<PAGE> 1
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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
COLLAGEN AESTHETICS, INC.
(NAME OF SUBJECT COMPANY)
INAMED CORPORATION
INAMED ACQUISITION CORPORATION
(BIDDERS)
COMMON STOCK, $.01 PAR VALUE
PREFERRED SHARE PURCHASE RIGHTS
(TITLE OF CLASSES OF SECURITIES)
194194106
(CUSIP NUMBER OF CLASS OF COMMON STOCK)
ILAN K. REICH, ESQ.
PRESIDENT
INAMED CORPORATION
1120 AVENUE OF THE AMERICAS
SUITE 4000
NEW YORK, NEW YORK 10036
(212) 626-6800
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPIES TO:
LAWRENCE LEDERMAN, ESQ.
MILBANK, TWEED, HADLEY & MCCLOY LLP
ONE CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10005
(212) 530-5000
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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<S> <C>
$166,545,583 $33,309
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</TABLE>
* For purposes of calculating the filing fee only. Based upon 8,592,359 shares
of common stock, par value $.01 per share, of Collagen Aesthetics, Inc.
outstanding on June 30, 1999, plus the number of Shares issuable upon the
exercise of all outstanding options and warrants.
** The fee, calculated in accordance with Rule 0-11(d) of the Securities
Exchange Act of 1934, is 1/50th of one percent of the aggregate Transaction
Valuation.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: None Filing Party: Not applicable
Form or Registration No.: Not applicable Date Filed: Not applicable
</TABLE>
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<PAGE> 2
14D-1
CUSIP NO. 194194106
<TABLE>
<S> <C> <C>
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1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Inamed Corporation
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCES OF FUNDS
00
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
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10 TYPE OF REPORTING PERSON
CO
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</TABLE>
<PAGE> 3
14D-1
CUSIP NO. 194194106
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Inamed Acquisition Corporation
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCES OF FUNDS
00
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- ---------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- ---------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
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10 TYPE OF REPORTING PERSON
CO
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</TABLE>
<PAGE> 4
This Schedule 14D-1 Tender Offer Statement relates to the offer by Inamed
Acquisition Corporation ("Purchaser"), a Delaware corporation and a wholly-owned
subsidiary of Inamed Corporation, a Delaware corporation ("Parent"), to purchase
all outstanding shares of common stock, par value $.01 per share (the "Shares"),
of Collagen Aesthetics, Inc., a Delaware corporation (the "Company"), and the
associated preferred share purchase rights (the "Rights") issued pursuant to the
Amended and Restated Preferred Share Rights Agreement, dated as of May 6, 1999,
between the Company and The Bank of New York, as Rights Agent (as the same may
be amended, the "Rights Agreement"), at a purchase price of $16.25 per Share
(and associated Right), net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase
and in the related Letter of Transmittal (which together constitute the
"Offer"), which are annexed to and filed with this Schedule 14D-1 as Exhibits
(a)(1) and (a)(2), respectively. Purchaser has been formed by Parent in
connection with the Offer and the transactions contemplated thereby.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Collagen Aesthetics, Inc. The
address of the Company's principal executive offices is 1850 Embarcadero Road,
Palo Alto, California 94303.
(b) Reference is hereby made to the information set forth in the
"Introduction," Section 1 ("Terms of the Offer") and Section 11 ("Purpose of the
Offer; the Merger Agreement; Appraisal Rights; Plans for the Company; the
Rights") of the Offer to Purchase (including note (a) thereto), which is
incorporated herein by reference.
(c) Reference is hereby made to the information set forth in Section 6
("Price Range of the Shares; Dividends") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) This Statement is being filed on behalf of Parent and Purchaser for
purposes of the Schedule 14D-1. Reference is hereby made to the information set
forth in the "Introduction," Section 9 ("Certain Information Concerning Parent
and Purchaser"), and Schedule I (Directors and Executive Officers of Parent and
Purchaser) of the Offer to Purchase, which is incorporated herein by reference.
(e)-(f) During the last five years, none of Parent or Purchaser, or, to the
best of their knowledge, any of the persons listed in Schedule I (Directors and
Executive Officers of Parent and Purchaser) of the Offer to Purchase (including
note (a) thereto), which is incorporated herein by reference, 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 and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, Federal or State securities laws or finding any violation
of such laws.
(g) Reference is hereby made to the information set forth in Schedule I
(Directors and Executive Officers of Parent and Purchaser) of the Offer to
Purchase (including note (a) thereto), which is incorporated herein by
reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) Reference is hereby made to the information set forth in the
"Introduction," Section 9 ("Certain Information Concerning Parent and
Purchaser"), Section 10 ("Background of the Offer; Past Contacts with the
Company") and Section 11 ("Purpose of the Offer; the Merger Agreement; Appraisal
Rights; Plans for the Company; the Rights") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) Reference is hereby made to the information set forth in Section 12
("Source and Amount of Funds") of the Offer to Purchase, which is incorporated
herein by reference.
(c) Not applicable.
2
<PAGE> 5
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) Reference is hereby made to the information set forth in the
"Introduction," Section 7 ("Possible Effects of the Offer on the Market for the
Shares; Nasdaq Quotation; Exchange Act Registration; Margin Regulations"),
Section 10 ("Background of the Offer; Past Contacts with the Company"), Section
11 ("Purpose of the Offer; the Merger Agreement; Appraisal Rights; Plans for the
Company; the Rights") and Section 13 ("Dividends and Distributions") of the
Offer to Purchase, which is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) Reference is hereby made to the information set forth in Section 9
("Certain Information Concerning Parent and Purchaser") of the Offer to
Purchase, which is incorporated herein by reference.
(b) Not applicable.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
Reference is hereby made to the information set forth in the
"Introduction," Section 9 ("Certain Information Concerning Parent and
Purchaser"), Section 10 ("Background of the Offer; Past Contacts with the
Company"), Section 11 ("Purpose of the Offer; the Merger Agreement; Appraisal
Rights; Plans for the Company; the Rights") and Section 15 ("Certain Legal
Matters; Required Regulatory Approvals") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is hereby made to the information set forth in Section 16
("Certain Fees and Expenses") of the Offer to Purchase, which is incorporated
herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Reference is hereby made to the information set forth in Section 9
("Certain Information Concerning Parent and Purchaser") of the Offer to
Purchase, which is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Reference is hereby made to the information set forth in the
"Introduction," Section 10 ("Background of the Offer; Past Contacts with the
Company") and Section 11 ("Purpose of the Offer; the Merger Agreement; Appraisal
Rights; Plans for the Company; the Rights") of the Offer to Purchase, which is
incorporated herein by reference.
(b)-(c) Reference is hereby made to the information set forth in the
"Introduction," Section 11 ("Purpose of the Offer; the Merger Agreement;
Appraisal Rights; Plans for the Company; the Rights") and Section 15 ("Certain
Legal Matters; Required Regulatory Approvals") of the Offer to Purchase, which
is incorporated herein by reference.
(d) Reference is hereby made to the information set forth in Section 7
("Possible Effects of the Offer on the Market for the Shares; Nasdaq Quotation;
Exchange Act Registration; Margin Regulations") of the Offer to Purchase, which
is incorporated herein by reference.
(e) Reference is hereby made to the information set forth in Section 15
("Certain Legal Matters; Required Regulatory Approvals") of the Offer to
Purchase, which is incorporated herein by reference.
(f) Reference is hereby made to the entire texts of the Offer to Purchase
and the related Letter of Transmittal, which are incorporated herein by
reference.
3
<PAGE> 6
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) -- Offer to Purchase, dated August 4, 1999.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Nominees.
(a)(4) -- Letter to Clients for Use by Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a)(5) -- Notice of Guaranteed Delivery.
(a)(6) -- Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) -- Text of press release issued by Parent on August 2, 1999.
(a)(8) -- Text of press release issued by the Company on August 2, 1999.
(a)(9) -- Text of press release issued by Parent on August 4, 1999.
(a)(10) -- Form of Summary Advertisement dated August 4, 1999.
(b)(1) -- Commitment Letter, dated as of July 23, 1999, from Cerberus Capital
Management, L.P.
(b)(2) -- Amendment to Commitment Letter, dated July 30, 1999, from Inamed
Corporation and acknowledged and confirmed by Cerberus Capital
Management, L.P.
(c)(1) -- Agreement and Plan of Merger, dated as of July 31, 1999, by and
among the Company, Purchaser and Parent.
(c)(2) -- Confidentiality Agreement, dated as of April 23, 1999, between the
Company and Parent.
(d) -- Not applicable.
(e) -- Not applicable.
(f) -- Not applicable.
4
<PAGE> 7
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: August 4, 1999
INAMED CORPORATION
By: /s/ ILAN K. REICH
------------------------------------
Name: Ilan K. Reich
Title: President
INAMED ACQUISITION CORPORATION
By: /s/ ILAN K. REICH
------------------------------------
Name: Ilan K. Reich
Title: President
5
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
(a)(1) -- Offer to Purchase, dated August 4, 1999.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(4) -- Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a)(5) -- Notice of Guaranteed Delivery.
(a)(6) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) -- Text of press release issued by Parent on August 2, 1999.
(a)(8) -- Text of press release issued by the Company on August 2,
1999.
(a)(9) -- Text of press release issued by Parent on August 4, 1999.
(a)(10) -- Form of Summary Advertisement dated August 4, 1999.
(b)(1) -- Commitment Letter, dated as of July 23, 1999, from Cerberus
Capital Management, L.P.
(b)(2) -- Amendment to Commitment Letter, dated July 30, 1999, from
Inamed Corporation and acknowledged and confirmed by
Cerberus Capital Management, L.P.
(c)(1) -- Agreement and Plan of Merger, dated as of July 31, 1999, by
and among the Company, Purchaser and Parent.
(c)(2) -- Confidentiality Agreement, dated as of April 23, 1999,
between the Company and Parent.
(d) -- Not applicable.
(e) -- Not applicable.
(f) -- Not applicable.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
COLLAGEN AESTHETICS, INC.
