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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
(14d-101)
Solicitation/Recommendation Statement under Section 14(d)(4) of the Securities
Exchange Act of 1934
ORATEC INTERVENTIONS, INC.
(Name of Subject Company)
ORATEC INTERVENTIONS, INC.
(Names of Persons Filing Statement)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(including the associated preferred stock purchase rights)
(Title of Class of Securities)
68554M
(CUSIP Number of Class of Securities)
Kenneth W. Anstey
Chief Executive Officer and President
ORATEC Interventions, Inc.
3700 Haven Court
Menlo Park, California 94025
(650) 369-9904
(Name, address, and telephone numbers of person authorized to receive
notices and communications on behalf of the persons filing statement)
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With copies to:
Mark B. Weeks
Steven J. Tonsfeldt
Venture Law Group
A Professional Corporation
2775 Sand Hill Road
Menlo Park, California 94025
(650) 854-4488
[_] Check the box if filing relates solely to preliminary communications made
before the commencement of a tender offer.
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Item 1. Subject Company Information.
The name of the subject company is ORATEC Interventions, Inc., a Delaware
corporation ("ORATEC" or the "Company"). The address of the principal executive
office of ORATEC is 3700 Haven Court, Menlo Park, California 94025, and its
telephone number is (650) 369-9904.
The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Schedule 14D-9")
relates is the Company's common stock, par value $0.001 per share, including
the associated preferred stock purchase rights issued pursuant to the Preferred
Shares Rights Agreement dated as of November 28, 2000 and as amended on
February 13, 2002 by and between ORATEC and American Stock Transfer & Trust
Company, the rights agent (collectively, the "Shares"). As of February 8, 2002,
there were 23,215,109 Shares issued and outstanding.
Item 2. Identity and Background of Filing Person.
The filing person of this Schedule 14D-9 is the subject company, ORATEC. The
business address and telephone number of ORATEC are as set forth in Item 1
above.
This Schedule 14D-9 relates to the tender offer (the "Offer") by Orchid
Merger Corp., a Delaware corporation ("Purchaser") and a wholly-owned
subsidiary of Smith & Nephew, Inc., a Delaware corporation ("Smith & Nephew"),
and an indirect wholly owned subsidiary of Smith & Nephew plc, a corporation
organized under the laws of England and Wales, to purchase all outstanding
Shares at a purchase price of $12.50 per Share, net to the seller in cash,
without interest (the "Offer Price"). The Offer is being made on the terms and
subject to the conditions set forth in the Offer to Purchase, dated February
22, 2002 (the "Offer to Purchase"), and in the related Letter of Transmittal
(the "Letter of Transmittal"). Copies of the Offer to Purchase and the Letter
of Transmittal are filed as Exhibit (a)(1) and (a)(2) herewith, respectively,
and are incorporated herein by reference in their entirety. The Offer is
described in a Tender Offer Statement on Schedule TO (the "Schedule TO"), which
was filed with the Securities and Exchange Commission on the date hereof.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of February 13, 2002 (the "Merger Agreement") by and among Smith & Nephew,
Purchaser and ORATEC. It is a condition to the Offer that there be validly
tendered and accepted for payment by the Purchaser that number of Shares which
represents a majority of the outstanding Shares determined on a fully diluted
basis (assuming the exercise of all options to purchase Shares, and the
conversion or exchange of all securities convertible or exchangeable into
Shares, outstanding on the expiration date of the Offer) (the "Minimum
Condition"). In addition, the Merger Agreement provides that, among other
things, following the consummation of the Offer and satisfaction or waiver of
the conditions set forth in the Merger Agreement, Purchaser will merge with and
into ORATEC (the "Merger") with ORATEC continuing as the surviving corporation
(the "Surviving Corporation"). At the effective time of the Merger (the
"Effective Time"), each outstanding Share (other than Shares held in the
treasury of ORATEC or owned by Smith & Nephew or by any wholly owned subsidiary
of Smith & Nephew, or by stockholders who properly exercise their appraisal
rights under Delaware law) will be converted into the right to receive the
merger consideration, without interest, which will be the same as the Offer
Price. The Merger Agreement was filed with the SEC on February 19, 2002 as an
exhibit to the Company's Current Report on Form 8-K and is incorporated herein
by reference in its entirety.
Concurrently with the execution of the Merger Agreement and as a condition
and an inducement to Smith & Nephew's and Purchaser's willingness to enter into
the Merger Agreement, Smith & Nephew and the Purchaser entered into Stockholder
Agreements (each a "Stockholder Agreement") with each of the current directors
and executive officers of the Company and certain stockholders (each a
"Signatory Stockholder") under which each Signatory Stockholder has, among
other things, subject to the conditions set forth therein, (i) agreed to tender
all of such Signatory Stockholder's Shares in the Offer, (ii) agreed to vote
all Shares beneficially owned by such Stockholder in favor of the Merger and
the Merger Agreement and against any competitive acquisition proposal
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and (iii) granted a proxy to Smith & Nephew with regard to such Signatory
Stockholder's Shares. A form of the Stockholder Agreement was filed with the
SEC on February 19, 2002 as an exhibit to the Company's Current Report on Form
8-K and is incorporated herein by reference in its entirety. The Shares subject
to the Stockholder Agreements, in total, represent approximately 13.99% of the
outstanding Shares as of February 8, 2002. The following table identifies each
Signatory Stockholder and the number of Shares owned by such Signatory
Stockholder:
Shares of
Common
Signatory Stockholder Stock
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Venrock Associates (4)....................................... 686,409
Venrock Associates II, L.P. (4).............................. 621,348
Patrick F. Latterell (2)..................................... 20,726
Jefferey A. Saal, M.D. (2)................................... 620,277
Kenneth W. Anstey (1)........................................ 522,893
Hugh R. Sharkey (1).......................................... 472,632
Nancy V. Westcott (3)........................................ 141,631
Richard M. Ferrari (2)....................................... 77,016
Roger H. Lipton (3).......................................... 63,364
Michael D. Hassman (3)....................................... 22,130
Theresa M. Mitchell (3)...................................... 0
Wayne R. Moon (2)............................................ 0
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Total.................................................... 3,248,426
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(1) Officer and Director
(2) Director
(3) Officer
(4) Affiliate
The Schedule TO states that the principal executive offices of the Purchaser
are located at 1450 Brooks Road, Memphis, Tennessee 38116.
Item 3. Past Contacts, Transactions, Negotiations and Agreements.
In considering the recommendation of the Company's Board of Directors (the
"Board") with respect to the Offer and the fairness of the consideration to be
received in the Offer and the Merger, stockholders should be aware that certain
officers and directors of the Company have interests in the Offer and the
Merger which are described below and which may present them with certain
potential conflicts of interest. The Board was aware of these actual and
potential conflicts of interest and considered them along with the other
matters described below in Item 4, "The Solicitation or
Recommendation--Background of the Transaction," "--Reasons for the
Recommendation."
3
Allocation of Consideration among Executive Officers and Directors
The table below sets forth information for each director and executive
officer of the Company who will be entitled to receive cash payments in
connection with the Offer or the Merger with respect to such individual's
Shares or options to purchase Shares. Except as set forth in the table below,
no director or executive officer of the Company is entitled to receive any cash
compensation in connection with the Offer or the Merger for Shares owned or
options to purchase Shares held.
Number of Total Cash
Shares In-The-Money Consideration
Name (#)(1) Options (#)(1) ($)
---- --------- -------------- -------------
Patrick F. Latterell.............. 20,726 5,000 285,025
Jeffrey A. Saal, M.D.............. 620,277 35,000 8,015,975
Kenneth W. Anstey................. 525,114(2) 157,918 7,966,248
Hugh R. Sharkey................... 472,632 19,167 5,946,234
Nancy V. Westcott................. 143,895(3) 68,125 2,304,313
Richard M. Ferrari................ 77,016 35,000 1,227,400
Roger H. Lipton................... 63,364 162,500 2,500,718
Michael D. Hassman................ 22,722(4) 78,000 694,100
Theresa M. Mitchell............... 0 160,000 660,500
Wayne R. Moon..................... 0 30,000 234,375
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Totals......................... 1,945,746 750,710 29,834,888
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(1) See "Security Ownership of Certain Beneficial Owners and Management" in
Annex A attached to this Schedule as Exhibit (a)(3) for a detailed
description of holdings.
(2) Includes 2,221 shares of common stock expected to be issued pursuant to the
Company's 1999 Employee Stock Purchase Plan prior to the Effective Time.
(3) Includes 2,264 shares of common stock expected to be issued pursuant to the
Company's 1999 Employee Stock Purchase Plan prior to the Effective Time.
(4) Includes 592 shares of common stock expected to be issued pursuant to the
Company's 1999 Employee Stock Purchase Plan prior to the Effective Time.
Employment Agreements and Severance Arrangements with Executive Officers and
Directors
Consummation of the Offer and the Merger will have the effects summarized
below on the compensation, incentive plans, agreements and arrangements in
which executive officers and directors of the Company are participating.
