delivery of this - --------------------- Agreement by the Company and the consummation of the transactions contemplated hereby, the failure to make or obtain any or all of which is reason ably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole, or could prevent or materially delay the transactions contemplated by this Agreement or impair the ability of Purchaser, Merger Sub, the Company or any of their respective affiliates, following consummation of the Offer or the Merger, to conduct any material business or operations in any jurisdiction where they are now being conducted. (ii) The execution and delivery of this Agreement by the Company do not, and the consummation by the Company of the transactions contemplated by this Agreement will not, constitute or result in (A) a breach or violation of, or a default under, the Certificate or the Company's Bylaws or the comparable governing instruments of any of its subsidiaries, (B) a breach or violation of, or a default under, the acceleration of or the creation of a lien, pledge, security interest or other encumbrance on assets (with or without the giving of notice or the lapse of time) pursuant to, any provision of any agreement, lease, permit, contract, note, mortgage, indenture, arrangement or other legal obligation ("Contracts") of the Company or any of its subsidiaries or any law, --------- rule, ordinance or regulation or judgment, decree, order, award or governmental or non-governmental permit or license to which the Company or any of its subsidiaries is subject or (C) any change in the rights or obligations of any party under any of the Contracts, except, in the case of clause (B) or (C) above, for such breaches, violations, defaults, accelerations or changes that, alone or in the aggregate, are not reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or that could not prevent or materially delay the transactions contemplated by this Agreement or impair the ability of Purchaser, Merger Sub, the Company or any of their respective affiliates, following consummation of the Offer or the Merger, to conduct any material business or -10- operations in any jurisdiction where they are now being conducted. The Disclosure Letter sets forth, to the knowledge of the officers of the Company, a list of any consents required under any material Contracts to be obtained prior to consummation of the transactions contemplated by this Agreement (whether or not subject to the exception set forth with respect to clause (B) above). (e) Company Reports; Financial Statements. The Company and, to the ------------------------------------- extent applicable, each of its then or current subsidiaries, has made all filings required to be made with the SEC since July 1, 1995 (collectively, including any such reports filed subsequent to the date hereof, the "Company ------- Reports") and the Company has delivered to Purchaser each registration - ------- statement, schedule, report, proxy statement or information statement prepared by it since July 7, 1996 (the "Audit Date"), including, without limitation, (i) ---------- the Company's Annual Report on Form 10-K for the fiscal year ended July 7, 1996, (ii) the Company's Quarterly Reports on Form 10-Q for the periods ended October 6, 1996, January 5, 1997 and April 6, 1997, (iii) a Form 8-K dated March 26, 1997, (iv) a Form 8-K dated December 5, 1996, (v) a Form 8-K dated September 9, 1996, (vi) a Form 8-K dated June 27, 1996, (vii) a Form S-8 Registration Statement dated December 12, 1996, (viii) a Form S-8 Registration Statement dated November 27, 1996, (ix) a Form S-8 Registration Statement dated July 26, 1996, (x) a Form 11-K for the fiscal year ended December 3, 1995, and (xi) a definitive proxy statement on Schedule 14A dated September 16, 1996, each in the form (including exhibits and any amendments thereto) filed with the SEC. As of their respective dates, the Company Reports did not, and any Company Reports filed with the SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. Each of the consolidated balance sheets included in or incorporated by reference into the Company Reports (including the related notes and schedules) fairly presents the consolidated financial position of the Company and its subsidiaries as of its date and each of the consolidated statements of income and of changes in financial position included in or incorporated by reference into the Company Reports (including any related notes and schedules) fairly presents the results of operations, retained earnings and changes in financial position, as the case may be, of the Company and its subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material in amount or effect), in each case in accordance with generally accepted accounting principles consistently applied during the periods involved, except as may be noted therein. Other than the Company Reports specifically recited above, the Company has not, on or prior to the date hereof, filed any other definitive reports or statements with the SEC since the Audit Date. The Company will periodically provide Purchaser with current draft versions of the Company's Annual Report on Form 10-K, including documents incorporated therein by reference, for the fiscal year ended July 6, 1997, (the "1997 l0-K") promptly --------- after preparation of such draft. As soon as practicable after receiving its auditor's opinion with respect to the Company's financial statements for the fiscal year ended July 6, 1997 (the "1997 Financial Statements"), the ------------------------- -11- Company will deliver to Purchaser a copy of such 1997 Financial Statements (including such auditor's opinion). (f) Absence of Certain Changes. Except as disclosed in the Company -------------------------- Reports filed with the SEC prior to the date hereof, since the Audit Date the Company and its subsidiaries have conducted their respective businesses only in, and have not engaged in any material transaction other than according to, the ordinary and usual course of such businesses and there has not been (i) any material adverse change in the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or any development or combination of developments of which management of the Company has knowledge that is reasonably likely to result in any such change; (ii) any declaration, setting aside or payment of any dividend or other distribution with respect to the capital stock of the Company; or (iii) any change by the Company in accounting principles, practices or methods. Since the Audit Date, except as provided for herein or as disclosed in the Company Reports filed with the SEC prior to the date hereof and other than in the ordinary course, there has not been any increase in the compensation payable or which could become payable by the Company and its subsidiaries to their officers or key employees, or any amendment of any Benefit Plans (as defined in Section 6.1(h), other than increases or amendments made in the ordinary course of business. Since July 7, 1997, with respect to members of the Company's Board of Directors, and since July 24, 1996, with respect to officers or employees of the Company (other than new hires), neither the Company nor any subsidiary of the Company has issued to any directors or officers or employees of the Company any options, warrants, rights or convertible securities relating to the issued or unissued capital stock of the Company. (g) Litigation and Liabilities. Except as disclosed with reasonable -------------------------- specificity in the Company Reports filed with the SEC prior to the date hereof or in the Disclosure Letter, there are no (i) civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending or, to the knowledge of the management of the Company, threatened against the Company or any of its subsidiaries or (ii) obligations or liabilities, whether or not accrued, contingent or otherwise, including, without limitation, those relating to matters involving any Environmental Law (as defined in Section 6.1(m)), or any other facts or circumstances of which the management of the Company is aware that insofar as can reasonably be foreseen could result in any claims against or obligations or liabilities of the Company or any of its subsidiaries, that, alone or in the aggregate, are reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole. For purposes of this subsection (g), a civil, criminal or administrative action, suit or claim shall be deemed to be "disclosed with reasonable specificity" in a Company Report if it is referred to by case name or case caption in such Company Report. -12- (h) Employee Benefits. ----------------- (i) All bonus, deferred compensation, pension, retirement, profit- sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option, employment, termination, severance, compensation, medical, health or other plan, contract, policy or arrangement which cover employees or former employees of the Company and its subsidiaries and directors and former directors of the Company and its subsidiaries (the "Compensation and Benefit Plans"), including, but not limited to, "employee - ------------------------------- benefit plans" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") are listed in the Disclosure ----- Letter. True and complete copies of all Compensation and Benefit Plans and such other benefit plans, contracts or arrangements, including, but to limited to, any trust instruments and insurance contracts, if any, forming a part of any such plans and agreements, and all amendments thereto have been made available to Purchaser. (ii) All Compensation and Benefit Plans are in substantial compliance with applicable law and all Compensation and Benefit Plans which are employee benefit plans, other than "multiemployer plans" within the meaning of Sections 3(37) of ERISA, to the extent subject to ERISA, are in substantial compliance with ERISA. Each Compensation and Benefit Plan which is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and ------------ which is intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), has received a favorable determination ---- letter from the Internal Revenue Service with respect to "TRA" (as defined in Section 1 of Internal Revenue Service Revenue Procedure 93-39), and the Company is not aware of any circumstances likely to result in revocation of any such favorable determination letter. There is no material pending or, to the knowledge of the Company, threatened litigation relating to the Compensation and Benefit Plans. Neither the Company nor any subsidiary has engaged in a transaction with respect to any Compensation and Benefit Plan that, assuming the taxable period of such transaction expired as of the date hereof, could subject the Company or any of its subsidiaries to a material tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA. (iii) No liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by the Company or any subsidiary with respect to any ongoing, frozen or terminated "single-employer plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the single-employer plan of any entity which is considered one employer with the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate"). The Company and its Subsidiaries have not incurred and do - ---------------- not expect to incur any withdrawal liability with respect to a multiemployer plan under Subtitle E of Title IV of ERISA. No notice of a "reportable event", within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been -13- waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate within the 12-month period ending on the date hereof. (iv) All contributions required to be made under the terms of any Compensation and Benefit Plan have been timely made. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither the Company nor its subsidiaries has provided, or is required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code. (v) Under each Pension Plan which is a single-employer plan, as of the last day of the most recent plan year ended prior to the date hereof, the actuarially determined present value of all "benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions contained in the Plan's most recent actuarial valuation), did not exceed the then current value of the assets of such Plan, and there has been no material change in the financial condition of such Plan since the last day of the most recent Plan Year. The withdrawal liability of the Company and its subsidiaries under each Compensation and Benefit Plan which is a multiemployer plan to which the Company, its subsidiaries or an ERISA Affiliate has contributed during the preceding 12 months, determined as if a "complete withdrawal", within the meaning of Section 4203 of ERISA, had occurred as of the date hereof, does not exceed $100,000. (vi) Neither the Company nor the subsidiaries have any obligations for retiree health and life benefits under any Compensation and Benefit Plan, except as set forth in the Disclosure Letter. The Company or its subsidiaries may amend or terminate any such Plan without incurring any liability thereunder. (vii) Except as set forth in Section 7.8, the consummation of the transactions contemplated by this Agreement will not (x) entitle any employees of the Company or any of its subsidiaries to severance pay, (y) accelerate the time of payment or vesting or trigger any payment of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of the Compensation and Benefit Plans or (z) result in any breach or violation of, or a default under any of the Compensation and Benefit Plans. (viii) All Compensation and Benefit Plans covering non-U.S. Employees comply in all material respects with applicable local law. The Company and its subsidiaries have no material unfunded liabilities with respect to any Pension Plan which covers non-U.S. Employees. (i) Compliance. Except to the extent specifically disclosed in ---------- Company Reports filed prior to the date hereof, neither the Company nor any of its subsidiaries is in -14- conflict with, or in default or violation of, (i) any law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties are bound or affected, or (ii) any Contract to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its or any of their respective properties are bound or affected, except for any such conflicts, defaults or violations that, individually or in the aggregate, are not reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole, or could prevent or materially delay the transactions contemplated by this Agreement or impair the ability of Purchaser, Merger Sub, the Company or any of their respective affiliates, following consummation of the Offer or the Merger, to conduct any material business or operations in any jurisdiction where they are now being conducted. (j) Brokers and Finders. Neither the Company nor any of its ------------------- officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated herein, except that the Company has employed the Financial Advisor as its financial advisors, the arrangements with which have been disclosed in writing to Purchaser prior to the date hereof. (k) Other Actions. ------------- (i) The transactions contemplated hereby have been approved by a majority of the total number of Disinterested Directors, as defined in Article Eleventh of the Certificate of the Company, in accordance with such Article and, as a result thereof, Article Eleventh is inapplicable to the Offer and the Merger. (ii) The Company has taken all necessary action to provide that (x) the execution of this Agreement and the consummation of the transactions contemplated hereby will not cause (i) Merger Sub and/or the Purchaser to become an Acquiring Person (as defined in the Rights Agreement) or (ii) a Distribution Date, a Shares Acquisition Date or a Triggering Event (as such terms are defined in the Rights Agreement) to occur and (y) all outstanding Rights will expire (whether or not tendered and purchased pursuant to the Offer) upon and as of the acceptance of Shares for payment pursuant to the Offer (so long as Purchaser thereafter purchases Shares accepted for payment pursuant to the Offer) and neither the Company, Merger Sub nor Purchaser nor any of their respective affiliates shall have any obligations under the Rights Agreement to any holder (or former holder) of Rights following consummation of the Offer. (l) Takeover Statutes. The Board of Directors of the Company has ----------------- taken all necessary action to approve the transactions contemplated by this Agreement such that the restrictions on transactions under Section 203 of the DGCL shall not apply to such -15- transactions. No other "fair price," "moratorium," "control share acquisition" or other similar antitakeover statute or regulation (each a "Takeover Statute") ---------------- is applicable to the Company, the Shares, the Offer, the Merger or the transactions contemplated thereby or hereby. (m) Environmental Matters. Except as disclosed in the Disclosure --------------------- Letter and except for such matters that, alone or in the aggregate, are not reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole: (i) Company and its subsidiaries have complied at all times with all applicable Environmental Laws; (ii) the properties currently owned or operated by the Company or any subsidiary (including soils, groundwater and surface water) have not been contaminated with any Hazardous Substances; (iii) the properties formerly owned or operated by the Company or any of its subsidiaries were not contaminated with Hazardous Substances during or prior to such period of ownership or operation; (iv) neither the Company nor any subsidiary is subject to liability for any Hazardous Substance disposal or contamination on any third party property; (v) neither the Company nor any subsidiary has received any notice, demand, letter, claim or request for information indicating that it may be subject to liability for any release or threat of release of any Hazardous Substance or in violation of or liable under any Environmental Law; (vi) neither the Company nor any subsidiary is subject to any order, decree, injunction or other legally binding arrangement with any governmental entity or any indemnity or other legally binding agreement with any third party relating to liability under any Environmental Law; (vii) none of the properties currently owned or operated by the Company or any subsidiary contain any underground storage tanks, asbestos-containing material, lead products, or polychlorinated biphenyls; (viii) there are no other circumstances or conditions involving the Company or any subsidiary that could reasonably be expected to result in any claims, liability, investigations, costs or restrictions against the Company or any subsidiary or on the ownership, use, or transfer of any property currently owned or operated by the Company or any of its subsidiaries pursuant to any Environmental Law; and (ix) the Company has delivered to Purchaser copies of all environmental reports, studies, assessments, sampling data and other environmental information in its possession relating to Company or any subsidiary or any of their current or former properties or operations. As used herein, the term "Environmental Law" means any federal, state ----------------- or local law, regulation, order, decree, permit, authorization, common law or legally binding agency requirement relating to: (A) the protection, investigation or restoration of the environment, health, safety, or natural resources, (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance or (C) noise, odor, wetlands, pollution, contamination or any injury or threat of injury to persons or property and the term "Hazardous Substance" means any substance that is: (A) listed, classified ------------------- or regulated pursuant to any applicable Environmental Law; or (B) any petroleum product or by-product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive materials or radon. -16- (n) Tax Matters. The Company and each of its subsidiaries, and any ----------- consolidated, combined or unitary group for tax purposes of which the Company or any of its subsidiaries is or has been a member, has timely filed all Tax Returns required to be filed by it in the manner provided by law except where the failure to file would not be reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole. All such Tax Returns are true, correct and complete in all material respects. The Company and each of its subsidiaries have paid all Taxes (including interest and penalties) due or required to be withheld from amounts owing to any employee, creditor or third party or have provided adequate reserves in their financial statements for any Taxes that have not been paid, whether or not shown as being due on any returns. Except as has been disclosed to Purchaser in Schedule 6.1(n) to this Agreement: (i) no material claim for unpaid Taxes has become a lien or encumbrance of any kind against the property of the Company or any of its subsidiaries or is being asserted against the Company or any of its subsidiaries; (ii) no audit, examination, investigation or other proceeding in respect of Taxes is pending, threatened or being conducted by a Tax Authority; (iii) no extension or waiver of the statute of limitations on the assessment of any Taxes has been granted by the Company or any of its subsidiaries and is currently in effect; (iv) neither the Company nor any of its subsidiaries is a party to, is bound by, or has any obligation under, or potential liability with regards to, any Tax sharing agreement, Tax indemnification agreement or similar contract or arrangement; (v) no power of attorney has been granted by or with respect to the Company or any of its subsidiaries with respect to any matter relating to Taxes; (vi) neither the Company nor any of its subsidiaries is a party to any agreement, plan, contract or arrangement that would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code; (vii) neither the Company nor any of its subsidiaries has any deferred intercompany gain or loss arising as a result of a deferred intercompany transaction within the meaning of Treasury Regulation Section 1.1502-13 (or similar provision under state, local or foreign law) or any excess loss accounts within the meaning of Treasury Regulation Section 1.1502-19; (viii) the Company is not and has not been a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(ii) of the Code. As used herein, "Taxes" ----- shall mean any taxes of any kind, including but not limited to those on or measured by or referred to as income, gross receipts, capital, sales, use, ad valorem, franchise, profits, license, withholding, premium, value added, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any governmental authority, domestic or foreign. As used herein, "Tax Return" shall mean any return, report ---------- or statement required to be filed with any governmental authority with respect to Taxes. (o) Contracts with Physicians, Hospitals, HMOs and Third Party ---------------------------------------------------------- Providers. The Company has made available to representatives of Purchaser a list - --------- of all outstanding contracts, partnerships, joint ventures and other arrangements or understandings (written or -17- oral) that are material to the Company's business and that are between (i) the Company and any of its subsidiaries and (ii) any physician, hospital, HMO, other managed care organization or other third-party provider relating to the sale or supply of medical devices, the provision of medical or consulting services, treatments or patient referrals or any other similar activities. (p) (i) The Disclosure Letter sets forth a complete and accurate list (and, with respect to the Company's Aequitron and Eden Prairie divisions, a complete and accurate list, to the knowledge of the Company's executives) for the last five years, of (A) all Regulatory Letters (as defined below), Notices of Adverse Findings and Section 305 notices and similar letters or notices issued by the Food and Drug Administration (the "FDA") or any other governmental --- entity that is concerned with the safety, efficacy, reliability or manufacturing of the medical products sold by the Company or its subsidiaries (any such governmental entity, a "Medical Device Regulatory Agency") to the Company or any -------------------------------- of its subsidiaries; (B) all United States Pharmacopoeia product problem reporting program complaints or reports, MedWatch FDA forms 3500 and device experience network complaints received by the Company or any of its subsidiaries and all Medical Device Reports filed by the Company or any of its subsidiaries, which complaints or reports pertain to any incident involving death or serious injury, and for which incident there has been (I) a notice or follow-up inquiry to the Company by the FDA, (II) a litigation or arbitration claim or cause of action commenced, or (III) a notice to any insurance carrier of the Company tendering the defense or giving any notice of a possible or actual claim against the Company; (C) all product recalls and safety alerts conducted by or issued to the Company or any of its subsidiaries and any requests from the FDA or any other Medical Device Regulatory Agency requesting the Company or any of its subsidiaries to cease to investigate, test or market any product; (D) any civil penalty actions begun by the FDA or any other Medical Device Regulatory Agency against the Company or any of its subsidiaries and known of by the Company or any of its subsidiaries and all consent decrees and all documents relating to the negotiation of and compliance with such consent decree issued with respect to the Company or the Company's subsidiaries; and (E) any other written communications between the Company or any of its subsidiaries, on the one hand, and the FDA or any other Medical Device Regulatory Agency on the other hand that describe matters that could have a material adverse effect on the sales or revenues attributable to any product or product line of the Company or its subsidiaries or discuss material issues concerning the safety or efficacy of any such product or product line. The Company has made available to Purchaser copies of all documents referred to in Section 6.1(p) of the Disclosure Letter as well as copies of all complaints and other information required to be maintained by the Company pursuant to 21 CFR Section 820. For purposes of this subparagraph (i), "Regulatory Letter" means a letter characterized by the FDA as ----------------- a warning letter, a notice of adverse finding or a similar letter in which FDA or any other Medical Device Regulatory Agency expresses the opinion that violations of law have occurred. -18- (ii) Except to the extent that such items would not, individually or in the aggregate, have a material adverse effect on the financial condition, properties, businesses or results of operations of the Company and its subsidiaries taken as a whole, and would not result in the entry or filing of any material injunction or criminal action or proceeding against or involving the Company, and would not require that executive officers of the Company or Purchaser be added as a named individual party to the consent decree to which the Company is presently subject: (A) the Company (or, if applicable, a subsidiary of the Company) has obtained all consents, approvals, certifications, authorizations and permits of, and has made all filings with, or notifications to, all Medical Device Regulatory Agencies pursuant to applicable requirements of all FDA rules, regulations and consent decrees, and all applicable state and foreign laws, rules and regulations applicable to the Company or any of its subsidiaries; (B) all representations made by the Company or any of its subsidiaries in connection with any such consents, approvals, certifications, authorizations, permits, filings and notifications were true and correct in all material respects at the time such representations and warranties were made, and the Company's products, and the products of the Company's subsidiaries, comply with, and perform in accordance with the specifications described in, such representations; (C) the Company and the Company's subsidiaries are in compliance with all applicable FDA rules, regulations and consent decrees, and all applicable state and foreign laws, rules and regulations (including Good Manufacturing Practices and Medical Device Reporting requirements) relating to medical device manufacturers and distributors or otherwise applicable to the Company's or the Company's subsidiaries' business; (D) the Company has no reason to believe that any of the consents, approvals, authorizations, registrations, certifications, permits, filings or notifications that it or any of its subsidiaries has received or made to operate their respective businesses have been or are being revoked or challenged; and (E) there are no investigations or inquiries pending or threatened relating to the operation of the Company's or the Company's subsidiaries' business or the Company's compliance with applicable laws relating to its medical device business or otherwise applicable to the Company's or its subsidiaries' business. 