BY
INAMED ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
INAMED CORPORATION
AT
$16.25 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, AUGUST 31, 1999, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE
OFFER AND THE MERGER (AS SUCH TERMS ARE DEFINED HEREIN) ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND
ADOPTED THE MERGER AGREEMENT AND RECOMMENDS ACCEPTANCE OF THE OFFER BY THE
COMPANY'S STOCKHOLDERS.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SHARES REPRESENTING AT
LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF COMMON STOCK OF
THE COMPANY ON A FULLY DILUTED BASIS (ASSUMING EXERCISE OF ALL OPTIONS WITH AN
EXERCISE PRICE BELOW $18.00 PER SHARE) BEING VALIDLY TENDERED AND NOT PROPERLY
WITHDRAWN PRIOR TO THE EXPIRATION DATE FOR THE OFFER AND CERTAIN OTHER
CONDITIONS. SEE SECTIONS 1, 12, 14 AND 15.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) either should (a) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and mail or deliver it together with the certificate(s)
representing tendered Shares and any other required documents to the Depositary
(as defined herein) or tender such Shares pursuant to the procedures for
book-entry transfer set forth in Section 3 or (b) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect such
transaction. A stockholder whose Shares are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company or other nominee if such
stockholder desires to tender such Shares.
<PAGE> 2
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis 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 or the Dealer Manager (as such terms are defined herein) at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent or the Dealer Manager or from brokers,
dealers, commercial banks, trust companies and other nominees.
The Dealer Manager for the Offer is:
HAMBRECHT & QUIST LLC
August 4, 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
1. TERMS OF THE OFFER.......................................... 2
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.......................... 4
3. PROCEDURES FOR TENDERING SHARES............................. 5
4. WITHDRAWAL RIGHTS........................................... 7
5. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES............... 8
6. PRICE RANGE OF THE SHARES; DIVIDENDS........................ 9
7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES;
NASDAQ QUOTATION; EXCHANGE ACT REGISTRATION; MARGIN
REGULATIONS................................................. 10
8. CERTAIN INFORMATION CONCERNING THE COMPANY.................. 11
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER......... 14
10. BACKGROUND OF THE OFFER; PAST CONTACTS WITH THE COMPANY..... 16
11. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; APPRAISAL
RIGHTS; PLANS FOR THE COMPANY; THE RIGHTS................... 20
12. SOURCE AND AMOUNT OF FUNDS.................................. 31
13. DIVIDENDS AND DISTRIBUTIONS................................. 36
14. CERTAIN CONDITIONS OF THE OFFER............................. 36
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS........ 37
16. CERTAIN FEES AND EXPENSES................................... 40
17. MISCELLANEOUS............................................... 40
</TABLE>
<PAGE> 4
TO: ALL HOLDERS OF SHARES OF COMMON STOCK OF
COLLAGEN AESTHETICS, INC.: INTRODUCTION
Inamed Acquisition Corporation ("Purchaser"), a Delaware corporation and a
wholly-owned subsidiary of Inamed Corporation, a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $.01 per share ("Shares"), of Collagen Aesthetics, Inc., a Delaware
corporation (the "Company"), and the associated preferred share purchase rights
(the "Rights") issued pursuant to the Amended and Restated Preferred Share
Rights Agreement, dated as of May 6, 1999, between the Company and The Bank of
New York, as Rights Agent (as the same may be amended, the "Rights Agreement"),
at a purchase price of $16.25 per Share (and associated Right), net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together, constitute the "Offer"). Unless the context
otherwise requires, all references to Shares will include the associated Rights.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of the Shares by Purchaser
pursuant to the Offer. Purchaser will pay all charges and expenses of Hambrecht
& Quist LLC, as Dealer Manager (the "Dealer Manager"), The Bank of New York, as
Depositary (the "Depositary"), and Innisfree M&A Incorporated, as Information
Agent (the "Information Agent"), incurred in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") UNANIMOUSLY HAS
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND ADOPTED THE
AGREEMENT AND PLAN OF MERGER, DATED AS OF JULY 31, 1999, BY AND AMONG THE
COMPANY, PURCHASER AND PARENT AND RECOMMENDS ACCEPTANCE OF THE OFFER BY THE
COMPANY'S STOCKHOLDERS.
Lehman Brothers, Inc. (the "Financial Advisor") has delivered to the
Company's Board of Directors a written opinion dated July 31, 1999 to the effect
that, as of such date and based upon and subject to certain matters stated in
such opinion, the $16.25 per Share cash consideration to be received by the
holders of outstanding Shares pursuant to the Offer and the Merger is fair, from
a financial point of view, to such holders. A copy of the Financial Advisor's
written opinion dated July 31, 1999 is included with the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders concurrently herewith, and stockholders
are urged to read such opinion carefully in its entirety for a description of
the assumptions made, matters considered and limitations of the review
undertaken by the Financial Advisor. THE OFFER IS CONDITIONED UPON, AMONG OTHER
THINGS, AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY
DILUTED BASIS (ASSUMING EXERCISE OF ALL OPTIONS WITH AN EXERCISE PRICE BELOW
$18.00 PER SHARE) BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE
EXPIRATION DATE FOR THE OFFER (THE "MINIMUM CONDITION"). THE OFFER IS ALSO
SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS. THE OFFER WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, AUGUST 31, 1999, UNLESS EXTENDED (THE
"EXPIRATION DATE"). SEE SECTIONS 1, 12, 14, AND 15. The Offer is being made
pursuant to the Agreement and Plan of Merger, dated as of July 31, 1999, by and
among the Company, Purchaser and Parent (the "Merger Agreement") pursuant to
which, following the consummation of the Offer and the satisfaction or waiver of
certain conditions, Purchaser will be merged with and into the Company (the
"Merger"), with the Company continuing as the surviving corporation (the
"Surviving Corporation"). In the Merger, each outstanding Share (other than
Shares held by Parent or any of its subsidiaries immediately prior to the
Effective Time, which Shares will be canceled with no payment being made with
respect thereto, and other than Shares, if any, held by stockholders who perfect
their appraisal rights under Delaware law ("Dissenting Shares")) will, by virtue
of the Merger and without any action by the holder thereof, be converted into
the right to receive $16.25 in cash, payable to the holder thereof, without
interest thereon (the "Merger Consideration"), upon the surrender of the
certificate formerly representing such Share. The Merger
1
<PAGE> 5
Agreement is more fully described in Section 11. Certain federal income tax
consequences of the sale of the Shares pursuant to the Offer and the Merger, as
the case may be, are described in Section 5.
If the Minimum Condition and the other conditions to the Offer are
satisfied or waived and the Offer is consummated, Purchaser will own a
sufficient number of Shares to ensure that the Merger will be approved. Under
the Delaware General Corporation Law (the "GCL"), if, after consummation of the
Offer, Purchaser owns at least 90% of the Shares then outstanding, Purchaser
will be able to cause the Merger to occur without a vote of the Company's
stockholders. If, however, after consummation of the Offer, Purchaser owns less
than 90% of the then outstanding Shares, a vote of the Company's stockholders
will be required under the GCL to approve the Merger, and a significantly longer
period of time will be required to effect the Merger. See Section 11. The
authorized capital stock of the Company consists of 28,950,000 shares of Common
Stock, par value $0.01 per share, and 5,000,000 shares of Preferred Stock, par
value $0.01 per share. As of June 30, 1999, (i) 8,592,359 Shares of Company were
issued and outstanding, (ii) no shares of preferred stock were issued or
outstanding, (iii) 2,454,000 Shares were held in the treasury of the Company,
and (iv) 1,608,900 Shares were issuable under outstanding options with an
exercise price below $18.00 per share.
Based on the foregoing and assuming no additional Shares (or warrants,
options or rights exercisable for, or securities convertible into, Shares) have
been issued (other than Shares issued pursuant to the outstanding stock options
referred to in clause (iv) of the preceding paragraph), if Purchaser were to
acquire approximately 5,101,000 Shares pursuant to the Offer, the Minimum
Condition would be satisfied.
No appraisal rights are available in connection with the Offer; however,
stockholders may have appraisal rights in connection with the Merger regardless
of whether the Merger is consummated with or without a vote of the Company's
stockholders. See Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and thereby purchase all Shares
validly tendered on or prior to the Expiration Date and not withdrawn in
accordance with the procedures set forth in Section 4, as soon as practicable
after such Expiration Date. Notwithstanding the foregoing, without the consent
of the Company, Purchaser shall have the right to extend the Offer (i) from time
to time if, at the scheduled or extended expiration date of the Offer, any of
the conditions to the Offer shall not have been satisfied or waived, until such
conditions are satisfied or waived, (ii) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "Commission") or the staff thereof applicable to the Offer or any period
required by applicable law, (iii) for a period of not more than 10 business days
in order to finalize Purchaser's financing arrangements for the purchase of the
Shares pursuant to the Offer and the Merger, (iv) during the pendency of a
Market Disruption (as defined in the Merger Agreement) until December 31, 1999
or (v) on one or more occasions for an aggregate period of not more than 15
business days beyond the latest expiration date that would otherwise be
permitted under clause (i), (ii), (iii) or (iv) of this sentence if, on such
expiration date, there shall not have been tendered at least 90% of the
outstanding Shares. The Offer will remain open until the Expiration Date, unless
and until Purchaser extends the period of time for which the Offer is open, in
which event the term "Expiration Date" will mean the time and date at which the
Offer, as so extended by Purchaser, will expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition and the expiration or termination of all waiting periods
imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"). See Section 14. If, at any Expiration Date, the conditions to
the Offer described in Section 14 will not have been satisfied or waived,
Purchaser shall extend the Offer from time to time until such conditions are
satisfied or waived, provided that Purchaser shall not be required to extend the
Offer beyond December 31, 1999; and provided further, that Purchaser shall not
be obligated to
2
<PAGE> 6
extend the Offer beyond October 29, 1999 in the event the Minimum Condition or
any of the conditions to the Offer described in paragraphs (c) and (h) of
Section 14 have not been satisfied or waived on or before such date. During any
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer and subject to the right of a tendering stockholder to withdraw
such stockholder's Shares. See Section 4. Under no circumstances will interest
be paid on the purchase price for tendered Shares, whether or not the Offer is
extended.
Subject to the applicable regulations of the Commission, Purchaser has
expressly reserved the right to waive any of the conditions to the Offer and to
make any change in the terms or conditions of the Offer, provided that, no
change or waiver may be made that, without the prior written consent of the
Company, (i) waives the Minimum Condition, (ii) changes the form of
consideration to be paid, (iii) decreases the price per Share or the number of
Shares sought in the Offer, (iv) imposes any additional conditions to the Offer
or (v) is otherwise adverse to the holders of the Shares. The rights reserved by
Purchaser in this paragraph are in addition to Purchaser's rights pursuant to
Section 14.