On February 13, 2002, the Board of Directors of the Company adopted a
resolution providing for the full acceleration of the vesting of outstanding
and unvested options to purchase Shares of the Company's capital stock in
connection with the consummation of the Offer and the Merger, including the
outstanding and unvested options to purchase Shares of the Company's capital
stock held by executive officers and directors of the Company.
The Company has entered into severance arrangements with certain of its
executive officers that may be triggered by the consummation of the Offer and
the Merger. Each of these arrangements is described below and is filed as an
exhibit hereto and is incorporated by reference herein. The Offer and the
Merger will result in a change in control under these arrangements.
Nancy V. Westcott, Chief Financial Officer and Vice President,
Administration. Pursuant to the terms of an employment agreement dated October
29, 1997, if Ms. Westcott is involuntarily terminated in connection with a
change in control, Ms. Westcott will be entitled to receive continued payment
of her salary and health benefits for a period of 12 months following such
termination.
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Theresa M. Mitchell, Vice President Regulatory, Clinical Affairs and Quality
Assurance. Pursuant to the terms of an employment agreement dated November 29,
1999, if Ms. Mitchell is terminated without cause in connection with a change
in control of the Company, she will be entitled to receive acceleration of the
vesting of all unvested options granted pursuant to the terms of the employment
agreement. In addition, if Ms. Mitchell is terminated at any time for reasons
other than cause, she will be entitled to receive continued payment of her
salary and health benefits for a period of six months following such
termination.
Stock Option Plans
The Company's directors and executive officers have been granted options
under the Company's stock option plans. See "Allocation of Consideration among
Executive Officers and Directors" above.
Under the Merger Agreement, each of the Company's option plans and all
options thereunder shall be deemed to be 100% vested and exercisable
immediately prior to the consummation of the Offer. Each option outstanding
upon the consummation of the Offer will be cancelled and the holder of each
such option will receive an amount equal to (i) the product of (A) the number
of Shares subject to such option and (B) the excess, if any, of the Offer Price
over the exercise price per Share minus (ii) all applicable federal, state and
local taxes required to be withheld. All option plans, and all options
outstanding, shall terminate and all rights thereunder shall be cancelled
immediately prior to the consummation of the Offer.
In addition, under the Merger Agreement, the Company shall cause any of the
purchase periods in progress under the 1999 Employee Stock Purchase Plan (the
"ESPP") to be shortened to a date which is no later than 10 business days
following the commencement of the Offer and provide that no new purchase period
shall commence on or after the date of the Merger Agreement. No participant in
the ESPP may increase his or her rate of payroll deduction under the ESPP
effective from and after the date of the Merger Agreement. The ESPP shall be
terminated immediately prior to the consummation of the Offer.
The Merger Agreement
A summary of certain material provisions of the Merger Agreement is included
under the caption "Purpose of the Offer and Merger; The Merger Agreement; The
Confidentiality Agreement; The Stockholders Agreement; Statutory Requirements;
Appraisal Rights; Rule 13e-3; Plans for ORATEC After the Offer and the
Merger--The Merger Agreement" in the Offer to Purchase attached as Exhibit
(a)(1) to this Schedule and incorporated herein by reference. Such summary does
not purport to be complete and is qualified in its entirety by reference to the
complete text of the Merger Agreement attached as Exhibit (e)(1) to this
Schedule. We urge you to read the Merger Agreement in its entirety for a more
complete description of the material summarized in the referenced section of
the Offer to Purchase.
Stockholder Agreements
A summary of certain material provisions of the Stockholder Agreements is
included under the caption "Purpose of the Offer and Merger; The Merger
Agreement; The Confidentiality Agreement; The Stockholders Agreement; Statutory
Requirements; Appraisal Rights; Rule 13e-3; Plans for ORATEC After the Offer
and the Merger--The Stockholder Agreements" in the Offer to Purchase attached
as Exhibit (a)(2) to this Schedule and incorporated herein by reference. Such
summary does not purport to be complete and is qualified in its entirety by
reference to the complete text contained in the form of the Stockholder
Agreement attached as Exhibit (e)(2) to this Schedule. We urge you to read the
form of Stockholder Agreement in its entirety for a more complete description
of the material summarized in the referenced section of the Offer to Purchase.
Confidentiality Agreement
A summary of certain material provisions of the Confidentiality Agreement is
included under the caption "Purpose of the Offer and Merger; The Merger
Agreement; The Confidentiality Agreement; The Stockholders
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Agreement; Statutory Requirements; Appraisal Rights; Rule 13e-3; Plans for
ORATEC After the Offer and the Merger--The Confidentiality Agreement" in the
Offer to Purchase attached as Exhibit (a)(1) to this Schedule and incorporated
herein by reference. Such summary does not purport to be complete and is
qualified in its entirety by reference to the complete text of the
Confidentiality Agreement attached as Exhibit (e)(3) to this Schedule. We urge
you to read the Confidentiality Agreement in its entirety for a more complete
description of the material summarized in the referenced section of the Offer
to Purchase.
Indemnification; Directors and Officers' Insurance
The Merger Agreement provides that from and after the Effective Time, Smith
& Nephew will cause the Company to indemnify and hold harmless all past and
present officers and directors of the Company to the same extent and in the
same manner such officers and directors were indemnified on the date of the
Merger Agreement pursuant to indemnification agreements between the Company and
such persons, the DGCL or the Company's Certificate of Incorporation or Bylaws
for acts or omissions occurring at or prior to the Effective Time.
The Merger Agreement provides that Smith & Nephew and the Surviving
Corporation will maintain in effect, for a period of six years after the
Effective Time, directors and officers liability insurance policies that
provide coverage for events occurring prior to the Effective Time that are
substantially equivalent to the Company's policies in existence on the date of
the Merger Agreement, or if substantially equivalent insurance coverage is
unavailable, the best coverage available; provided, however, that neither Smith
& Nephew nor the Surviving Corporation will be obligated to pay aggregate
premiums for such insurance over the six year period in excess of $1,300,000.
Except as described or referred to in this Item 3 and Item 4--"The
Solicitation or Recommendation," there exists on the date hereof no material
agreement, arrangement or understanding and no actual or potential conflict of
interest between ORATEC or its affiliates and either (i) ORATEC, its executive
officers, directors or affiliates or (ii) Smith & Nephew or the Purchaser or
any of their respective executive officers, directors or affiliates. For a
complete description of the stock ownership of ORATEC's executive officers and
directors, please see the section entitled "Security Ownership of Certain
Beneficial Owners and Management" in Annex A attached hereto.
Item 4. The Solicitation or Recommendation.
Recommendation of the Board
At a special meeting of the Board of Directors of the Company held on
February 13, 2002, the Board by unanimous vote of all directors:
. approved and adopted the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger;
. determined that the Merger is advisable and that the terms of the Offer
and the Merger are fair to, and in the best interests of, the Company's
stockholders; and
. recommended that the Company's stockholders accept the Offer, tender their
Shares thereunder to the Purchaser, and approve and adopt the Merger
Agreement.
THEREFORE, THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER, TENDER ALL OF THEIR SHARES
PURSUANT TO THE OFFER, AND APPROVE AND ADOPT THE MERGER AGREEMENT.
The Board's recommendation is based in part on the oral opinion, which was
subsequently confirmed in writing, delivered by J.P. Morgan Securities Inc.
("JP Morgan") to the Board of Directors on February 13, 2002 to the effect
that, as of such date, and based on and subject to the matters described in the
opinion, the $12.50 per
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share cash consideration to be received by the holders of ORATEC common stock
in the proposed transactions was fair, from a financial point of view, to such
stockholders. The full text of the written opinion, which sets forth the
assumptions made, the procedures followed, the matters considered and the
limitations on the review undertaken by JP Morgan, is set forth in Annex B to
this Schedule 14D-9.
Background of the Transaction
As part of its long term plan to review strategic business opportunities, in
May 2000 ORATEC engaged JP Morgan to act as its financial advisor.
As part of its customary review of its strategic business development plans
for 2001, in early 2001 Parent determined to pursue acquisition opportunities
in the area of radio frequency technology and related products that would
complement and expand the product offerings of Parent's Endoscopy Division.
In February 2001, representatives of U.S. Bancorp Piper Jaffray Inc. ("Piper
Jaffray") met with senior management of Parent to discuss potential acquisition
candidates in the United States, including ORATEC. Representatives of Piper
Jaffrey subsequently requested a meeting with Mr. Ken Anstey President and
Chief Executive Officer of ORATEC.
On April 19, 2001, representatives of Piper Jaffray met with Mr. Anstey in
Menlo Park, California to discuss the possibility of a strategic acquisition of
ORATEC by Smith & Nephew. At the meeting, Mr. Anstey indicated that ORATEC was
in the midst of implementing its operating strategy and was not at that time
interested in pursuing discussions relating to such a transaction.
On July 19, 2001, members of senior management of Smith & Nephew, including
Mr. Ron Sparks, President, Endoscopy Division of Smith & Nephew, members of
senior management of Parent and representatives of Piper Jaffray met with Mr.
Anstey in Menlo Park, California. At the meeting, Mr. Anstey gave an overview
presentation of ORATEC and Mr. Sparks gave an overview presentation of Parent
and Smith & Nephew. At the meeting, the parties discussed Smith & Nephew's
continued desire to commence discussions relating to the possible acquisition
of ORATEC by Smith & Nephew.