6.2. Representations and Warranties of Purchaser and Merger Sub. ---------------------------------------------------------- Purchaser and Merger Sub represent and warrant to the Company that: (a) Corporate Organization and Qualification. Each of Purchaser and ---------------------------------------- Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization, has all requisite corporate power and authority to carry on its business as presently conducted and is in good standing as a foreign corporation in each jurisdiction where the properties owned, leased or operated, or the business conducted, by it require such qualification except for any such failure to be so organized, existing, in good standing or to have such power and authority or to so qualify, which, when taken together with all other such failures, is not reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of Purchaser and its subsidiaries, taken as a whole. -19- (b) Corporate Authority. Purchaser and Merger Sub each has the ------------------- requisite corporate power and authority and has taken all corporate action necessary in order to execute and deliver this Agreement and to consummate the transactions contemplated hereby. Assuming the due authorization, execution and delivery hereof by the Company, this Agreement is a valid and binding agreement of Purchaser and Merger Sub enforceable against Purchaser and Merger Sub in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights and to general equitable principles. (c) Governmental Filings; No Violations. (i) Other than the ----------------------------------- Regulatory Filings, no notices, reports or other filings are required to be made by Purchaser and Merger Sub with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by Purchaser and Merger Sub from, any Governmental Entity in connection with the execution and delivery of this Agreement by Purchaser and Merger Sub and the consummation of the transactions contemplated hereby, the failure to make or obtain any or all of which could prevent or materially delay the transactions contemplated by this Agreement. (ii) The execution and delivery of this Agreement by Purchaser and Merger Sub do not, and the consummation by Purchaser and Merger Sub of the transactions contemplated by this Agreement will not, constitute or result in (i) a breach or violation of, or a default under, the Certificate of Incorporation or Bylaws of Purchaser or Merger Sub or the comparable governing instruments of any of their subsidiaries or (ii) a breach or violation of, a default under, the acceleration of or the creation of a lien, pledge, security interest or other encumbrance on assets (with or without the giving of notice or the lapse of time) pursuant to, any provision of any Contract of Purchaser or Merger Sub or any of their subsidiaries or any law, ordinance, rule or regulation or judgment, decree, order, award or governmental or non-governmental permit or license to which Purchaser or Merger Sub or any of their subsidiaries are subject, except, in the case of clause (ii) above, for such breaches, violations, defaults or accelerations or changes that, alone or in the aggregate, could not prevent or materially delay the transactions contemplated by this Agreement. (d) Funds. Purchaser has or will have the funds necessary to ----- consummate the transactions contemplated by this Agreement. On or prior to the date hereof, Purchaser has made available to the Company a copy of the executed Commitment Letter, dated July 21, 1997, among Purchaser and the Lenders party thereto (the "Commitment Letter"). ----------------- -20- ARTICLE VII COVENANTS 7.1. Interim Operations of the Company. The Company covenants and --------------------------------- agrees, as to itself and its subsidiaries, that, after the date hereof and prior to the date on which Purchaser's nominees comprise a majority of the Board of Directors of the Company (unless Purchaser shall otherwise agree in writing and except as otherwise permitted by this Agreement (including Section 7.2) or specifically disclosed in the corresponding section of the Disclosure Letter): (a) the business of the Company and its subsidiaries shall be conducted only in the ordinary and usual course and, to the extent consistent therewith, each of the Company and its subsidiaries shall use its best efforts to preserve its business organization intact and maintain its existing relations with customers, suppliers, employees and business associates; (b) the Company shall not (i) sell or pledge or agree to sell or pledge any stock owned by it in any of its subsidiaries; (ii) amend the Certificate or its Bylaws or amend, modify or terminate the Rights Agreement, or redeem the Rights issued pursuant thereto; (iii) split, combine or reclassify the outstanding Shares; or (iv) declare, set aside or pay any dividend payable in cash, stock or property with respect to the Shares; (c) neither the Company nor any of its subsidiaries shall (i) issue, sell, pledge, dispose of or encumber any additional shares of, or securities convertible or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock of any class of the Company or its subsidiaries or any other property or assets other than, in the case of the Company, Shares issuable pursuant to options outstanding on the date hereof under the Stock Plans; (ii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any assets or incur or modify any indebtedness (other than drawings under existing credit facilities in the ordinary course of business) or other liability other than in the ordinary and usual course of business; (iii) acquire directly or indirectly by redemption or otherwise any shares of the capital stock of the Company or (iv) authorize capital expenditures in excess of $500,000 individually or $5,000,000 in the aggregate or make any acquisition of another company (by merger, consolidation or acquisition of stock or assets) or any investment in, assets or stock of any other person or entity; (d) except to the extent required under the existing Compensation and Benefit Plans (as in effect prior to the date of this Agreement and set forth in the Disclosure Schedule) neither the Company nor any of its subsidiaries shall grant any severance -21- or termination pay to, or enter into any employment or severance agreement with any director, officer or other employee of the Company or such subsidiaries, other than as required by statute in foreign jurisdictions and except in the ordinary course of business consistent with past practice; and neither the Company nor any of its subsidiaries shall establish, adopt, enter into, make any new grants or awards under or amend, any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, employee stock ownership, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employees (the "Benefit Plans"); - -------------- (e) neither the Company nor any of its subsidiaries shall settle or compromise any material claims or litigation or, except in the ordinary and usual course of business and with the consent of Purchaser (which consent shall not be unreasonably withheld), modify, amend or terminate any of its material Contracts or waive, release or assign any material rights or claims; (f) neither the Company nor any of its subsidiaries shall make any tax election or permit any insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated without notice to Purchaser, except in the ordinary and usual course of business; (g) except as may be required as a result of a change in law or in generally accepted accounting principles, neither the Company nor any of its subsidiaries shall change any of the accounting practices or principles used by it; (h) neither the Company nor any of its subsidiaries shall adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization, or other reorganization of the Company or any of its subsidiaries not constituting an inactive subsidiary (other than the Merger); and (i) neither the Company nor any of its subsidiaries will authorize or enter into an agreement to do any of the foregoing or take any action that would knowingly cause any of the representations or warranties of the Company contained in this Agreement to be untrue or incorrect or would result in any of the Offer Conditions set forth in Annex A not being satisfied. -22- 7.2. Acquisition Proposals. The Company, its affiliates and its and ---------------------- their respective officers, directors, employees, representatives and agents (including, without limitation, any investment banker, attorney or accountant retained by the Company or any of its subsidiaries) shall immediately cease any existing discussions or negotiations, if any, with any parties conducted heretofore with respect to any acquisition or exchange of all or any material portion of the assets of, or more than 15% of the equity interest in, the Company or any of its subsidiaries (by direct purchase from the Company, tender or exchange offer or otherwise) or any business combination, merger or similar transaction (including an exchange of stock or assets) with or involving the Company or any subsidiary (except for the subsidiary specified in Section 7.2 of the Disclosure Letter) or division of the Company (an "Acquisition ----------- Transaction"). Except as set forth in this Section 7.2, neither the Company nor any of its affiliates, nor any of its or their respective officers, directors, employees, representatives or agents, shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Purchaser and Merger Sub, any affiliate or associate of Purchaser and Merger Sub or any designees of Purchaser and Merger Sub) with respect to any inquiries or the making of any offer or proposal (including, without limitation, any offer or proposal to the stockholders of the Company) concerning an Acquisition Transaction ( an "Acquisition Proposal"); provided, -------------------- however, that the Company may, directly or indirectly, furnish information and access pursuant to an appropriate confidentiality agreement, in each case only in response to a request for information or access, to any person making a written Acquisition Proposal to the Board of Directors of the Company made after the date hereof which was not encouraged, solicited or initiated by the Company or any of its affiliates or any of its or their respective officers, directors, employees, representatives or agents on or after the date hereof and may participate in discussions and negotiate with such person concerning any such Acquisition Proposal, if and only if the Board of Directors of the Company determines in good faith, based upon the advice of outside counsel to the Company, that failing to provide such information or access or to participate in such discussions or negotiations would constitute a breach of the Board's fiduciary duty under applicable law and provided, further, that nothing herein shall prevent the Board from taking, and disclosing to the Company's stockholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to any tender offer; provided, further, that the Board shall not recommend that the stockholders of the Company tender their Shares in connection with any such tender offer unless the Board shall have determined in good faith, based upon the advice of outside counsel to the Company, that failing to take such action would constitute a breach of the Board's fiduciary duty under applicable law. The Board shall notify Purchaser immediately if any such written Acquisition Proposal is made and shall in such notice indicate the identity of the offeror and the terms and conditions of any such proposal. The Company agrees not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which the Company is a party, unless the Board shall have determined in good faith, based upon the advice of outside counsel to the Company, that -23- failing to release such third party or waive such provisions would constitute a breach of the fiduciary duties of the Board of Directors under applicable law. 7.3. Meetings of the Company's Stockholders. (a) If required to -------------------------------------- consummate the Merger, the Company will take, consistent with applicable law, the Certificate and the Company's Bylaws, all action necessary to convene a meeting of holders of Shares as promptly as practicable following the purchase of Shares pursuant to the Offer to consider and vote upon the approval of this Agreement and the Merger. Subject to fiduciary requirements of applicable law, the Board of Directors of the Company shall recommend such approval and the Company shall take all lawful action to solicit such approval. At any such meeting of the Company all of the Shares then owned by the Purchaser Companies will be voted in favor of this Agreement. The Company's proxy or information statement with respect to such meeting of shareholders (the "Proxy Statement"), --------------- at the date thereof and at the date of such meeting, will not include an untrue statement of a material fact or omit 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; provided, however, -------- ------- that the foregoing shall not apply to the extent that any such untrue statement of a material fact or omission to state a material fact was made by the Company in reliance upon and in conformity with written information concerning the Purchaser Companies furnished to the Company by Purchaser specifically for use in the Proxy Statement. The Proxy Statement shall not be filed, and no amendment or supplement to the Proxy Statement will be made by the Company, without consultation with Purchaser and its counsel. (b) Notwithstanding the foregoing, in the event that Merger Sub shall acquire at least 90% of the outstanding Shares, the Company agrees, at the request of Merger Sub, subject to Article VIII, to take all necessary and appropriate action to cause the Merger to become effective as soon as reasonably practicable after such acquisition, without a meeting of the Company's stockholders, in accordance with Section 253 of the DGCL. 7.4. Filings; Other Action. (a) Subject to the terms and conditions --------------------- herein provided, the Company and Purchaser shall: (i) promptly make their respective filings and thereafter make any other required submissions under the HSR Act and other Regulatory Filings with respect to the Offer and the Merger; and (ii) use all commercially reasonable efforts to promptly take, or cause to be taken, all other action and do, or cause to be done, all other things necessary, proper or appropriate under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including but not limited to cooperating in the preparation and filing of the Offer Documents, the Schedule 14D-9, the Proxy Statement, any required filings under the HSR Act or other foreign filings and any amendments to any thereof. Each party hereto shall use all commercially reasonable efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to Contracts with the Company and its subsidiaries as are necessary for the consummation of the transactions contemplated by this Agreement and to fulfill the conditions to the Offer and the -24- Merger. The Company, as reasonably requested by Purchaser and in a manner not inconsistent with the terms of the Commitment Letter, will cooperate with Purchaser and Merger Sub with respect to consummating the financing for the Offer and the Merger and any refinancing of the Company's indebtedness. (b) The Company and Purchaser each shall keep the other apprised of the status of matters relating to completion of the transactions contemplated hereby, including promptly furnishing the other with copies of notices or other communications received by Purchaser or the Company, as the case may be, or any of their subsidiaries, from any Governmental Authority with respect to the Offer or the Merger or any of the other transactions contemplated by this Agreement. The parties hereto will consult and cooperate with one another, and consider in good faith the views of one another in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto in connection with proceedings under or relating to the HSR Act or any other antitrust law. 7.5. Access. (a) Upon reasonable notice, the Company shall (and ------ shall cause each of its subsidiaries to) afford Purchaser's officers, employees, counsel, lenders, accountants and other authorized representatives ("Representatives") access, during normal business hours throughout the period - ----------------- prior to the Effective Time, to its properties, books, Contracts and records and, during such period, the Company shall (and shall cause each of its subsidiaries to) furnish promptly to Purchaser all information concerning its business, properties and personnel as Purchaser or its Representatives may reasonably request, pro vided that no investigation pursuant to this Section 7.5 shall affect or be deemed to modify any representation or warranty made by the Company and provided, further, that the foregoing shall not require the Company -------- ------- to permit any inspection, or to disclose any information, which in the reasonable judgment of the Company (a) would result in the disclosure of any trade secrets of third parties or violate any obligation of the Company with respect to confidentiality if the Company shall have used reasonable efforts to obtain the consent of such third party to such inspection or disclosure, (b) would be in violation of applicable law, rules or regulation or (c) constitutes information protected by attorney-client privilege or attorney work product, but only to the extent that disclosure, in the opinion of counsel to the Company, would jeopardize the Company's ability to assert such attorney-client privilege or attorney work product and Purchaser is informed at the time that information is being withheld on the foregoing bases. Upon any termination of this Agreement, Purchaser will collect and deliver to the Company all documents obtained by it or any of its Representatives then in their possession and any copies thereof. (b) Upon any termination of this Agreement, Purchaser will treat all documents obtained by it or any of its Representatives in accordance with the terms of the Confidentiality Agreement, dated as of June 3, 1997 ( the "Confidentiality Agreement") between the Company and Purchaser. All requests - -------------------------- for information made pursuant to this -25- Section shall be directed to an executive officer of the Company or such person as may be designated by any such officer. 7.6. Notification of Certain Matters. The Company shall give prompt ------------------------------- notice to Purchaser of: (a) any notice of, or other communication relating to, any environmental matter, a default or event that, with notice or lapse of time or both, would become a default, received by the Company or any of its subsidiaries subsequent to the date of this Agreement and prior to the Effective Time, under any Contract to which the Company or any of its subsidiaries is a party or is subject; and (b) any material adverse change in the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or the occurrence of any event which, so far as reasonably can be foreseen at the time of its occurrence, is reasonably likely to result in any such change. Each of the Company and Purchaser shall give prompt notice to the other party of any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement. 7.7. Publicity. The initial press release shall be a joint press --------- release and thereafter the Company and Purchaser each shall consult with the other prior to issuing any press releases or otherwise making public announcements with respect to the transactions contemplated hereby and prior to making any filings with any Governmental Entity or with any national securities exchange with respect thereto. 7.8. Stock Plans and Benefits. ------------------------ (a) Stock Plans. Except as provided in the next sentence, the Company ----------- shall take such actions as may be necessary such that immediately prior to the Effective Time each stock option outstanding pursuant to the Stock Plans (the "Option"), whether or not then exercisable, shall be canceled and only entitle - ------- the holder thereof, upon surrender thereof, to receive an amount in cash from the Company equal to the result of multiplying the number of Shares previously subject to such Option by the difference between the Merger Consideration and the per Share exercise price of such Option. Notwithstanding anything contained herein to the contrary, all Options granted after July 21, 1997 shall, at the Effective Time, be assumed by Purchaser in accordance with the terms of the applicable Stock Plan and the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each post July 21, 1997 Option may be exercised solely for shares of Purchaser common stock, (ii) the number of shares of Purchaser common stock subject to such Option shall be equal to the result (rounded down to the nearest whole share) of multiplying the number of Shares subject to such Option immediately prior to the Effective Time by a fraction (the "Conversion Fraction"), the numerator of which is the Merger Consideration ------------------- and the denominator of which is the average of the closing prices of one share of Purchaser common stock on the New York Stock Exchange for the five business days immediately prior to the Effective Time and (iii) the per share exercise price under each such Option shall be equal to -26- the result (rounded up to the nearest whole cent) of dividing the per share exercise price under each such Option immediately prior the Effective Time by the Conversion Fraction; provided, however, that with respect to any Option which is an "incentive stock option", within the meaning of Section 422 of the Code, the adjustments provided in this Section shall, if applicable, be modified in a manner so that the adjustments are consistent with requirements of Section 424(a) of the Code. The Company agrees to take such actions as may be necessary so that each employee participating in the 1995 ESPP immediately prior to the Effective Time shall only be entitled to receive an amount in cash equal to the result of multiplying (i) the Merger Consideration by (ii) a fraction, the numerator of which is the accumulated payroll deductions in the employee's account under the 1995 ESPP at the Effective Time, and the denominator of which is the purchase price for the "Offering" for the "Purchase Period" (as such terms are defined in the 1995 ESPP) in effect immediately prior to the Effective Time. The Company agrees to take such actions as may be necessary to cease as of the Effective Time all further Offerings and payroll deductions under the 1995 ESPP. All restrictions on the retention of shares of restricted stock granted to employees under the 1994 Plan shall lapse immediately prior to the Effective Time. (b) Employee Benefits. Purchaser agrees that during the period ----------------- commencing at the Effective Time and ending on the second anniversary thereof, the employees of the Company will continue to be provided with benefits under employee benefit plans (other than stock options or other plans involving the issuance of securities of the Company or Purchaser) which in the aggregate are substantially comparable to those currently provided by the Company to such employees; provided, however, that employees covered by collective bargaining agreements need not be provided with such benefits. Purchaser will cause each employee benefit plan of Purchaser in which employees of the Company are eligible to participate to take into account for purposes of eligibility and vesting thereunder the service of such employees with the Company as if such service were with Purchaser, to the same extent that such service was credited under a comparable plan of the Company. Purchaser will, and will cause the Surviving Corporation to, honor in accordance with their terms (i) all employee benefit obligations to current and former employees of the Company accrued as of the Effective Time and (ii) to the extent set forth in the Disclosure Letter, all employee severance plans in existence on the date hereof and all employment or severance agreements entered into prior to the date hereof. 7.9. Indemnification; Directors' and Officers' Insurance. (a) From --------------------------------------------------- and after the Effective Time, Purchaser agrees that it will (i) to the fullest extent that the Company would have been permitted under Delaware law and the Certificate or the Company's Bylaws in effect on the date hereof, and (ii) cause the Surviving Corporation, to the fullest extent permitted under Delaware law, to indemnify and hold harmless each present and former -27- director and officer of the Company, determined as of the Effective Time (the "Indemnified Parties"), against any costs or expenses (including reasonable - -------------------- attorneys' fees), judgments, fines, losses, claims, damages or liabilities (collectively, "Costs") incurred in connection with any claim, action, suit, ----- proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, (and Purchaser shall also advance expenses as incurred to the fullest extent permitted under applicable law provided the person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification); provided that -------- if there is any disagreement between any Indemnified Party and the Merger Sub or Purchaser with respect to whether an officer's or director's conduct complies with the standards set forth under Delaware law and the Certificate and the Company's Bylaws, such determination shall be made by independent counsel selected by the Surviving Corporation. The indemnification provisions of Article X and Article XI of the Bylaws of the Company shall not be amended, modified or repealed for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of individuals who at the Effective Time were officers, directors or employees of the Company. (b) Any Indemnified Party wishing to claim indemnification under paragraph (a) of this Section 7.9, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify Purchaser thereof but failure to so notify will not relieve Purchaser of liability except to the extent Purchaser is materially adversely affected thereby. In the event of any such claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), (i) Purchaser or the Surviving Corporation shall have the right to assume the defense thereof and Purchaser shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if Purchaser or the Surviving Corporation elects not to assume such defense or counsel for the Indemnified Parties advises that, in such counselor's reasonable judgment, there are issues that constitute conflicts of interest between Purchaser or the Surviving Corporation and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and Purchaser or the Surviving Corporation shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; provided, however, that Purchaser shall be obligated -------- ------- pursuant to this paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of any such matter and (iii) Purchaser shall not be liable for any settlement effected without its prior written consent; and provided further that Purchaser shall not have any obligation hereunder to any Indemnified Party when and if a court of competent jurisdiction shall ultimately determine, and such determination shall have become final, that the indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable law. -28- (c) Purchaser shall cause the Surviving Corporation either (i) to maintain the Company's existing officers' and directors' liability insurance (or equivalent thereof) ("D&O Insurance") for a period of six years after the ------------- Effective Time so long as the annual premium therefor is not in excess of an amount (the "D&O Premium") equal to 150% of the last annual premium paid prior ----------- to the date hereof; provided, however, if the existing D&O Insurance expires, is -------- ------- terminated or canceled during such six year period, the Surviving Corporation will use its best efforts to obtain as much D&O Insurance as can be obtained for the remainder of such period for a premium not in excess (on an annualized basis) of the D&O Premium or (ii) purchase tail insurance in respect of the existing D&O Insurance for six years for a premium not to exceed $1,000,000. (d) If the Surviving Corporation or any of its successors or assigns (i) shall consolidate with or merge into any other corporation or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of its properties and assets to any individual, corporation or other entity, then and in each such case, proper provisions shall be made so that the successors and assigns of the Surviving Corporation shall assume all of the obligations set forth in Section 7.8 and this Section 7.9. (e) The provisions of this Section 7.9 are intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Parties, their heirs and their representatives. 7.10. Other Actions by the Company. If any Takeover Statute shall ---------------------------- become applicable to the transactions contemplated hereby, the Company and the members of the Board of Directors of the Company shall 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 eliminate or minimize the effects of such statute or regulation on the transactions contemplated hereby. ARTICLE VIII CONDITIONS 8.1. Conditions to Obligations of Purchaser and Merger Sub. The ----------------------------------------------------- respective obligations of Purchaser and Merger Sub to consummate the Merger are subject to the ful fillment of each of the following conditions, any or all of which may be waived in whole or in part by Purchaser or Merger Sub, as the case may be, to the extent permitted by applicable law: -29- (a) Stockholder Approval. If required by the DGCL, this Agreement -------------------- shall have been duly approved by the holders of a majority of the Shares, in accordance with applicable law and the Certificate and the Company's Bylaws; (b) Purchase of Shares. Merger Sub (or one of the Purchaser ------------------ Companies) shall have purchased Shares pursuant to the Offer; (c) Injunction. No United States or state court or other ---------- Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, pre liminary or permanent) which is in effect and prohibits consummation of the transactions contemplated by this Agreement (collectively, an "Order"); and ----- (d) Other Obligations. The Company shall have fulfilled its ----------------- obligations under Section 7.8(a) and the representations set forth in Section 6.1(k) shall be true and correct; provided, however, that this condition shall -------- ------- be deemed satisfied if Purchaser Representatives constitute not less than a majority of the Board of Directors of the Company and take any action to reverse, modify or amend any action taken by the Board of Directors of the Company prior to the Purchaser Representatives constituting such majority. 8.2. Conditions to Obligations of the Company. The obligations of ---------------------------------------- the Company to consummate the Merger are subject to the fulfillment of each of the following conditions, any or all of which may be waived in whole or in part by the Company to the extent permitted by applicable law: (a) Stockholder Approval. If required by the DGCL, this Agreement -------------------- shall have been duly approved by the holders of a majority of the Shares, in accordance with applicable law and the Certificate and the Company's Bylaws; (b) Purchase of Shares. Merger Sub (or one of the Purchaser ------------------ Companies) shall have purchased Shares pursuant to the Offer; (c) Order. There shall be in effect no Order. ----- ARTICLE IX TERMINATION 9.1. Termination by Mutual Consent. This Agreement may be terminated ----------------------------- and the transactions contemplated hereby may be abandoned at any time prior to the Effective -30- Time, before or after the approval by holders of Shares, by the mutual consent of Purchaser and the Company, by action of their respective Boards of Directors. 9.2. Termination by either Purchaser or the Company. This Agreement ---------------------------------------------- may be terminated and the transactions contemplated hereby may be abandoned by action of the Board of Directors of either Purchaser or the Company if (i) Merger Sub, or any Purchaser Company, shall have terminated the Offer without purchasing any Shares pursuant thereto; or (ii) the Merger shall not have been consummated by December 31, 1997, whether or not such date is before or after the approval by holders of Shares; or (iii) if required, the approval of shareholders required by Section 8.1(a) shall not have been obtained at a meeting duly convened therefor; or (iv) any court of competent jurisdiction or other governmental body located or having jurisdiction within the United States or any country or economic region in which either the Company or Purchaser, directly or indirectly, has material assets or operations, shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Offer or the Merger and such order, decree, ruling or other action is or shall have become final and nonappealable. 