Any such extension, termination or amendment will be followed as promptly
as practicable by public announcement thereof. In the case of an extension, Rule
14e-1(d) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires that the announcement be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rule
14e-1 under the Exchange Act. 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 Purchaser may choose to make any public announcement, Purchaser will
not have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If Purchaser makes a material change in the terms of the Offer, or if
Purchaser waives a material condition to the Offer, Purchaser will extend the
Offer and disseminate additional tender offer materials to the extent required
by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality of the changes. In the Commission's view, an offer should remain
open for a minimum of five business days from the date the material change is
first published, sent or given to stockholders, and, if material changes are
made with respect to information that approaches the significance of price and
the percentage of securities sought, a minimum of ten business days may be
required to allow for adequate dissemination and investor response. With respect
to a change in price, a minimum ten business day period from the date of such
change is generally required under applicable Commission rules and regulations
to allow for adequate dissemination to stockholders. For purposes of the Offer,
a "business day" means any day other than a Saturday, Sunday or a federal
holiday and consists of the time period from 12:01 a.m. through 12:00 midnight,
New York City time.
As of the date of this Offer to Purchase, the Rights are evidenced by the
certificates representing Shares and do not trade separately. Accordingly, by
tendering a certificate representing Shares, a stockholder is automatically
tendering a similar number of associated Rights. If, however, pursuant to the
Rights Agreement or for any other reason, the Rights detach and separate
certificates representing rights ("Rights Certificates") are issued,
stockholders will be required to tender one Right for each Share tendered in
order to effect a valid tender of such Share. The Company has provided Purchaser
with the Company's stockholder lists and security position listings for the
purpose of disseminating the Offer to holders of Shares. This Offer to Purchase,
the related Letter of Transmittal and other relevant materials will be mailed by
Purchaser to record holders of Shares, and will be furnished by Purchaser to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the securityholder lists or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
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<PAGE> 7
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of the Offer as so
extended or amended), Purchaser will purchase, by accepting for payment, and
will pay for, all Shares validly tendered and not properly withdrawn (in
accordance with Section 4) prior to the Expiration Date promptly after the
Expiration Date. In addition, subject to applicable rules of the Commission,
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply with
applicable law, including the HSR Act. See Sections 1 and 15. In all cases,
payment for Shares purchased pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates representing such Shares
("Share Certificates") or timely confirmation (a "Book-Entry Confirmation") of
the book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in Section 3; (ii) the appropriate Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees or an Agent's Message (as defined herein) in
connection with a book-entry transfer; and (iii) any other documents required by
the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that 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 Purchaser may enforce such agreement
against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance of such Shares for payment pursuant to the Offer. In all cases, upon
the terms and subject to the conditions of the Offer, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from Purchaser and transmitting payment to
validly tendering stockholders.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID BY PURCHASER.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the provisions of Rule 14e-1(c)
under the Exchange Act, which requires Purchaser to pay the consideration
offered or to return Shares deposited by or on behalf of stockholders promptly
after the termination or withdrawal of the Offer.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than are
tendered, Share Certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3,
such Shares will be credited to an account maintained within the Book-Entry
Transfer Facility), as promptly as practicable following the expiration,
termination or withdrawal of the Offer. IF, PRIOR TO THE EXPIRATION DATE,
PURCHASER SHALL INCREASE THE CONSIDERATION OFFERED TO HOLDERS OF SHARES PURSUANT
TO THE OFFER, SUCH INCREASED CONSIDERATION SHALL BE PAID TO ALL HOLDERS OF
SHARES THAT ARE PURCHASED PURSUANT TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE
TENDERED PRIOR TO SUCH INCREASE IN CONSIDERATION.
Parent and Purchaser reserve the right, subject to the provisions of the
Merger Agreement, to transfer or assign, in whole or from time to time in part,
to one or more of Parent's affiliates, the right to purchase all or a portion of
the Shares pursuant to the Offer, but no such transfer or assignment will
relieve Parent or Purchaser of its obligations under the Offer or prejudice the
rights of tendering stockholders to receive payment of the Shares validly
tendered and accepted for payment pursuant to the Offer.
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<PAGE> 8
3. PROCEDURES FOR TENDERING SHARES.
VALID TENDER. Except as set forth below, in order for Shares to be validly
tendered pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with any required signature
guarantees or an Agent's Message in connection with a book-entry delivery of
Shares and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date and either (i)
Share Certificates representing tendered Shares must be received by the
Depositary or tendered pursuant to the procedure for book-entry transfer set
forth below and Book-Entry Confirmation must be received by the Depositary, in
each case, on or prior to the Expiration Date, or (ii) the guaranteed delivery
procedures set forth below must be complied with. No alternate, conditional or
contingent tenders will be accepted.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, RIGHTS CERTIFICATES (IF
APPLICABLE), THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER, AND DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE
CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to Shares at the Book-Entry Transfer Facility for purposes of the Offer. Any
financial institution that is a participant in any of the Book-Entry Transfer
Facility's systems may make book-entry delivery of Shares by causing such
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer into the Depositary's account
at the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
any other required documents must, in any case, be transmitted to and received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the Securities
Transfer Agents Medallion Program (an "Eligible Institution"), unless Shares
tendered thereby are tendered (i) by a registered holder of Shares who has not
completed either the box labeled "Special Payment Instructions" or the box
labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for
the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for unpurchased Shares are to be issued or returned to, a
person other than the registered holder, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the name
or names of the registered holder or holders appear on the certificates, with
the signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the Letter of Transmittal. See Instructions 1 and 5
of the Letter of Transmittal.
If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents
5
<PAGE> 9
to reach the Depositary on or prior to the Expiration Date or the procedures for
book-entry transfer cannot be completed on a timely basis, such Shares or rights
may nevertheless be tendered if all of the following guaranteed delivery
procedures are duly complied with:
(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 made available by Purchaser, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation)
representing all tendered Shares, in proper form for transfer together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the Nasdaq National Market is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery and a representation that the stockholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or, of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the appropriate Letter of
Transmittal. Accordingly, payment might not be made to all tendering
stockholders at the same time, and will depend upon when Share Certificates are
received by the Depositary or Book-Entry Confirmations of such Shares are
received into the Depositary's account at the Book-Entry Transfer Facility.
BACKUP WITHHOLDING. Under the backup federal income tax withholding laws
applicable to certain stockholders (other than certain exempt stockholders,
including, among others, all corporations and certain foreign persons), the
Depositary may be required to withhold 31% of the amount of any payments made to
such stockholders pursuant to the Offer or the Merger. To prevent backup federal
income tax withholding, each such stockholder must provide the Depositary with
such stockholder's correct taxpayer identification number, if any, and certify
that such stockholder is not subject to backup federal income tax withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Instruction 9 of the Letter of Transmittal.
APPOINTMENT AS PROXY. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of Purchaser as such stockholder's
agents, attorneys-in-fact and proxies, with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by Purchaser and with respect to any and all other Shares
and other securities or rights issued or issuable in respect of such Shares on
or after the date of this Offer to Purchase. All such powers of attorney and
proxies will be considered irrevocable and coupled with an interest in the
tendered Shares. Such appointment will be effective upon the acceptance for
payment of such Shares by Purchaser in accordance with the terms of the Offer.
Upon such acceptance for payment, all other powers of attorney and proxies given
by such stockholder with respect to such Shares and such other securities or
rights prior to such payment will be revoked, without further action, and no
subsequent powers of attorney and proxies may be given by such stockholder (and,
if given, will not be deemed effective). The designees of Purchaser will, with
respect to the Shares and such other securities and rights for which such
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 or special meeting of the Company's stockholders, or any adjournment or
postponement thereof, or by consent in lieu of any such
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<PAGE> 10
meeting or otherwise. In order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, Purchaser or its
designee must be able to exercise full voting rights with respect to such Shares
and other securities, including voting at any meeting of stockholders.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding on all parties. Purchaser reserves
the absolute right to reject any or all tenders determined by it not to be in
proper form or the acceptance of or payment for which may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to
waive any of the conditions of the Offer to the extent permitted by applicable
law and the Merger Agreement or any defect or irregularity in any tender of
Shares of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering stockholder's acceptance of the terms and conditions of
the Offer, as well as the tendering stockholder's representation and warranty to
Purchaser that (a) such stockholder has a net long position in such Shares being
tendered within the meaning of Rule 14e-4 under the Exchange Act and (b) the
tender of such Shares complies with Rule 14e-4 under the Exchange Act. It is a
violation of Rule 14e-4 under the Exchange Act for a person, directly or
indirectly, to tender Shares for such person's own account unless, at the time
of tender, the person so tendering (i) has a net long position equal to or
greater than the amount of (x) Shares tendered or (y) other securities
immediately convertible into or exchangeable or exercisable for the Shares
tendered and such person will acquire such Shares for tender by conversion,
exchange or exercise and (ii) will cause such Shares to be delivered in
accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person.
Purchaser's interpretation of the terms and conditions of the Offer will be
final and binding. No tender of Shares will be deemed to have been validly made
until all defects and irregularities with respect to such tender have been cured
or waived by Purchaser. None of Parent, Purchaser or any of their respective
affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent
or any other person or entity will be under any duty to give any notification of
any defects or irregularities in tenders or incur any liability for failure to
give any such notification.
Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time on or prior to the Expiration Date and, unless
theretofore accepted for payment as provided herein, may also be withdrawn at
any time after October 2, 1999 (or such later date as may apply in the case that
the Offer is extended).
If, for any reason whatsoever, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that the tendering stockholder is
entitled to and duly exercises withdrawal rights as described in this Section 4.
In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn, and (if Share
Certificates have been tendered) the name of the registered holder of the Shares
as set forth in the Share Certificate, if different from that of the person who
tendered such Shares. If Share Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the tendering stockholder must submit the serial numbers
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<PAGE> 11
shown on the particular certificates evidencing the Shares to be withdrawn and
the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Shares tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares, in which case a notice of withdrawal
will be effective if delivered to the Depositary by any method of delivery
described in the first sentence of this paragraph. Withdrawals of Shares may not
be rescinded. Any Shares properly withdrawn will be deemed not validly tendered
for purposes of the Offer, but may be tendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Parent, Purchaser or any
of their respective affiliates or assigns, the Depositary, the Information Agent
or any other person or entity will be under any duty to give any notification of
any defects or irregularities in any notice of withdrawal or incur any liability
for failure to give any such notification.
5. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following discussion summarizes the material United States federal
income tax consequences to stockholders that are "U.S. Holders" upon the receipt
of cash in exchange for Shares either pursuant to the Offer or in the Merger.