On July 31, 2001, the Board met at a special meeting to discuss ORATEC's
recent meeting with Smith & Nephew. JP Morgan gave the Board a presentation
related to potential acquisition scenarios. The Board engaged in a lengthy
discussion relating to potential transactions, including a potential
transaction with Smith & Nephew. The Board determined that it would not pursue
further discussions with Smith & Nephew at that time.
In September 2001, representatives of Piper Jaffray had several
conversations with Mr. Anstey and with Mr. Richard Ferrari, Chairman of ORATEC,
regarding a possible acquisition of ORATEC by Smith & Nephew.
In September 2001, Mr. Anstey was contacted by senior management of another
company ("Company A") to discuss potential strategic business opportunities.
Mr. Anstey had several meetings and discussions with a representative of
Company A to discuss a potential strategic relationship between ORATEC and
Company A. Following these initial discussions, ORATEC and Company A decided
not to pursue a strategic transaction in the near term.
On September 21, 2001, Smith & Nephew formally engaged Piper Jaffray to act
as Smith & Nephew's financial advisor in connection with possible strategic
transactions in the United States in the area of endoscopy.
On October 9, 2001, representatives of Piper Jaffray gave a presentation to
senior management of Parent regarding a possible acquisition of ORATEC by Smith
& Nephew. At a regular meeting on November 1, 2001, senior management of Parent
briefed the board of directors of Parent on discussions with ORATEC.
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On November 8, 2001, Mr. Peter Huntley, Group Director, Business Development
of Parent, Mr. Sparks and representatives of Piper Jaffray met with Mr. Anstey,
Ms. Nancy V. Westcott, Chief Financial Officer and Vice President of
Administration of ORATEC, and representatives of JP Morgan in New York City.
Smith & Nephew indicated its interest in the acquisition of ORATEC at a price
of $11.25 per Share in cash, based on the information with respect to ORATEC
that it had reviewed to date. Mr. Anstey and representatives of JP Morgan
indicated that ORATEC would not be interested in discussing an acquisition by
Smith & Nephew at that price. After the meeting, representatives of Piper
Jaffray and representatives of JP Morgan had discussions relating to Smith &
Nephew's valuation of ORATEC.
On November 27, 2001, members of senior management of Parent and Smith &
Nephew and representatives of Piper Jaffray met with members of senior
management of ORATEC and representatives of JP Morgan in New York City. Senior
management of ORATEC gave a presentation of the business, operations and
financial condition of ORATEC. At the meeting, senior management of Smith &
Nephew and representatives of Piper Jaffray indicated that they would use the
information provided by ORATEC to determine whether Smith & Nephew would be
willing to increase its proposed purchase price. Also on November 27, 2001,
Smith & Nephew and ORATEC entered into a mutual confidentiality agreement.
On November 27, 2001, Mr. Anstey requested that JP Morgan renew discussions
with another company ("Company B") with whom ORATEC had had prior discussions
in 2000 and 2001 relating to a possible acquisition of ORATEC by Company B. On
December 5, 2001, ORATEC entered into a mutual confidentiality agreement with
Company B. On December 6, 2001, ORATEC met with Company B to discuss a
potential transaction and gave Company B a presentation relating to ORATEC's
business.
On December 7, 2001, Mr. Sparks delivered a letter to Mr. Anstey containing
Smith & Nephew's indication of interest in acquiring ORATEC through a tender
offer for all outstanding Shares at $12.50 per Share in cash followed by a
back-end merger at the same price, subject to completion of satisfactory due
diligence, negotiation and execution of a definitive merger agreement and of
agreements providing for directors and executive officers of ORATEC to support
the transaction and approval of the board of directors of Parent. This letter
also requested that ORATEC enter into an exclusivity agreement with Smith &
Nephew so that Smith & Nephew could complete its due diligence investigation of
ORATEC.
On December 10, 2001, at a regularly scheduled meeting of the Board,
representatives of JP Morgan presented Smith & Nephew's indication of interest
to the Board along with a detailed analysis of alternative scenarios. The Board
directed senior management to continue discussions with Smith & Nephew.
On December 14, 2001, the Board held a telephonic meeting to continue its
deliberations regarding the options currently available to ORATEC. Following a
report by representatives of JP Morgan on discussions they had engaged in with
Company B, the Board concluded that Company B would not be able to present
ORATEC with the terms of a proposed offer in a timely manner, and that any
delay in responding to Smith & Nephew's indication of interest could jeopardize
a possible transaction with Smith & Nephew. The Board then authorized senior
management of ORATEC to pursue a possible transaction with Smith & Nephew at a
price of $12.50 per Share and to enter into an exclusivity agreement with
Smith & Nephew.
On December 19, 2001, Smith & Nephew and ORATEC entered into an exclusivity
agreement pursuant to which ORATEC agreed, for a period extending until January
23, 2002, not to solicit, initiate or encourage the submission of proposals by
third parties relating to an acquisition of ORATEC.
From December 19, 2001 through December 21, 2001, senior management of Smith
& Nephew, representatives of Piper Jaffray, Smith & Nephew's legal counsel and
Smith & Nephew's accounting advisors met with ORATEC's senior management,
representatives of J.P. Morgan and ORATEC's legal counsel in Menlo Park,
California to perform financial, operational and legal due diligence. During
the last two weeks of 2001 and the first two weeks of January 2002, Smith &
Nephew and its legal and financial advisors continued
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their due diligence investigation of ORATEC with the cooperation of senior
management of ORATEC and ORATEC's legal and financial advisors.
On January 8, 2002, Smith & Nephew's legal counsel delivered a draft merger
agreement and a draft stockholder agreement to ORATEC's legal counsel. Between
January 8, 2002, and February 13, 2002 representatives of Smith & Nephew and
ORATEC and their respective legal counsel and financial advisors held numerous
meetings and conferences during which the draft merger agreement and
stockholder agreements were discussed and negotiated.
On January 16, 2002, members of senior management of Smith & Nephew and its
legal counsel and representatives of Piper Jaffray met with senior management
of ORATEC, representatives of JP Morgan and ORATEC's legal counsel to conduct
additional due diligence.
On January 21, 2002, at a regularly scheduled board meeting, senior
management of ORATEC updated the Board on Smith & Nephew's due diligence effort
and negotiations with Smith & Nephew relating to the merger agreement and
stockholder agreements.
On February 5, 2002, ORATEC and Smith & Nephew executed an amendment
extending the exclusivity agreement from January 23, 2002 to February 13, 2002.
On February 6, 2002 at a regularly scheduled board meeting, senior management
of Parent updated Parent's board of directors on negotiations between Smith &
Nephew and ORATEC. Between February 7, 2002 and February 13, 2002, the parties
and their respective legal counsel continued to negotiate the terms of the
proposed merger agreement and stockholder agreements.
On February 13, 2002, the board of directors of Parent approved the proposed
transaction after receiving a presentation of the material terms of the
proposed transaction from senior management. On the same date, the Offer, the
Merger, the Merger Agreement and the related transactions were approved by the
board of directors of each of Smith & Nephew and Purchaser.
On the morning of February 13, 2002, the Board had a telephonic meeting with
senior management of ORATEC, ORATEC's legal counsel, and representatives of JP
Morgan to discuss the status of negotiations with Smith & Nephew and the
directors' comments on the Merger Agreement and Stockholder Agreement.
Representatives of ORATEC's legal counsel then presented a detailed review of
the terms of the Merger Agreement and the Stockholder Agreement and reviewed
for the Board the Board's fiduciary duties with respect to the transaction.
Representatives of JP Morgan presented JP Morgan's analysis of information to
serve as the basis for evaluating the proposed price to be paid pursuant to the
Offer and Merger and rendered to the Board its oral opinion (which opinion was
subsequently confirmed by delivery of a written opinion dated February 13,
2002) that as of such date and based on and subject to the matters described in
the opinion, the $12.50 per Share cash consideration to be received by the
holders of the Shares in the proposed transactions was fair, from a financial
point of view, to such holders. Representatives of JP Morgan then responded to
questions raised by the Board regarding its analysis and opinion. The Board
then engaged in a full discussion of the terms of the proposed Merger Agreement
and Stockholder Agreement, the various factors considered by the Board in
approving the Merger Agreement and recommending the Offer and the analysis and
opinion of JP Morgan. Thereafter, the Board unanimously approved the Merger
Agreement, the Stockholder Agreement, the Offer and the Merger, determined that
the terms of the Offer and the Merger are fair to, and in the best interests
of, the stockholders of ORATEC and recommended that the stockholders of ORATEC
accept the Offer and tender their Shares pursuant to the Offer.
On February 13/, 2002, ORATEC, Smith & Nephew and Purchaser executed the
Merger Agreement and Smith & Nephew, Purchaser and the Signatory Stockholders
executed the Stockholder Agreements. Public disclosure of the execution of the
Merger Agreement was made by joint press release on the February 14, 2002,
prior to the opening of trading of the Shares on Nasdaq. /
On February 22, 2002, in accordance with the Merger Agreement, Purchaser
commenced the Offer.