9.3. Termination by Purchaser. This Agreement may be terminated and ------------------------ the transactions contemplated hereby may be abandoned at any time prior to the Effective Time, before or after the approval by holders of Shares, by action of the Board of Directors of Purchaser, if (i) the Company shall have breached or failed to perform in any material respect any of the covenants or agreements contained in this Agreement to be complied with or performed by the Company prior to such date of termination which breach or failure shall not have been cured prior to the earlier of (A) ten business days following the giving of written notice to the Company of such breach or failure and, if applicable, (B) the date on which the Offer is then scheduled to expire, or any representation or warranty of the Company set forth in this Agreement shall have been inaccurate or incomplete when made except for such failures to be complete or accurate that, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or could prevent or materially delay the transactions contemplated by this Agreement or impair the ability of Purchaser, Merger Sub, the Company or any of their respective affiliates, following consummation of the Offer or the Merger, to conduct any material business or operations in any jurisdiction where they are now being conducted, (ii) the Board of Directors of the Company (or a special committee thereof) shall have amended, modified or withdrawn in a manner adverse to Purchaser or Merger Sub its approval or recommendation of the Offer, this Agreement or the Merger or the Board of Directors of the Company, upon request by Purchaser, shall have failed to publicly reaffirm such approval or recommendation within ten business days of such request by Purchaser, or shall have endorsed, approved or recommended any other Acquisition Proposal, or shall have resolved to do any of the foregoing, or (iii) the Company shall have entered into any agreement, letter of intent or agreement in principle with respect to any other Acquisition Proposal. -31- 9.4. Termination by the Company. This Agreement may be terminated -------------------------- and the transactions contemplated hereby may be abandoned at any time prior to the Effective Time, before or after the approval by holders of Shares by action of the Board of Directors of the Company, (i) if Purchaser or Merger Sub (or another Purchaser Company) (x) shall have breached or failed to perform in any material respect any of the covenants or agreements contained in this Agreement to be complied with or performed by Purchaser or Merger Sub prior to such date of termination which breach or failure shall not have been cured prior to the earlier of (A) ten business days following the giving of written notice to the Purchaser of such breach or failure, and, if applicable, (B) the date on which the Offer is then scheduled to expire, or (y) shall have failed to commence the Offer within the time required in Section 1.1, or (ii) if (w) the Company is not in material breach of any of the terms of this Agreement, (x) the Board of Directors of the Company authorizes the Company, subject to complying with the terms of this Agreement, to enter into a definitive written acquisition agreement concerning an Acquisition Transaction (the "Alternative Acquisition ----------------------- Agreement") and five business days elapse after delivery to Purchaser of a - --------- written notice that the Board of Directors has so authorized the Company to enter into such Alternative Acquisition Agreement, attaching the most current version of such agreement (which shall include all of the material terms, including the price proposed to be paid for Shares pursuant thereto) to such notice, (y) Purchaser does not make, within five business days of receipt of such written notice from the Company, an offer that the Board of Directors of the Company determines, in good faith after consultation with its financial advisors, is at least as favorable, from a financial point of view, to the stockholders of the Company as the offer set forth in the Alternative Acquisition Agreement that the Company has indicated that it intends to enter into following the end of such five business day period, and (z) the Company, prior to such termination, pays to Purchaser in immediately available funds the fees required to be paid pursuant to Section 9.5(b). 9.5. Effect of Termination and Abandonment. (a) In the event of the ------------------------------------- termination of this Agreement pursuant to this Article IX, no party hereto (or any of its directors or officers, employees, agents or advisors) shall have any liability or further obligation to any other party to this Agreement, except as provided in Section 9.5(b) below and Section 10.2 and except that nothing herein will relieve any party from liability for any willful breach of this Agreement, including, without limitation, Section 1.1 hereof. (b) If (i) (x) the Offer shall have remained open for a minimum of at least 25 business days, (y) after the date hereof any corporation, partnership, person, other entity or group (as defined in Section 13(d)(3) of the Exchange Act) other than Purchaser or Merger Sub or any of their respective subsidiaries or affiliates (collectively, a "Person") shall have become the beneficial owner ------ of 15% or more of the outstanding Shares or shall have publicly announced a proposal or intention to make an Acquisition Proposal or any Person shall have commenced, or shall have publicly announced an intention to commence, a tender offer or exchange offer for 15% or more of the outstanding Shares, and (z) the Minimum -32- Condition (as defined in Annex A) shall not have been satisfied and the Offer is terminated without the purchase of any Shares thereunder, or (ii) the Purchaser shall have terminated this Agreement pursuant to Section 9.3 (ii) or 9.3(iii), or (iii) the Company shall have terminated this Agreement pursuant to Section 9.4(ii), then the Company shall promptly, but in no event later than two days after the date of such termination (except as otherwise expressly provided in Section 9.4(ii) requiring an earlier payment), pay Purchaser a fee of $45,000,000 (the "Termination Fee") and shall reimburse Purchaser and Merger Sub --------------- (not later than one business day after submission of statements therefor) for (i) an amount equal to all of the actual documented out-of-pocket charges and expenses incurred by Purchaser or Merger Sub in connection with this Agreement and the transactions contemplated by this Agreement up to a maximum amount of $3,500,000, plus (ii) an amount equal to all of the actual documented financing fees paid by Purchaser in connection with the debt facilities referred to in the Commitment Letter up to a maximum amount of $4,000,000 (such charges, expenses and financing fees referred to in clauses (i) and (ii) collectively, the "Purchaser Expenses"), in each case payable by wire transfer in same day funds. - ------------------- If this Agreement is terminated by Purchaser pursuant to Section 9.3(i), then the Company shall promptly pay to Purchaser the Purchaser Expenses and, if within 18 months of the date of such termination, the Company shall enter into any agreement with respect to an Acquisition Transaction, the Company shall, promptly, but in no event later than two days after the entry into such agreement, pay Purchaser the Termination Fee. The Company acknowledges that the agreements contained in this Section 9.5(b) are an integral part of the transactions contemplated in this Agreement, and that, without these agreements, Purchaser and Merger Sub would not enter into this Agreement; accordingly, if the Company fails to promptly pay the amount due pursuant to this Section 9.5(b), and, in order to obtain such payment, Purchaser or Merger Sub commences a suit which results in a judgment against the Company for the fee set forth in this paragraph (b), the Company shall pay to Purchaser or Merger Sub its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the amount of the fee at the prime rate of Morgan Guaranty Trust Company of New York on the date such payment was required to be made. (c) If this Agreement is terminated by the Company pursuant to Section 9.4(i) or by the Company or Purchaser pursuant to Section 9.2(i) in the event Merger Sub or Purchaser shall have terminated the Offer in violation of the terms of the Offer, then Purchaser shall promptly reimburse the Company (not later than one business day after submission of statements therefor) for an amount equal to the Company's actual documented out-of-pocket expenses incurred in connection with the transactions contemplated by the Agreement in an amount not to exceed $3,500,000. -33- ARTICLE X Miscellaneous and General 10.1. Payment of Expenses. Whether or not the Merger shall be ------------------- consummated, each party hereto shall, subject to Section 9.5(b), pay its own expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the Merger. 10.2. Survival. The agreements of the Company, Purchaser and Merger -------- Sub contained in Sections 5.2 (but only to the extent that such Section expressly relates to actions to be taken after the Effective Time), 5.3, 5.4, 7.8, 7.9, 7.10, 10.1 and 10.6 through 10.13 shall survive the consummation of the Merger. The agreements of the Company, Purchaser and Merger Sub contained in the Confidentiality Agreement and Sections 7.5(b), 9.5, 10.1 and 10.6 through 10.13 shall survive the termination of this Agreement. Except as provided in Section 9.5(b), all other representations, warranties, agreements and covenants in this Agreement shall not survive the consummation of the Merger or the termination of this Agreement. 10.3. Modification or Amendment. Subject to the applicable ------------------------- provisions of the DGCL, at any time prior to the Effective Time, the parties hereto may modify or amend this Agreement, by written agreement executed and delivered by duly authorized officers of the respective parties. 10.4. Waiver of Conditions. The conditions to each of the parties' -------------------- obligations to consummate the Merger are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable law. 10.5. Counterparts. For the convenience of the parties hereto, this ------------ Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. 10.6. Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of Delaware. 10.7. Notices. Any notice, request, instruction or other document to ------- be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, if to ----- Purchaser or Merger Sub, addressed to Purchaser or Merger Sub, as the case may - ----------------------- be, at Mallinckrodt Inc., 7733 Forsyth Boulevard, St. Louis, Missouri 63105- 1820, Attention: Roger A. Keller, Esq. (with a copy to James C. Morphy, Esq., Sullivan & Cromwell, 125 Broad Street, New York, New York 10004); and --- -34- if to the Company, addressed to the Company at Nellcor Puritan Bennett - ----------------- Incorporated, 4280 Hacienda Drive, Pleasanton, California 94588, Attention: Laureen DeBuono (with a copy to Robert M. Mattson, Jr., Esq., Morrison & Foerster LLP, 19900 MacArthur Boulevard, 12th Floor, Irvine, California 92612), or to such other persons or addresses as may be designated in writing by the party to receive such notice. 10.8. 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 conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. 10.9. Entire Agreement, etc. This Agreement (including the --------------------- Disclosure Letter and any exhibits or Annexes hereto) (a) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof, and (b) shall not be assignable by operation of law or otherwise and is not intended to create any obligations to, or rights in respect of, any persons other than the parties hereto; provided, -------- however, that Purchaser may designate, by written notice to the Company, another - ------- wholly-owned direct or indirect subsidiary to be a Constituent Corporation in lieu of Merger Sub, in the event of which, all references herein to Merger Sub shall be deemed references to such other subsidiary except that all representations and warranties made herein with respect to Merger Sub as of the date of this Agreement shall be deemed representations and warranties made with respect to such other subsidiary as of the date of such designation. 10.10. Parties in Interest. This Agreement shall be binding upon and ------------------- inure solely to the benefit of each party hereto, and, except for Section 7.9, nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. 10.11. Definition of "Subsidiary". When a reference is made in this -------------------------- Agreement to a subsidiary of a party, the word "subsidiary" means any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its subsidiaries, or by such party and one or more of its subsidiaries. -35- 10.12. Obligation of Purchaser. Whenever this Agreement requires ----------------------- Merger Sub to take any action, such requirement shall be deemed to include an undertaking on the part of Purchaser to cause Merger Sub to take such action. 10.13. Captions. The Article, Section and paragraph captions herein -------- are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. -36- IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto on the date first hereinabove written. MALLINCKRODT INC. By: /s/ C. Ray Holman ------------------------ Name: C. Ray Holman Title: Chairman & Chief Executive Officer NELLCOR PURITAN BENNETT INC. By: /s/ C. Raymond Larkin, Jr. --------------------------------- Name: C. Raymond Larkin, Jr. Title: President & Chief Executive Officer NPB ACQUISITION CORP. By: /s/ C. Ray Holman ----------------------- Name: C. Ray Holman Title: Chairman & Chief Executive Officer -37- ANNEX A CERTAIN CONDITIONS OF THE OFFER. The capitalized terms used in this ------------------------------- Annex A have the meanings set forth in the attached Agreement. Notwithstanding any other provision of the Offer, Merger 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 Merger Sub's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, or may delay the acceptance for payment of or payment for, any tendered Shares, or may, in its sole discretion (subject to the Merger Agreement), terminate or amend the Offer as to any Shares not then paid for if, (i) prior to the expiration of the Offer, (x) a number of Shares which, together with any Shares owned by Purchaser or Merger Sub, constitutes more than 50% of the voting power (determined on a fully-diluted basis) of all the securities of the Company entitled to vote generally in the election of directors or in connection with a merger shall not have been validly tendered and not withdrawn prior to the expiration of the Offer (the "Minimum Condition") ----------------- or (y) any waiting periods under the HSR Act applicable to the purchase of Shares pursuant to the Offer, and any similar waiting periods under any foreign statutes or regulations that are applicable to the Offer or the Merger shall not have expired or been terminated, or any Regulatory Approvals applicable to the Offer and the Merger shall not have been obtained on terms satisfactory to the Purchaser in its reasonable judgment, or (ii) on or after July 23, 1997, and at or before the time of payment for any of such Shares (whether or not any Shares have theretofore been accepted for payment), any of the following events shall occur: (a) there shall have occurred and be continuing (i) any general suspension of, or limitation on prices for, trading in securities on the NYSE or in the over-the-counter market, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any material limitation (whether or not mandatory) by any Governmental Entity on, or any other event that could reasonably be expected to materially adversely affect, the extension of credit by banks or other lending institutions, (iv) or in the case of any of the foregoing existing at the time of the com mencement of the Offer, a material acceleration or worsening thereof, or (v) any material adverse change in the relevant financial markets that could reasonably be expected to materially and adversely affect the syndication of the senior bank debt facilities referred to in the Commitment Letter; (b) the Company shall have breached or failed to perform in any material respect any of the covenants or agreements contained in the Agreement to be complied with or performed by the Company prior to the date of termination of the Agreement which breach or failure shall not have been cured prior to the earlier of (A) ten business days following the giving of written notice to the Company of such breach or failure and (B), the date on which the Offer is then scheduled to expire, or any representation or warranty of the Company set forth in the Agreement shall have been inaccurate or incomplete when made or, except for those representations or warranties that address matters only as of a particular date, thereafter shall -1- become inaccurate or incomplete and except for changes specifically permitted in this Agreement and the failure of any such representations and warranties to be complete and accurate that, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or could prevent or materially delay the transactions contemplated by this Agreement or impair the ability of Purchaser, the Merger Sub, the Company or any of their respective affiliates, following consummation of the Offer or the Merger, to conduct any material business or operations in any jurisdiction where they are now being conducted. (c) there shall be instituted or pending any action, litigation, proceeding, investigation or other application (hereinafter, an "Action") ------ before any court or other Governmental Entity by any Governmental Entity: (i) challenging the acquisition by Purchaser or Merger Sub of Shares, seeking to restrain or prohibit the consummation of the transactions contemplated by the Offer or the Merger, seeking to obtain any material damages or otherwise directly or indirectly relating to the transactions contemplated by the Offer or the Merger; (ii) seeking to prohibit, or impose any material limitations on, Purchaser's or Merger Sub's ownership or operation of all or any portion of their or the Company's business or assets (including the business or assets of their respective affiliates and subsidiaries), or to compel Purchaser or Merger Sub to dispose of or hold separate all or any portion of Purchaser's or Merger Sub's or the Company's business or assets (including the business or assets of their respective affiliates and subsidiaries) as a result of the transactions contemplated by the Offer or the Merger; (iii) seeking to make the acceptance for payment, purchase of, or payment for, some or all of the Shares illegal or render Merger Sub unable to, or result in a material delay in, or restrict, the ability of Merger Sub to, accept for payment, purchase or pay for some or all of the Shares; (iv) seeking to impose material limitations on the ability of Purchaser or Merger Sub effectively to acquire or hold or to exercise full rights of ownership of the Shares including, without limitation, the right to vote the Shares purchased by them on an equal basis with all other Shares on all matters properly presented to the stockholders; or (v) that, in any event, is reasonably likely to have a material adverse effect on the financial condition, properties, business or operations of the Company or Purchaser or Merger Sub (or any of their respective affiliates or subsidiaries) or the value of the Shares to Purchaser or Merger Sub or the benefits expected to be derived by Purchaser or Merger Sub as a result of consummation of the transactions contemplated by the Offer and the Merger; -2- (d) any statute, rule, regulation, order or injunction shall be enacted, promulgated, entered, enforced or deemed or become applicable to the Offer or the Merger, or any Action shall be instituted or pending brought by any person not on behalf of a Governmental Entity or other action shall have been taken by any court or other Governmental Entity other than the application to the Offer or the Merger of waiting periods under the HSR Act, that, in the reasonable judgment of Purchaser, could be expected to, directly or indirectly, result in any of the effects of, or have any of the consequences sought to be obtained or achieved in, any Action referred to in clauses (i) through (v) of paragraph (c) above; (e) a tender or exchange offer for 15% or more of the outstanding Shares shall have been commenced or publicly proposed to be made by another Person (including the Company or its subsidiaries), or it shall have been publicly disclosed or the Purchaser shall have learned that any Person (including the Company or its subsidiaries), shall have become the beneficial owner (as defined in Section 13(d) of the Exchange Act and the rules promulgated thereunder) of more than 15% of any class or series of capital stock of the Company (including the Shares) (other than for bona fide arbitrage purposes); (f) any change or development shall have occurred that has had, or is reasonably likely to have, a material adverse effect on the financial condition, properties, businesses or results of operations of the Company and its subsidiaries taken as a whole; (g) the Board of Directors of the Company (or a special committee thereof) shall have amended, modified or withdrawn in a manner adverse to Purchaser or Merger Sub its approval or recommendation of the Offer, the Agreement or the Merger, or the Board of Directors of the Company, upon request by Purchaser, shall have failed to publicly reaffirm such approval or recommendation within ten business days of such request by Purchaser, or shall have endorsed, approved or recommended any other Acquisition Proposal, or shall have resolved to do any of the foregoing; or (h) the Agreement shall have been terminated by the Company or Purchaser or Merger Sub in accordance with its terms or Purchaser or Merger Sub shall have reached an agreement or understanding in writing with the Company providing for termination or amendment of the Offer or delay in payment for the Shares; -3- which, in the sole judgment of Purchaser and Merger Sub, in any such case, and regardless of the circumstances (including any action or inaction by Purchaser or Merger Sub) giving rise to any such conditions, makes it inadvisable to proceed with the Offer and/or with such acceptance for payment of or payment for Shares. The foregoing conditions are for the sole benefit of Purchaser and Merger Sub and may be asserted by Purchaser or Merger Sub regardless of the circumstances (including any action or inaction by Purchaser or Merger Sub) giving rise to such condition or may be waived by Purchaser or Merger Sub, by express and specific action to that effect, in whole or in part at any time and from time to time in its sole discretion. Any determination by Purchaser and Merger Sub concerning any event described in this Annex A shall be final and binding upon all parties. The failure by Merger 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 other 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. -4- EX-99.10 12 CREDIT AGREEMENT, DATED JULY 23, 1997 EXHIBIT (10) $2,000,000,000 CREDIT AGREEMENT dated as of July 23, 1997 among Mallinckrodt Inc., The Lenders Listed Herein, Morgan Guaranty Trust Company of New York, as Administrative Agent, Goldman Sachs Credit Partners L.P., as Syndication Agent, and Citibank, N.A., as Documentation Agent ------------------------------ J.P. Morgan Securities Inc., Goldman Sachs Credit Partners L.P. and Citicorp Securities, Inc., Co-Arrangers TABLE OF CONTENTS -------------- Page ---- ARTICLE 1 Definitions Section 1.01. Definitions........................................... 1 Section 1.02. Accounting Terms and Determinations................... 19 Section 1.03. Classes and Types of Loans and Borrowings............. 19 ARTICLE 2 The Credits Section 2.01. Commitments to Lend................................... 20 Section 2.02. Notice of Committed Borrowing......................... 20 Section 2.03. Money Market Borrowings............................... 21 Section 2.04. Notice to the Lenders; Funding of Loans............... 25 Section 2.05. Notes................................................. 26 Section 2.06. Maturity of Loans..................................... 26 Section 2.07. Interest Rates........................................ 27 Section 2.08. Facility Fees......................................... 30 Section 2.09. Optional Termination or Reduction of Commitments...... 30 Section 2.10. Method of Electing Interest Rates..................... 30 Section 2.11. Mandatory Reduction and Termination of Commitments; Mandatory Prepayments............................... 32 Section 2.12. Optional Prepayments.................................. 34 Section 2.13. General Provisions as to Payments..................... 34 Section 2.14. Funding Losses........................................ 35 Section 2.15. Computation of Interest and Fees...................... 35 Section 2.16. Regulation D Compensation............................. 35 ARTICLE 3 Conditions Section 3.01. Closing............................................... 36 Section 3.02. Borrowings............................................ 37 ARTICLE 4 Representations and Warranties Section 4.01. Corporate Existence................................... 38 Page ---- Section 4.02. Financial Condition................................... 39 Section 4.03. Litigation............................................ 39 Section 4.04. No Breach............................................. 40 Section 4.05. Action................................................ 40 Section 4.06. Approvals............................................. 40 Section 4.07. ERISA................................................. 40 Section 4.08. Taxes................................................. 40 Section 4.09. Investment Company Act................................ 41 Section 4.10. Public Utility Holding Company Act.................... 41 Section 4.11. True and Complete Disclosure.......................... 41 Section 4.12. Environmental Matters................................. 41 ARTICLE 5 Covenants Section 5.01. Financial Statements, Etc............................. 42 Section 5.02. Litigation............................................ 45 Section 5.03. Existence, Etc........................................ 45 Section 5.04. Insurance............................................. 46 Section 5.05. Limitation on Liens................................... 46 Section 5.06. Mergers and Sales of Assets........................... 48 Section 5.07. Change in Nature of Business.......................... 48 Section 5.08. Financial Covenants................................... 49 Section 5.09. Indebtedness of Subsidiaries.......................... 49 Section 5.10. Transactions with Affiliates.......................... 49 Section 5.11. Use of Proceeds....................................... 49 Section 5.12. Environmental Laws.................................... 49 Section 5.13. Most Favored Lender................................... 50 ARTICLE 6 Defaults Section 6.01. Events of Default..................................... 51 Section 6.02. Notice of Default..................................... 53 ARTICLE 7 The Agents Section 7.01. Appointment and Authorization......................... 54 ii Page ---- Section 7.02. Agent and Affiliates.................................. 54 Section 7.03. Action by Agent....................................... 54 Section 7.04. Consultation with Experts............................. 54 Section 7.05. Liability of Agent.................................... 54 Section 7.06. Indemnification....................................... 55 Section 7.07. Credit Decision....................................... 55 Section 7.08. Successor Administrative Agent........................ 55 Section 7.09. Documentation Agent and Syndication Agent............. 56 ARTICLE 8 Change in Circumstances Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair.............................................. 56 Section 8.02. Illegality............................................ 57 Section 8.03. Increased Cost and Reduced Return..................... 57 Section 8.04. Taxes................................................. 59 Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans.......................................... 61 Section 8.06. Substitution of Lender................................ 61 ARTICLE 9 Miscellaneous Section 9.01. Notices............................................... 62 Section 9.02. No Waivers............................................ 62 Section 9.03. Expenses; Indemnification............................. 62 Section 9.04. Sharing of Set-offs................................... 63 Section 9.05. Amendments and Waivers................................ 63 Section 9.06. Successors and Assigns................................ 64 Section 9.07. Collateral............................................ 66 Section 9.08. Governing Law; Submission to Jurisdiction............. 66 Section 9.09. Counterparts; Integration; Effectiveness.............. 66 Section 9.10. WAIVER OF JURY TRIAL.................................. 66 Section 9.11. Confidentiality....................................... 67 iii PRICING SCHEDULE COMMITMENT SCHEDULE EXHIBIT A - Note EXHIBIT B - Money Market Quote Request EXHIBIT C - Invitation for Money Market Quotes EXHIBIT D - Money Market Quote EXHIBIT E - Opinion of Counsel for the Borrower EXHIBIT F - Opinion of Special Counsel for the Agents EXHIBIT G - Assignment and Assumption Agreement AGREEMENT dated as of July 23, 1997 among MALLINCKRODT INC., the BANKS party hereto from time to time, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent, GOLDMAN SACHS CREDIT PARTNERS L.P., as Syndication Agent, and CITIBANK, N.A., as Documentation Agent. The parties hereto agree as follows: ARTICLE 1 Definitions Section 1.01. Definitions. The following terms, as used herein, have the following meanings: "ABSOLUTE RATE AUCTION" means a solicitation of Money Market Quotes setting forth Money Market Absolute Rates pursuant to Section 2.03. "ACQUISITION" means the acquisition by the Borrower of Target as contemplated by the Offer to Purchase and the Merger Agreement. "ADJUSTED CD RATE" has the meaning set forth in Section 2.07(b). "ADJUSTED CONSOLIDATED EBITDA" means, for any fiscal period, Consolidated EBITDA for such period, adjusted to exclude therefrom Excluded Items. "ADJUSTED CONSOLIDATED NET WORTH" means, for any fiscal period, Consolidated Net Worth for such period, adjusted to exclude therefrom Excluded Items (after adjustment for related tax effects). "ADMINISTRATIVE AGENT" means Morgan Guaranty Trust Company of New York, in its capacity as administrative agent for the Lenders hereunder, and its successors in such capacity. "ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Lender, an administrative questionnaire in the form prepared by the Administrative Agent and submitted to the Administrative Agent (with a copy to the Borrower) duly completed by such Lender. "AFFILIATE" means any Person that directly or indirectly controls, or is under common control with, or is controlled by, the Borrower and, if such Person is an individual, any member of the immediate family (including parents, spouse, children and siblings) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust. As used in this definition, "CONTROL" (including, with its correlative meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event, any Person that owns directly or indirectly securities having 15% or more of the voting power for the election of directors or other governing body of a corporation or 15% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person. Notwithstanding the foregoing, (a) no individual shall be an Affiliate solely by reason of his or her being a director, officer or employee of the Borrower or any of its Subsidiaries and (b) none of the Subsidiaries of the Borrower shall be Affiliates. "AGENT" means each of the Administrative Agent, the Syndication Agent and the Documentation Agent. "APPLICABLE LENDING OFFICE" means, with respect to any Lender, (i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its Money Market Loans, its Money Market Lending Office. "ASSESSMENT RATE" has the meaning set forth in Section 2.07(b). "ASSET SALE" means any sale or other disposition (including any such transaction effected by way of merger or consolidation) by the Borrower or any of its Subsidiaries of any asset (including without limitation any capital stock held by the Borrower or such Subsidiary), including without limitation any sale- leaseback transaction, whether or not involving a capital lease, but excluding (i) dispositions to the Borrower or a Subsidiary of the Borrower, (ii) any sale, transfer or other disposition of inventory or obsolete equipment or property in the ordinary course of business, (iii) any sale, transfer or other disposition of cash, cash equivalents and short term investments in the ordinary course of business and (iv) any sale, transfer or other disposition of any "margin stock" (within the meaning of the Margin Regulations) for fair value. 