For purposes of this discussion a U.S. Holder is any beneficial owner of Shares,
including as a partner in a partnership, that is (i) a citizen or resident of
the United States, (ii) a corporation organized under the laws of the United
States or any State, (iii) an estate the income of which is subject to United
States federal income tax without regard to its source or (iv) a trust, if a
court within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. This summary does
not take into account the specific circumstances of particular investors (such
as tax exempt entities, insurance companies, broker-dealers, regulated
investment companies, banks, or stockholders who acquired their Shares pursuant
to the exercise of employee stock options or otherwise as compensation) nor does
the discussion address any tax consequences to stockholders that are not U.S.
Holders. This discussion also does not address any aspects of taxation other
than United States federal income taxation. This discussion is based on the law,
including the Internal Revenue Code of 1986, as amended, the legislative history
thereto, existing and proposed U.S. Treasury Department regulations promulgated
thereunder, and published Internal Revenue Service rulings and court decisions,
all as in effect on the date hereof and all of which are subject to change,
possibly with retroactive effect.
Each U.S. Holder will recognize gain or loss realized on the sale of Shares
pursuant to the Offer or in the Merger equal to the difference between the cash
the U.S. Holder receives for the Shares and the U.S. Holder's tax basis in the
Shares. This gain or loss will be a capital gain or loss to the U.S. Holder if
the U.S. Holder holds the Shares as capital assets, and the gain or loss as to
any one Share will be a long term capital gain if the U.S. Holder held the Share
for more than one year as of the Expiration Date of the Offer or the Effective
Time of the Merger. A U.S. Holder who is an individual will pay tax on any long
term capital gain at a maximum rate of 20%.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY. STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND
MERGER, INCLUDING FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.
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<PAGE> 12
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
The Shares are traded on the Nasdaq National Market under the symbol
"CGEN." The following table sets forth, for the periods indicated, the reported
high and low sale prices for the Shares on the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1997
First Quarter............................................... $23.75 $18.50
Second Quarter.............................................. $19.25 $14.13
Third Quarter............................................... $19.88 $16.63
Fourth Quarter.............................................. $20.88 $18.00
1998
First Quarter............................................... $22.13 $16.75
Second Quarter.............................................. $22.00 $17.75
Third Quarter............................................... $18.88 $ 8.50
Fourth Quarter.............................................. $10.75 $ 7.50
1999
First Quarter............................................... $15.63 $ 8.78
Second Quarter.............................................. $13.88 $12.50
Third Quarter (through August 3)............................ $15.88 $11.00
</TABLE>
On August 18, 1998, the Company spun-off, in a one-for-one distribution of
common stock to the Company's stockholders (the "Spinoff"), Cohesion
Technologies, Inc., which prior to the Spinoff was a wholly-owned subsidiary of
the Company. The transaction resulted in the distribution of 100% of the
outstanding shares of Cohesion.
On July 30, 1999, the last full day of trading prior to the announcement of
the execution of the Merger Agreement, according to publicly available sources,
the reported closing price on the Nasdaq National Market for the Shares was
$12.00 per Share. On August 3, 1999, the last full day of trading prior to the
commencement of the Offer, according to publicly available sources, the reported
closing price on the Nasdaq National Market for the Shares was $15.81 per Share.
The Company declared a cash dividend of $.10 per Share payable to stockholders
of record on June 30, 1998, in addition to a $.10 per Share dividend declared
and paid earlier in fiscal 1998. In fiscal 1997, the Company declared a cash
dividend of $.10 per Share payable
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<PAGE> 13
to stockholders of record on June 30, 1997, in addition to a $.10 per Share
dividend declared and paid earlier in fiscal 1997.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ QUOTATION;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES. The purchase
of Shares pursuant to the Offer will reduce the number of Shares that might
otherwise trade publicly, and could adversely affect the liquidity and market
value of the remaining Shares held by the public. The purchase of Shares
pursuant to the Offer can also be expected to reduce the number of holders of
Shares. Purchaser cannot predict whether the reduction in the number of Shares
that might otherwise trade publicly would have an adverse or beneficial effect
on the market price for or marketability of the Shares or whether it would cause
future market prices to be greater or less than the Offer price therefor.
NASDAQ QUOTATION. The purchase of Shares pursuant to the Offer will reduce
the number of holders of Shares and the number of Shares that might otherwise
trade publicly, and could adversely affect the liquidity and market value of the
remaining Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued inclusion in the Nasdaq
National Market. According to published guidelines, the Shares would not be
eligible for continued inclusion if the Shares fail to substantially meet, among
other things, the following standards: (i) 200,000 publicly held Shares, (ii)
market value of publicly held Shares of $1 million, and (iii) 400 holders of
Shares or 300 holders of Shares of round lots. If these standards are not met,
the Shares might nevertheless continue to be included in the Nasdaq Small Cap
Market, but if, among other things, the number of holders of Shares falls below
300, or if the number of publicly held Shares falls below 100,000, or if the
aggregate market value of such publicly held Shares falls below $200,000 or if
there are not at least two market makers (one of which may be a market maker
entering a stabilizing bid), Nasdaq Stock Market rules provide that the Shares
would no longer qualify for inclusion in the Nasdaq Stock Market and the Nasdaq
Stock Market would cease to provide any quotations. Shares held, directly or
indirectly, by an officer or director of the Company, or by any beneficial owner
of more than 10% of the Shares, ordinarily will not be considered as being
publicly held for this purpose.
In the event the Shares are no longer eligible for Nasdaq Stock Market
quotation, quotations might still be available from other sources. The extent of
the public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of such Shares remaining at such
time, the interest in maintaining a market in such Shares on the part of
securities firms, the possible termination of registration of such Shares under
the Exchange Act as described below and other factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares may be terminated upon application by the Company to the
Commission if the Shares are not listed on a "national securities exchange" and
there are fewer than 300 record holders of the Shares. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its stockholders and the
Commission and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) under the Exchange Act
and the requirements of furnishing a proxy statement in connection with
stockholders' meetings pursuant to Section 14(a) or 14(c) under the Exchange Act
and the related requirement of an annual report, no longer applicable to the
Company. If the Shares are no longer registered under the Exchange Act, the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions would no longer be applicable to the Company. 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, with respect
to certain persons, eliminated. If registration of the Shares under the Exchange
Act were terminated,
10
<PAGE> 14
the Shares would no longer be "margin securities" or eligible for stock exchange
listing or Nasdaq reporting. Purchaser believes that the purchase of the Shares
pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act, and it would be the intention of
Purchaser to cause the Company to make an application for termination of
registration of the Shares as soon as possible after successful completion of
the Offer if the Shares are then eligible for such termination.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will no longer be eligible for Nasdaq quotation and the registration
of the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which regulations have the effect, among other things,
of allowing brokers to extend credit on the collateral of such Shares for the
purpose of buying, carrying or trading in securities. Depending upon factors
such as the number of record holders of the Shares and the number and market
value of publicly held Shares, following the purchase of Shares pursuant to the
Offer, the Shares might no longer constitute "margin securities" for purposes of
the Federal Reserve Board's margin regulations and, therefore, could no longer
be used as collateral for Purpose Loans made by brokers. In addition, if
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Delaware corporation with its principal executive offices
located at 1850 Embarcadero Road, Palo Alto, California 94303. The following
description of the Company's business has been taken from, and is qualified in
its entirety by reference to, the Form 10-K filed by the Company for the year
ended June 30, 1998 (the "Company Form 10-K"):
"The Company designs, develops, manufactures and markets on a
worldwide basis biocompatible products for the treatment of defective,
diseased, traumatized or aging human tissues. The Company has grown by
identifying medical applications for its technology, developing innovative
products and building markets with healthcare professionals, either
directly or with marketing and technology partners. The Company's core
products are principally used in facial aesthetic applications.
The market for facial aesthetic products and treatments includes
surgical and non-surgical therapies to remedy aging and defective soft
tissues of the face. These products are used by healthcare professionals,
including plastic surgeons and dermatologists, in an office environment and
by consumers in the home. Most of these treatments are elective and are
pursued by patients for cosmetic effects rather than due to medical
necessity.
The worldwide market for facial aesthetic products has experienced
significant growth over the past several years. The Company believes that
growth of the market, both within the U.S. and internationally, can be
attributed to changing social conventions, which encourage consumers to
explore products and treatments to make them look and feel younger. As
demand has grown for facial aesthetic products and treatments, cost
containment pressures imposed by managed care have induced many healthcare
providers to offer additional services that are less dependent on
reimbursement and are paid for by the consumer. The Company believes that
the needs of physicians and patients have created a demand for more
innovative aesthetic products, a wider selection of alternatives, and
products that are safe, more affordable and longer lasting than existing
products and treatments."
The selected financial information of the Company and its consolidated
subsidiaries for the years ended June 30, 1998, 1997 and 1996 and for the nine
months ended March 31, 1999 and 1998 set forth below has been excerpted and
derived from such documents filed by the Company for the nine months ended March
31, 1999. More comprehensive financial and other information is included in the
Company Form 10-K and Form 10-Q (including management's discussion and analysis
of financial condition and results of operations) and in other reports and
documents filed by the Company with the Commission. The financial information
set forth below is qualified in its entirety by reference to such reports and
documents filed with the Commission and the financial statements and related
notes contained therein. These reports and other documents may be examined and
copies thereof may be obtained in the manner set forth below.