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Reasons for the Recommendation
In unanimously deciding to approve the Merger Agreement and recommend the
Offer, as set forth above under "Recommendation of the Board," the Board
considered the information set forth under "Background of the Transaction"
above, as well as the following factors:
. the amount and form of consideration to be received by the Company's
stockholders in the Offer and the Merger pursuant to the Merger Agreement;
. the Company's prospects if it were to remain independent, including the
risks inherent in remaining independent, and the prospects of the Company
going forward as an independent company;
. the possible alternatives to the Offer and the Merger (including the
possibility of continuing to operate the Company as an independent
entity), the range of possible benefits to the Company's stockholders of
such alternatives and the timing and the likelihood of accomplishing the
goal of any of such alternatives;
. the fact that in view of discussions held with various parties over the
past several months, management of the Company believed that it was
unlikely that any other party would propose an acquisition or strategic
business combination that, taken as a whole, would be more favorable to
the Company and its stockholders than the Offer and the Merger;
. the financial condition, historical results of operations and business and
strategic objectives of the Company, as well as the risks involved in
achieving those objectives;
. other historical information concerning the Company's business, prospects,
financial performance and condition, operations, technology, management
and competitive position;
. the extensive arms-length negotiations between the Company and Smith &
Nephew leading to the belief of the Board that $12.50 per Share
represented the highest price per Share that could be negotiated with
Smith & Nephew;
. the fact that the $12.50 per Share to be paid in the Offer and the Merger
represents a premium of approximately 103% over the 90-day trailing
average of $6.16 per Share, a premium of approximately 66% over the 30-day
trailing average of $7.55 per Share, a premium of approximately 54% over
the 10-day trailing average of $8.11 per Share, and a premium of
approximately 40% over the $8.90 closing sale price per Share on The
Nasdaq National Market on February 13, 2002, the last trading day prior to
public announcement of the execution of the Merger Agreement;
. the current financial market conditions and historical market prices,
volatility and trading information with respect to the common stock of the
Company;
. the opinion of JP Morgan, dated February 13, 2002, that as of such date,
and based on and subject to the matters described in the opinion, the
$12.50 per share cash consideration to be received by the holders of
ORATEC common stock in the proposed transactions was fair, from a
financial point of view, to such stockholders. The full text of the
written opinion, which sets forth the assumptions made, the procedures
followed, the matters considered and the limitations on the review
undertaken by JP Morgan, is set forth in Annex B to this Schedule 14D-9.
Stockholders are urged to, and should, read the opinion of JP Morgan in
its entirety;
. the terms of the Merger Agreement, including the parties' representations,
warranties and covenants, and the conditions to their respective
obligations; and
. the fact that pursuant to the Merger Agreement, the Company is not
prohibited from responding to any unsolicited Superior Proposal (as
defined in the Merger Agreement) to acquire the Company in the manner
provided in the Merger Agreement, and the Company may terminate the Merger
Agreement and accept such Superior Proposal subject to the Company's
compliance with the terms of the Merger Agreement and the Company's
obligation to pay the termination fee in the amount and in the manner
described in the Merger Agreement.
10
The Board did not assign any relative or specific weights to the above
factors nor did it determine that any factor was of particular importance.
Rather, the Board viewed its position and recommendations as being based on the
totality of the information presented to and considered by it. In addition,
individual members of the Board may have given differing weights to differing
factors and may have viewed certain factors more positively or negatively than
others. Throughout its deliberations, the Board received the advice of its
financial advisors and legal counsel.
Intent to Tender
To the best knowledge of the Company, after making reasonable inquiry, the
Company's executive officers, directors and affiliates currently intend to
tender all Shares held of record or beneficially by them pursuant to the Offer.
The foregoing does not include any Shares over which, or with respect to which,
any such executive officer, director or affiliate acts in a fiduciary or
representative capacity or is subject to the instructions of a third party with
respect to such tender or vote.
Item 5. Person/Assets, Retained, Employed, Compensated or Used.
Pursuant to a letter agreement dated May 22, 2000, the Company retained JP
Morgan as its exclusive financial advisor in connection with a potential sale,
merger or other business combination involving the Company. Pursuant to the
terms of JP Morgan's engagement, the Company will pay JP Morgan $5,000,000 for
its financial advisory services. The Company also has agreed to reimburse JP
Morgan for reasonable out-of-pocket expenses, including reasonable fees and
expenses of its legal counsel, incurred in connection with its services and to
indemnify JP Morgan and its officers, agents, employees, affiliates and
controlling persons against certain costs, expenses and liabilities arising out
of JP Morgan's engagement. In the ordinary course of business of its trading
and brokerage activities, JP Morgan or its affiliates may hold positions, for
its own account or the accounts of customers, in equity, debt or other
securities of the Company or Smith & Nephew.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated, or currently intends to employ, retain or compensate,
any person to make solicitations or recommendations to the stockholders of the
Company on its behalf with respect to the Offer or the Merger.
Item 6. Interest in Securities of the Subject Company.
No transactions in Shares have been effected during the past 60 days by the
Company or, to the best of the Company's knowledge, by any executive officer,
director, affiliate or subsidiary of the Company, with the exception of
transfers by Hugh Sharkey of 28,600 Shares to his daughters.
Item 7. Purposes of the Transaction and Plans or Proposal.
(a) Except as described or referred to in this Schedule 14D-9, to the
knowledge of the Company, no negotiation is being undertaken or underway on the
part of the Company in response to the Offer that relates to or would result in
(i) any extraordinary transaction, such as a merger or reorganization,
involving the Company or any affiliate or subsidiary of the Company, (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company, (iii) a tender offer for or other acquisition of
securities by or of the Company or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described or referred to in this Schedule 14D-9, there are no
transactions, resolutions, agreements in principal or signed contracts in
response to the Offer that would relate to one or more of the matters referred
to in clauses (i) through (iv) of the preceding paragraph.
11
Item 8. Additional Information.
Delaware General Corporation Law
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of the Delaware General Corporation Law (the "DGCL"). In general, Section
203 would prevent an "interested stockholder" (generally defined as a person
beneficially owning 15% or more of a corporation's voting stock) from engaging
in a "business combination" (as defined in Section 203) with a Delaware
corporation for three years following the date such person became an interested
stockholder unless: (1) before such person became an interested stockholder,
the board of directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the
business combination, (2) on consummation of the transaction which resulted in
the interested stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding for purposes of
determining the number of shares of outstanding stock held by directors who are
also officers and by employee stock plans that do not allow plan participants
to determine confidentially whether to tender shares), or (3) following the
transaction in which such person became an interested stockholder, the business
combination is (x) approved by the board of directors of the corporation and
(y) authorized at a meeting of stockholders by the affirmative vote of the
holders of at least 66 2/3% of the outstanding voting stock of the corporation
not owned by the interested stockholder. In accordance with the provisions of
Section 203, the Board has approved the Merger Agreement and the Stockholders
Agreement, as described in Item 4 above, and, therefore, the restrictions of
Section 203 are inapplicable to the Merger and the transactions contemplated
under the Merger Agreement.
Under the DGCL, if Purchaser acquires, pursuant to the Offer or otherwise,
at least 90% of the outstanding Shares, Purchaser will be able to effect the
Merger after consummation of the Offer without the approval of the Company's
stockholders. However, if Purchaser does not acquire at least 90% of the Shares
pursuant to the Offer or otherwise and a vote of the Company's stockholders is
required under the DGCL, a significantly longer period of time will be required
to effect the Merger.
Amendment to Rights Agreement
On February 13, 2002, the Company amended the Preferred Shares Rights
Agreement, dated as of November 28, 2000 (the "Rights Agreement"), by executing
the First Amendment to Preferred Shares Rights Agreement (the "Amendment")
between the Company and American Stock Transfer and Trust Company attached to
this Schedule as Exhibit (e)(6). The Amendment provides that none of Smith &
Nephew, Purchaser or any of their affiliates or associates (Smith & Nephew,
Purchaser and their affiliates or associates, together, the "Smith & Nephew
Group") will be an Acquiring Person (as that term is defined in the Rights
Agreement) in the event that the Smith & Nephew Group shall become the
Beneficial Owners (as that term is defined in the Rights Agreement) of Shares
of the Company upon the execution of, or in one or more transactions
contemplated by, and not in contravention of, the Merger Agreement or the
Stockholder Agreements. The Amendment further provides that none of the Smith &
Nephew Group shall be deemed a Person (as that term is defined in the Merger
Agreement) for purposes of determining whether any Person has commenced a
tender offer or exchange offer that would trigger the occurrence of a
Distribution Date (as that term is defined in the Rights Agreement).
Regulatory Filings
Under the Hart-Scott-Rodino Antitrust Improvements Act ("HSR Act"), and the
rules that have been promulgated thereunder by the Federal Trade Commission
("FTC"), certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied.
12
Board Designation
The Information Statement attached as Annex A hereto is being furnished in
connection with the possible designation by Purchaser, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board other than at a
meeting of the Company's stockholders.
Offer Documents
Reference is hereby made to the Offer to Purchase and the related Letter of
Transmittal, which are attached as Exhibits (a)(1) and (a)(2) hereto,
respectively, and are incorporated by reference herein in their entirety.