2 "ASSIGNEE" has the meaning set forth in Section 9.06(c). "BANKRUPTCY CODE" means the United States Bankruptcy Code of 1978, as amended from time to time. "BASE RATE" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day. "BASE RATE LOAN" means (i) a Committed Loan which bears interest at the Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or the provisions of Article 8 or (ii) an overdue amount which was a Base Rate Loan immediately before it became overdue. "BORROWER" means Mallinckrodt Inc., a New York corporation, and its successors. "BORROWING" has the meaning set forth in Section 1.03. "CAPITAL LEASE OBLIGATIONS" means, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board), and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP (including such Statement No. 13). "CD BASE RATE" has the meaning set forth in Section 2.07(b). "CD LOAN" means (i) a Committed Loan which bears interest at a CD Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or (ii) an overdue amount which was a CD Loan immediately before it became overdue. "CD MARGIN" means a rate per annum determined in accordance with the Pricing Schedule. "CD RATE" means a rate of interest determined pursuant to Section 2.07(b) on the basis of an Adjusted CD Rate. 3 "CD REFERENCE LENDERS" means Citibank, N.A. and Morgan Guaranty Trust Company of New York. "CLASS" has the meaning set forth in Section 1.03. "CLOSING DATE" means the date on or after the Effective Date on which the Administrative Agent shall have received the documents specified in or pursuant to Section 3.01. "CODE" means the Internal Revenue Code of 1986, as amended from time to time. "COMMITMENT" means any Term Loan Commitment or Revolving Credit Commitment, and "COMMITMENTS" means any or all of the foregoing, as the context may require. "COMMITMENT SCHEDULE" means the Schedule attached hereto and identified as such. "COMMITTED LOAN" means a loan made by a Lender pursuant to Section 2.01; provided that, if any such loan or loans (or portions thereof) are combined or subdivided pursuant to a Notice of Interest Rate Election, the term "COMMITTED LOAN" shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. "CONSOLIDATED EBITDA" means, for any fiscal period, Consolidated Net Income for such period plus, to the extent deducted in determining such Consolidated Net Income for such period, the aggregate amount of (i) Consolidated Interest Expense, (ii) consolidated income tax expense and (iii) consolidated depreciation and amortization expense. "CONSOLIDATED INTEREST EXPENSE" means, for any fiscal period, the aggregate interest expense of the Borrower and its Subsidiaries determined on a consolidated basis for such period. "CONSOLIDATED NET INCOME" means, for any fiscal period, the net income of the Borrower and its Subsidiaries, determined on a consolidated basis for such period. 4 "CONSOLIDATED NET WORTH" means, as at any date, the sum, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) the amount of capital stock, plus (b) the amount of capital in excess of par value, plus (c) the amount of reinvested earnings (or in the case of a reinvested earnings deficit, minus the amount of such deficit), minus (d) the cost of treasury stock. "COVENANT" means, with respect to any agreement or instrument representing or governing Indebtedness, any covenant (whether expressed as a covenant or an event of default) contained therein. "DEFAULT" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "DERIVATIVES OBLIGATIONS" of any Person means all obligations of such Person in respect of any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions. "DOCUMENTATION AGENT" means Citibank, N.A. in its capacity as documentation agent hereunder. "DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close. "DOMESTIC LENDING OFFICE" means, as to each Lender, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Lender may hereafter designate as its Domestic Lending Office by notice to the Borrower and the Administrative Agent; provided that any Lender may so 5 designate separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and its CD Loans, on the other hand, in which case all references herein to the Domestic Lending Office of such Lender shall be deemed to refer to either or both of such offices, as the context may require. "DOMESTIC LOANS" means CD Loans or Base Rate Loans or both. "DOMESTIC RESERVE PERCENTAGE" has the meaning set forth in Section 2.07(b). "EFFECTIVE DATE" means the date this Agreement becomes effective in accordance with Section 9.09. "ENVIRONMENTAL CLAIM" means, with respect to any Person, (a) any written or oral notice, claim, demand or other communication (collectively, a "CLAIM") by any other Person alleging or asserting such Person's liability for investigatory costs, cleanup costs, governmental response costs, damages to natural resources or other Property, personal injuries, fines or penalties arising out of, based on or resulting from (i) the presence, or Release into the environment, of any Hazardous Material at any location, whether or not owned by such Person, or (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. The term "ENVIRONMENTAL CLAIM" shall include, without limitation, any claim by any governmental authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and any claim by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence of Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. "ENVIRONMENTAL LAWS" means any and all present and future Federal, state, local and foreign laws, rules or regulations, and any orders or decrees, in each case as now or hereafter in effect, relating to the regulation or protection of human health, safety or the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes into the indoor or outdoor environment, including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. 6 "ERISA AFFILIATE" means any corporation or trade or business that is a member of any group of organizations (i) described in Section 414(b) or (c) of the Code of which the Borrower is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which the Borrower is a member. "EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London. "EURO-DOLLAR LENDING OFFICE" means, as to each Lender, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro- Dollar Lending Office) or such other office, branch or affiliate of such Lender as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower and the Administrative Agent. "EURO-DOLLAR LOAN" means (i) a Committed Loan which bears interest at a Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or (ii) an overdue amount which was a Euro- Dollar Loan immediately before it became overdue. "EURO-DOLLAR MARGIN" means a rate per annum determined in accordance with the Pricing Schedule. "EURO-DOLLAR RATE" means a rate of interest determined pursuant to Section 2.07(c) on the basis of a London Interbank Offered Rate. "EURO-DOLLAR REFERENCE LENDERS" means the principal London offices of Citibank, N.A. and Morgan Guaranty Trust Company of New York. "EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "EUROCURRENCY LIABILITIES" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other 7 assets which includes loans by a non-United States office of any Lender to United States residents). "EVENT OF DEFAULT" has the meaning set forth in Section 6.01. "EXCLUDED ITEMS" means, without duplication, (i) non-recurring charges incurred during Fiscal Year 1998 in connection with the Acquisition (without adjustment for related tax effects) to the extent such amounts do not exceed $105,000,000 and (ii write downs of capitalized research and development related to the Acquisition and losses on dispositions of assets (without adjustment for related tax effects) to the extent such write downs and losses do not exceed $295,000,000 and are incurred within 30 months of the Acquisition. "EXISTING CREDIT AGREEMENT" has the meaning specified in Section 3.01(f). "EXPOSURE" means, at any time as to any Lender, the sum of (i) such Lender's Term Loan Commitment, if still in existence, or the outstanding principal amount of such Lender's Term Loans, if its Term Loan Commitment is no longer in existence, plus (ii) such Lender's Revolving Credit Commitment, if still in existence, or the outstanding principal amount of such Lender's Revolving Credit Loans and Money Market Loans, if its Revolving Credit Commitment is no longer in existence. "FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Morgan Guaranty Trust Company of New York on such day on such transactions as determined by the Administrative Agent. "FISCAL YEAR" refers to a fiscal year of the Borrower, identified by the calendar year in which such fiscal year ends. 8 "FIXED RATE LOANS" means CD Loans or Euro-Dollar Loans or Money Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant to Section 8.01) or any combination of the foregoing. "GAAP" means generally accepted accounting principles applied on a basis consistent with those which, in accordance with Section 1.02 hereof, are to be used in making the calculations for purposes of determining compliance with this Agreement. "GROUP OF LOANS" means at any time a group of Loans consisting of (i) all Committed Loans which are Base Rate Loans at such time, (ii) all Euro-Dollar Loans having the same Interest Period at such time or (iii) all CD Loans having the same Interest Period at such time, provided that, if a Committed Loan of any particular Lender is converted to or made as a Base Rate Loan pursuant to Section 8.02 or 8.05, such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been in if it had not been so converted or made. "GUARANTEE" means a guarantee, an endorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise directly or indirectly to be or become contingently liable under or with respect to, the Indebtedness of any Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms "GUARANTEE" and "GUARANTEED" used as a verb shall have a correlative meaning. "HAZARDOUS MATERIAL" means collectively, (a) any petroleum or petroleum products, flammable explosives, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, and transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls (PCB's), (b) any chemicals or other materials or substances which are now or hereafter become defined as or included in the definition of "HAZARDOUS SUBSTANCES", "HAZARDOUS WASTES", "HAZARDOUS MATERIALS", "EXTREMELY HAZARDOUS WASTES", "RESTRICTED HAZARDOUS WASTES", "TOXIC SUBSTANCES", "TOXIC POLLUTANTS", "CONTAMINANTS", "POLLUTANTS" or words of similar import under any Environmental Law and (c) any other chemical or other material or substance, exposure to which is now or hereafter prohibited, limited or regulated under any Environmental Law. "INDEBTEDNESS" means, for any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property 9 from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within one year of the date the respective goods are delivered; (c) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person under any contract for the purchase of materials, supplies or other Property or the rendering of services if such contract (or any related document) requires that payment for such materials, supplies or other Property or services shall be made regardless of whether or not delivery of such materials, supplies or other Property is ever made or tendered or such services are ever rendered; (e) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person (other than commercial documentary letters of credit); (f) Capital Lease Obligations of such Person; and (g) Indebtedness of others Guaranteed by such Person; provided, that Indebtedness of the Borrower and its Subsidiaries shall not include obligations of the Borrower and its Subsidiaries in respect of unfunded liabilities of the Borrower in respect of postretirement health and welfare benefits under Financial Accounting Standards Board Statement of Financial Accounting Standards No. 106 ("EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS") not in excess of $96,000,000 in the aggregate. "INDEMNITEE" has the meaning set forth in Section 9.03(b). "INTEREST COVERAGE RATIO" means, at any date, the ratio of (i) Adjusted Consolidated EBITDA to (ii) Consolidated Interest Expense, in each case for the period of four consecutive fiscal quarters most recently ended on or prior to such date. "INTEREST PERIOD" means: (1) with respect to each Euro-Dollar Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in the applicable Notice of Interest Rate Election and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro- Dollar Business Day; 10 (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clauses (c) and (d) below, end on the last Euro-Dollar Business Day of a calendar month; (c) no Interest Period for any Revolving Credit Loan shall extend beyond the Revolving Credit Termination Date; and (d) no Interest Period for any Term Loan shall extend beyond the Term Loan Maturity Date; (2) with respect to each CD Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in the applicable Notice of Interest Rate Election and ending 30, 60, 90 or 180 days thereafter, as the Borrower may elect in the applicable notice; provided that: (a) any Interest Period (other than an Interest Period determined pursuant to clause (b) or (c) below) which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; (b) no Interest Period for any Revolving Credit Loan shall extend beyond the Revolving Credit Termination Date; and (c) no Interest Period for any Term Loan shall extend beyond the Term Loan Maturity Date; (3) with respect to each Money Market LIBOR Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such whole number of months thereafter (but not less than 1 month) as the Borrower may elect in accordance with Section 2.03; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such 11 Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and (c) any Interest Period which would otherwise end after the Revolving Credit Termination Date shall end on the Revolving Credit Termination Date; and (4) with respect to each Money Market Absolute Rate Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than 7 days) as the Borrower may elect in accordance with Section 2.03; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; and (b) any Interest Period which would otherwise end after the Revolving Credit Termination Date shall end on the Revolving Credit Termination Date. "LENDER" means each bank or other financial institution listed on the signature pages hereof, each Assignee which becomes a Lender pursuant to Section 9.06(c), and their respective successors. "LIBOR AUCTION" means a solicitation of Money Market Quotes setting forth Money Market Margins based on the London Interbank Offered Rate pursuant to Section 2.03. "LIEN" means, with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Property. For purposes of this Agreement, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property. "LOAN" means a Domestic Loan, a Euro-Dollar Loan or a Money Market Loan and "LOANS" means Domestic Loans, Euro-Dollar Loans or Money Market Loans or any combination of the foregoing. "LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section 2.07(c). 12 "MARGIN REGULATIONS" means Regulations G and U of the Board of Governors of the Federal Reserve System as in effect from time to time. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the financial condition, operations or business taken as a whole of the Borrower and its Subsidiaries, (b) the ability of the Borrower to perform its obligations hereunder and under the Notes, (c) the validity or enforceability of this Agreement or of the Notes or (d) the rights and remedies of the Lenders and the Agents hereunder and under the Notes. "MERGER AGREEMENT" means the Agreement and Plan of Merger dated as of July 23, 1997, among Target, the Offeror and the Borrower, in substantially the form of the draft of July 23, 1997 heretofore furnished to each of the Lenders, with such changes (other than changes to (i) the conditions set forth in Article 8 and Annex A thereto in any respect material to the creditworthiness of the Borrower or to the rights and obligations of the Lenders hereunder, (ii) the price at which the Borrower will offer to purchase all the outstanding shares of Common Stock, par value $.001 per share, of Target, including the associated right to purchase Series A Junior Participating Preferred Stock and (iii) the latest date upon which any of the Borrower, the Offeror or Target may terminate the Merger Agreement if the Acquisition has not been consummated) therein as may be made by the parties thereto. "MONEY MARKET ABSOLUTE RATE" has the meaning set forth in Section 2.03(d)(ii)(C). "MONEY MARKET ABSOLUTE RATE LOAN" means a loan to be made by a Lender pursuant to an Absolute Rate Auction. "MONEY MARKET LENDING OFFICE" means, as to each Lender, its Domestic Lending Office or such other office, branch or affiliate of such Lender as it may hereafter designate as its Money Market Lending Office by notice to the Borrower and the Administrative Agent; provided that any Lender may from time to time by notice to the Borrower and the Administrative Agent designate separate Money Market Lending Offices for its Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate Loans, on the other hand, in which case all references herein to the Money Market Lending Office of such Lender shall be deemed to refer to either or both of such offices, as the context may require. "MONEY MARKET LIBOR LOAN" means a loan to be made by a Lender pursuant to a LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant to Section 8.01). 13 "MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money Market Absolute Rate Loan. "MONEY MARKET MARGIN" has the meaning set forth in Section 2.03(d)(ii)(C). "MONEY MARKET QUOTE" means an offer by a Lender to make a Money Market Loan in accordance with Section 2.03. "MOODY'S" means Moody's Investors Service, Inc. "MULTIEMPLOYER PLAN" means a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been made by the Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA. "NET CASH PROCEEDS" means, with respect to any Asset Sale, an amount equal to the cash proceeds received by the Borrower or any of its Subsidiaries from or in respect of such Asset Sale (including any cash proceeds received as interest or similar income or other cash proceeds of any noncash proceeds of any Asset Sale), less (a) any fees, costs and expenses incurred by such Person in respect of such Asset Sale, (b) the amount of any Debt secured by a Lien on any asset disposed of in such Asset Sale and discharged from the proceeds thereof, (c) any taxes actually paid or to be payable by such Person (as estimated by a senior financial or accounting officer of the Borrower, giving effect to the overall tax position of the Borrower) in respect of such Asset Sale, (d) all payments made with respect to liabilities associated with the assets which are the subject of the Asset Sale, including, without limitation, trade payables and other accrued liabilities, (e) appropriate amounts to be provided by such Person or any Subsidiary thereof, as the case may be, as a reserve in accordance with generally accepted accounting principles against any liabilities associated with such assets and retained by such Person or any Subsidiary thereof, as the case may be, after such Asset Sale, including, without limitation, liabilities under any indemnification obligations and severance and other employee termination costs associated with such Asset Sale, until such time as such amounts are no longer reserved or such reserve is no longer necessary (at which time any remaining amounts will become Net Cash Proceeds); and (f) all distributions and other payments required to be made (or made on a pro rata basis) to minority interest holders in Subsidiaries of such Person as a result of such Asset Sale. "NOTES" means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Loans, and "NOTE" means any one of such promissory notes issued hereunder. 14 "NOTICE OF BORROWING" means a Notice of Committed Borrowing (as defined in Section 2.02)or a Notice of Money Market Borrowing (as defined in Section 2.03(f)). "NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in Section 2.10. "OFFER TO PURCHASE" means the Offeror's offer to purchase for cash all outstanding shares of common stock of Target, the terms and conditions of which offer to purchase shall be reasonably satisfactory in form and substance to the Required Lenders. "OFFEROR" means NBP Acquisition Corp., a Delaware corporation and a Wholly- Owned Subsidiary of the Borrower, and its successors. "OPERATING LEASE AMOUNT" means, at any time, an amount equal to seven times the amount by which (i) the minimum rental commitments under non-cancelable operating leases of the Borrower and its Subsidiaries for the fiscal year of the Borrower and its Subsidiaries following the most recent fiscal year for which audited financial statements are available at such time, as reflected in the notes to such financial statements, exceed (ii) $50,000,000. "PARENT" means, with respect to any Lender, any Person controlling such Lender. "PARTICIPANT" has the meaning set forth in Section 9.06(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "PERSON" means an individual, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "PLAN" means an employee benefit or other plan established or maintained by the Borrower or any ERISA Affiliate and that is covered by Title IV of ERISA, other than a Multiemployer Plan. "PRICING SCHEDULE" means the Schedule attached hereto identified as such. 15 "PRIME RATE" means the rate of interest publicly announced by Morgan Guaranty Trust Company of New York in New York City from time to time as its Prime Rate. "PROPERTY" means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. "QUARTERLY DATE" means the last day of March, June, September and December in each year, the first of which shall be the first such day after the date of this Agreement; provided that if any such day is not a Euro-Dollar Business Day, then such Quarterly Date shall be the next succeeding Euro-Dollar Business Day (unless such Euro-Dollar Business Day falls in a subsequent calendar month, in which event such Quarterly Date shall be the next preceding Euro-Dollar Business Day). "REFERENCE LENDERS" means the CD Reference Lenders or the Euro-Dollar Reference Lenders, as the context may require, and "REFERENCE LENDER" means any one of such Reference Lenders. "RELEASE" means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata. "REQUIRED LENDERS" means at any time Lenders having at least (i) prior to the Selldown Date, 75% and (ii) thereafter, 51% of the aggregate amount of the Exposures at such time. "REVOLVING CREDIT COMMITMENT" means, (i) with respect to each Revolving Credit Lender listed on the signature pages hereof, the amount set forth opposite the name of such Lender under the heading "Revolving Credit Commitment" in the Commitment Schedule, or (ii) with respect to each Assignee which becomes a Revolving Credit Lender pursuant to Section 9.06(c), the amount of the Revolving Credit Commitment thereby assumed by it, 16 in each case as such amount may be reduced from time to time pursuant to Section 2.09 or 2.11 or increased or reduced by reason of an assignment to or by such Lender in accordance with Section 9.06(c). "REVOLVING CREDIT LENDER" means each Lender identified in the Commitment Schedule as having a Revolving Credit Commitment and each Assignee which acquires a Revolving Credit Commitment and/or Revolving Credit Loans pursuant to Section 9.06(c), and their respective successors. "REVOLVING CREDIT LOAN" means a loan made by a Revolving Credit Lender pursuant to Section 2.01(b). "REVOLVING CREDIT PERIOD" means the period from and including the Effective Date to but not including the Revolving Credit Termination Date. "REVOLVING CREDIT TERMINATION DATE" means the fifth anniversary of the Effective Date (or, if such fifth anniversary date is not a Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the Revolving Credit Termination Date shall be the next preceding Euro-Dollar Business Day). "S&P" means Standard & Poor's Rating Services, a division of The McGraw- Hill Companies, Inc. "SELLDOWN DATE" means the earliest date on which each of the initial Lenders hereunder shall have assigned to one or more Assignees (other than an affiliate) 50% or more of its Commitments. "SUBSIDIARY" means, as to any Person, any corporation, limited liability company partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person; unless otherwise specified, "SUBSIDIARY" means a Subsidiary of the Borrower. 17 "SYNDICATION AGENT" means Goldman Sachs Credit Partners L.P. in its capacity as syndication agent hereunder. "TARGET" means Nellcor Puritan Bennett Incorporated, a Delaware corporation. "TERM AVAILABILITY PERIOD" means the period from and including the Effective Date to and including December 31, 1997. "TERM LOAN" means a loan made by a Term Loan Lender pursuant to Section 2.01(a). "TERM LOAN COMMITMENT" means, (i) with respect to each Term Loan Lender listed on the signature pages hereof, the amount set forth opposite the name of such Lender under the heading "TERM LOAN COMMITMENT" in the Commitment Schedule, or (ii) with respect to each Assignee which becomes a Term Loan Lender pursuant to Section 9.06(c), the amount of the Term Loan Commitment thereby assumed by it, in each case as such amount may be reduced from time to time pursuant to Section 2.09 or 2.11 or increased or reduced by reason of an assignment to or by such Lender in accordance with Section 9.06(c). "TERM LOAN LENDER" means each Lender identified in the Commitment Schedule as having a Term Loan Commitment and each Assignee which acquires a Term Loan Commitment or Term Loan pursuant to Section 9.06(c), and their respective successors. "TERM LOAN MATURITY DATE" means the second anniversary of the Effective Date (or if such second anniversary date is not a Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business falls in another calendar month, in which case the Term Loan Maturity Date shall be the next preceding Euro-Dollar Business Day). "TOTAL CAPITAL" means, at any time, Adjusted Consolidated Net Worth plus Total Debt. 18 "TOTAL DEBT" means, at any time, the aggregate outstanding principal amount of all Indebtedness of the Borrower and its Subsidiaries at such time (determined on a consolidated basis without duplication in accordance with GAAP). "TYPE" has the meaning set forth in Section 1.03. "WHOLLY-OWNED SUBSIDIARY" means any Subsidiary all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by the Borrower. "UNITED STATES" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. Section 1.02. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Borrower's independent public accountants) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Lenders; provided that, if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Article 5 to eliminate the effect of any change in generally accepted accounting principles on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend Article 5 for such purpose), then the Borrower's compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders. Section 1.03. Classes and Types of Loans and Borrowings. The term "Borrowing" denotes the aggregation of Loans of one or more Lenders to be made to the Borrower pursuant to Article 2 on the same date, all of which Loans are of the same Class and Type (subject to Article 8) and, except in the case of Base Rate Loans, have the same initial Interest Period. Loans hereunder are distinguished by "Class" and by "Type". The "CLASS" of a Loan (or of a Commitment to make such a Loan or of a Borrowing comprised of such Loans) refers to the determination whether such Loan is a Term Loan or Revolving Credit Loan, each of which constitutes a Class. The "TYPE" of a Loan refers to the 19 determination whether such Loan is a Euro-Dollar Loan, a CD Loan, a Base Rate Loan or a Money Market Loan, each of which constitutes a "Type". Identification of a Loan (or a Borrowing) by both Class and Type (e.g., a "EURO-DOLLAR TERM LOAN") indicates that such Loan is both a Term Loan and a Euro-Dollar Loan (or that such Borrowing is comprised of such Loans). ARTICLE 2 The Credits Section 2.01. Commitments to Lend. (a) Term Loan Facility. During the Term Availability Period each Term Loan Lender severally agrees, on the terms and conditions set forth in this Agreement, to make a single Term Loan to the Borrower in an amount not to exceed the amount of its Term Loan Commitment. The Term Loan Commitments are not revolving in nature, and amounts repaid or prepaid pursuant to Section 2.11 or Section 2.12 shall not be reborrowed. (b) Revolving Credit Facility. During the Revolving Credit Period, each Revolving Credit Lender severally agrees, on the terms and conditions set forth in this Agreement, to make Revolving Credit Loans to the Borrower from time to time in an aggregate amount at any time outstanding not to exceed the amount of its Revolving Credit Commitment. Within the limits specified in this Agreement, the Borrower may borrow under this Section 2.01(b), prepay Revolving Credit Loans to the extent permitted by Section 2.12 and reborrow at any time during the Revolving Credit Period pursuant to this Section 2.01(b). (c) Minimum Amount. Each Borrowing under this Section 2.01 shall be in the aggregate principal amount of $10,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing may be in the aggregate amount of the unused Commitments of the relevant Class) and shall be made from the several Lenders ratably in proportion to their respective Commitments of the relevant Class. Section 2.02. Notice of Committed Borrowing. The Borrower shall give the Administrative Agent notice (a "NOTICE OF COMMITTED BORROWING") not later than 10:30 A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y) the second Domestic Business Day before each CD Borrowing and (z) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, (A) specifying: 20 (i) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing; (ii) the aggregate amount of such Borrowing; (iii) the Class and initial Type of Loans comprising such Borrowing; and (iv) in the case of a Fixed Rate Borrowing, the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period; and (B) certifying that each of the conditions precedent to such Borrowing has been satisfied. Section 2.03. Money Market Borrowings. (a) The Money Market Option. In addition to Revolving Credit Borrowings pursuant to Section 2.01, but within the limitations of the Revolving Credit Commitments as contemplated by Section 3.02(c), the Borrower may, as set forth in this Section, request the Lenders during the Revolving Credit Period to make offers to make Money Market Loans to the Borrower. The Lenders may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section. (b) Money Market Quote Request. When the Borrower wishes to request offers to make Money Market Loans under this Section, it shall transmit to the Administrative Agent by telex or facsimile transmission a Money Market Quote Request substantially in the form of Exhibit B hereto so as to be received not later than 10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y) the Domestic Business Day next preceding the date of Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective) specifying: (i) the proposed date of Borrowing, which shall be a Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute Rate Auction, 21 (ii) the aggregate amount of such Borrowing, which shall be $10,000,000 or a larger multiple of $1,000,000, (iii) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and (iv) whether the Money Market Quotes requested are to set forth a Money Market Margin or a Money Market Absolute Rate. The Borrower may request offers to make Money Market Loans for more than one Interest Period in a single