11
<PAGE> 15
COLLAGEN AESTHETICS, INC.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH 31, YEARS ENDED JUNE 30,
---------------------- --------------------------------
1999(4) 1998 1998 1997 1996
-------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Revenues................................... $ 62,156 $ 60,040 $ 82,772 $68,335 $68,285
Research and development expenses.......... 7,002 16,078 22,715 14,087 9,175
Operating income (loss)(2)................. 6,631 (14,203) (18,564) (1,767) 6,589
Gain from investments, net(1).............. 3,721 13,739 19,096 24,458 82,093
Net income (loss).......................... 6,303 (4,737) (14,083) 7,371 26,652
======== ========= ======== ======= =======
Net income (loss) per share --
Basic:
Continuing operations.................... $ 0.73 $ (0.21) $ (0.21) $ 1.68 $ 5.66
Discontinued operations.................. -- (0.32) (1.37) (0.84) (2.67)
-------- --------- -------- ------- -------
Net income (loss) per
share -- Basic.................. $ 0.73(3) $ (0.53)(3) $ (1.58)(3) $ 0.84(3) $ 2.99(3)
======== ========= ======== ======= =======
Net income (loss) per share --
Diluted:
Continuing operations.................... $ 0.72 $ (0.21) $ (0.21) $ 1.66 $ 5.56
Discontinued operations.................. -- (0.32) (1.37) (0.83) (2.62)
-------- --------- -------- ------- -------
Net income (loss) per
share -- Diluted................ $ 0.72 $ (0.53) $ (1.58) $ 0.83 $ 2.94
======== ========= ======== ======= =======
Shares used in calculating income (loss)
per share information -- Basic........... 8,678 8,901 8,913 8,804 8,915
======== ========= ======== ======= =======
Shares used in calculating income (loss)
per share information -- Diluted......... 8,711 8,901 8,913 8,930 9,075
======== ========= ======== ======= =======
</TABLE>
- ---------------
(1) In the first five months of fiscal 1996, financial information is presented
with Target Therapeutics, Inc. ("Target") accounted for under the equity
method. In January 1997, Boston Scientific and Target jointly announced the
signing of a definitive agreement to merge in a tax-free stock-for-stock
transaction. Gains from sales of portions of the Company's investment in
Boston Scientific (formerly Target) contributed $20.4 million, $9.2 million
and $85.8 million, to fiscal years 1998, 1997 and 1996 pre-tax earnings,
respectively. In addition, in fiscal 1997, the Company recorded an
additional $15.4 million, resulting from the sale of its holdings in
Prograft to W.L. Gore and Associates, Inc.
(2) Includes in-process research and development charges of $10.6 and $3.0
million in fiscal years 1998 and 1996, respectively.
(3) Includes effect of adopting Statement of Financial Accounting Standard No.
128 ("SFAS 128"). The adoption of SFAS 128 resulted in no significant impact
for fiscal years 1998, 1997 and 1996.
(4) Includes results of operations of Cohesion Technologies, Inc., which was
spun-off to Company stockholders on August 18, 1998.
12
<PAGE> 16
<TABLE>
<CAPTION>
JUNE 30,
MARCH 31, --------------------
1999* 1998 1997
--------- -------- --------
<S> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Total current assets........................................ $50,887 $ 53,225 $ 57,740
Property and Equipment, net................................. 12,412 14,448 13,945
Other current assets........................................ 10,927 11,016 9,226
Total assets................................................ 74,422 166,339 184,640
Current liabilities......................................... 28,160 33,717 25,380
Deferred income taxes....................................... -- 30,589 35,449
Total long-term liabilities................................. 1,224 31,982 39,126
Stockholders' equity........................................ 45,038 100,640 120,085
</TABLE>
- ---------------
* Includes amounts with respect to Cohesion Technologies, Inc., which was
spun-off to Company stockholders on August 18, 1998.
The Company is subject to the information and reporting requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning the Company's business, principal physical
properties, capital structure, material pending legal proceedings, operating
results, financial condition, directors and officers (including their
remuneration and the 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 certain other matters is required to be disclosed in proxy
statements and annual reports distributed to the Company's stockholders and
filed with the Commission. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following regional offices of the Commission: Northeast Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048, and
Midwest Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Such material may be obtained electronically by visiting the Commission's
worldwide web site on the Internet at HTTP://WWW.SEC.GOV. The Shares are traded
on the Nasdaq National Market. Reports, proxy statements and other information
concerning the Company should also be available for inspection at the National
Association of Securities Dealers, Inc., at 1735 K Street, N.W., Washington D.C.
20006.
Although neither Parent nor Purchaser has any knowledge that any such
information is untrue, neither Parent nor Purchaser takes any responsibility for
the accuracy or completeness of information contained in this Offer to Purchase
with respect to the Company or any of its subsidiaries or affiliates 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.
In the course of discussions between representatives of Parent and the
Company (see Section 10), the Company furnished certain projections of future
operating performance to Parent's representatives (the "Projections"). The
Projections were based on assumptions which management of the Company believed
to be reasonable at the time. The Projections have not been adjusted to reflect
the effects of the Offer or the Merger or the incurrence of indebtedness in
connection therewith. The Projections should be read together with the financial
statements of the Company referred to herein.
According to the Projections, for the fiscal years ending June 30, 1999 and
2000, the Company projected revenues of $86.6 million and $101.8 million,
respectively, and the Company projected net income of $8.8 million and $11.2
million, respectively. Parent gave no weight to the Projections in formulating
its offer price or evaluating the value of the Company.
THESE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDE-
13
<PAGE> 17
LINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
REGARDING PROJECTIONS, AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE
THEY WERE PROVIDED TO PARENT. NONE OF PARENT, PURCHASER, THE COMPANY, THE
FINANCIAL ADVISOR, THE DEPOSITARY, THE INFORMATION AGENT OR THE DEALER MANAGER
ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OF THESE PROJECTIONS. WHILE
PRESENTED WITH NUMERICAL SPECIFICITY, THESE PROJECTIONS ARE BASED UPON A VARIETY
OF ASSUMPTIONS, ALL MADE BY MANAGEMENT OF THE COMPANY, RELATING TO THE BUSINESS
OF THE COMPANY WHICH MAY NOT BE REALIZED, AND ARE SUBJECT TO SIGNIFICANT
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE
COMPANY. THERE CAN BE NO ASSURANCE THAT THE PROJECTIONS WILL BE REALIZED, AND
ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE SHOWN. THE INCLUSION OF THE
PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT ANY OF PARENT,
PURCHASER, THE COMPANY, THE FINANCIAL ADVISOR, THE DEPOSITARY, THE INFORMATION
AGENT OR THE DEALER MANAGER CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A
RELIABLE PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED
UPON AS SUCH. NONE OF PARENT, PURCHASER, THE COMPANY, THE FINANCIAL ADVISOR, THE
DEPOSITARY, THE INFORMATION AGENT OR THE DEALER MANAGER HAS MADE, OR MAKES, ANY
REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION CONTAINED IN THE
PROJECTIONS.
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
PURCHASER. Purchaser is a newly incorporated Delaware corporation. To
date, Purchaser has not conducted any business other than that incident to its
formation, the execution and delivery of the Merger Agreement and the
commencement of the Offer. Accordingly, no meaningful financial information with
respect to Purchaser is available. Purchaser is a wholly-owned subsidiary of
Parent. The principal executive office of Purchaser is located at 5541 Ekwill
Street -- Suite D, Santa Barbara, California 93111-2919.
PARENT. Parent is a Delaware corporation with its principal executive
offices located at 5541 Ekwill Street -- Suite D, Santa Barbara, California
93111-2919. The following description of Parent's business has been taken from,
and is qualified in its entirety by reference to, the Form 10-K filed by Parent
for the year-ended December 31, 1998 (the "Parent Form 10-K").
"Parent is a medical device company which . . . operates through
subsidiaries which are organized under three business units. Through two
business units -- U.S. Plastic and Reconstructive Surgery and Inamed
International -- Parent manufactures and markets saline and silicone
gel-filled breast implants for plastic and reconstructive surgery, as well
as other silicone based products including tissue expanders, facial
implants and custom prostheses for plastic and reconstructive surgery.
Through its third business unit -- BioEnterics Corporation -- the Company
manufactures and markets products for the treatment of obesity and for use
by general and laparoscopic surgeons.
Parent manufactures its products in Santa Barbara, California and in
Arklow, County Wicklow, Ireland, and owns or has exclusive licenses for
over 40 patents in the United Sates and overseas. Parent believes, with an
approximately 50% U.S. market share and a worldwide market share of
approximately 40%, that it is the leading company in the $275 million
worldwide breast implant market."
The selected financial information of Parent and its consolidated
subsidiaries set forth below for the three years ended December 31, 1998, has
been excerpted and derived from the Parent Form 10-K. More comprehensive
financial and other information is included in such reports (including
management's discussion and analysis of financial condition and results of
operations) and in other reports and documents filed or to be filed by Parent
with the Commission (including Parent's Form 10-Q for the quarter ended June 30,
1999). Such financial information is qualified in its entirety by reference to
such reports and documents filed with the Commission and the financial
statements and related notes contained therein. These reports and other
documents may be examined and copies thereof may be obtained in the manner set
forth below.
14
<PAGE> 18
INAMED CORPORATION
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
---------------------- -------------------------------------
1999 1998 1998 1997 1996
------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales...................... $79,753 $ 66,980 $131,566 $106,381 $ 93,372
Restructuring expense.......... -- -- (4,202) -- --
Operating income (loss)........ 20,383 5,627 8,467 (3,577) (3,956)
Litigation settlement.......... -- -- -- (28,150) --
Income (loss) before income tax
expense (benefit) and
extraordinary charges........ 19,603 4,446 5,341 (39,696) (8,165)
Income tax expense (benefit)... -- 104 (8,432)(4) 1,881(2) 3,214(1)
Net income (loss) before
extraordinary charges........ -- -- 13,772 (41,577) (11,379)
Extraordinary charges.......... -- -- (1,800) -- --
Net income (loss).............. $16,564 $ 2,488 $ 11,973 $(41,577) $(11,379)
Net income (loss) per share of
common stock(3) --
Basic........................ $1.27 $0.25 $1.15 $(4.97) $(1.46)
Diluted...................... $1.11 $0.25 $0.92 $(4.97) $(1.46)
Weighted average common shares
outstanding (basic).......... 13,074,191 12,691,152 10,387,163 8,371,399 7,811,073
</TABLE>
- ---------------
(1) Includes a write-off of domestic deferred tax assets of $2,006.
(2) Includes a provision of $1,000 for the conversion of foreign intercompany
accounts to equity.
(3) The earnings per share amounts for all years presented have been restated to
comply with the provisions of Statement of Financial Accounting Standards
No. 128, "Earnings per Share."
(4) Reflects the recognition of a $8,000 deferred tax asset based on future
short-term income projections.
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital (deficiency)................................ $39,456 $ (988) $ 6,460
Total assets................................................ $95,236 80,707 58,842
Long term debt, net of current installments................. 17,047 27,767 23,574
Subordinated long term debt, related party.................. -- -- 8,813
Stockholders' (deficiency) equity........................... 42,748 (15,625) (46,689)
Dividends paid.............................................. -- -- --
</TABLE>
Parent is subject to the information and reporting requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning Parent's business, principal physical properties,
capital structure, material pending legal proceedings, operating results,
financial condition, directors and officers (including their remuneration and
the stock options granted to them), the principal holders of Parent's
securities, and any material interest of such persons in transactions with
Parent and certain other matters is required to be disclosed in proxy statements
and annual reports distributed to Parent's stockholders and filed with the
Commission. Such reports, proxy statements and other information may be
inspected, and copies may be obtained at the same places and in the same manner
set forth with respect to the information concerning the Company in Section 8.