13
EXHIBITS
(a)(1) Offer to Purchase dated February 22, 2002 (incorporated by reference to Exhibit (a)(1)(A) to the
Schedule TO filed by Purchaser with respect to the Company on February 22, 2002 ("Schedule TO"))
(a)(2) Form of Letter of Transmittal (incorporated by reference to Exhibit (a)(1)(B) to Schedule TO)
(a)(3) Information Statement Pursuant to Section 14(f) of the Securities Exchange Act of 1934 and
Rule 14f-1 thereunder (incorporated by reference and attached hereto as Annex A)
(a)(4) Opinion of J.P. Morgan Securities Inc. dated February 13, 2002
(a)(5) Press Release, dated February 14, 2002, regarding the proposed transaction between Smith & Nephew
and the Company (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed
by the Company on February 19, 2002)
(a)(6) Letter to Stockholders of ORATEC Interventions, Inc. dated February 22, 2002*
(e)(1) Agreement and Plan of Merger among Smith & Nephew, Orchid Merger Corp. and the Company
dated as of February 13, 2002 (incorporated by reference to Exhibit 2.1 to the Current Report on
Form 8-K filed by the Company on February 13, 2002)
(e)(2) Form of Stockholder Agreement, dated as of February 13, 2002, among Smith & Nephew, Inc., Orchid
Merger Corp. and certain stockholders of the Company (including a schedule listing such stockholders
and the number of shares owned by such stockholders as set forth in the Stockholder Agreement
entered into by such stockholder) (incorporated by reference to Exhibit 2.2 to the Current Report on
Form 8-K filed by the Company on February 19, 2002)
(e)(3) Confidentiality Agreement, dated November 13, 2001 between Smith & Nephew and the Company
(incorporated by reference to Exhibit (d)(3) to Schedule TO)
(e)(4) Employment Agreement, dated November 29, 1999, between the Company and Theresa M. Mitchell
(e)(5) Employment Agreement, dated October 29, 1997, between the Company and Nancy V. Westcott
(e)(6) First Amendment to Preferred Shares Rights Agreement, dated as of February 13, 2002, between the
Company and American Stock Transfer and Trust Company (incorporated by reference to Exhibit 2 to
the Amended Registration Statement on Form 8-A12G/A filed by the Company on February 19, 2002)
- --------
* Included with the Schedule mailed to stockholders.
14
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.
Date: February 22, 2002
ORATEC INTERVENTIONS, INC.
By: /s/ KENNETH W. ANSTEY
-----------------------------
Kenneth W. Anstey
President and Chief Executive
Officer
15
ANNEX A
ORATEC INTERVENTIONS, INC.
3700 Haven Court
Menlo Park, California 94025
-----------------
INFORMATION STATEMENT PURSUANT TO SECTION 14(f) OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about February 22, 2002, as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") to holders of shares of common stock, $0.001 par value per
share, including the associated preferred stock purchase rights issued pursuant
to the Preferred Shares Rights Agreement dated as of November 28, 2000, and as
amended on February 13, 2002, by and between the Company and American Stock
Transfer & Trust Company, the rights agent (the "Shares"), of ORATEC
Interventions, Inc., a Delaware corporation (the "Company"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings set forth
in the Schedule 14D-9. This Information Statement is being provided in
connection with the possible appointment of persons designated by Orchid Merger
Corp., a Delaware corporation ("Purchaser"), a wholly-owned subsidiary of Smith
& Nephew, a Delaware corporation ("Smith & Nephew"), to at least a majority of
the seats on the Board of Directors of the Company (the "Board"). Such
designation is to be made pursuant to Section 6.3 of the Agreement and Plan of
Merger, dated as of February 13, 2002 (the "Merger Agreement"), among Smith &
Nephew, Purchaser and the Company.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE
NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION.
Pursuant to the Merger Agreement, on February 22, 2002, Purchaser commenced
a cash tender offer to acquire all of the issued and outstanding Shares (the
"Offer"). It is a condition to the Offer that a majority of the Shares
(determined on a fully diluted basis assuming the exercise of all options to
purchase Shares, and the conversion or exchange of all securities convertible
or exchangeable into Shares, outstanding on the expiration date of the Offer)
are tendered and accepted for payment by the Purchaser (the "Minimum
Condition"). The Offer is scheduled to expire at 12:00 midnight, New York City
time, on Thursday, March 21, 2002, unless the Offer is extended. Following the
successful completion of the Offer, upon approval by a stockholder vote, if
required, and subject to certain other conditions, Purchaser will be merged
with and into the Company (the "Merger") and the Company shall become a
wholly-owned subsidiary of Smith & Nephew.
The information contained in this Information Statement concerning Smith &
Nephew and Purchaser has been furnished to the Company by Smith & Nephew, and
the Company assumes no responsibility for the accuracy or completeness of such
information.
1
GENERAL INFORMATION REGARDING THE COMPANY
General
The Shares are the only class of securities outstanding having the right to
vote for the election of the Company's directors. Each Share entitles its
record holder to one vote. As of February 8, 2002, there were 23,215,109 Shares
issued and outstanding.
Designees to the Company's Board of Directors
If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement
provides that Purchaser will be entitled to designate such number of directors,
rounded up to the next whole number, on the Board as will give Purchaser,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Board equal to the percentage of aggregate voting power of the Shares held
by Smith & Nephew or any of its subsidiaries. The Company shall, on request of
Purchaser, promptly increase the size of the Board as is necessary, or promptly
secure resignations of such number of its incumbent directors or both, to
enable Purchaser's designees to be elected to the Board. Notwithstanding the
foregoing, if Purchaser's designees are appointed or elected to the Board,
until the Effective Time, at least two of the non-employee members of the Board
will be directors who were directors on the date of the Merger Agreement
("Independent Directors"), provided that if less than two Independent Directors
remain, the remaining Independent Director (if any) or, if no Independent
Directors remain, the other directors shall designate persons to fill the
vacancies who shall be Independent Directors. Notwithstanding the foregoing,
after the time that Purchaser's designees constitute at least a majority of the
Board and until the Effective Time, any (i) amendment or waiver of any term or
condition of the Merger Agreement on behalf of the Company, (ii) amendment or
waiver of any term or condition of the Company's Certificate of Incorporation
or Amended and Restated By-Laws, (iii) termination of the Merger Agreement by
the Company, (iv) extension by the Company of the time for performance of any
of the obligations or other acts of Purchaser or any waiver or assertion of any
of the Company's rights under the Merger Agreement, or (v) other consent or
action by the Board with respect to the Merger Agreement, will require the
concurrence of a majority of the Independent Directors. The Board has, with
their consent, designated Richard Ferrari and Patrick F. Latterell as the
prospective Independent Directors. See "General Information Regarding the
Company--Current Directors and Executive Officers of the Company" of this Annex
A for more information with respect to these individuals.
Purchaser has informed the Company that it currently intends to choose the
individuals it has the right to designate to serve on the Board pursuant to the
Merger Agreement from the officers and employees of Smith & Nephew and
Purchaser listed below. The name, age, current business address and present
principal occupation or employment and five-year employment history of each of
these persons is set forth below. None of the persons listed below owns any
Shares or has engaged in transactions with respect to Shares during the past 60
days. During the last five years, none of the persons listed below has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) nor was such person a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction, and as a result of such
proceeding was or is subject to a judgement, decree, or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws. None of the persons
listed below (i) is currently a director of, or holds any position with, the
Company, (ii) has a familial relationship with any director or executive
officers of the Company, or (iii) based on information provided to the Company
by Smith & Nephew (which is to the best of Smith & Nephew's knowledge),
beneficially owns any securities (or any rights to acquire securities) of the
Company. The Company has been advised by Smith & Nephew that, to the best
knowledge of Smith & Nephew, none of the designees listed below have been
involved in any transactions with the Company or any of its directors, officers
or affiliates that are required to be disclosed pursuant to the rules and
regulations of the SEC, except as may be disclosed herein.
2
The information set forth below was furnished by Smith & Nephew. Unless
otherwise indicated, each person's business address is 160 Dascomb Road,
Andover, Massachusetts 01810. All persons listed below are citizens of the
United States of America.
Principal Occupation or Employment
Name, Age Business Address and Five-Year Employment History
- --------- ---------------- ---------------------------------------------
Ron Sparks, 46........... President, Endoscopy of Parent since 1999.
Director and President, Endoscopy, of Smith &
Nephew since 1999. Executive Officer of
Smith & Nephew since 1995. Director and
President of Purchaser as of 2002. Member of
Holy Family Hospital and Medical Center,
Valley Regional Ventures, Inc. and Valley
Regional Support Services, Inc. Board of
Trustees since 2000. Member of Holy Family
Hospital Foundation Board of Trustees since
2001.
Mark Frost, 39........... Vice President--Finance, Endoscopy, of Smith
& Nephew since 1999. Director and Vice
President--Finance of Purchaser as of 2002.
Chief Financial Officer of General Electric--
Sovac Auto Financial Services Division from
1997 to 1999. Director of Financial Planning
and Analysis for General Electric Groupe
Sovac from 1996 to 1997.