Money Market Quote Request. No Money Market Quote Request shall be given within five Euro-Dollar Business Days (or such other number of days as the Borrower and the Administrative Agent may agree) of any other Money Market Quote Request. (c) Invitation for Money Market Quotes. Promptly upon receipt of a Money Market Quote Request, the Administrative Agent shall send to the Lenders by telex or facsimile transmission an Invitation for Money Market Quotes substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Lender to submit Money Market Quotes offering to make the Money Market Loans to which such Money Market Quote Request relates in accordance with this Section. (d) Submission and Contents of Money Market Quotes. (i) Each Lender may submit a Money Market Quote containing an offer or offers to make Money Market Loans in response to any Invitation for Money Market Quotes. Each Money Market Quote must comply with the requirements of this subsection (d) and must be submitted to the Administrative Agent by telex or facsimile transmission at its offices specified in or pursuant to Section 9.01 not later than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective); provided that Money Market Quotes submitted by the Administrative Agent (or any affiliate of the Administrative Agent) in the capacity of a Lender may be submitted, and may only be submitted, if the Administrative Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) one hour prior to the deadline for the other Lenders, in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the other 22 Lenders, in the case of an Absolute Rate Auction. Subject to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except with the written consent of the Administrative Agent given on the instructions of the Borrower. (ii) Each Money Market Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify: (A) the proposed date of Borrowing, (B) the principal amount of the Money Market Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Lender, (x) must be $5,000,000 or a larger multiple of $1,000,000, (y) may not exceed the principal amount of Money Market Loans for which offers were requested, (z) may be subject to an aggregate limitation as to the principal amount of Money Market Loans for which offers being made by such quoting Lender may be accepted, (C) in the case of a LIBOR Auction, the margin above or below the applicable London Interbank Offered Rate (the "MONEY MARKET MARGIN") offered for each such Money Market Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate, (D) in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the "MONEY MARKET ABSOLUTE RATE") offered for each such Money Market Loan, and (E) the identity of the quoting Lender. A Money Market Quote may set forth up to five separate offers by the quoting Lender with respect to each Interest Period specified in the related Invitation for Money Market Quotes. (iii) Any Money Market Quote shall be disregarded if it: (A) is not substantially in conformity with Exhibit D hereto or does not specify all of the information required by subsection (d)(ii); (B) contains qualifying, conditional or similar language; 23 (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Money Market Quotes; or (D) arrives after the time set forth in subsection (d)(i). (e) Notice to Borrower. The Administrative Agent shall promptly notify the Borrower of the terms (x) of any Money Market Quote submitted by a Lender that is in accordance with subsection (d) and (y) of any Money Market Quote that amends, modifies or is otherwise inconsistent with a previous Money Market Quote submitted by such Lender with respect to the same Money Market Quote Request. Any such subsequent Money Market Quote shall be disregarded by the Administrative Agent unless such subsequent Money Market Quote is submitted solely to correct a manifest error in such former Money Market Quote. The Administrative Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Money Market Loans for which offers have been received for each Interest Period specified in the related Money Market Quote Request, (B) the respective principal amounts and Money Market Margins or Money Market Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Money Market Loans for which offers in any single Money Market Quote may be accepted. (f) Acceptance and Notice by Borrower. Not later than 10:30 A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall notify the Administrative Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e). In the case of acceptance, such notice (a "NOTICE OF MONEY MARKET BORROWING") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Money Market Quote in whole or in part; provided that: (i) the aggregate principal amount of each Money Market Borrowing may not exceed the applicable amount set forth in the related Money Market Quote Request; (ii) the principal amount of each Money Market Borrowing must be $10,000,000 or a larger multiple of $1,000,000; 24 (iii) acceptance of offers may only be made on the basis of ascending Money Market Margins or Money Market Absolute Rates, as the case may be; and (iv) the Borrower may not accept any offer that is described in subsection (d)(iii) or that otherwise fails to comply with the requirements of this Agreement. (g) Allocation by Administrative Agent. If offers are made by two or more Lenders with the same Money Market Margins or Money Market Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Money Market Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Lenders as nearly as possible (in multiples of $1,000,000, as the Administrative Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Administrative Agent of the amounts of Money Market Loans shall be conclusive in the absence of manifest error. Section 2.04. Notice to the Lenders; Funding of Loans. (a) Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly notify each Lender of the contents thereof and of such Lender's share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower. (b) Not later than 12:00 Noon (New York City time) on the date of each Borrowing, each Lender participating therein shall make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Administrative Agent at its address referred to in Section 9.01. Unless the Administrative Agent determines that any applicable condition specified in Article 3 has not been satisfied, the Administrative Agent will make the funds so received from the Lenders available to the Borrower at the Administrative Agent's aforesaid address. (c) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available to the Administrative Agent on the date of such Borrowing in accordance with subsection (b) of this Section and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a 25 corresponding amount. If and to the extent that such Lender shall not have so made such share available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender's Loan included in such Borrowing for purposes of this Agreement. Section 2.05. Notes. (a) The Loans of each Lender shall be evidenced by a single Note payable to the order of such Lender for the account of its Applicable Lending Office in an amount equal to the aggregate unpaid principal amount of such Lender's Loans. (b) Each Lender may, by notice to the Borrower and the Administrative Agent, request that its Loans of a particular Class or Type be evidenced by a separate Note in an amount equal to the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of Exhibit A hereto with appropriate modifications to reflect the fact that it evidences solely Loans of the relevant Class or Type. Each reference in this Agreement to the "NOTE" of such Lender shall be deemed to refer to and include any or all of such Notes, as the context may require. (c) Upon receipt of each Lender's Note pursuant to Section 3.01(a), the Administrative Agent shall forward such Note to such Lender. Each Lender shall record the date, amount, type and maturity of each Loan made by it and the date and amount of each payment of principal made by the Borrower with respect thereto, and may, if such Lender so elects in connection with any transfer or enforcement of its Note, endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding; provided that the failure of any Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Notes. Each Lender is hereby irrevocably authorized by the Borrower so to endorse its Note and to attach to and make a part of its Note a continuation of any such schedule as and when required. Section 2.06. Maturity of Loans. (a) Each Term Loan shall mature, and the principal amount thereof together with accrued interest thereon shall be due and payable, on the Term Loan Maturity Date. 26 (b) Each Revolving Credit Loan shall mature, and the principal amount thereof together with accrued interest thereon shall be due and payable, on the Revolving Credit Termination Date. (c) Each Money Market Loan included in any Money Market Borrowing shall mature, and the principal amount thereof together with accrued interest thereon shall be due and payable, on the last day of the Interest Period applicable to such Borrowing. Section 2.07. Interest Rates. (a) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate for such day. Such interest shall be payable quarterly in arrears on each Quarterly Date and, with respect to the principal amount of any Base Rate Loan converted to a CD Loan or a Euro-Dollar Loan, on each date a Base Rate Loan is so converted. Any overdue principal of or interest on any Base Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Base Rate Loans for such day. (b) Each CD Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the sum of the CD Margin for such day plus the Adjusted CD Rate applicable to such Interest Period; provided that if any CD Loan or any portion thereof shall, as a result of clause (2)(b) of the definition of Interest Period, have an Interest Period of less than 30 days, such portion shall bear interest during such Interest Period at the rate applicable to Base Rate Loans during such period. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than 90 days, at intervals of 90 days after the first day thereof. Any overdue principal of or interest on any CD Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate applicable to Base Rate Loans for such day, provided that until the end of the Interest Period applicable to such CD Loan, any such overdue principal shall bear interest at the higher of the foregoing rate and 2% plus the sum of the CD Margin plus the Adjusted CD Rate applicable to such Loan at the date such payment was due. The "ADJUSTED CD RATE" applicable to any Interest Period means a rate per annum determined pursuant to the following formula: 27 [ CDBR ]* ACDR = [ ---------- ] + AR [ 1.00 - DRP ] ACDR = Adjusted CD Rate CDBR = CD Base Rate DRP = Domestic Reserve Percentage AR = Assessment Rate --------------- * The amount in brackets being rounded upward, if necessary, to the next higher 1/100 of 1% The "CD BASE RATE" applicable to any Interest Period is the rate of interest determined by the Administrative Agent to be the average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the first day of such Interest Period by two or more New York certificate of deposit dealers of recognized standing for the purchase at face value from each CD Reference Lender of its certificates of deposit in an amount comparable to the principal amount of the CD Loan of such CD Reference Lender to which such Interest Period applies and having a maturity comparable to such Interest Period. "DOMESTIC RESERVE PERCENTAGE" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including without limitation any basic, supplemental or emergency reserves) for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of new non-personal time deposits in dollars in New York City having a maturity comparable to the related Interest Period and in an amount of $100,000 or more. The Adjusted CD Rate shall be adjusted automatically on and as of the effective date of any change in the Domestic Reserve Percentage. "ASSESSMENT RATE" means for any day the annual assessment rate in effect on such day which is payable by a member of the Bank Insurance Fund classified as adequately capitalized and within supervisory subgroup "A" (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. (S) 327.4(a) (or any successor provision) to the Federal Deposit Insurance Corporation (or any successor) for such Corporation's (or such successor's) insuring time deposits at offices of such institution in the United States. The 28 Adjusted CD Rate shall be adjusted automatically on and as of the effective date of any change in the Assessment Rate. (c) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus the London Interbank Offered Rate applicable to such Interest Period. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period means the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in dollars are offered to each of the Euro-Dollar Reference Lenders in the London interbank market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Lender to which such Interest Period is to apply and for a period of time comparable to such Interest Period. (d) Any overdue principal of or interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate applicable to Base Rate Loans for such day, provided that until the end of the Interest Period applicable to such Euro- Dollar Loan, any such overdue principal shall bear interest at the higher of the foregoing rate and the sum of 2% plus the Euro-Dollar Margin for such day plus the London Interbank Offered Rate applicable to such Loan at the date such payment was due. (e) Subject to Section 8.01, each Money Market LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with Section 2.07(c) as if the related Money Market LIBOR Borrowing were a Committed Euro- Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the Lender making such Loan in accordance with Section 2.03. Each Money Market Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Money Market Absolute Rate quoted by the Lender making such Loan in accordance with Section 2.03. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue 29 principal of or interest on any Money Market Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day. (f) The Administrative Agent shall determine each interest rate applicable to the Loans hereunder. The Administrative Agent shall give prompt notice to the Borrower and the participating Lenders of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. (g) Each Reference Lender agrees to use its best efforts to furnish quotations to the Administrative Agent as contemplated by this Section. If any Reference Lender does not furnish a timely quotation, the Administrative Agent shall determine the relevant interest rate on the basis of the quotation or quotations furnished by the remaining Reference Lender or Lenders or, if none of such quotations is available on a timely basis, the provisions of Section 8.01 shall apply. Section 2.08. Facility Fees. The Borrower shall pay to the Administrative Agent, for the account of the Lenders ratably in accordance with their respective Exposures, a facility fee for each day at a rate per annum equal to the Facility Fee Rate for such day (determined in accordance with the Pricing Schedule), on the aggregate amount of the Exposures on such day. Such facility fees shall accrue for each day from and including the Effective Date to but excluding the date on which no Lender has any Exposure (the "TERMINATION DATE"). Accrued fees under this Section shall be payable quarterly in arrears on each Quarterly Date and on the Termination Date. Section 2.09. Optional Termination or Reduction of Commitments. The Borrower may, upon at least three Domestic Business Days' notice to the Administrative Agent, (i) terminate the Commitments of any Class at any time, if no Loans of such Class are outstanding at such time or (ii) ratably reduce from time to time by an aggregate amount of $10,000,000 or a larger multiple of $1,000,000, the aggregate amount of the Commitments of any Class in excess of the aggregate outstanding amount of the Loans of such Class (in each of cases (i) and (ii), after giving effect to any mandatory or optional prepayments to be made at such time and treating Money Market Loans as part of the Class of Revolving Credit Loans for this purpose). Section 2.10. Method of Electing Interest Rates. (a) The Loans included in each Committed Borrowing shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Committed Borrowing. 30 Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Group of Loans (subject in each case to the provisions of Article 8), as follows: (i) if such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to CD Loans as of any Domestic Business Day or to Euro-Dollar Loans as of any Euro-Dollar Business Day; (ii) if such Loans are CD Loans, the Borrower may elect to convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect to continue such Loans as CD Loans for an additional Interest Period, subject to Section 2.14 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period applicable to such Loans; and (iii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Base Rate Loans or CD Loans or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, subject to Section 2.14 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period applicable to such Loans. Each such election shall be made by delivering a notice (a "NOTICE OF INTEREST RATE ELECTION") to the Administrative Agent not later than 10:30 A.M. (New York City time) on the third Euro-Dollar Business Day before the conversion or continuation selected in such notice is to be effective (unless the relevant Loans are to be converted to Domestic Loans of the other type or are CD Rate Loans to be continued as CD Rate Loans for an additional Interest Period, in which case such notice shall be delivered to the Administrative Agent not later than 10:30 A.M. (New York City time) on the second Domestic Business Day before such conversion or continuation is to be effective). A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans; provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each $10,000,000 or any larger multiple of $1,000,000. (b) Each Notice of Interest Rate Election shall specify: (i) the Group of Loans (or portion thereof) to which such notice applies; 31 (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection (a) above; (iii) if the Loans comprising such Group are to be converted, the new type of Loans and, if the Loans being converted are to be Fixed Rate Loans, the duration of the next succeeding Interest Period applicable thereto; and (iv) if such Loans are to be continued as CD Loans or Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of Interest Period. (c) Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to subsection (a) above, the Administrative Agent shall promptly notify each Lender of the contents thereof and such notice shall not thereafter be revocable by the Borrower. If the Borrower fails to deliver a timely Notice of Interest Rate Election to the Administrative Agent for any Group of Fixed Rate Loans, such Loans shall be converted into Base Rate Loans on the last day of the then current Interest Period applicable thereto. (d) An election by the Borrower to change or continue the rate of interest applicable to any Group of Loans pursuant to this Section 2.10 shall not constitute a "BORROWING" subject to the provisions of Section 3.02. Section 2.11. Mandatory Reduction and Termination of Commitments; Mandatory Prepayments. (a) The Term Commitments shall terminate at the close of business on the earlier of (i) the date of the Term Borrowing hereunder and (ii) the last day of the Term Availability Period. (b) The Revolving Credit Commitments shall terminate on the Revolving Credit Termination Date. (c) If an Asset Sale shall occur, an amount equal to the Net Cash Proceeds thereof shall be applied as follows until such amount has been fully applied: First, to the reduction of the Term Loan Commitments until such Commitments shall have been reduced to zero; and 32 Second, to the prepayment of Term Loans, until the Term Loans shall have been prepaid in full. Each such reduction and/or prepayment shall be made within five Euro-Dollar Business Days of receipt by the Borrower or any of its Subsidiaries, as the case may be, of such Net Cash Proceeds, provided that (i) if the Net Cash Proceeds in respect of any Asset Sale are less than $5,000,000, such reduction and/or prepayment shall be made within five Euro- Dollar Business Days of receipt of proceeds such that, together with all other such amounts not previously applied, the Net Cash Proceeds are equal to at least $5,000,000; and (ii) if any prepayment would otherwise require prepayment of Fixed Rate Loans or portions thereof prior to the last day of the then current Interest Period, then such prepayment shall, unless the Administrative Agent otherwise notifies the Borrower upon the instructions of the Required Lenders, be deferred to the last day of such Interest Period. (d) Unless at such time the Borrower's long-term debt is rated BBB or higher by S&P and Baa2 or higher by Moody's, the aggregate amount of the Revolving Credit Commitments shall on June 30, 2000 be reduced to $1,400,000,000 and, if at such time the sum of the aggregate outstanding principal amount of Revolving Credit Loans and the aggregate outstanding principal amount of Money Market Loans exceeds the aggregate amount of the Revolving Credit Commitments as so reduced, the Borrower shall on such date prepay a principal amount of such Loans equal to such excess. (e) Each reduction of the Commitments and/or prepayment of Loans shall be applied ratably to the respective Commitments and/or Loans of the relevant Class of all Lenders. Each payment of principal of the Loans of any Class shall be made together with interest accrued and unpaid on the amount repaid to the date of payment. Each payment of the Loans of any Class shall be applied to such Group or Groups of Loans of such Class as the Borrower may designate (or, failing such designation, as determined by the Administrative Agent). (f) The Borrower shall give the Administrative Agent at least five Euro- Dollar Business Days' notice of each prepayment required to be made pursuant to subsection (c) or (d). 33 Section 2.12. Optional Prepayments. (a) Subject in the case of any Fixed Rate Loans to Section 2.14, the Borrower may, upon at least one Domestic Business Day's notice to the Administrative Agent, prepay the Group of Base Rate Loans (or any Money Market Borrowing bearing interest at the Base Rate pursuant to Section 8.01), upon at least three Domestic Business Days' notice to the Administrative Agent, prepay any Group of CD Loans, or upon at least three Euro- Dollar Business Days' notice to the Administrative Agent, prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or from time to time in part in amounts aggregating $10,000,000 or any larger multiple of $1,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Lenders included in such Group or Borrowing. (b) Except as provided in subsection (a) above the Borrower may not prepay all or any portion of the principal amount of any Money Market Loan prior to the maturity thereof. (c) Upon receipt of a notice of prepayment pursuant to this Section, the Administrative Agent shall promptly notify each Lender of the contents thereof and of such Lender's ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. Section 2.13. General Provisions as to Payments. (a) The Borrower shall make each payment of principal of, and interest on, the Loans and of fees hereunder, not later than 12:00 Noon (New York City time) on the date when due, in Federal or other funds immediately available in New York City, to the Administrative Agent at its address referred to in Section 9.01. The Administrative Agent will promptly distribute to each Lender its ratable share of each such payment received by the Administrative Agent for the account of the Lenders. Whenever any payment of principal of, or interest on, the Domestic Loans or of fees shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro- Dollar Loans or the Money Market LIBOR Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day. Whenever any payment of principal of, or interest on, the Money Market Absolute Rate Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar 34 Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. (b) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate. Section 2.14. Funding Losses. If the Borrower makes any payment of principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is converted (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or the last day of an applicable period fixed pursuant to Section 2.07(d), or if the Borrower fails to borrow or prepay any Fixed Rate Loans after notice has been given to any Lender in accordance with Section 2.04(a) or 2.12(c), the Borrower shall reimburse each Lender within 15 days after demand for any resulting loss or expense incurred by it (or by an existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or conversion or failure to borrow or prepay, provided that such Lender shall have delivered to the Borrower a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error. Section 2.15. Computation of Interest and Fees. Interest based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). Section 2.16. Regulation D Compensation. For so long as any Lender maintains reserves against "EUROCURRENCY LIABILITIES" (or any other category of liabilities which includes deposits by reference to which the interest rate on Euro- 35 Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of such Lender to United States residents), and as a result the cost to such Lender (or its Applicable Lending Office) of making or maintaining its Euro-Dollar Loans is increased, then such Lender may require the Borrower to pay, contemporaneously with each payment of interest on the Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of such Lender at a rate per annum determined by such Lender up to but not exceeding the excess of (i) (A) the applicable London Interbank Offered Rate divided by (B) one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank Offered Rate. Any Lender wishing to require payment of such additional interest (x) shall so notify the Borrower and the Administrative Agent, in which case such additional interest on the Euro-Dollar Loans of such Lender shall be payable to such Lender at the place indicated in such notice with respect to each Interest Period commencing at least three Euro-Dollar Business Days after the giving of such notice and (y) shall furnish to the Borrower at least five Euro-Dollar Business Days prior to each date on which interest is payable on the Euro-Dollar Loans an officer's certificate setting forth in reasonable detail the amount to which such Lender is then entitled under this Section 2.16 (which shall be consistent with such Lender's good faith estimate of the level at which the related reserves are maintained by it). ARTICLE 3 Conditions Section 3.01. Closing. The closing hereunder shall occur on the date that each of the following conditions shall have been satisfied (or waived in accordance with Section 9.05): (a) receipt by the Administrative Agent of a duly executed Note for the account of each Lender dated on or before the Closing Date complying with the provisions of Section 2.05. (b) receipt by the Administrative Agent of an opinion of the General Counsel of the Borrower, substantially in the form of Exhibit E hereto; (c) receipt by the Administrative Agent of an opinion of Davis Polk & Wardwell, special counsel for the Agents, substantially in the form of Exhibit F hereto; 36 (d) receipt by the Administrative Agent of evidence satisfactory to it of the payment of all fees, expenses and other amounts payable by the Borrower on or before the Closing Date to the Administrative Agent and the Lenders in connection with this Agreement; (e) all documents the Administrative Agent may reasonably request relating to the existence of the Borrower, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Administrative Agent; and (f) receipt by the Administrative Agent of evidence satisfactory to it that the principal and interest on all loans and accrued fees under the Existing Credit Agreement dated as of May 22, 1996 (the "EXISTING CREDIT AGREEMENT") among the Borrower, the banks party thereto from time to time, Morgan Guaranty Trust of New York, as administrative agent, and Citibank, N.A., as documentation agent, have been paid in full and that the commitments thereunder shall have terminated. The Administrative Agent shall promptly notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding on all parties hereto. Section 3.02. Borrowings. The obligation of any Lender to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions: (a) the fact that the Closing Date shall have occurred on or prior to September 15, 1997; (b) receipt by the Administrative Agent of a Notice of Borrowing as required by Section 2.02 or 2.03, as the case may be; (c) in the case of a Revolving Credit Borrowing or a Money Market Borrowing, the fact that, immediately after such Borrowing, the sum of the aggregate outstanding principal amount of the Revolving Credit Loans and the aggregate outstanding principal amount of the Money Market Loans will not exceed the aggregate amount of the Revolving Credit Commitments; (d) the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing; 37 (e) the fact that the representations and warranties of the Borrower contained in this Agreement (except, in the case of (i) any Borrowing the proceeds of which are to be applied to finance the Acquisition and (ii) any Borrowing made on a date at which the Borrower's long-term debt securities are rated at least BBB, Baa2 or BBB by any two of S&P, Moody's or Duff & Phelps, Inc., respectively, and not lower than BBB-, Baa3 or BBB- by the third of such rating agencies, those contained in Section 4.02(c), in Section 4.03(i) and in the last sentence of Section 4.12 hereof) shall be true on and as of the date of such Borrowing; and (f) in the case of the first Borrowing after giving effect to which the aggregate outstanding principal amount of the Loans exceeds $550,000,000, the facts that (x) the Administrative Agent shall have received a certificate of the chief executive officer or the chief financial officer of the Borrower that the Offeror shall have accepted tenders of not less than the minimum number of shares of Target specified in the Offer to Purchase, without waiver of any of the conditions thereof in any respect material to the creditworthiness of the Borrower or to the rights and obligations of the Lenders hereunder and (y) the Administrative Agent shall not have received notice from the Required Lenders that, in their reasonable determination, any of the conditions specified in the Offer to Purchase has not been fulfilled in any respect material to the creditworthiness of the Borrower or to the rights and obligations of the Lenders hereunder. Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in clauses (c), (d) and (e) of this Section. ARTICLE 4 Representations and Warranties The Borrower represents and warrants that: Section 4.01. Corporate Existence. Each of the Borrower and its Subsidiaries: (a) is a corporation, partnership or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (b) has all requisite corporate or other power, and has all material governmental licenses, authorizations, consents and approvals, necessary to own its assets and carry on its business as now being or as proposed to be conducted; and (c) is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify could have a Material Adverse Effect. 