15
<PAGE> 19
Except as set forth elsewhere in this Offer to Purchase or Schedule I
hereto: (i) none of Parent or Purchaser and, to the knowledge of Parent or
Purchaser, none of the persons listed in Schedule I hereto or any associate or
majority-owned subsidiary of any of the foregoing, beneficially owns or has a
right to acquire any Shares or any other equity securities of the Company,
except that Appaloosa Management L.P. (which beneficially owns shares
constituting approximately 36.8% of Parent's outstanding shares of common stock)
beneficially owns 425,0000 Shares, constituting approximately 4.9% of the Shares
outstanding; (ii) neither Parent nor Purchaser nor, to the knowledge of Parent
or Purchaser, any of the persons or entities referred to in clause (i) above has
effected any transaction in the Shares or any other equity securities of the
Company during the past 60 days; (iii) neither Parent nor Purchaser nor, to the
knowledge of Parent or Purchaser, any of the persons referred to in clause (i)
above has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company (including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or the voting of any such securities, joint ventures, loan or
option arrangements, puts or calls, guaranties of loans, guaranties against loss
or the giving or withholding of proxies, consents or authorizations); (iv)
during the past sixty (60) days, there have been no transactions which would
require reporting under the rules and regulations of the Commission between
Parent, Purchaser or any of their respective subsidiaries or, to the knowledge
of Parent or Purchaser, any of the persons referred to in clause (i) above, on
the one hand, and the Company or any of its executive officers, directors or
affiliates, on the other hand; and (v) during the past sixty (60) days, there
have been no contacts, negotiations or transactions between Parent or Purchaser
or any of their respective subsidiaries or, to the knowledge of Parent or
Purchaser, any of the persons referred to in clause (i) above, on the one hand,
and the Company or any of its subsidiaries or 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 Parent nor Purchaser had any relationship with the Company prior to
the commencement of the discussions that led to the execution of the Merger
Agreement. See Section 10. Both Parent and Purchaser disclaim that they are an
"affiliate" of the Company within the meaning of Rule 13e-3 under the Exchange
Act.
10. BACKGROUND OF THE OFFER; PAST CONTACTS WITH THE COMPANY.
On March 1, 1999, the Company announced that it had received an unsolicited
proposal from Mentor Corporation to acquire all the capital stock of the
Company. In response to this proposal, on March 3, 1999, the Company announced
that, following consultation with its financial advisor Lehman Brothers Inc.
("Lehman"), it would undertake an evaluation of the strategic alternatives
available to the Company with the objective of maximizing shareholder value,
including a possible sale or merger of the Company. During the next six weeks,
the Company, with the assistance of Lehman, prepared a Confidential Descriptive
Memorandum about the Company for circulation (upon the execution of a
confidentiality agreement) to certain entities identified by Lehman and the
Company as possible bidders.
The Company and Parent executed a confidentiality agreement, dated April
23, 1999, following which Parent received a copy of the Confidential Descriptive
Memorandum.
On May 19, 1999, based on its review of the Confidential Descriptive
Memorandum, Parent submitted a preliminary, non-binding indication of interest
in acquiring all the outstanding shares of the Company for $15 - $17 per share.
Based on this indication of interest, Parent was invited to participate in
presentations by the management of the Company as part of the due diligence
process which the Company had established for all interested bidders.
On June 3, Parent's Board of Directors held an extensive meeting with its
financial advisor, Hambrecht & Quist LLC, to discuss whether to move forward
with its investigation of the Company. During the course of this meeting,
Parent's Board of Directors decided that Parent's senior officers should
participate in the Company's due diligence process. On June 8 and 9, 1999,
Parent along with its legal advisors, conducted due diligence with respect to
the Company. Thereafter, Parent held numerous telephonic meetings with the
Company to discuss the information learned through Parent's due diligence
investigation. On June 21, 1999,
16
<PAGE> 20
Parent's Board of Directors reconvened and, following a further presentation by
Hambrecht & Quist LLC and its review of financing alternatives, unanimously
approved a proposal to make a formal bid for the Company. During the course of
this meeting, Parent's Board of Directors also unanimously adopted a set of
resolutions authorizing Parent's senior officers to negotiate, among other
things, the Offer and the Merger.
On June 23, 1999, Parent submitted a bid of $15.75 per Share to the
Company, which was negotiated to $16.25 per share, subject to agreement on the
definitive documentation and the other material terms of the transaction. On
June 30, 1999, Parent's legal advisors delivered a copy of the form of Merger
Agreement proposed by the Company that reflected Parent's initial comments,
following which the Company and Parent initiated negotiations of the Merger
Agreement concerning such matters as purchase price, representations and
warranties, covenants, conditions to the Offer and the Merger, and termination
events. During the first three weeks of July, Parent negotiated the terms of its
financing for the Offer and the Merger. On July 21, 1999, Parent's Board of
Directors again reconvened and, following a full presentation by Parent's senior
officers, unanimously approved the then current form of the Merger Agreement and
adopted resolutions authorizing Parent's senior officers to execute the Offer
and the other documents contemplated by the Merger Agreement. Parent's Board of
Directors also authorized Parent's senior officers to conclude an agreement to
finance the transactions in accordance with parameters discussed at the meeting.
On July 23, 1999, Parent received a commitment letter from Cerberus Capital
Management, L.P., agreeing, subject to certain conditions, to finance the Offer,
the Merger and the related fees and expenses.
Thereafter, Parent, the Company and their respective financial and legal
advisors concluded their negotiation of a definitive Merger Agreement. On
Friday, July 30, 1999, a form of the Merger Agreement was presented to the
Company's Board of Directors. On Saturday, July 31, 1999, the form of the Merger
Agreement was unanimously approved by the Company's Board of Directors. On that
same day, the definitive Merger Agreement was executed. On the following Monday,
August 2, 1999, the parties issued the following press releases:
"INAMED CORPORATION AGREES TO ACQUIRE
COLLAGEN AESTHETICS, INC. FOR $16.25 PER SHARE
Santa Barbara, California -- August 2, 1999 -- Inamed
Corporation (OTC BB:IMDC) announced today that it has agreed to
acquire Collagen Aesthetics, Inc. (Nasdaq: CGEN) for $16.25 per
share in cash, for a total of approximately $142 million. The
directors of both companies have unanimously approved a
definitive merger agreement.
The combination of these two companies will create a global
leader in plastic surgery and aesthetic medicine, with over $225
million of annual sales and a broad portfolio of products to
address the needs of plastic and reconstructive surgeons,
dermatologists, cosmetic surgeons and other aesthetic
practitioners throughout the world. These products include
Inamed's comprehensive line of saline and silicone gel filled
implants for breast augmentation and reconstruction, as well as
devices to treat obesity. Collagen Aesthetics' products include
the flagship Zyderm(R) and Zyplast(R)collagen implants for the
correction of facial wrinkles and scars.
Beginning later this week Inamed will commence a cash
tender offer for all outstanding shares of common stock of
Collagen Aesthetics. Following completion of the tender offer
all remaining Collagen Aesthetics shares will be acquired in a
cash merger at the same price. It is anticipated that these
transactions will be completed by September 30, 1999.
The tender offer is subject to a majority of Collagen
Aesthetics' fully diluted shares (approximately 10.2 million
shares as of July 30, 1999) being validly tendered and not
17
<PAGE> 21
withdrawn, as well as the expiration of the Hart-Scott premerger
notification waiting period and other customary conditions.
Neither the tender offer nor the second step merger is
subject to financing contingencies. In that regard, Inamed has
obtained a secured bridge loan commitment for $155 million from
a group of financial institutions, which was arranged by U.S.
Bancorp Libra. Inamed currently contemplates that the bridge
loan will be refinanced during 1999 with the proceeds of
long-term debt financing.
Further details about the merger agreement, the tender
offer and the financing will be available later this week in the
SEC filings to be made by both parties at the time the tender
offer commences.
Collagen Aesthetics had sales of $84 million for the twelve
months ended March 31, 1999. It has no debt and over $17 million
of cash. Collagen Aesthetics expects to report its financial
results for the fiscal year ended June 30, 1999 by mid-August.
For the twelve months ending June 30, 1999, Inamed had
sales of $144 million and cash flow (consisting of earnings
before interest, taxes, depreciation and amortization) of
approximately $30.5 million. As of that date Inamed had $17
million of debt and $14 million of cash. Upon completion of the
tender offer Inamed will retire its existing debt, so that the
combined company will have only the $155 million of bridge debt
outstanding. Inamed's current equity market capitalization is
approximately $375 million.
Richard G. Babbitt, Inamed's Chairman and CEO, stated:
'This acquisition brings together two of the strongest and
largest franchises in plastic and reconstructive surgery and
aesthetic medicine. Both companies are dedicated to devoting
resources to new products and to sales and marketing initiatives
which will further enhance their position in the growing fields
of aesthetic, plastic and reconstructive medicine.'
Ilan Reich, Inamed's President, said: 'We anticipate that
for the fiscal year ending December 31, 2000 this acquisition
will add at least $0.25 per share to Inamed's earnings on a
fully taxed, fully diluted basis. But more significantly, this
acquisition marks the culmination of a fifteen-month effort by
Inamed to implement its strategy of diversifying into the
collagen business, while leveraging its existing marketing,
distribution and corporate infrastructure. We are particularly
excited about having Collagen Aesthetics be the platform for
accelerating the marketing of the human collagen products for
facial and incontinence uses which we recently licensed from
Advanced Tissue Sciences Inc. The value we see in Collagen
Aesthetics reflects both its current franchise as well as the
unique benefit which Inamed hopes to derive by commercializing
those human collagen products faster than Collagen Aesthetics
could have done based on its current R&D program.'
Collagen Aesthetics was advised by Lehman Brothers Inc.,
which also provided a fairness opinion to the Collagen Board of
Directors. Inamed was advised by Hambrecht & Quist LLC, which
will be acting as dealer manager in the tender offer.
Collagen Aesthetics is maximizing its worldwide aesthetic
medicine franchise and nearly two decades of physician
relationships with proprietary and in-licensed products.
Collagen's proprietary product line includes Zyderm(R) and
Zyplast(R) collagen implants and Contigen(R) Bard collagen
implant, while in-licensed products include Hylaform(R)
viscoelastic gel, SoftForm(R) facial implant, Refinity(TM)
Medical Skin Solutions and the Coblation(TM) dermatologic
surgery system.