John Konsin, 43.......... Vice President--Marketing, Endoscopy, of
Smith & Nephew since 1999. Vice President--
Marketing of Purchaser as of 2002. Vice
President--Marketing of Chiron Corporation
from 1996 to 1999.
James Ralston, 55........ Smith & Nephew, Inc. Executive Officer of Parent as of 2002.
1450 Brooks Road Director, Senior Vice President and General
Memphis, Tennessee Counsel of Smith & Nephew since 1999.
38116 Senior Vice President, Secretary and General
Counsel of Purchaser as of 2002. Vice
President, General Counsel and Secretary of
Eagle-Picher Industries, Inc. from 1997 to
1998.
Each of the designees has consented to act as a director of the Company. It
is expected that Purchaser's designees may assume office at any time following
the purchase by Purchaser of the specified minimum number of Shares pursuant to
the Offer, which purchase cannot be earlier than 12:00 midnight, New York City
time, on Thursday, March 21, 2002, and that, upon assuming office, Purchaser's
designees will thereafter constitute at least a majority of the Board.
3
Current Directors and Executive Officers of the Company
The Company's executive officers and directors and their ages and positions
as of February 8, 2002 are as follows:
Name Age Position(s)
- ---- --- -----------
Kenneth W. Anstey........ 55 Director, President and Chief Executive Officer
Hugh R. Sharkey.......... 51 Director, Executive Vice President and Chief Technical Officer
Nancy V. Westcott........ 49 Chief Financial Officer and Vice President, Administration
Roger H. Lipton.......... 44 Vice President, Sales and Marketing
Michael D. Hassman....... 33 Vice President, Manufacturing
Theresa M. Mitchell...... 52 Vice President, Regulatory and Clinical Affairs and Quality Assurance
Richard M. Ferrari....... 48 Director
Patrick F. Latterell..... 43 Director
Jeffrey A. Saal, M.D..... 52 Director
Wayne R. Moon............ 62 Director
Kenneth W. Anstey joined ORATEC in April 1996 as a director and has served
as President and Chief Executive Officer of ORATEC since July 1997. From
December 1995 to March 1997, Mr. Anstey was the Chief Executive Officer of
Biofield Corporation, a cancer diagnostic company. From August 1991 to December
1995, he served as President and Chief Executive Officer of Mitek Surgical
Products, an orthopedic implant company, which was subsequently acquired by
Johnson & Johnson. He currently serves as a director of Vision Sciences, a
medical device company, and he also serves as a director of Ascension
Orthopedics. Mr. Anstey holds a B.A. degree in Advertising and an M.B.A. degree
from Michigan State University.
Hugh R. Sharkey co-founded ORATEC and has served as a director since
inception. From July 1995 until July 1997, he served as Chief Executive
Officer, President and Chief Financial Officer, and in June 1997 he became
Executive Vice President and Chief Technical Officer. In March 1994, Mr.
Sharkey co-founded ZoMed International (now RITA Medical Systems), a
radiofrequency ablation company. In 1992, Mr. Sharkey co-founded VIDAMed, a
urology company, and in 1987, he co-founded Danforth Biomedical, a medical
device company. From May 1988 to May 1989, he served as Vice President and
General Manager of EP Technologies, a cardiac electrode company, which was
acquired by Boston Scientific, a minimally invasive medical device company. Mr.
Sharkey is listed as an inventor on over 70 patents for medical devices. He
holds an A.A. degree in Nursing and a B.S. degree in Business Administration
from the University of Phoenix.
Nancy V. Westcott joined ORATEC as its Chief Financial Officer and Vice
President, Administration in November 1997 and was elected to the office of
Secretary in August 1999. From November 1992, she served as Vice President of
Corporate Communications for Caremark International, a health care services
company, until its acquisition in September 1996. From June 1978 to November
1992, she held a number of management positions with Baxter International in
pension management and international and domestic treasury. Ms. Westcott holds
a B.A. degree in German from the University of Idaho and a Masters of
International Management degree from the American Graduate School of
International Management (Thunderbird). She earned her Professional Accounting
Certificate at the J.L. Kellogg Graduate School of Management at Northwestern
University.
Roger H. Lipton joined ORATEC in January 1996 as Vice President, Sales and
Marketing. From January 1989 to November 1995, Mr. Lipton held management
positions in marketing and business development at AME Orthofix, an orthopedic
and spine implant company. Prior to working at AME Orthofix, he served as a
principal of Martek, a marketing consulting firm, and as Director of Sales and
Marketing of Medmax, a start-up cardiovascular company. Mr. Lipton holds a B.S.
degree in Business Administration from the University of Hartford.
4
Theresa M. Mitchell joined ORATEC in December 1999 as Vice President,
Regulatory and Clinical Affairs and Quality Assurance. From June 1999 to
December 1999, Ms. Mitchell was a regulatory consultant to APX, Inc. and
Circulation, Inc., cardiovascular medical device companies. From December 1997
to June 1999, she served as co-CEO and Senior Vice President, Business
Development and Marketing of Fidus Medical Technology, Inc., a medical
technology company. From October 1995 to October 1997, Ms. Mitchell served as
Vice President, Business Development, Regulatory and Clinical Affairs and
Quality Assurance of Intella Interventional, Inc., a cardiovascular medical
device company. From January 1995 to September 1995, Ms. Mitchell was a
consultant to Sunrise Medical, an ophthalmic lasers company. Ms. Mitchell holds
M.A. and B.A. degrees in Experimental Psychology/Biostatistics from the
California State University, San Francisco.
Michael D. Hassman joined ORATEC as a Production Manager in February 1997,
and has held several positions including Manufacturing Engineering Manager,
Director of Manufacturing, and in February 2002, he became Vice President,
Manufacturing. From March 1993 to February 1997, Mr. Hassman was employed by
Stryker Endoscopy, a manufacturer of endoscopic medical devices, most recently
as Unit Manager. Prior to working at Stryker, Mr. Hassman served as an officer
in the United States Army. Mr. Hassman holds a B.S. degree in Mechanical
Engineering from the United States Military Academy at West Point in New York.
Richard M. Ferrari has served as a director of ORATEC since May 1996 and was
elected Chairman of the Board in January 1997. Mr. Ferrari has been a general
partner at DeNovo Ventures since March 2000. From June 1995 until March 2000,
Mr. Ferrari served as Chief Executive Officer of CardioThoracic Systems, a
minimally invasive coronary bypass company, which was acquired by Guidant
Corporation in November 1999. From January 1991 to September 1995, Mr. Ferrari
was President and Chief Executive Officer of CVIS, a cardiovascular medical
device company, which was recently acquired by Boston Scientific. From January
1986 to April 1990, he was an Executive Vice President and General Manager with
ADAC Laboratories, a nuclear medical imaging and healthcare information systems
company. Mr. Ferrari also serves as a director and advisor for several start-up
companies in the medical device industry. Mr. Ferrari holds a B.S. degree in
Health and Education from Ashland University and an M.B.A. from the University
of South Florida.
Patrick F. Latterell has served as a director of ORATEC since October 1997,
and previously served as a director and Chairman of the Board from August 1996
to January 1997. Mr. Latterell is a general partner at Venrock Associates, a
venture capital firm, where he has been since April 1989. Mr Latterell is also
a general partner of Latterell Venture Partners, a healthcare venture capital
firm he founded in September 2001. Mr. Latterell also serves as a director of
Vical, a gene-based pharmaceutical company, as well as several other private
biomedical companies. He holds S.B. degrees in both Biology and Economics from
the Massachusetts Institute of Technology and an M.B.A degree from the Stanford
University Graduate School of Business.
Jeffrey A. Saal, M.D. is a co-founder of ORATEC and has been a director
since August 1995. Since 1981, Dr. Saal has been conducting his medical
practice with the S.O.A.R. Physiatry Medical Group. Since 1992, he has been an
Associate Clinical Professor at Stanford University, and since 1981 he has
served as team physician to various college sports teams. Dr. Saal is on the
editorial boards of several peer review journals, including Spine. Dr. Saal
holds several positions with professional societies, including Founding
Chairman of PASSOR, the Physiatric Association of Spine Sports and Occupational
Rehabilitation. He was also a former President of the North American Spine
Society, or NASS. Dr. Saal holds a B.A. degree in Biology from the State
University of New York, Oneonta and an M.D. degree from Tulane Medical School.
He completed his residency training at the Boston VA Hospital and Stanford
University. Dr. Saal is board certified in Physical Medicine, Internal Medicine
and Electrodiagnostic Medicine.
Wayne R. Moon has served as a director of ORATEC since December 2000. Mr.
Moon was Chairman of the Board and Chief Executive Officer of Blue Shield of
California from September 1993 until his retirement in January 2000. Mr. Moon
was President, Chief Operating Officer and Director of Kaiser Foundation Health
Plan, Inc. and Kaiser Hospitals where he was employed from June 1970 until
September 1993. Mr. Moon also serves as a director of Varian, Inc., a
manufacturer of scientific instruments and vacuum technologies,
5
IntegraMed America, as well as several private companies in the healthcare
field. Mr. Moon is a past Chairman of the Board of the American Association of
Health Plans and the International Federation of Health Plans. He holds a B.A.
degree in Business Administration and an Masters degree in Hospital
Administration from the University of Michigan.