38 Section 4.02. Financial Condition. (a) The Borrower has heretofore furnished to each of the Lenders the consolidated balance sheet of the Borrower and its Subsidiaries as at June 30, 1996 and the related consolidated statements of earnings, cash flows and changes in shareholders' equity of the Borrower and its Subsidiaries for the fiscal year ended on said date, with the opinion thereon of Ernst & Young LLP. All such financial statements fairly present, in all material aspects, the consolidated financial condition of the Borrower and its Subsidiaries, as at said date, and the consolidated results of their operations for the fiscal year ended on said date, all in accordance with GAAP. (b) The Borrower has heretofore furnished to each of the Lenders the unaudited consolidated balance sheet of the Borrower and its Subsidiaries as at March 31, 1997 and the related unaudited consolidated statements of earnings, cash flows and changes in shareholders' equity of the Borrower and its Subsidiaries for the nine month period ended on said date. All such financial statements fairly present, in all material aspects, the consolidated financial condition of the Borrower and its Subsidiaries, as at said date, and the consolidated results of their operations for the nine month period ended on said date, all in accordance with GAAP. (c) As of the Effective Date (which is the only date on which the representation in this sentence is made), since March 31, 1997, there has been no material adverse change, and nothing has occurred that is reasonably likely to result in any material adverse change, in the consolidated financial condition, operations or business taken as a whole of the Borrower and its Subsidiaries from that set forth in the financial statements referred to in clause (b) above as at the date referred to therein. As of any subsequent date on which this representation is made pursuant to Section 3.02(e), since March 31, 1997, there has been no material adverse change in the ability of the Borrower to perform its obligations hereunder or in the rights and obligations of the Lenders hereunder. Section 4.03. Litigation. Except as may be disclosed in regular periodic reports filed with the Securities and Exchange Commission prior to the date of this Agreement (copies of which reports have heretofore been furnished to the Lenders), there are no legal or arbitral proceedings, or any proceedings by or before any governmental or regulatory authority or agency, now pending or (to the knowledge of the Borrower) threatened against the Borrower or any of its Subsidiaries (i) which, if adversely determined, is reasonably likely to have a Material Adverse Effect or (ii which in any manner draws into question the validity of this Agreement or the Notes. 39 Section 4.04. No Breach. None of the execution and delivery of this Agreement and the Notes, the consummation of the transactions herein contemplated or compliance with the terms and provisions hereof will conflict with or result in a breach of, or require any consent under, the charter or by- laws of the Borrower, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which the Borrower or any of its Subsidiaries is a party or by which any of them or any of their Property is bound or to which any of them is subject, or constitute a default under any such agreement or instrument. Section 4.05. Action. The Borrower has all necessary corporate power, authority and legal right to execute, deliver and perform its obligations under this Agreement and the Notes; the execution, delivery and performance by the Borrower of this Agreement and the Notes have been duly authorized by all necessary corporate action on its part (including, without limitation, any required shareholder approvals); and this Agreement has been duly and validly executed and delivered by the Borrower and constitutes, and each of the Notes when executed and delivered for value will constitute, its legal, valid and binding obligation, enforceable against the Borrower in accordance with their respective terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors' rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Section 4.06. Approvals. No authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency, or any securities exchange, are necessary for the execution, delivery or performance by the Borrower of this Agreement or the Notes or for the legality, validity or enforceability hereof. Section 4.07. ERISA. Each Plan, and, to the knowledge of the Borrower, each Multiemployer Plan, is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Code and any other Federal or State law, and no event or condition has occurred and is continuing as to which the Borrower would be under an obligation to furnish a report to the Lenders under Section 5.01(e) hereof. Section 4.08. Taxes. The Borrower and its Subsidiaries are members of an affiliated group of corporations filing consolidated returns for Federal income tax purposes, of which the Borrower is the "COMMON PARENT" (within the 40 meaning of Section 1504 of the Code) of such group. The Borrower and its Subsidiaries have filed all Federal income tax returns and all other material tax returns that are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any of its Subsidiaries. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of the Borrower, adequate. The Borrower has not given or been requested to give a waiver of the statute of limitations relating to the payment of Federal, state, local and foreign taxes or other impositions, the payment of which is reasonably likely to have a Material Adverse Effect. Section 4.09. Investment Company Act. Neither the Borrower nor any of its Subsidiaries is an "INVESTMENT COMPANY", or a company "CONTROLLED" by an "INVESTMENT COMPANY", within the meaning of the Investment Company Act of 1940, as amended. Section 4.10. Public Utility Holding Company Act. Neither the Borrower nor any of its Subsidiaries is a "HOLDING COMPANY", or an "AFFILIATE" of a "HOLDING COMPANY," or a "SUBSIDIARY COMPANY" of a "HOLDING COMPANY", within the meaning of the Public Utility Holding Company Act of 1935, as amended. Section 4.11. True and Complete Disclosure. The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Borrower to either Agent or any Lender in connection with the negotiation, preparation or delivery of this Agreement or included herein or delivered pursuant hereto, when taken as a whole do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. All written information furnished after the date hereof by the Borrower and its Subsidiaries to the Administrative Agent or any Lender in connection with this Agreement and the transactions contemplated hereby will be true, complete and accurate in every material respect, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified. There is no fact known to the Borrower that could have a Material Adverse Effect that has not been disclosed herein or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Lenders for use in connection with the transactions contemplated hereby. Section 4.12. Environmental Matters. In the ordinary course of its business, the Borrower conducts an ongoing review of the effect of Environmental 41 Laws on the business, operations and properties of the Borrower and its Subsidiaries, in accordance with customary industry practice. On the basis of this review, the Borrower has reasonably concluded that the costs of compliance with Environmental Laws are unlikely to have a Material Adverse Effect. ARTICLE 5 Covenants The Borrower agrees that, so long as any Lender has any Commitment hereunder or any amount payable under any Note remains unpaid: Section 5.01. Financial Statements, Etc. The Borrower will deliver to each of the Lenders: (a) as soon as available and in any event within 60 days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Borrower, consolidated statements of earnings, cash flows and changes in shareholders' equity of the Borrower and its Subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such period, setting forth in each case in comparative form the corresponding consolidated figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of a senior financial officer of the Borrower, which certificate shall state that said consolidated financial statements fairly present, in all material respects, the consolidated financial condition and results of operations of the Borrower and its Subsidiaries, in accordance with generally accepted accounting principles, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments); (b) as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, consolidated statements of earnings, cash flows and changes in shareholders' equity of the Borrower and its Subsidiaries for such fiscal year and the related consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated figures for the preceding fiscal year, and accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements fairly present, in all material respects, the consolidated financial condition and results of operations of the Borrower and its 42 Subsidiaries as at the end of, and for, such fiscal year in accordance with generally accepted accounting principles; (c) promptly upon their becoming available, copies of all registration statements and regular periodic reports, if any, which the Borrower shall have filed with the Securities and Exchange Commission (or any governmental agency substituted therefor) or any national securities exchange; (d) promptly upon the mailing thereof to the shareholders of the Borrower generally, copies of all financial statements, reports and proxy statements so mailed; (e) as soon as possible, and in any event within ten days after the Borrower knows or has reason to believe that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan has occurred or exists, a statement signed by a senior financial officer of the Borrower setting forth details respecting such event or condition and the action, if any, that the Borrower or its ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by the Borrower or an ERISA Affiliate with respect to such event or condition): (i) any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued thereunder, with respect to a Plan, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event (provided that a failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA, including, without limitation, the failure to make on or before its due date a required installment under Section 412(m) of the Code or Section 302(e) of ERISA, shall be a reportable event regardless of the issuance of any waivers in accordance with Section 412(d) of the Code); and any request for a waiver under Section 412(d) of the Code for any Plan; (ii) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by the Borrower or an ERISA Affiliate to terminate any Plan; (iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan; 43 (iv) the complete or partial withdrawal from a Multiemployer Plan by the Borrower or any ERISA Affiliate that results in liability under Section 4201 or 4204 of ERISA (including the obligation to satisfy secondary liability as a result of a purchaser default) or the receipt by the Borrower or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA; (v) the institution of a proceeding by a fiduciary of any Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days; and (vi) the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of tax- exempt status of the trust of which such Plan is a part if the Borrower or an ERISA Affiliate fails to timely provide security to the Plan in accordance with the provisions of said Sections; (f) promptly after the Borrower knows or has reason to believe that any Default has occurred, a notice of such Default describing the same in reasonable detail and, together with such notice or as soon thereafter as possible, a description of the action that the Borrower has taken or proposes to take with respect thereto; and (g) from time to time such other information regarding the financial condition, operations, business or prospects of the Borrower or any of its Subsidiaries (including, without limitation, any Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA) as any Lender or the Agent may reasonably request. The Borrower will furnish to each Lender, at the time it furnishes each set of financial statements pursuant to paragraph (a) or (b) above, a certificate of a senior financial officer of the Borrower (i) to the effect that no Default has occurred and is continuing (or, if any Default has occurred and is continuing, describing the same in reasonable detail and describing the action that the Borrower has taken or proposes to take with respect thereto) and (ii) setting forth in reasonable detail the computations necessary to determine whether the Borrower is in compliance with Sections 5.08 and 5.09 hereof as of the end of the respective quarterly fiscal period or fiscal year. 44 Section 5.02. Litigation. The Borrower will promptly give to each Lender notice of all legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, and any material development in respect of such legal or other proceedings, affecting the Borrower or any of its Subsidiaries, except proceedings which, if adversely determined, would not have a Material Adverse Effect. Without limiting the generality of the foregoing, the Borrower will give to each Lender notice of the assertion of any Environmental Claim by any Person against, or with respect to the activities of, the Borrower or any of its Subsidiaries and notice of any alleged violation of or non-compliance with any Environmental Laws or any permits, licenses or authorizations, other than any Environmental Claim or alleged violation which, if adversely determined, would not have a Material Adverse Effect. Section 5.03. Existence, Etc. The Borrower will, and will cause each of its Subsidiaries to: (a) preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises (provided that nothing in this Section 5.03 shall prohibit any transaction expressly permitted under Sections 5.06 and 5.07 hereof); (b) comply with the requirements of all applicable laws, rules, regulations and orders of governmental or regulatory authorities if failure to comply with such requirements could have a Material Adverse Effect; (c) pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained; (d) maintain all of its Properties used or useful in its business in good working order and condition, ordinary wear and tear excepted; (e) keep adequate records and books of account, in which complete entries will be made in accordance with GAAP; and (f) subject to Section 9.11 hereof, permit representatives of any Lender, during normal business hours, to examine, copy and make extracts from its books and records, to inspect any of its Properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by such Lender. 45 Section 5.04. Insurance. The Borrower will, and will cause each of its Subsidiaries to, keep insured by financially sound and reputable insurers all Property of a character usually insured by corporations engaged in the same or similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such corporations and carry such other insurance as is usually carried by such corporations. Section 5.05. Limitation on Liens. The Borrower will not, nor will it permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except: (a) Liens in existence on the date hereof securing Indebtedness outstanding on the date hereof in an aggregate principal amount not exceeding $50,000,000; (b) Liens imposed by any governmental authority for taxes, assessments or charges not yet due or which are being contested in good faith and by appropriate proceedings if, unless the amount thereof is not material with respect to it or its financial condition, adequate reserves with respect thereto are maintained on the books of the Borrower or the affected Subsidiaries, as the case may be, in accordance with GAAP; (c) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings; (d) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation; (e) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (f) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of Property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not in any case materially detract from the value of the Property subject thereto or interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries; 46 (g) Liens on Property of any corporation which becomes a Subsidiary of the Borrower after the date of this Agreement; provided that such Liens are in existence at the time such corporation becomes a Subsidiary of the Borrower, were not created in anticipation thereof and do not at any time secure any Indebtedness other than Indebtedness which was secured by such Liens at the time such corporation became a Subsidiary; (h) Liens upon real and/or tangible personal Property acquired after the date hereof (by purchase, construction or otherwise) by the Borrower or any of its Subsidiaries, each of which Liens either (A) existed on such Property before the time of its acquisition and was not created in anticipation thereof, or (B) was created solely for the purpose of securing Indebtedness representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such Property; provided that no such Lien shall extend to or cover any Property of the Borrower or such Subsidiary other than the Property so acquired and improvements thereon; (i) Liens incidental to the conduct of its business or the ownership of its Property which were not incurred in connection with the borrowing of money, the obtaining of credit or Derivatives Obligations, and which do not in the aggregate materially detract from the value of its Property or materially impair the use thereof in the operation of its business; (j) Liens arising from judgments, decrees or attachments not in excess of $25,000,000 in the aggregate and in circumstances not constituting an Event of Default under Section 6.01(h) hereof; (k) leases or subleases granted to others otherwise permitted by this Agreement; (l) UCC financing statements and other similar filings regarding leases and other Liens otherwise permitted by this Agreement; (m) rights to receive income in connection with consignment arrangements or licensing agreements in the ordinary course of the Borrower's or such Subsidiary's business, as the case may be; (n) Liens on cash and cash equivalents securing Derivatives Obligations, provided that the aggregate amount of cash and cash equivalents subject to such Liens may at no time exceed $50,000,000; 47 (o) any extension, renewal or replacement of the foregoing, provided, however, that the Liens permitted hereunder shall not be spread to cover any additional Indebtedness or Property (other than a substitution of like Property); and (p) Liens on "margin stock" (as defined in the Margin Regulations), if and to the extent that the value of such margin stock exceeds 25% of the total assets of the Borrower and its Subsidiaries subject to this Section. Notwithstanding the foregoing, nothing in this Section shall restrict the ability of the Borrower or any of its Subsidiaries to sell or assign its accounts receivable. Section 5.06. Mergers and Sales of Assets. The Borrower will not, nor will it permit any of its Subsidiaries to, merge or consolidate with or into, or acquire all or substantially all of the assets of, any Person, except that (i) any Subsidiary of the Borrower may merge or consolidate with or into, or transfer assets to, or acquire assets of, any other Subsidiary of the Borrower, (ii) any Subsidiary of the Borrower may merge or consolidate with or into, or transfer assets to, the Borrower and (iii) the Borrower may merge with or consolidate into, or acquire assets of, and any Subsidiary of the Borrower may merge or consolidate with or into, or acquire assets of, any other Person, provided in each case that, immediately after giving effect to such proposed transaction, no Default would exist and in the case of any such proposed transaction to which the Borrower is a party, the Borrower is the surviving corporation. The Borrower will not, and will not permit any Subsidiary to, consummate any Asset Sale unless (i) the aggregate book value of assets disposed of subsequent to the date hereof pursuant to Asset Sales does not exceed the greater of (x) $1,200,000,000 or (y) 30% of the total assets of the Borrower and its Subsidiaries at such time and (ii such Asset Sale is for fair market value (in the reasonable determination of the Borrower) and for consideration consisting of at least 80% cash payable at the closing of such Asset Sale. Section 5.07. Change in Nature of Business. The Borrower will not (i) make any material change in the nature of the business of the Borrower and its Subsidiaries taken as a whole as carried on as of the date hereof, or (ii) except as contemplated by the Offer to Purchase, acquire, or permit any of its Subsidiaries to acquire, businesses which result in any material change in the nature of the business of the Borrower and its Subsidiaries taken as a whole as carried on as of the date hereof; provided, however, that the Borrower or any of its Subsidiaries may engage in or acquire a business of a nature substantially related to the nature of its business as carried on as of the date hereof, and provided, further, in each 48 case that, immediately after giving effect to such proposed transaction, no Default would exist. Section 5.08. Financial Covenants. (a) The Borrower will not permit the ratio of (i) the sum of (x) Total Debt plus (y) the Operating Lease Amount at any time to (ii) the sum of (x) Total Capital at such time plus (y) the Operating Lease Amount at such time to exceed: (A) to but excluding the last day of Fiscal Year 1999, 68%, (B) thereafter, to but excluding the last day of Fiscal Year 2000, 63% and (C) thereafter, 60%. (b) The Borrower will not permit the Interest Coverage Ratio at the last day of any fiscal quarter to be less than (i) to but excluding the last day of Fiscal Year 1999, 2.70, (ii thereafter, to but excluding the last day of Fiscal Year 2000, 2.9 and (ii thereafter, 3.50; provided that this Section 5.08(b) shall not apply at any date at which the Borrower's long-term debt is rated BBB+ or higher by S&P and Baal or higher by Moody's. Section 5.09. Indebtedness of Subsidiaries. The Borrower will not permit the aggregate Indebtedness of all of its Subsidiaries (exclusive of Indebtedness owing to the Borrower or a Wholly-Owned Subsidiary) to exceed at any time 10% of Total Capital. Section 5.10. Transactions with Affiliates. Except as expressly permitted by this Agreement, the Borrower will not, nor will it permit any of its Subsidiaries to, directly or indirectly enter into transactions with any Affiliates unless the monetary or business consideration arising therefrom would be substantially as advantageous to the Borrower and its Subsidiaries as the monetary or business consideration which would obtain in a comparable transaction with a Person not an Affiliate. Section 5.11. Use of Proceeds. The Borrower will use the proceeds of the Loans hereunder solely for general corporate purposes (in compliance with all applicable legal and regulatory requirements), including, without limitation, to finance the Acquisition; provided that neither Agent nor any Lender shall have any responsibility as to the use of any of such proceeds. No part of the proceeds of any extension of credit hereunder will be used in violation of the Margin Regulations. Section 5.12. Environmental Laws. The Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with the requirements of all applicable Environmental Laws and all ordinances and regulatory and administrative authorities with respect thereto, and shall not permit or suffer any 49 of its Subsidiaries to, generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process Hazardous Materials other than in the ordinary course of business and in compliance in all material respects with applicable Environmental Laws, and shall not, and shall not permit or suffer any of its Subsidiaries to, cause or permit, as a result of any intentional or unintentional act or omission on the part of the Borrower or any Subsidiary thereof, the installation or placement of Hazardous Materials in violation of or actionable under in any material respect applicable Environmental Laws onto any of its Property or suffer the presence of Hazardous Materials in violation of or actionable under in any material respect applicable Environmental Laws on any of its Property. The Borrower shall, and shall cause each of its Subsidiaries to, promptly undertake and diligently pursue to completion any remedial clean-up action required of the Borrower or any Subsidiary under applicable Environmental Laws in the event of any release of Hazardous Materials. Section 5.13. Most Favored Lender. The Borrower will not and will not permit any Subsidiary to (a) enter into any indenture, agreement or other instrument under which any Indebtedness for borrowed money in excess of $15,000,000 for any such indenture, agreement or instrument (or series of related agreements or instruments) of the Borrower or of any Subsidiary may be issued (a "RESTRICTED AGREEMENT"), or (b) agree to any amendment, waiver, consent, modification, refunding, refinancing or replacement of any Restricted Agreement, in either case, with terms the effect of which is to (i) include a Covenant which imposes a restriction, limitation or obligation in favor of another lender not imposed in favor of the Lenders by this Agreement, or (ii) revise or alter any Covenant contained therein the effect of which is to impose a restriction, limitation or obligation in favor of another lender not imposed in favor of the Lenders by this Agreement, unless the Borrower or such Subsidiary, as the case may be, concurrently (x) notifies the Lenders and the Administrative Agent thereof and (y) incorporates herein such additional, altered or revised Covenant. If the Administrative Agent at the time so elects by notice to the Borrower and the Lenders, the incorporation of each such additional Covenant shall be deemed to occur automatically without any further action or the execution of any additional document by any of the parties to this Agreement. If the Administrative Agent does not elect to effect such an automatic incorporation, the Administrative Agent shall promptly tender to the Borrower for execution by it an amendment (executed by the Administrative Agent) incorporating such additional Covenant and shall promptly deliver a copy of such amendment to the Lenders. 50 ARTICLE 6 Defaults Section 6.01. Events of Default. If one or more of the following events ("EVENTS OF DEFAULT") shall have occurred and be continuing: (a) The Borrower shall: (i) default in the payment of any principal of any Loan when due (whether at stated maturity or at mandatory or optional prepayment); or (ii default in the payment of any interest on any Loan, any fee or any other amount payable by it hereunder when due and such default shall have continued unremedied for five days; or (b) The Borrower or any of its Subsidiaries shall default beyond any applicable grace period, or, in the case of any Derivatives Obligations for which no grace period is otherwise provided, beyond five days, in the payment when due of any principal of or interest on any Indebtedness (other than the Indebtedness hereunder or under the Notes) aggregating $15,000,000 or more, or in the payment when due of amounts exceeding $15,000,000 in the aggregate for the payment or collateralization of Derivatives Obligations; or any event specified in any note, agreement, indenture or other document evidencing or relating to any such Indebtedness or any event specified in any instrument or agreement governing such Derivatives Obligations shall occur if the effect of such event is (or, with the giving of notice or the passage of time or both, would be) to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Indebtedness to become due, or to be prepaid in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity or to have the interest rate thereon reset to a level so that securities evidencing such Indebtedness trade at a level specified in relation to the par value thereof or, in the case of an instrument or agreement governing such Derivatives Obligations, to permit the payments owing under such instrument or agreement to be liquidated; or (c) Any representation, warranty or certification made or deemed made herein (or in any modification or supplement hereto) by the Borrower, or any certificate furnished to any Lender or the Administrative Agent pursuant to the provisions hereof, shall prove to have been false or misleading as of the time made or furnished in any material respect; or (d) The Borrower shall default in the performance of any of its obligations under any of Sections 5.01(f), 5.05 through 5.09 (inclusive), or 5.13 hereof; or the Borrower shall default in the performance of any of its other obligations in this Agreement and such default shall continue unremedied for a 51 period of 30 days after notice thereof to the Borrower by the Administrative Agent at the request of any Lender; or (e) The Borrower or any of its Subsidiaries shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or (f) The Borrower or any of its Subsidiaries shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator of itself or of all or a substantial part of its Property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code or (vi) take any corporate action for the purpose of effecting any of the foregoing; or (g) A proceeding or case shall be commenced, without the application or consent of the Borrower or any of its Subsidiaries, in any court of competent jurisdiction, seeking (i) its reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of the Borrower or such Subsidiary or of all or any substantial part of its Property, or (iii) similar relief in respect of the Borrower or such Subsidiary under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against the Borrower or such Subsidiary shall be entered in an involuntary case under the Bankruptcy Code; or (h) A final judgment or judgments for the payment of money in excess of $15,000,000 in the aggregate shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against the Borrower or any of its Subsidiaries and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 30 days from the date of entry thereof and the Borrower or the relevant Subsidiary shall not, within said period of 30 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; or 52 (i) An event or condition specified in Section 5.01(e) hereof shall occur or exist with respect to any Plan or Multiemployer Plan and, as a result of such event or condition, together with all other such events or conditions, the Borrower or any ERISA Affiliate shall incur or in the opinion of the Required Lenders shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the foregoing) which would constitute, in the determination of the Required Lenders, a Material Adverse Effect; or (j) Any Person or two or more Persons acting in concert shall have acquired, in one transaction or in a series of related transactions, beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of securities of the Borrower (or other securities convertible into such securities) representing 40% or more of the combined voting power of the Borrower's then outstanding securities entitled to vote in the election of directors (other than securities having such power only by reason of the happening of a contingency); THEREUPON: (1) in the case of an Event of Default other than one referred to in clause (f) or (g) of this Section 6.01 with respect to the Borrower, (A) the Administrative Agent, upon request of the Lenders having at least 51% of the aggregate amount of the Commitments, shall, by notice to the Borrower, terminate the Commitments and they shall thereupon terminate, and (B) the Administrative Agent, upon request of Lenders holding at least 51% of the aggregate unpaid principal amount of the Loans, shall, by notice to the Borrower, declare the principal amount then outstanding of, and the accrued interest on, the Loans and all other amounts payable by the Borrower hereunder and under the Notes to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Borrower; and (2) in the case of the occurrence of an Event of Default referred to in clause (f) or (g) of this Section 6.01 with respect to the Borrower, the Commitments shall automatically be terminated and the principal amount then outstanding of, and the accrued interest on, the Loans and all other amounts payable by the Borrower hereunder and under the Notes shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Borrower. Section 6.02. Notice of Default. The Administrative Agent shall give notice to the Borrower under Section 6.01(d) promptly upon being requested to do so by any Lender and shall thereupon notify all the Lenders thereof. 