Inamed is a global surgical and medical device company
engaged in the development, manufacturing and marketing of
medical devices for the plastic, reconstructive and aesthetic
surgery markets, as well as devices to treat obesity.
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<PAGE> 22
This release contains forward-looking statements that are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements involve known and unknown risks and uncertainties
that may cause Inamed's actual results in future periods to
differ materially from that which is anticipated. Factors that
may cause such differences include, but are not limited to,
those described in Inamed's Annual Report on Form 10-K for the
year ended December 31, 1998."
"COLLAGEN AESTHETICS, INC. TO BE ACQUIRED
BY INAMED CORPORATION FOR $16.25 IN CASH
Palo Alto, California -- Aug. 2, 1999 -- Collagen
Aesthetics, Inc. (NASDAQ NM: CGEN-news) announced today that
Inamed Corporation of Santa Barbara, California has agreed to
acquire Collagen for $16.25 per share in cash, for a total value
of approximately $142 million. The price represents
approximately a 65% premium over the 90-day average Collagen
stock price prior to an unsolicited acquisition proposal from
Mentor Corporation of $14.50 made on March 1, 1999. The
directors of both companies have unanimously approved a
definitive merger agreement.
The combination of these two companies will create a global
leader in plastic surgery and aesthetic medicine, with over $225
million of annual sales and a broad portfolio of products to
address the needs of plastic and reconstructive surgeons,
dermatologists, cosmetic surgeons and other aesthetic
practitioners throughout the world. These products include
Inamed's comprehensive line of saline and silicone gel filled
implants for breast augmentation and reconstruction, as well as
devices to treat obesity. Collagen Aesthetics' products include
the flagship Zyderm(R) and Zyplast(R) collagen implants for the
correction of facial wrinkles and scars.
Beginning later this week Inamed will commence a cash
tender offer for all outstanding shares of common stock of
Collagen Aesthetics. Following completion of the tender offer
all remaining Collagen Aesthetics shares will be acquired in a
cash merger at the same price. It is anticipated that these
transactions will be completed by September 30, 1999.
The tender offer is subject to a majority of Collagen
Aesthetics' fully diluted shares being validly tendered and not
withdrawn, as well as the expiration of the Hart-Scott premerger
notification waiting period and other customary conditions. The
transaction is not subject to financing contingencies. In that
regard, Inamed has obtained a secured bridge loan commitment for
$155 million from a group of financial institutions.
Collagen Aesthetics Inc. was advised by Lehman Brothers.
Further details about the merger agreement, the tender offer and
the financing will be available later this week in the SEC
filings to be made by both parties at the time the tender offer
commences.
'The merger agreement with Inamed represents the successful
completion of a process Collagen Aesthetics initiated in March
1999 to explore strategic alternatives and to maximize
shareholder value' stated Gary S. Petersmeyer, Collagen
Aesthetics' President and CEO.
Collagen Aesthetics is maximizing the Company's worldwide
aesthetic medicine franchise and nearly two decades of physician
relationships with proprietary and in-licensed products. The
Company's proprietary products include Zyderm and Zyplast
collagen implants and Contigen(R) Bard collagen implant, while
in-licensed products include Hylaform(R) viscoelastic gel,
SoftForm(R) facial implant, Refinity(TM) Medical Skin Solutions
and the Coblation(TM) dermatologic surgery system. For more
information regarding Collagen
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Aesthetics, please visit the Company's Web site at
www.collagen.com. In addition, Collagen Aesthetics' press
releases can be viewed at www.businesswire.com/cnn/cgen.htm.
Except for the historical information contained herein, the
matters discussed in this press release are forward-looking
statements, the accuracy of which is necessarily subject to
risks and uncertainties including the tender of sufficient
Collagen shares to complete the transaction, receipt of
regulatory approvals, potential unfavorable publicity regarding
Collagen Aesthetics or its products and possible reversal of
sales trends, among other matters discussed in this release.
Actual results are subject to risks and uncertainties, and
actual events and results may differ significantly from the
discussion of such matters in the forward-looking statements.
Such differences may be based upon factors within Collagen
Aesthetics' control, such as strategic planning decisions by
management and reallocation of internal resources, or on factors
outside of the Company's control, such as actions or delays by
regulatory authorities or other third parties, as well as those
factors set forth under the heading 'Factors That May Affect
Future Results of Operations' in Collagen Aesthetics' Form 10-K
filed for the year ended June 30, 1998 and Form 10-Q for the
quarter ended March 31, 1999."
11. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; APPRAISAL RIGHTS; PLANS FOR THE
COMPANY; THE RIGHTS.
(A) Purpose
The purpose of the Offer and the Merger is to acquire control of, and the
entire equity interest in, the Company. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all the
Shares. The purpose of the Merger is to acquire all capital stock of the Company
not purchased pursuant to the Offer or otherwise. As a result of the Offer and
Merger, the Company will (subject to a possible restructuring if requested by
Parent) become a wholly-owned subsidiary of Parent.
The following is a summary of certain provisions of the Merger Agreement.
This summary is qualified in its entirety by reference to the Merger Agreement,
which is incorporated by reference and copies or forms of which have been filed
with the Commission as exhibits to the Schedule 14D-1. The Merger Agreement may
be examined and copies may be obtained at the places set forth in Section 8.
Defined terms used herein and not defined herein shall have the respective
meanings assigned to those terms in the Merger Agreement.
(B) The Merger Agreement
THE OFFER. The Merger Agreement provides that Purchaser will commence the
Offer, and that, upon the terms and subject to prior satisfaction or waiver of
the conditions of the Offer, as set forth in Section 14, Purchaser will purchase
all Shares validly tendered pursuant to the Offer. The Merger Agreement provides
that Purchaser has the right to waive any of the conditions to the Offer and to
make any change in the terms or conditions of the Offer, provided that, no
change or waiver may be made that, without the prior written consent of the
Company, (i) waives the Minimum Condition, (ii) changes the form of
consideration to be paid, (iii) decreases the price per Share or the number of
Shares sought in the Offer, (iv) imposes any additional conditions to the Offer,
or (v) is otherwise adverse to the holders of the Shares. Notwithstanding the
foregoing, without the consent of the Company, Purchaser has the right to extend
the Offer (i) from time to time if, at the scheduled or extended expiration date
of the Offer, any of the conditions to the Offer shall not have been satisfied
or waived, until such conditions are satisfied or waived, (ii) for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer or any period required by
applicable law, (iii) for a period of not more than 10 business days in order to
finalize Purchaser's financing arrangements for the purchase of Shares pursuant
to the Offer and the Merger, (iv) during the pendency of a Market Disruption (as
defined in the Merger Agreement) until December 31, 1999, or (v) on one or more
occasions for an aggregate period of not more than 15 business days beyond the
latest expiration date that would otherwise be permitted under clause (i), (ii),
(iii) or (iv) of this sentence if,
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<PAGE> 24
on such expiration date there shall not have been tendered at least 90% of the
outstanding Shares. If all of the conditions to the Offer described in Section
14 have not been satisfied or waived on any scheduled Expiration Date of the
Offer, Purchaser is required to extend the Offer from time to time until such
conditions are satisfied or waived, provided that Purchaser shall not be
required to extend the Offer beyond December 31, 1999; and provided further,
that Purchaser shall not be obligated to extend the Offer beyond October 29,
1999 in the event the Minimum Condition or any of the conditions to the Offer
described in paragraphs (c) and (h) of Section 14 have not been satisfied or
waived on or before such date.
RECOMMENDATION. The Company has represented to Parent in the Merger
Agreement that the Company's Board of Directors, at a meeting duly called and
held, has (i) determined that the Offer and the Merger are fair to and in the
best interests of the Company's stockholders, (ii) approved and adopted the
Merger Agreement and the transactions contemplated by the Merger Agreement in
accordance with Delaware law, (iii) except as otherwise provided in the Merger
Agreement, resolved to recommend acceptance of the Offer and approval and
adoption of the Merger Agreement and the Merger by the Company's stockholders,
(iv) taken all action necessary to render Section 203 of the GCL inapplicable to
the Merger Agreement, the Offer and the Merger and (v) taken all action
necessary to render the Rights inapplicable to the Merger Agreement, the Offer
and the Merger. The Company's Board of Directors' recommendation and approval of
the Merger Agreement, the Offer and the Merger may be withdrawn, modified or
amended to the extent that (i) the Company has complied with all the provisions
in the Merger Agreement regarding solicitation as described below in "No
Solicitation," (ii) a Superior Proposal, as defined below in "No Solicitation,"
is pending at the time the Board of Directors of the Company determines to take
any such action, and (iii) the Company's Board of Directors determines in good
faith by a majority vote, on the basis of the advice of its outside legal
counsel, that, consistent with its fiduciary duties, under applicable law, it
must take such action. The Company has further represented that, prior to the
execution of the Merger Agreement, the Financial Advisor delivered to the
Company's Board of Directors its written opinion to the effect that, as of the
date of the Merger Agreement, the consideration to be received by the holders of
the Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view.
DIRECTORS. The Merger Agreement provides that effective upon the purchase
pursuant to the Offer of a number of Shares that satisfies the Minimum
Condition, Parent shall be entitled to designate the number of directors,
rounded up to the next whole number, on the Company's Board of Directors that
equals the product of (i) the total number of directors on the Company's Board
of Directors (giving effect to the election of any additional directors pursuant
to this Section) and (ii) the percentage that the number of Shares beneficially
owned by Parent (including Shares accepted for payment) bears to the total
number of Shares outstanding; and the Company shall take all action necessary to
cause Parent's designees to be elected or appointed to the Company's Board of
Directors, including, without limitation, increasing the number of directors and
seeking and accepting resignations of incumbent directors. At such time, if
requested by Parent, the Company will also use its best efforts to cause
individual directors designated by Parent to constitute the same percentage
(rounded up to the next whole number) as such individuals represent on the
Company's Board of Directors of (i) each committee of the Company's Board of
Directors other than any committee of the Board of Directors established to take
action under the Merger Agreement and (ii) each Board of Directors of each
subsidiary of the Company (and each committee thereof). Notwithstanding the
foregoing, the Company shall use its reasonable best efforts to ensure that at
least one member of the Board of Directors as of the date of the Merger
Agreement who is not an employee of the Company shall remain a member of the
Board of Directors until the Effective Time.