The are no family relationships among any of the directors or executive
officers of the Company.
Board Meetings
During the period from January 1, 2001 through December 31, 2001 (the "last
fiscal year"), the Board met 9 times, took action by written consent one time,
and no director attended fewer than 75% of the aggregate number of meetings of
the Board and meetings of the committees of the Board on which he serves.
Board Committees
The Board has an Audit Committee and a Compensation Committee.
The Audit Committee consists of directors Richard Ferrari, Patrick Latterell
and Wayne Moon, three of the Company's non-employee directors, and held four
meetings during the last fiscal year. The Audit Committee recommends the
engagement of the firm of certified public accountants to audit the financial
statements of the Company and monitors the effectiveness of the audit effort,
the Company's financial and accounting organization and its system of internal
accounting controls.
The Compensation Committee consists of directors Richard Ferrari and Jeffrey
Saal, M.D., and held three meetings during the last fiscal year. Its functions
are to establish and administer the Company's policies regarding annual
executive salaries and cash incentives and long term equity incentives. The
Compensation Committee administers the Company's 1995 Stock Plan, 1999 Stock
Plan, 1999 Employee Stock Purchase Plan and 1999 Directors' Stock Option Plan.
Director Compensation
Directors currently receive no cash fees for services provided in that
capacity but are reimbursed for out-of-pocket expenses incurred in connection
with attendance at meetings of the Board. Employee directors and nonemployee
directors are eligible to participate in the 1999 Stock Plan. Employee
directors are eligible to participate in the 1999 Employee Stock Purchase Plan.
The Company's 1999 Directors' Stock Option Plan (the "Directors' Plan")
currently provides that each person who becomes a nonemployee director of the
Company will be granted a nonstatutory stock option to purchase 30,000 shares
of Common Stock on the date on which the optionee first becomes a nonemployee
director of the Company. Thereafter, on the date of each annual meeting of the
Company's shareholders at which such director is elected, each such nonemployee
director shall be granted an additional option to purchase 10,000 shares of
Common Stock if, on such date, he or she shall have served on the Company's
Board of Directors for at least six months. With the exception of Wayne Moon,
each of the Company's nonemployee directors received options to purchase 5,000
shares of the Company's Common Stock at the time of the 2000 Annual Meeting. In
addition, Dr. Saal received $16,700 during 2001 in honorariums.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is composed of Richard M. Ferrari and Jeffrey A.
Saal, M.D. No member of the Compensation Committee or executive officer of the
Company has a relationship that would constitute an interlocking relationship
with executive officers or directors of another entity. Neither Mr. Ferrari nor
Dr. Saal has at any time been an officer or employee of the Company. The
Compensation Committee reviews and recommends to the Board the compensation and
benefits of all officers of the Company, and establishes and reviews general
policies relating to compensation and benefits of employees of the Company.
6
Compensation of Executive Officers
The following table shows compensation earned by (a) the Company's Chief
Executive Officer; and (b) the four other most highly compensated executive
officers of the Company during the fiscal year ended December 31, 2001 (the
"Named Executive Officers"), and the compensation received by each such
individual during the Company's preceding two fiscal years.
SUMMARY COMPENSATION TABLE
Number of
Other Annual Securities
Fiscal Salary Bonus Compensation Underlying
Name and Principle Position Year ($) ($) ($) Options (#)
- --------------------------- ------ ------- ------- ------------ -----------
Kenneth W. Anstey (6)............................... 2001 240,000 50,000 6,000(1) --
President and Chief Executive Officer 2000 239,121 50,000 25,316(2) 50,000
1999 220,000 118,000 95,439(3) 100,000
Hugh R. Sharkey (7)................................. 2001 178,173 40,000 6,000(1) --
Executive Vice President and 2000 176,154 20,000 6,000(1) 20,000
Chief Technical Officer 1999 160,000 35,000 6,000(1) --
Nancy V. Westcott (8)............................... 2001 170,000 50,000 -- --
Chief Financial Officer, 2000 169,615 25,000 -- 40,000
Vice President, Administration 1999 160,000 40,000 -- --
Roger H. Lipton (9)................................. 2001 180,000 45,000 3,600(1) --
Vice President, Operations 2000 179,423 25,000 26,035(4) 40,000
1999 165,000 65,000 50,480(5) --
Theresa M. Mitchell (10)............................ 2001 150,000 40,000 -- --
Vice President, Regulatory and Clinical Affairs and 2000 150,000 -- -- 40,000
Quality Assurance 1999 2,855 -- -- 120,000
- --------
(1) Consists of car allowance.
(2) Consists of $19,316 in perquisites (including reimbursement of taxes) and
$6,000 car allowance.
(3) Consists of $49,670 in perquisites (including reimbursement of taxes) and
$5,769 car allowance.
(4) Consists of $22,435 in perquisites (including reimbursement of taxes) and
$3,600 car allowance.
(5) Consists of $46,880 in perquisites (including reimbursement of taxes) and
$3,600 car allowance.
(6) Pursuant to the terms of an employment agreement dated July 14, 1997, and
amended on January 21, 2002, if Mr. Anstey is involuntarily terminated
without cause, he will receive a severance payment, paid in two
installments, equal to twelve months of his base salary and target bonus
earned.
(7) Pursuant to the terms of an employment agreement dated August 21, 1996, as
amended on July 14, 1997 and January 21, 2002, Mr. Sharkey will receive
continued payment of his base salary and a pro rata amount of his prior
year's annual bonus for a period of six months after his termination date
if he is terminated without cause.
(8) Pursuant to the terms of an employment agreement dated October 29, 1997,
if Ms. Westcott is involuntarily terminated in connection with a change in
control, Ms. Westcott will be entitled to receive continued payment of her
salary and health benefits for a period of twelve months following such
termination.
(9) Pursuant to the terms of an employment agreement dated January 3, 1996,
all of Mr. Lipton's unvested options will vest upon a change of control of
the Company.
(10) Pursuant to the terms of an employment agreement dated November 29, 1999,
if Ms. Mitchell is terminated without cause in connection with a change in
control of the Company, she will be entitled to receive acceleration of
the vesting of all unvested options granted pursuant to the terms of
employment agreement. In addition, if Ms. Mitchell is terminated at any
time for reasons other than cause, she will be entitled to receive
continued payment of her salary and health benefits for a period of six
months following such termination.
7
Option Grants During Fiscal 2001
The Company did not grant any options to purchase its common stock during
the fiscal years ended December 31, 2001 to the persons named in the Summary
Compensation Table above.
Option Exercises in 2001 and Year-End Value
The following table provides certain information concerning exercises of
options to purchase the Company's common stock during the fiscal year ended
December 31, 2001, and unexercised options held as of December 31, 2001, by the
persons named in the Summary Compensation Table above.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values
Number of Securities Value of Unexercised
Underlying In-The-Money
Shares Unexercised Options Options at 12/31/01
acquired Value at 12/31/01 (#)(1) (#)(2)
on Exercise Realized -------------------- --------------------
Name ($) ($) Vested Unvested Vested Unvested
- ---- ----------- -------- ------- -------- ------- --------
Kenneth W. Anstey....... 105,000 680,313 111,649 46,269 359,423 91,780
Hugh R. Sharkey......... -- -- 9,184 9,983 -- --
Nancy V. Westcott....... 34,375 180,469 47,708 20,417 157,606 17,825
Roger H. Lipton......... -- -- 141,978 20,522 823,391 18,321
Theresa M. Mitchell..... -- -- 80,000 80,000 35,650 35,650
- --------
(1) No stock appreciation rights (SARs) were outstanding during fiscal 2001.
(2) Based on the $6.47 closing price of the Company's Common Stock on the
Nasdaq Stock Market on December 31, 2001, less the exercise price of the
options.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Shares and
other equity securities of the Company. Officers, directors, and greater than
ten-percent stockholders are required to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the last fiscal year, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with by such persons.
8
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return data
for the Company's stock from April 4, 2000 (the date of the Company's initial
public offering) through December 31, 2001 to the cumulative return over such
period of (i) the Nasdaq National Market Composite Index and (ii) the JP Morgan
H&Q Healthcare-Excluding Biotechnology Index. The graph assumes that $100 was
invested on April 4, 2000, the date on which the Company completed the initial
public offering of its Common Stock, in the Common Stock of the Company and in
each of the comparative indexes. The graph further assumes that such amount was
initially invested in the Common Stock of the Company at a per share price of
$14.00, the price to which such stock was first offered to the public by the
Company on the date of its initial public offering, and reinvestment of any
dividends. The stock price performance on the following graph is not
necessarily indicative of future stock price performance.
COMPARISON OF 21 MONTH CUMULATIVE TOTAL RETURN*
AMONG ORATEC INTERVENTIONS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND THE JP MORGAN H&Q
HEALTHCARE-EXCLUDING BIOTECHNOLOGY INDEX
[PERFORMANCE GRAPH]
ORATEC NASDAQ JP MORGAN H&Q
INTERVENTIONS, STOCK HEALTHCARE-
INC. MARKET(U.S.) EXCLUDING BIOTECHNOLOGY
4/4/2000 100.00 100.00 100.00
6/00 238.39 95.86 119.18
9/00 87.50 88.21 132.39
12/00 36.61 59.07 144.66
3/01 57.59 44.09 129.87
6/01 66.21 51.97 139.16
9/01 49.43 36.06 139.42
12/01 46.21 46.87 142.70
* Assumes $100 invested on April 4, 2000 in stock or in index, including
reinvestment of dividends. Fiscal year ending December 31, 2001.