53 ARTICLE 7 The Agents Section 7.01. Appointment and Authorization. Each Lender irrevocably appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers under this Agreement and the Notes as are delegated to Administrative Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. Section 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of New York, Goldman Sachs Credit Partners L.P. and Citibank, N.A. shall each have the same rights and powers under this Agreement as any other Lender and may exercise or refrain from exercising the same as though it were not an Agent, and Morgan Guaranty Trust Company of New York, Goldman Sachs Credit Partners L.P. and Citibank, N.A. and their respective affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or affiliate of the Borrower as if it were not an Agent hereunder. Section 7.03. Action by Agent. The obligations of each Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, no Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article 6. Section 7.04. Consultation with Experts. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. Section 7.05. Liability of Agent. No Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees of the foregoing shall be liable for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Lenders or (ii) in the absence of its own gross negligence or willful misconduct. No Agent nor any of the affiliates nor any of the respective directors, officers, agents or employees of the foregoing shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of the Borrower; (iii) the satisfaction of any condition specified in Article 3, except in the case of the Administrative Agent receipt of 54 items required to be delivered to such Agent; or (iv) the validity, effectiveness or genuineness of this Agreement, the Notes or any other instrument or writing furnished in connection herewith. No Agent shall incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex, facsimile transmission or similar writing) believed by it to be genuine or to be signed by the proper party or parties. Section 7.06. Indemnification. Each Lender shall, ratably in accordance with its Commitment, indemnify each Agent, its affiliates and the respective directors, officers, agents and employees of the foregoing (to the extent not reimbursed by the Borrower) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with this Agreement or any action taken or omitted by such indemnitees hereunder. Section 7.07. Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon either Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon either Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement. Section 7.08. Successor Administrative Agent. The Administrative Agent may resign at any time by giving notice thereof to the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Administrative Agent reasonably acceptable to the Borrower. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent the provisions of this Article shall inure to its 55 benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent. Section 7.09. Documentation Agent and Syndication Agent. Nothing in this Agreement shall impose upon the Documentation Agent or the Syndication Agent, in their respective capacities as such, any duty or obligation whatsoever. ARTICLE 8 Change in Circumstances Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period for any CD Loan, Euro-Dollar Loan or Money Market LIBOR Loan: (a) the Administrative Agent is advised by the Reference Lenders that deposits in dollars (in the applicable amounts) are not being offered to the Reference Lenders in the relevant market for such Interest Period, or (b) in the case of CD Loans or Euro-Dollar Loans, Lenders having 50% or more of the aggregate principal amount of the affected Loans advise the Administrative Agent that the Adjusted CD Rate or the London Interbank Offered Rate, as the case may be, as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Lenders of funding their CD Loans or Euro-Dollar Loans, as the case may be, for such Interest Period, the Administrative Agent shall forthwith give notice thereof to the Borrower and the Lenders, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Lenders to make CD Loans or Euro-Dollar Loans, as the case may be, or to continue or convert outstanding Loans as or into CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended and (ii) each outstanding CD Loan or Euro-Dollar Loan, as the case may be, shall be converted into a Base Rate Loan on the last day of the then current Interest Period applicable thereto. Unless the Borrower notifies the Administrative Agent at least two Domestic Business Days before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear interest for each day from and including the 56 first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day. Section 8.02. Illegality. If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its Euro-Dollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Lender (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Lender shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Lenders and the Borrower, whereupon until such Lender notifies the Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make Euro-Dollar Loans, or to convert outstanding Loans into Euro-Dollar Loans, shall be suspended. Before giving any notice to the Administrative Agent pursuant to this Section, such Lender shall designate a different Euro-Dollar Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. If such notice is given, each Euro-Dollar Loan of such Lender then outstanding shall be converted to a Base Rate Loan either (a) on the last day of the then current Interest Period applicable to such Euro- Dollar Loan if such Lender may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Lender shall determine that it may not lawfully continue to maintain and fund such Loan to such day. Section 8.03. Increased Cost and Reduced Return. (a) If on or after (x) the date hereof, in the case of any Committed Loan or any obligation to make Committed Loans or (y) the date of the related Money Market Quote, in the case of any Money Market Loan, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding (i) with respect to any CD Loan any such requirement included in an applicable Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any such 57 requirement with respect to which such Lender is entitled to compensation during the relevant Interest Period under Section 2.16), special deposit, insurance assessment (excluding, with respect to any CD Loan, any such requirement reflected in an applicable Assessment Rate) or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (or its Applicable Lending Office) or shall impose on any Lender (or its Applicable Lending Office) or on the United States market for certificates of deposit or the London interbank market any other condition affecting its Fixed Rate Loans, its Note or its obligation to make Fixed Rate Loans and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or receivable by such Lender (or its Applicable Lending Office) under this Agreement or under its Note with respect thereto, by an amount deemed by such Lender to be material, then, within 15 days after demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction. (b) If any Lender shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Lender (or its Parent) as a consequence of such Lender's obligations hereunder to a level below that which such Lender (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, within 15 days after demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender (or its Parent) for such reduction. (c) Each Lender will promptly notify the Borrower and the Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to this Section but in any event within 45 days, after such Lender obtains actual knowledge thereof; provided that (i) if any Lender fails to give such notice within 45 days after it obtains actual knowledge of such an event, such Lender shall, with respect to compensation payable pursuant to this Section 8.03 in respect of any 58 costs resulting from such event, only be entitled to payment under this Section 8.03 for costs incurred from and after the date 45 days prior to the date that such Lender does give such notice and (ii) each Lender will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. A certificate of any Lender claiming compensation under this Section and setting forth in reasonable detail the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Lender shall use reasonable averaging and attribution methods. Section 8.04. Taxes. (a) For the purposes of this Section 8.04, the following terms have the following meanings: "TAXES" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings with respect to any payment by the Borrower pursuant to this Agreement or under any Note, and all liabilities with respect thereto, excluding (i) in the case of each Lender and the Agent, taxes imposed on its income, and franchise or similar taxes imposed on it, by a jurisdiction under the laws of which such Lender or such Agent (as the case may be) is organized or in which its principal executive office is located or, in the case of each Lender, in which its Applicable Lending Office is located and (ii) in the case of each Lender, any United States withholding tax imposed on such payments but only to the extent that such Lender is subject to United States withholding tax at the time such Lender first becomes a party to this Agreement. "OTHER TAXES" means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, which arise from any payment made pursuant to this Agreement or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note. (b) Any and all payments by the Borrower to or for the account of any Lender or the Administrative Agent hereunder or under any Note shall be made without deduction for any Taxes or Other Taxes; provided that, if the Borrower shall be required by law to deduct any Taxes or Other Taxes from any such payments, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.04) such Lender or such Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or 59 other authority in accordance with applicable law and (iv) the Borrower shall furnish to the Administrative Agent, at its address referred to in Section 9.01, the original or a certified copy of a receipt evidencing payment thereof. (c) The Borrower agrees to indemnify each Lender and each Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 8.04) paid by such Lender or such Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be paid within 15 days after such Lender or the Agent (as the case may be) makes demand therefor. (d) Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Lender listed on the signature pages hereof and on or prior to the date on which it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by the Borrower (but only so long as such Lender remains lawfully able to do so), shall provide the Borrower with Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which exempts the Lender from United States withholding tax or reduces the rate of withholding tax on payments of interest for the account of such Lender or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. (e) For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form pursuant to Section 8.04(d) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which such form originally was required to be provided), such Lender shall not be entitled to indemnification under Section 8.04(b) or (c) with respect to Taxes imposed by the United States; provided that if a Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, becomes subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. (f) If the Borrower is required to pay additional amounts to or for the account of any Lender pursuant to this Section 8.04, then such Lender will change the jurisdiction of its Applicable Lending Office if, in the judgment of such Lender, such change (i) will eliminate or reduce any such additional payment 60 which may thereafter accrue and (ii) is not otherwise disadvantageous to such Lender. Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans. If (i) the obligation of any Lender to make, or convert outstanding Loans to, Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Lender has demanded compensation under Section 8.03 or 8.04 with respect to its CD Loans or Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such Lender through the Administrative Agent, have elected that the provisions of this Section shall apply to such Lender, then, unless and until such Lender notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist: (a) all Loans which would otherwise be made by such Lender as (or continued as or converted into) CD Loans or Euro-Dollar Loans, as the case may be, shall instead be Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Fixed Rate Loans of the other Lenders); and (b) after each of its CD Loans or Euro-Dollar Loans, as the case may be, has been repaid (or converted to a Base Rate Loan), all payments of principal which would otherwise be applied to repay such Fixed Rate Loans shall be applied to repay its Base Rate Loans instead. If such Lender notifies the Borrower that the circumstances giving rise to such notice no longer apply, the principal amount of each such Base Rate Loan shall be converted into a CD Loan or Euro-Dollar Loan, as the case may be, on the first day of the next succeeding Interest Period applicable to the related CD Loans or Euro-Dollar Loans of the other Lenders. Section 8.06. Substitution of Lender. Provided that no Default shall have occurred and be continuing, if (i) the obligation of any Lender to make Euro- Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Lender has demanded compensation under Section 8.03 or 8.04 the Borrower shall have the right to designate an Assignee which is not an Affiliate to purchase for cash, pursuant to an Assignment and Assumption Agreement substantially in the form of Exhibit G hereto, the outstanding Loans and Commitment(s) of such Lender and to assume all of such Lender's other rights and obligations hereunder without recourse to or warranty by such Lender, for a purchase price equal to the principal amount of all of such Lender's outstanding Loans plus any accrued but unpaid interest thereon and the accrued but unpaid facility fees in respect of any Lender's 61 Commitment(s) hereunder plus such amount, if any, as would be payable pursuant to Section 2.14 if the outstanding Loans of such Lender were prepaid in their entirety on the date of consummation of such assignment, plus the compensation then due and payable pursuant to Sections 8.03 and 8.04. ARTICLE 9 Miscellaneous Section 9.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Borrower or any Agent, at its address, facsimile number or telex number set forth on the signature pages hereof, (y) in the case of any Lender, at its address, facsimile number or telex number set forth in its Administrative Questionnaire or (z) in the case of any party, such other address, facsimile number or telex number as such party may hereafter specify for the purpose by notice to the Administrative Agent and the Borrower. Each such notice, request or other communication shall be effective (i) if given by telex, when such telex is transmitted to the telex number specified in this Section and the appropriate answerback is received, (ii) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (iii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iv) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Administrative Agent under Article 2 or Article 8 shall not be effective until received. Section 9.02. No Waivers. No failure or delay by any Agent or Lender in exercising any right, power or privilege hereunder or under any Note shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. Section 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i) all out-of-pocket expenses of each Agent, including fees and disbursements of special counsel for the Agents, in connection with the preparation and administration of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs and is continuing, all out-of-pocket expenses incurred by each 62 Agent and each Lender, including (without duplication) the fees and disbursements of outside counsel and the allocated cost of inside counsel, in connection with collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. (b) The Borrower agrees to indemnify each Agent and each Lender, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "INDEMNITEE") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel and settlement costs, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction. Section 9.04. Sharing of Set-offs. Each Lender agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to any Note held by it which is greater than the proportion received by any other Lender in respect of the aggregate amount of principal and interest due with respect to any Note held by such other Lender, the Lender receiving such proportionately greater payment shall purchase such participations in the Notes held by the other Lenders, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Notes held by the Lenders shall be shared by the Lenders pro rata; provided that nothing in this Section shall impair the right of any Lender to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than its indebtedness hereunder. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation. Section 9.05. Amendments and Waivers. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Lenders (and, if the rights or duties of any Agent are affected thereby, 63 by such Agent); provided that no such amendment or waiver shall, unless signed by all the Lenders, (i) increase or decrease the Commitment of any Lender (except for a ratable decrease in the Commitments of all Lenders) or subject any Lender to any additional obligation, (ii reduce the principal of or rate of interest on any Loan, or any fees hereunder (ii postpone the date fixed for any payment of principal of or interest on any Loan, or any fees hereunder or for termination of any Commitment or (iv change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Lenders, which shall be required for the Lenders or any of them to take any action under this Section or any other provision of this Agreement; and provided further that, at the option of the Administrative Agent, an additional, altered or revised Covenant shall be incorporated herein pursuant to Section 5.13 either (i) automatically or (ii) by an amendment signed solely by the Administrative Agent and the Borrower. Section 9.06. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Lenders. (b) Any Lender may at any time grant to one or more banks or other institutions (each a "PARTICIPANT") participating interests in any or all of its Commitments or Loans. In the event of any such grant by a Lender of a participating interest to a Participant, whether or not upon notice to the Borrower and the Administrative Agent, such Lender shall remain responsible for the performance of its obligations hereunder, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement pursuant to which any Lender may grant such a participating interest shall provide that such Lender shall retain the sole right and responsibility to enforce the obligations of the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Lender will not agree to any modification, amendment or waiver of this Agreement described in clause (i), (ii or (iii) of Section 9.05 without the consent of the Participant. The Borrower agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Section 2.16 and Article 8 with respect to its participating interest. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). 64 (c) Any Lender may at any time assign to one or more banks or other institutions (each an "ASSIGNEE") all, or a proportionate part (equivalent to an Exposure of not less than $10,000,000, unless a lower amount is agreed to by the Borrower and the Administrative Agent) of all, of its rights and obligations under this Agreement and the Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto executed by such Assignee and such transferor Lender, with (and subject to) the subscribed consent of the Borrower, which shall not be unreasonably withheld, and the Administrative Agent; provided that if an Assignee is an affiliate of such transferor Lender, no such consent shall be required; and provided further that such assignment may, but need not, include rights of the transferor Lender in respect of outstanding Money Market Loans. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Lender of an amount equal to the purchase price agreed between such transferor Lender and such Assignee, such Assignee shall be a Lender party to this Agreement and shall have all the rights and obligations of a Lender with Commitment(s) and Loans as set forth in such instrument of assumption, and the transferor Lender shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Lender, the Administrative Agent and the Borrower shall make appropriate arrangements so that, if required, a new Note is issued to the Assignee. In connection with any such assignment, the transferor Lender shall pay to the Administrative Agent an administrative fee for processing such assignment in the amount of $2,500. If the Assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to the Borrower and the Administrative Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 8.04. (d) Any Lender may at any time assign all or any portion of its rights under this Agreement and its Note to a Federal Reserve Bank. No such assignment shall release the transferor Lender from its obligations hereunder. (e) No Assignee, Participant or other transferee of any Lender's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Lender would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Borrower's prior written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Lender to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. 65 Section 9.07. Collateral. Each of the Lenders represents to each of the Agents and each of the other Lenders that it in good faith is not relying upon any "MARGIN STOCK" (as defined in the Margin Regulations) as collateral in the extension or maintenance of the credit provided for in this Agreement. Section 9.08. Governing Law; Submission to Jurisdiction. This Agreement and each Note shall be governed by and construed in accordance with the laws of the State of New York. The Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Section 9.09. Counterparts; Integration; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof; provided that the obligations of the Borrower under the Commitment Letter, the Joint Fee Letter and the Administrative Agency Fee Letter agreement, each dated July 21, 1997, among the initial parties to this Agreement shall remain in effect in accordance with their terms. This Agreement shall become effective upon receipt by the Administrative Agent of counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Administrative Agent in form satisfactory to it of telegraphic, telex, facsimile or other written confirmation from such party of execution of a counterpart hereof by such party). SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 66 Section 9.11. Confidentiality. The Agents and each Lender agree to keep any information delivered or made available by the Borrower pursuant to this Agreement confidential from anyone other than persons employed or retained by it who are engaged in evaluating, approving, structuring or administering the credit facility contemplated hereby; provided that nothing herein shall prevent any Lender from disclosing such information (a) to any other Lender or to an Agent, (b) to any other Person if reasonably incidental to the administration of the credit facility contemplated hereby, (c) upon the order of any court or administrative agency, (d) upon the request or demand of any regulatory agency or authority, (e) which had been publicly disclosed other than as a result of a disclosure by an Agent or Lender prohibited by this Agreement, (f) in connection with any litigation to which an Agent or Lender or its subsidiaries or Parent may be a party, (g) to the extent necessary in connection with the exercise of any remedy hereunder, (h) to such Lender's or the Agents' legal counsel and independent auditors and (i) subject to provisions substantially similar to those contained in this Section, to any actual or proposed Participant or Assignee. 67 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. MALLINCKRODT INC. By: /s/ D. A. McKinney ---------------------------------------- Title: Treasurer Address: 7733 Forsyth Boulevard Clayton, Missouri 63105 Facsimile: (314) 854-5380 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By ----------------------------------------- Name: Title: GOLDMAN SACHS CREDIT PARTNERS L.P. By ----------------------------------------- Name: Title: CITIBANK, N.A. By ----------------------------------------- Name: Title: 68 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. MALLINCKRODT INC. By: _________________________________________ Title: Address: 7733 Forsyth Boulevard Clayton, Missouri 63105 Facsimile: (314) 854-5380 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ John H. Chaplin ----------------------------------------- Name: John H. Chaplin Title: Associate GOLDMAN SACHS CREDIT PARTNERS L.P. By ----------------------------------------- Name: Title: CITIBANK, N.A. By ----------------------------------------- Name: Title: 69 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. MALLINCKRODT INC. By: ---------------------------------------- Title: Address: 7733 Forsyth Boulevard Clayton, Missouri 63105 Facsimile: (314) 854-5380 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By ----------------------------------------- Name: Title: GOLDMAN SACHS CREDIT PARTNERS L.P. By /s/ Stephen B. King ----------------------------------------- Name: Stephen B. King Title: Authorized Signatory CITIBANK, N.A. By ----------------------------------------- Name: Title: 70 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. MALLINCKRODT INC. By: ---------------------------------------- Title: Address: 7733 Forsyth Boulevard Clayton, Missouri 63105 Facsimile: (314) 854-5380 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By ----------------------------------------- Name: Title: GOLDMAN SACHS CREDIT PARTNERS L.P. By ----------------------------------------- Name: Title: CITIBANK, N.A. By /s/ E. Ogimachi ----------------------------------------- Name: E. Ogimachi Title: Attorney-in-Fact 71 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By /s/ John H. Chaplin ----------------------------------------- Name: John H. Chaplin Title: Associate Address: 60 Wall Street New York, New York 10260 Telex Number: 177615 MGT UT Facsimile number: (212) 648-5336 GOLDMAN SACHS CREDIT PARTNERS L.P. as Syndication Agent By ----------------------------------------- Name: Title: Address: 85 Broad Street New York, NY 10004 Telex Number: Facsimile number: (212) 902-2417 CITIBANK, N.A. as Documentation Agent By ----------------------------------------- Name: Title: Address: 399 Park Avenue New York, New York 10043 Facsimile number: (212) 826-2371 72 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By ----------------------------------------- Name: Title: Address: 60 Wall Street New York, New York 10260 Telex Number: 177615 MGT UT Facsimile number: (212) 648-5336 GOLDMAN SACHS CREDIT PARTNERS L.P. as Syndication Agent By /s/ Stephen B. King ----------------------------------------- Name: Stephen B. King Title: Authorized Signatory Address: 85 Broad Street New York, NY 10004 Telex Number: Facsimile number: (212) 902-2417 CITIBANK, N.A. as Documentation Agent By ----------------------------------------- Name: Title: Address: 399 Park Avenue New York, New York 10043 Facsimile number: (212) 826-2371 73 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By ----------------------------------------- Name: Title: Address: 60 Wall Street New York, New York 10260 Telex Number: 177615 MGT UT Facsimile number: (212) 648-5336 GOLDMAN SACHS CREDIT PARTNERS L.P. as Syndication Agent By ----------------------------------------- Name: Title: Address: 85 Broad Street New York, NY 10004 Telex Number: Facsimile number: (212) 902-2417 CITIBANK, N.A. as Documentation Agent By /s/ E. Ogimachi ----------------------------------------- Name: E. Ogimachi Title: Attorney-in-Fact Address: 399 Park Avenue New York, New York 10043 Facsimile number: (212) 826-2371 74 PRICING SCHEDULE Each of "CD MARGIN", "EURO-DOLLAR MARGIN" and "FACILITY FEE RATE" means, for any day, the rates set forth below (in basis points per annum) in the row opposite such term and in the column corresponding to the "PRICING LEVEL" that exists on such day:
Level I Level II Level III Level IV Level V Level VI Level VII Level VIII - ------------------------------------------------------------------------------------------------ CD Margin 30.00 31.00 34.00 36.25 42.50 50.00 62.50 87.50 - ------------------------------------------------------------------------------------------------ Euro-Dollar Margin 17.50 18.50 21.50 23.75 30.00 37.50 50.00 75.00 - ------------------------------------------------------------------------------------------------ Facility Fee 7.50 9.00 11.00 13.75 15.00 22.50 25.00 25.00 Rate - ------------------------------------------------------------------------------------------------
For purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule: "LEVEL I PRICING" applies at any date if, at such date, (i) the Borrower's long-term debt is rated A- or higher by S&P or A3 or higher by Moody's. "LEVEL II PRICING" applies at any date if, at such date, (i) the Borrower's long-term debt is rated BBB+ or higher by S&P or Baa1 or higher by Moody's and (ii) Level I Pricing does not apply. "LEVEL III PRICING" applies at any date if, at such date, (i) the Borrower's long-term debt is rated BBB or higher by S&P or Baa2 or higher by Moody's and (ii) neither Level I Pricing nor Level II Pricing applies. "LEVEL IV PRICING" applies at any date if, at such date, (i) the Borrower's long-term debt is rated BBB- or higher by S&P and Baa3 or higher by Moody's and (ii) none of Level I Pricing, Level II Pricing and Level III Pricing applies. "LEVEL V PRICING" applies at any date if, at such date, (i) the Borrower's long-term debt is rated BBB- or higher by S&P or Baa3 or higher by Moody's and (ii) none of Level I Pricing, Level II Pricing, Level III Pricing and Level IV Pricing applies. "LEVEL VI PRICING" applies at any date if, at such date, (i) the Borrower's long-term debt is rated BB+ or higher by S&P and Ba1 or higher by Moody's, 75 and (ii) none of Level I Pricing, Level II Pricing, Level III Pricing, Level IV Pricing and Level V Pricing applies. "LEVEL VII PRICING" applies at any date if, at such date, (i) the Borrower's long-term debt is rated BB+ or higher by S&P or Ba1 or higher by Moody's and (ii) none of Level I Pricing, Level II Pricing, Level III Pricing, Level IV Pricing, Level V Pricing and Level VI Pricing applies. "LEVEL VIII PRICING" applies at any date if, at such date, no other Pricing Level applies. "PRICING LEVEL" refers to the determination of which of Level I, Level II, Level III, Level IV, Level V, Level VI, Level VII or Level VIII applies at any date. The credit ratings to be utilized for purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Borrower without third-party credit enhancement, and any rating assigned to any other debt security of the Borrower shall be disregarded. The rating in effect at any date is that in effect at the close of business on such date; provided that prior to the first date subsequent to the Acquisition (and after giving effect thereto) on which the senior unsecured long-term debt securities of the Borrower are rated, the Pricing Level shall be Level V. 76 COMMITMENT SCHEDULE