Comparison of Cumulative Total Return from April 4, 2000, through December 31,
2001 (1)
4/4/00 6/00 9/00 12/00 3/01 6/01 9/01 12/01
------ ------ ------ ------ ------ ------ ------ ------
ORATEC Interventions, Inc.............. $100 238.39 87.50 36.61 57.59 66.21 49.43 46.21
The Nasdaq National Market Composite
Index................................. $100 95.86 88.21 59.07 44.09 51.97 36.06 46.87
JP Morgan H&Q Healthcare-Excluding
Biotechnology Index................... $100 119.18 132.39 144.66 129.87 139.16 139.42 142.70
- --------
(1) The Stock Performance Graph assumes $100 was invested on April 4, 2000 at
the closing sales price of the Shares and each index. No cash dividends
have been declared on the Shares. Stockholder returns over the indicated
period should not be considered indicative of future stockholder returns.
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 8, 2002,
with respect to the beneficial ownership of the Company common stock by:
. each person known by the Company to be the beneficial owner of more than
5% of our common stock;
. each director and director nominee of the Company;
. the executive officers named in the Summary Compensation Table above; and
. all executive officers and directors of the Company as a group.
Except as otherwise indicated, the address of each beneficial owner is c/o
ORATEC Interventions, Inc., 3700 Haven Court, Menlo Park, California 94025.
Except as indicated in the footnotes to the table, the Company believes that
the persons named in the table have sole voting and dispositive power with
respect to all shares of common stock shown as beneficially owned by them,
subject to community property laws, where applicable. A person is deemed to be
the beneficial owner of securities that can be acquired by such person within
60 days upon the exercise of options. Percentages are based on 23,215,109
shares of common stock outstanding on February 8, 2002.
Number of Percentage
Shares Owned
Name and Address of Beneficial Owners (1) (#)(2) (%)(3)
- ----------------------------------------- --------- ----------
Entities affiliated with Venrock Associates (4)............ 1,307,911 5.63
Patrick F. Latterell (5)................................... 1,333,637 5.74
Kenneth W. Anstey (6)...................................... 645,258 2.78
Richard M. Ferrari (7)..................................... 105,138 *
Jeffrey A. Saal, M.D. (8).................................. 640,902 2.76
Hugh R. Sharkey (9)........................................ 483,014 2.08
Nancy V. Westcott (10)..................................... 193,089 *
Wayne R. Moon (11)......................................... 14,583 *
Roger H. Lipton (12)....................................... 209,197 *
Theresa M. Mitchell (13)................................... 92,500 *
All directors and executive officers as a group (9
persons)(14)............................................. 3,717,318 16.01
- --------
* Less than 1%
(1) Except as otherwise indicated, the persons named in this table have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable and to the information contained in the footnotes to this
table. Under the rules of the Securities and Exchange Commission, a person
is deemed to be the beneficial owner of shares that can be acquired by
such person within 60 days upon the exercise of options.
(2) Calculated on the basis of 23,215,109 shares of Common Stock outstanding
as of February 8, 2002, provided that any additional shares of Common
Stock that a stockholder has a right to acquire within 60 days after
February 8, 2002 are deemed to be outstanding for the purposes of
calculating that stockholder's percentage beneficial ownership.
(3) Percentage of beneficial ownership excludes shares issuable upon the
exercise of outstanding stock options except for Shares issuable upon the
exercise of options and warrants exercisable within the next 60 days.
(4) Consists of 621,348 shares held by Venrock Associates II, L.P., 686,409
shares held by Venrock Associates and 154 shares held by Venrock
Management LLC. The general partners of these funds who share voting and
dispositive power over these shares are Anthony B. Evnin and Anthony Sun.
(5) Includes 5,000 shares issuable upon exercise of options exercisable within
60 days of February 8, 2002 and 1,307,911 shares held by entities
associated with Venrock Associates, of which Mr. Latterell is a general
partner. Mr. Latterell disclaims beneficial ownership of the shares held
by the entities except to the extent of his pecuniary interest therein.
10
(6) Includes 122,455 shares issuable upon exercise of options exercisable
within 60 days of February 8, 2002 and 16,666 shares held by Mary Jo
Anstey, Mr. Anstey's spouse.
(7) Includes 24,791 shares issuable upon exercise of options exercisable
within 60 days of February 8, 2002 and 3,331 shares held by Saratoga
Ventures, a limited partnership of which Mr. Ferrari is a general partner.
(8) Includes 20,625 shares issuable upon exercise of options exercisable
within 60 days of February 8, 2002 and 116,000 shares held in trust for
Dr. Saal's children.
(9) Includes 55,191 shares held on behalf of Mr. Sharkey's children and 10,382
shares issuable upon exercise of options exercisable within 60 days of
February 8, 2002.
(10) Includes 51,458 shares issuable upon exercise of options exercisable
within 60 days of February 8, 2002.
(11) Includes 14,583 shares issuable upon exercise of options exercisable
within 60 days of February 8, 2002.
(12) Includes 145,833 shares issuable upon exercise of options exercisable
within 60 days of February 8, 2002.
(13) Includes 395,127 shares issuable upon exercise of options exercisable
within 60 days of February 8, 2002.
Merger Agreement
On February 13, 2002, the Company entered into the Merger Agreement,
pursuant to which: (i) Purchaser is making the Offer; and (ii) following the
successful completion of the Offer, upon approval by a stockholder vote, if
required, and subject to certain other conditions, Purchaser will be merged
with and into the Company, with the Company continuing as the surviving
corporation and a wholly owned subsidiary of Smith & Nephew.
Stockholders Agreements with Certain Officers, Directors and other Stockholders
The discussion set forth in "Item 3--Past Contacts, Transactions,
Negotiations and Agreements" of the foregoing Schedule 14d-9 is incorporated
herein by this reference.
Allocation of Consideration among Executive Officers and Directors
The discussion set forth in "Item 3--Past Contacts, Transactions,
Negotiations and Agreements" of the foregoing Schedule 14d-9 is incorporated
herein by this reference.
Employment Agreements and Severance Arrangements with Executive Officers and
Directors
The discussion set forth in "Item 3--Past Contacts, Transactions,
Negotiations and Agreements" of the foregoing Schedule 14d-9 is incorporated
herein by this reference.
Stock Option Plans
The discussion set forth in "Item 3--Past Contacts, Transactions,
Negotiations and Agreements" of the foregoing Schedule 14d-9 is incorporated
herein by this reference.
11
EXHIBIT INDEX
No. Exhibit
- --- -------
(a)(1) Offer to Purchase dated February 22, 2002 (incorporated by reference to Exhibit (a)(1)(A) to the
Schedule TO filed by Purchaser with respect to the Company on February 22, 2002 ("Schedule TO"))
(a)(2) Form of Letter of Transmittal (incorporated by reference to Exhibit (a)(1)(B) to Schedule TO)
(a)(3) Information Statement Pursuant to Section 14(f) of the Securities Exchange Act of 1934 and
Rule 14f-1 thereunder (incorporated by reference and attached hereto as Annex A)
(a)(4) Opinion of J.P. Morgan Securities Inc. dated February 13, 2002
(a)(5) Press Release, dated February 14, 2002, regarding the proposed transaction between Smith & Nephew
and the Company (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed
by the Company on February 19, 2002)
(a)(6) Letter to Stockholders of ORATEC Interventions, Inc. dated February 22, 2002*
(e)(1) Agreement and Plan of Merger among Smith & Nephew, Orchid Merger Corp. and the Company,
dated as of February 13, 2002 (incorporated by reference to Exhibit 2.1 to the Current Report on
Form 8-K filed by the Company on February 19, 2002)
(e)(2) Form of Stockholder Agreement, dated as of February 13, 2002, among Smith & Nephew, Inc., Orchid
Merger Corp. and certain stockholders of the Company (including a schedule listing such stockholders
and the number of shares owned by such stockholders as set forth in the Stockholder Agreement
entered into by such stockholder) (incorporated by reference to Exhibit 2.2 to the Current Report on
Form 8-K filed by the Company on February 19, 2002)
(e)(3) Confidentiality Agreement dated November 13, 2001 between Smith & Nephew and the Company
(incorporated by reference to Exhibit (d)(3) to Schedule TO)
(e)(4) Employment Agreement, dated November 29, 1999, between the Company and Theresa M. Mitchell
(e)(5) Employment Agreement, dated October 29, 1997, between the Company and Nancy V. Westcott
(e)(6) First Amendment to Preferred Shares Rights Agreement, dated as of February 13, 2002, between the
Company and American Stock Transfer and Trust Company (incorporated by reference to Exhibit 2 to
the Amended Registration Statement on Form 8-A12G/A filed by the Company on February 19, 2002)
- --------
* Included with the Schedule mailed to stockholders.