Lender Term Loan Commitment Revolving Credit Commitment - --------------------------------------------------------------- Morgan Guaranty Trust $160,000,000 $ 640,000,000 Company of New York - --------------------------------------------------------------- Goldman Sachs Credit $120,000,000 $ 480,000,000 Partners L.P. - --------------------------------------------------------------- Citibank, N.A. $120,000,000 $ 480,000,000 - --------------------------------------------------------------- Totals $400,000,000 $1,600,000,000 - ---------------------------------------------------------------
77 EXHIBIT A - Note NOTE New York, New York ________ __, ____ For value received, Mallinckrodt Inc., a New York corporation (the "BORROWER"), promises to pay to the order of _________________________ (the "LENDER"), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Lender to the Borrower pursuant to the Credit Agreement referred to below on the maturity date provided for in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall Street, New York, New York. All Loans made by the Lender, the respective types and maturities thereof and all repayments of the principal thereof shall be recorded by the Lender and, if the Lender so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding may be endorsed by the Lender on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This note is one of the Notes referred to in the $2,000,000,000 Credit Agreement dated as of July 23, 1997 among the Borrower, the Lenders party thereto from time to time, and Morgan Guaranty Trust Company of New York, as Administrative Agent, Goldman Sachs Credit Partners L.P., as Syndication Agent, and Citibank, N.A., as Documentation Agent (as the same may be amended from time to time, the "CREDIT AGREEMENT"). Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof. A-1 MALLINCKRODT INC. By ---------------------------------- Name: Title: A-2 LOANS AND PAYMENTS OF PRINCIPAL
Amount Amount of of Principal Maturity Notation Date Loan Type of Loan Repaid Date Made By - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
A-3 EXHIBIT B - Money Market Quote Request Form of Money Market Quote Request ---------------------------------- [Date] To: Morgan Guaranty Trust Company of New York From: Mallinckrodt Inc. Re: $2,000,000,000 Credit Agreement (the "CREDIT AGREEMENT") dated as of July 23, 1997 among Mallinckrodt Inc., the Lenders party thereto from time to time, Morgan Guaranty Trust Company of New York, as Administrative Agent, Goldman Sachs Credit Partners L.P., as Syndication Agent, and Citibank, N.A., as Documentation Agent. We hereby give notice pursuant to Section 2.03 of the Credit Agreement that we request Money Market Quotes for the following proposed Money Market Borrowing(s): Date of Borrowing: __________________ Principal Amount/1/ Interest Period/2/ - ---------------- --------------- $ - -------------------- /1/ Amount must be $10,000,000 or a larger multiple of $1,000,000. /2/ Not less than one month (LIBOR Auction) or not less than 7 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period. B-1 Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Terms used herein have the meanings assigned to them in the Credit Agreement. MALLINCKRODT INC. By ------------------------------------ Name: Title: B-2 EXHIBIT C - Invitation for Money Market Quotes Form of Invitation for Money Market Quotes ------------------------------------------ To: [Name of Lender] Re: Invitation for Money Market Quotes to Mallinckrodt Inc. (the "BORROWER") Pursuant to Section 2.03 of the $2,000,000,000 Credit Agreement dated as of July 23, 1997 among Mallinckrodt Inc., the Lenders party thereto from time to time, Goldman Sachs Credit Partners L.P., as Syndication Agent, Citibank, N.A., as Documentation Agent, and the undersigned, as Administrative Agent, we are pleased on behalf of the Borrower to invite you to submit Money Market Quotes to the Borrower for the following proposed Money Market Borrowing(s): Date of Borrowing: __________________ Principal Amount Interest Period - ---------------- --------------- $ Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please respond to this invitation by no later than [2:00 P.M.] [9:30 A.M.] (New York City time) on [date]. MORGAN GUARANTY TRUST COMPANY OF NEW YORK By ------------------------------------ Authorized Officer C-1 EXHIBIT D - Money Market Quote Form of Money Market Quote -------------------------- To: Morgan Guaranty Trust Company of New York, as Administrative Agent Re: Money Market Quote to Mallinckrodt Inc. (the "BORROWER") In response to your invitation on behalf of the Borrower dated _____________, ____, we hereby make the following Money Market Quote on the following terms: 1. Quoting Lender: ________________________________ 2. Person to contact at Quoting Lender: _____________________________ 3. Date of Borrowing: ____________________/*/ 4. We hereby offer to make Money Market Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates: - ------------------ /*/ As specified in the related Invitation. D-1 Principal Interest Money Market Amount/**/ Period/***/ [Margin/****/] [Absolute Rate/*****/] - ---------- ----------- ------------------------------------- $ $ [Provided, that the aggregate principal amount of Money Market Loans for which the above offers may be accepted shall not exceed $____________.]** We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the $2,000,000,000 Credit Agreement dated as of July 23, 1997 among Mallinckrodt Inc., the Lenders party thereto from time to time, Goldman Sachs Credit Partners L.P., as Syndication Agent, Citibank, N.A., as Documentation Agent, and yourselves, as Administrative Agent, irrevocably obligates us to make the Money Market Loan(s) for which any offer(s) are accepted, in whole or in part. Very truly yours, [NAME OF BANK] Dated:_______________ By:__________________________ Authorized Officer - ------------- /2/ Principal amount bid for each Interest Period may not exceed principal amount requested. Specify aggregate limitation if the sum of the individual offers exceeds the amount the Lender is willing to lend. Bids must be made for $5,000,000 or a larger multiple of $1,000,000. /3/ Not less than one month or not less than 7 days, as specified in the related Invitation. No more than five bids are permitted for each Interest Period. /4/ Margin over or under the London Interbank Offered Rate determined for the applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS". /5/ Specify rate of interest per annum (to the nearest 1/10,000th of 1%). D-2 EXHIBIT E - Opinion of Counsel for the Borrower [Closing Date] Each of the Lenders and each of the Agents party to the Credit Agreement referred to below c/o Morgan Guaranty Trust Company of New York 60 Wall Street New York, NY 10260 Ladies and Gentlemen: I am the General Counsel of Mallinckrodt Inc., a corporation organized under the laws of the State of New York (the "BORROWER") and I am furnishing this opinion in connection with the Credit Agreement dated as of July 23, 1997 (the "CREDIT AGREEMENT") among the Borrower, the Lenders party thereto from time to time, Goldman Sachs Credit Partners, as Syndication Agent, Citibank, N.A., as Documentation Agent, and Morgan Guaranty Trust Company of New York, as Administrative Agent, providing for, among other things, the making of loans by the Lenders in an aggregate principal amount not exceeding $2,000,000,000. All capitalized terms used but not defined herein have the respective meanings given to such terms in the Credit Agreement. In rendering the opinions expressed below, I have examined: (i) the Credit Agreement; (ii) the Notes (collectively with the Credit Agreement, the "CREDIT DOCUMENTS"); and (iii) such corporate records, agreements and instruments of the Borrower and such other documents and records as I have deemed necessary as a basis for the opinions expressed below. In my examination, I have assumed the genuineness of all signatures (except those of officers of the Borrower), the authenticity of all documents submitted to me as originals and the conformity with authentic original documents of all documents submitted to me as copies. When relevant facts were not independently E-1 established, I have relied upon representations made in or pursuant to the Credit Documents and certificates of appropriate representatives of the Borrower. In rendering the opinions expressed below, I have assumed, with respect to all of the documents referred to in this opinion letter, that (except, to the extent set forth in the opinions expressed below, as to the Borrower): (i) such documents have been duly authorized by, have been duly executed and delivered by, and constitute legal, valid, binding and enforceable obligations of, all of the parties to such documents; (ii) all signatories to such documents have been duly authorized; and (iii) all of the parties to such documents are duly organized and validly existing and have the power and authority (corporate or other) to execute, deliver and perform such documents. Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as I have deemed necessary as a basis for the opinions expressed below, I am of the opinion that: 1. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. 2. The Borrower has all requisite corporate power to execute and deliver, and to perform its obligations under, each Credit Document and has all requisite corporate power to borrow under the Credit Agreement. 3. The execution, delivery and performance by the Borrower of the Credit Documents and the borrowings by the Borrower under the Credit Agreement have been duly authorized by all necessary corporate action on the part of the Borrower. 4. Each Credit Document has been duly executed and delivered by the Borrower. E-2 5. Neither the execution, delivery nor performance by the Borrower of the Credit Documents nor the application of any proceeds of any Loans to the acquisition by the Borrower or any of its Subsidiaries of any shares of common stock of Target pursuant to the Offer to Purchase will contravene any provision of Regulation G, T, U or X of the Board of Governors of the Federal Reserve System as in effect on the date hereof. 6. Under Missouri conflict of laws principles, the stated choice of New York Law to govern the Credit Documents will be honored by the courts of the State of Missouri and the Credit Documents will be construed in accordance with, and will be treated as being governed by, the law of the State of New York. However, if the Credit Documents were stated to be governed by and construed in accordance with the law of the State of Missouri, or if a court were to apply the law of the State of Missouri to the Credit Documents, each Credit Document (assuming, in the case of the Notes, execution and delivery thereof for value) would constitute the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally and except as the enforceability of the Credit Documents is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of materiality, reasonableness, good faith and fair dealing. 7. No authorization, approval or consent of, and no filing or registration with, any governmental or regulatory authority or agency is required on the part of the Borrower for the execution, delivery or performance by the Borrower of, or for the legality, validity or enforceability of, the Credit Documents or for any borrowing by the Borrower under the Credit Agreement. 8. The execution, delivery and performance by the Borrower of the Credit Documents, and borrowings by the Borrower under the Credit Agreement, do not and will not (a) violate any provision of the charter or by-laws of the Borrower, (b) violate any applicable law, rule or regulation, (c) violate any order, writ, injunction or decree of any court or governmental authority or agency or any arbitral award applicable to the Borrower of which I have knowledge (after due inquiry) or (d) result in a breach of, constitute a default under, require any consent under, or result E-3 in the acceleration or required prepayment of any indebtedness pursuant to the terms of, any agreement or instrument of which I have knowledge (after due inquiry) to which the Borrower is a party or by which the Borrower is bound or to which the Borrower is subject. 9. Except as may be disclosed in regular periodic reports filed with the Securities and Exchange Commission prior to the date of the Credit Agreement (copies of which reports have heretofore been furnished to the Lenders), I have no knowledge (after due inquiry) of any legal or arbitral proceeding by or before any governmental or regulatory authority or agency, now pending or threatened against the Borrower or any of its Subsidiaries or any of their respective Properties that, if adversely determined, is reasonably likely to have a Material Adverse Effect. 10. Neither the Borrower nor any of its Subsidiaries is an "INVESTMENT COMPANY", or a company "CONTROLLED" by an "INVESTMENT COMPANY", within the meaning of the Investment Company Act of 1940, as amended. 11. Neither the Borrower nor any of its Subsidiaries is a "HOLDING COMPANY", or an "AFFILIATE" of a "HOLDING COMPANY" or a "SUBSIDIARY COMPANY" of a "HOLDING COMPANY", within the meaning of the Public Utility Holding Company Act of 1935, as amended. The foregoing opinions are subject to the following comments and qualifications: A. The enforceability of Section 9.03 of the Credit Agreement may be limited by laws rendering unenforceable indemnification contrary to Federal or State securities laws and the public policy underlying such laws. B. The enforceability of provisions in the Credit Documents to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances. C. I express no opinion as to (i) the effect of the laws of any jurisdiction in which any Lender is located (other than the State of Missouri) that limit the interest, fees, or other charges such Lender may impose, and (ii) the second sentence of Section 9.08 of the Credit Agreement, insofar as such sentence relates to the subject matter E-4 jurisdiction of the United States District Court for the Southern District of New York to adjudicate any controversy related to the Credit Documents. The foregoing opinions are limited to matters involving the Federal law of the United States of America, the law of the State of Missouri and (with respect to my opinions in paragraphs 1 through 4 above) the Business Corporation Law of the State of New York, and I do not express any opinion as to any other laws. At the request of my client, this opinion letter is, pursuant to Section 3.01(b) of the Credit Agreement, provided to you by me in my capacity as General Counsel of the Borrower and may not be relied upon by any Person for any purpose other than in connection with the transactions contemplated by the Credit Agreement without, in each instance, my prior written consent. Very truly yours, E-5 EXHIBIT F - Opinion of Special Counsel for the Agents OPINION OF DAVIS POLK & WARDWELL, SPECIAL COUNSEL FOR THE AGENTS [Closing Date] To the Lenders and the Agents Referred to Below c/o Morgan Guaranty Trust Company of New York 60 Wall Street New York, NY 10260 Dear Sirs: We have participated in the preparation of the $2,000,000,000 Credit Agreement (the "CREDIT AGREEMENT") dated as of July 23, 1997 among Mallinckrodt Inc., a New York corporation (the "BORROWER"), the Lenders party thereto from time to time (the "LENDERS"), Goldman Sachs Credit Partners L.P., as Syndication Agent, Citibank, N.A., as Documentation Agent, and Morgan Guaranty Trust Company of New York, as Administrative Agent, and have acted as special counsel for the Agents for the purpose of rendering this opinion pursuant to Section 3.01(c) of the Credit Agreement. Terms defined in the Credit Agreement are used herein as therein defined. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. Upon the basis of the foregoing, we are of the opinion that: F-1 1. The execution, delivery and performance by the Borrower of the Credit Agreement and the Notes are within the Borrower's corporate powers and have been duly authorized by all necessary corporate action. 2. The Credit Agreement constitutes a valid and binding agreement of the Borrower and each Note constitutes a valid and binding obligation of the Borrower, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. We are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York and the federal laws of the United States of America. In giving the foregoing opinion, we express no opinion as to the effect (if any) of any law of any jurisdiction (except the State of New York) in which any Lender is located which limits the rate of interest that such Lender may charge or collect. This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by any other person without our prior written consent. Very truly yours, F-2 EXHIBIT G - Assignment and Assumption Agreement ASSIGNMENT AND ASSUMPTION AGREEMENT AGREEMENT dated as of _________, ____ among [ASSIGNOR] (the "ASSIGNOR"), [ASSIGNEE] (the "ASSIGNEE"), MALLINCKRODT INC. (the "BORROWER") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent (the "AGENT"). WHEREAS, this Assignment and Assumption Agreement (the "AGREEMENT") relates to the $2,000,000,000 Credit Agreement dated as of July 23, 1997 among the Borrower, the Assignor and the other Lenders party thereto from time to time, as Lenders, Goldman Sachs Credit Partners L.P., as Syndication Agent, Citibank, N.A., as Documentation Agent, and Morgan Guaranty Trust Company of New York, as Administrative Agent (as amended from time to time, the "CREDIT AGREEMENT"); [WHEREAS, as provided under the Credit Agreement, the Assignor has a [Term] [Revolving Credit] Commitment to make Loans to the Borrower in an aggregate principal amount at any time outstanding not to exceed $__________;] WHEREAS, [Term] [Revolving Credit] Loans made to the Borrower by the Assignor under the Credit Agreement in the aggregate principal amount of $__________ are outstanding at the date hereof; and [WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Credit Agreement in respect of a portion of its [Term] [Revolving Credit] Commitment thereunder in an amount equal to $__________ (the "ASSIGNED AMOUNT"), together with a corresponding portion of its outstanding [Term] [Revolving Credit] Loans, and the Assignee proposes to accept assignment of such rights and assume the corresponding obligations from the Assignor on such terms;] NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: G-1 SECTION 1. Definitions. All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Credit Agreement. SECTION 2. Assignment. The Assignor hereby assigns and sells to the Assignee all of the rights of the Assignor under the Credit Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of the Assignor under the Credit Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the [Term] [Revolving Credit] Loans made by the Assignor outstanding at the date hereof. [Upon the execution and delivery hereof by the Assignor, the Assignee, [the Borrower and the Administrative Agent] and the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of a Lender under the Credit Agreement with a [Term] [Revolving Credit] Commitment in an amount equal to the Assigned Amount, and (ii) the [Term] [Revolving Credit] Commitment of the Assignor shall, as of the date hereof, be reduced by a like amount and the Assignor released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee.] The assignment provided for herein shall be without recourse to the Assignor. SECTION 3. Payments. As consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in Federal funds in the amount heretofore mutually agreed between them. It is understood that facility fees in respect of the Assigned Amount accrued to the date hereof are for the account of the Assignor and such fees accruing from and including the date hereof are for the account of the Assignee. Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party's interest therein and shall promptly pay the same to such other party. [SECTION 4. Consent of the Borrower and the Administrative Agent. This Agreement is conditioned upon the consent of the Borrower and the Administrative Agent pursuant to Section 9.06(c) the Credit Agreement. The execution of this Agreement by the Borrower and the Administrative Agent is evidence of this consent. Pursuant to Section 9.06(c), the Borrower agrees to execute and deliver a Note payable to the order of the Assignee to evidence the assignment and assumption provided for herein.] G-2 SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of the Borrower, or the validity and enforceability of the obligations of the Borrower in respect of the Credit Agreement or any Note. The Assignee acknowledges that it has, independently and without reliance on the Assignor, any other Lender or either Agent and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Borrower. SECTION 6. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. SECTION 7. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. [ASSIGNOR] By_________________________ Name: Title: [ASSIGNEE] By__________________________ Name: Title: G-3 MALLINCKRODT INC. By__________________________ Name: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By__________________________ Name: Title: G-4 EX-99.11 13 CONFIDENTIALITY AGREEMENT, DATED JUNE 3, 1997 EXHIBIT (11) CONFIDENTIALITY AGREEMENT ------------------------- In connection with a possible business combination (the "Transaction") involving Nellcor Puritan Bennett Incorporated and Mallinckrodt Inc. (collectively the "Companies," and each a "Company"), certain information may be requested by either Company relating to the other or to the Transaction. All such information (whether written or oral) furnished (whether before or after the date hereof) by either Company, or its directors, officers, employees, affiliates, representatives (including, without limitation, financial advisors, attorneys and accountants) or agents (collectively, "Representatives") to the other Company and all analyses, compilations, forecasts, studies or other documents prepared by the Companies or their Representatives in connection with their review of, or their interest in, the Transaction which contain or reflect any such furnished information is hereinafter referred to as the "Information." The term Information will not, however, include information which (i) is or becomes publicly available other than as a result of a disclosure by the receiving Company or its Representatives or (ii) is or becomes available to the receiving Company on a non-confidential basis from a source which, to the best of its knowledge after due inquiry, is not prohibited from disclosing such Information to the receiving Company by a legal, contractual or fiduciary obligation to the disclosing Company. Accordingly, each of the Companies hereby agree that: 1. Each Company and its Representatives (i) will keep the Information confidential and will not (except as required by applicable law, regulation or legal process and only after the compliance with paragraph 3 below), without the prior written consent of the other Company, disclose any Information in any manner whatsoever, including the existence of the contemplated Transaction, and (ii) will not use any Information other than in connection with the Transaction; provided, however, that the Company may reveal the Information to its -------- ------- Representatives (a) who need to know the Information for the purpose of evaluating the Transaction, (b) who are informed by the Companies of the confidential nature of the Information and (c) who agree to act in accordance with the terms of this letter agreement. Each Company will cause its Representatives to observe the terms of this letter agreement and will be responsible for any breach of this letter agreement by any of its Representatives. 2. Each Company and its Representatives will not (except as required by applicable law, regulation or legal process, and only after compliance with paragraph 3 below), without the other Company's prior written consent, disclose to any person the fact that the Information exists or has been made available, that the Companies are considering the Transaction or any other 1 transaction involving the Companies, or that discussions or negotiations are taking or have taken place concerning the Transaction or involving the Companies or any term, condition or other fact relating to the Transaction or such discussions or negotiations, including, without limitation, the status thereof. 3. In the event that the Company or any of its Representatives is requested pursuant to, or required by, applicable law, regulation or legal process to disclose any of the Information, the Company as to which disclosure has been requested shall notify the other Company promptly so that the other Company may seek a protective order or other appropriate remedy or, in its sole discretion, waive compliance with the terms of this letter agreement. In the event that no such protective order or other remedy is obtained, or that the other Company waives compliance with the terms of this letter agreement, the Company as to which disclosure has been requested shall furnish only that portion of the Information which it is advised by counsel is legally required and will exercise all reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Information so furnished. 4. If either Company determines not to proceed with the Transaction, it will promptly inform the other Company of that decision and, in that case, and at any time upon request of either Company, the other Company will either (i) promptly destroy all copies of the written Information in its or its Representatives' possession and confirm such destruction to the requesting Company in writing or (ii) promptly deliver to the requesting Company all copies of the written Information in its or its Representatives' possession. Any oral Information will continue to be the subject to the terms of this letter agreement. 5. Each Company acknowledges that neither itself, nor its Representatives, nor any of its officers, directors, employees, agents or controlling persons within the meaning of Section 20 of the Securities Exchange Act of 1934, as amended, makes any express or implied representation or warranty as to the accuracy or completeness of the Information, and each Company agrees that no such person will have any liability relating to the Information or for any errors therein or omissions therefrom. Each Company further agrees that it is not entitled to rely on the accuracy or completeness of the Information and that it will be entitled to rely solely on such representations and warranties as may be included in any definitive agreement with respect to the Transaction, subject to such limitations and restrictions as may be contained therein. 6. Each Company is aware, and will advise its Representatives who are informed of the matters that are subject of this letter agreement, of the 2 restrictions imposed by the United States securities laws on the purchase or sale of securities by any person who has received material, non-public information from the issuer of such securities and on the communication of such information to any other person when it is reasonably foreseeable that such other person is likely to purchase or sell such securities in reliance upon such information. 7. Each Company agrees that, for a period of three (3) years from the date of this executed letter agreement, neither they nor any of their affiliates will, without the prior written consent of the other Company's Board of Directors: (i) acquire, offer to acquire, or agree to acquire, directly or indirectly, by purchase or otherwise, any voting securities or rights to acquire any voting securities of the other Company or any subsidiary thereof, or any successor to or person in control of the other party, or any assets of the other party, or any subsidiary or division thereof or of any such successor or controlling person, (ii) make, or in any way participate in, directly or indirectly, any "solicitation" of "proxies" (as such terms are used in the rules of the Securities Exchange Commission) to vote, or seek to advise or influence any person or entity with respect to the voting of, any voting securities of the other Company, (iii) make any public announcement with respect to, or submit a proposal for, or offer of (with or without conditions) any extraordinary transaction involving the other party or its securities or assets, (iv) form, join or in any way participate in a "group" (as defined in Section 13 (d)(3) of the Securities Exchange Act of 1934, as amended) in connection with any of the foregoing or (v) request the other Company or any of its Representatives directly or indirectly, to amend or waive any provision of this paragraph. 8. Each Company agrees that, for a period of three (3) years from the date of this letter agreement, it will not directly or indirectly, solicit for employment or hire any employee of the other party or any of its subsidiaries with whom such Company has had contact or who became known to it in connection with their consideration of the Transaction; provided, however, that the -------- ------- foregoing provision will not prevent either Company from employing any such person who contacts it on his or her own initiative without any direct or indirect solicitation by or encouragement from such Company. 9. Each Company acknowledges that the remedies at law may be inadequate to protect it against any actual or threatened breach of this letter agreement by the other Company or by the other Company's Representatives, and, without prejudice to any other rights and remedies otherwise available to it, each Company agrees to the availability of equitable relief. In the event of litigation relating to this letter agreement, if a court of competent jurisdiction determines in a final, non-appealable order that this letter agreement has been breached by either Company or by its 3 Representatives, then the breaching Company will reimburse the other Company for reasonable costs and expense (including, without limitation, reasonable legal fees and expenses) incurred in connection with all such litigation. 10. Each Company agrees that no failure or delay by it in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof of the exercise of any right, power or privilege hereunder. 11. This letter agreement contains the entire agreement between the Companies concerning the matters covered hereby. No modification of this letter agreement or waiver of the terms and conditions hereof will be binding upon the Companies, unless approved in writing by both Companies. NELLCOR PURITAN BENNETT MALLINCKRODT INC. INCORPORATED By: /s/ Raymond Larkin, Jr. By: /s/ C. Ray Holman ------------------------ ---------------------- C. Raymond Larkin, Jr. C. Ray Holman President and Chief Chairman and Chief Executive Officer Executive Officer Date: June 3, 1997 Date: June 3, 1997 ---------------------- --------------------- -----END PRIVACY-ENHANCED MESSAGE-----