THE MERGER. The Merger Agreement provides that, at the Effective Time,
Purchaser will be merged with and into the Company. Following the Merger, the
separate corporate existence of Purchaser will cease and the Company will
continue as the Surviving Corporation. Parent and Purchaser may, however, with
the consent of the Company, which consent shall not be unreasonably withheld,
restructure the Merger in the form of a forward subsidiary merger of the Company
into Purchaser, with Purchaser being the surviving corporation, as a merger of
the Company into Parent, with Parent being the surviving corporation, or as a
series of mergers involving the Company and one or more of Parent's affiliates.
In such event, the Merger Agreement shall be deemed appropriately modified to
reflect such form of merger.
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<PAGE> 25
The Company has agreed pursuant to the Merger Agreement that, if required
by applicable law in order to consummate the Merger, it will (i) convene a
special meeting of its stockholders as soon as practicable following the
consummation of the Offer for the purpose of voting on the approval and adoption
of the Merger Agreement and the Merger unless Delaware law does not require a
vote of stockholders of the Company for consummation of the Merger; (ii)
promptly prepare and file with the Commission, use its best efforts to have
cleared by the Commission and thereafter mail to its stockholders as promptly as
practicable a preliminary proxy statement relating to the Merger (the "Company
Proxy Statement") and all other proxy materials for such meeting, (iii) use its
best efforts to obtain the necessary approvals by its stockholders of the Merger
Agreement and the transactions contemplated by the Merger Agreement and (iv)
otherwise comply with all legal requirements applicable to such meeting. The
Company shall give Parent and its counsel the opportunity to review the Company
Proxy Statement and all responses to requests for additional information by and
replies to comments of the Commission before their being filed with, or sent to,
the Commission.
CHARTER, BY-LAWS, DIRECTORS AND OFFICERS. The certificate of incorporation
of Purchaser in effect at the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until amended in accordance with
applicable law, provided that, at the Effective Time, Article First of such
certificate of incorporation shall be amended to read as follows: "The name of
the corporation is Collagen Aesthetics, Inc." The bylaws of Purchaser in effect
at the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (a) the directors of Purchaser at the Effective Time shall be
the directors of the Surviving Corporation and (b) the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation.
CONVERSION OF SECURITIES. By virtue of the Merger and without any action
on the part of the holders thereof, at the Effective Time, each Share issued and
outstanding immediately prior to the Effective Time (other than (i) any Shares
held by Parent or any wholly-owned subsidiary of Parent, which Shares, by virtue
of the Merger and without any action on the part of the holder thereof, will be
canceled and will cease to exist with no payment being made with respect thereto
and (ii) Dissenting Shares) will be canceled and retired and will be converted
into the right to receive the Merger Consideration, upon surrender of the
certificate formerly representing such Share. At the Effective Time, each share
of common stock of Purchaser, par value $.01 per share, issued and outstanding
immediately prior to the Effective Time will, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become one share of common stock, par value $.01 per share, of the Surviving
Corporation with the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation.
The Merger Agreement provides that, prior to the consummation of the Offer,
the Board of Directors of the Company will take all other actions (including, if
appropriate, amending the terms of any option plan or arrangement or obtaining
all necessary consents or releases from optionees or otherwise) that are
necessary to provide for the cancellation, effective at the Effective Time, of
all the outstanding stock options (the "Options") granted under any other option
plan or similar plan or agreement of the Company (collectively referred to
herein as the "Stock Option Plans"). Such cancellation will occur without any
payment therefor except as otherwise discussed in this Section 11. At the
Effective Time, each Option outstanding under any Stock Option Plan, whether
vested or not vested (the "Compensation Options"), shall be changed into an
amount in cash in respect of each Share subject to such Option equal to the
Merger Consideration less the purchase price thereof pursuant to the Stock
Option Plan and the applicable stock option agreements, to the extent such
number is a positive number (the "Option Amount"). Upon receipt by any Option
holder of the Option Amount, each Compensation Option held by such holder shall
be canceled and the surrender of a Compensation Option to the Company in
exchange for the Option Amount shall be deemed a release of any and all rights
such holder had or may have had in respect of such Compensation Option. Except
as otherwise agreed to by the parties in the Merger Agreement: (i) each Stock
Option Plan shall terminate as of the Effective Time and the provisions in any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company, or any subsidiary
thereof, shall be canceled as of the Effective Time; and (ii) no participant in
any Stock Option Plan or other plans, programs or
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<PAGE> 26
arrangements shall have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation or any subsidiary thereof and that the
Company will terminate all such plans as of the Effective Time.
As of the Effective Time, no new offering period shall commence under the
Company's 1998 Employee Stock Purchase Plan (the "ESPP") and the ESPP shall be
terminated. In addition, no person who was not a current employee on the
offering date with respect to the current offering period, as those terms are
used in the ESPP, shall be entitled to purchase shares under the ESPP. The
Company shall pay each participant in any current offering period under such
plan in cash at the Effective Time, in cancellation of all rights under such
plan, an amount determined by multiplying (i) the Merger Consideration by (ii)
the number of Shares such participant could have purchased under the ESPP based
on his or her account balance under such plan immediately prior to the Effective
Time (treating, for such purpose, the option price per Share as equal to the
lesser of 85% of the fair market value of a Share on the offering date with
respect to such offering period and 85% of the Merger Consideration). Prior to
the Effective Time, the Company shall take all actions (including, if
appropriate, amending the terms of the ESPP or obtaining participant consents)
that are necessary to provide for the termination of the ESPP.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to the Parent with
respect to, among other matters, its organization and qualification, authority,
consents and approvals, capitalization, public filings, financial statements,
the absence of certain changes, no undisclosed material liabilities, litigation,
environmental matters, tax matters, employee benefit matters, termination
benefits, patents and other proprietary rights, Year 2000 matters, products
liability insurance, the Rights Agreement, Section 203 of the GCL, finders'
fees, the opinion of its financial advisor and transaction expenses. Parent has
made customary representations and warranties to the Company with respect to,
among other matters, its organization, authority, consents and approvals,
finders' fees and financing.
COVENANTS. The Merger Agreement obligates the Company and its
subsidiaries, from the date of the Merger Agreement until the Effective Time, to
conduct their operations only in the ordinary course of business consistent with
past practice and use their reasonable best efforts to preserve intact their
business organizations and relationships with third parties and to keep
available the services of their present officers and employees. The Merger
Agreement also contains specific restrictive covenants as to certain
impermissible activities of the Company prior to the Effective Time, which
provide that the Company will not (and will not permit any of its subsidiaries
to) take certain actions, including, among other things, amendments to its
certificate of incorporation or by-laws, mergers or consolidations, material
acquisitions or dispositions, increases in compensation or adoption of new
benefit plans, dividends and other distributions, entrance into any material
commitment or transaction, issuances or sales of its securities, entrance into
or assumption of certain additional indebtedness, and certain other material
events or transactions.
NO SOLICITATION. The Merger Agreement provides that the Company will not,
and will cause its subsidiaries and the officers, directors, employees,
investment bankers, attorneys, accountants, consultants or other agents or
advisors of the Company and its subsidiaries not to, directly or indirectly,
except as otherwise provided in the Merger Agreement, (i) take any action to
solicit, initiate, facilitate or encourage the submission of any inquiry, offer
or proposal regarding any of the following events involving the Company or any
of its subsidiaries: (w) any merger, consolidation, share exchange, share
purchase, recapitalization, business combination or other similar transaction,
(x) any sale, lease, exchange, transfer or other disposition of all or
substantially all the assets of the Company and its subsidiaries, taken as a
whole, in a single transaction or series of related transactions, (y) any tender
offer or exchange offer for 20 percent or more of the outstanding Shares or the
filing of a registration statement under the Securities Act of 1933 in
connection therewith, or (z) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing (an "Acquisition Proposal"); (ii) engage in substantive discussions or
negotiations with, or disclose any nonpublic information relating to the Company
or any of its subsidiaries or afford access to the properties, books or records
of the Company or any of its subsidiaries to, any person who the Company has
reason to believe may be considering making, or has made, an Acquisition
Proposal; or (iii) grant any waiver or release under any standstill or similar
agreement with respect to any class
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<PAGE> 27
of equity securities of the Company. The Company will notify Parent promptly
after receipt by the Company (or any of its advisors) of any Acquisition
Proposal or any request for nonpublic information relating to the Company or any
of its subsidiaries or for access to the properties, books or records of the
Company or any of its subsidiaries by any person who the Company has reason to
believe may be considering making, or has made, an Acquisition Proposal. The
Company shall, and shall cause its subsidiaries and the directors, employees and
other agents of the Company and its subsidiaries to, cease immediately and cause
to be terminated all activities, discussions and negotiations, if any, with any
persons conducted prior to the date of the Merger Agreement with respect to any
Acquisition Proposal. Nothing, however, shall prevent the Board of Directors of
the Company from complying with Rule 14d-9 or Rule 14e-2 under the 1934 Act with
respect to any Acquisition Proposal.
Notwithstanding the foregoing, the Company may negotiate or otherwise
engage in substantive discussions with, and furnish nonpublic information to,
any person who delivers a written Acquisition Proposal if (i) two (2) business
days prior to furnishing such information to, or entering into substantive
discussions or negotiations with, such person, the Company provides written
notice to Parent to the effect that it is furnishing information to, or entering
into substantive discussions or negotiations with, such person, which notice
shall identify such person in reasonable detail, (ii) the Company keeps Parent
reasonably informed of the status of any such discussions or negotiations, (iii)
the Board of Directors of the Company determines in good faith by a majority
vote, on the basis of advice from its outside legal counsel, that, consistent
with its fiduciary duties under applicable law, it must take such action, (iv)
such person executes a confidentiality agreement with terms no less favorable to
the Company than those contained in the Confidentiality Agreement, (v) such
Acquisition Proposal is reasonably expected to be all cash and is not explicitly
subject to any financing contingency, and that in the event that such
Acquisition Proposal is in the form of a tender offer or exchange offer, such
tender offer or exchange offer is for 50% or more of the outstanding Shares and
(vi) the Board of Directors of the Company has concluded in good faith that the
person making such Acquisition Proposal is reasonably expected to have adequate
sources of financing to consummate such Acquisition Proposal and is reasonably
expected not to encounter significant regulatory obstacles to consummating the
transactions on a timely basis. A Superior Proposal is any bona fide,
unsolicited written Acquisition Proposal on terms that the Board of Directors of
the Company determines in good faith by a majority vote is more favorable and
provides greater value to all the Company's stockholders than is provided under
the Merger Agreement, which decision takes into account the advice of a
financial advisor of nationally recognized reputation (a copy of which shall be
provided promptly to Parent) and all the terms and conditions of the Acquisition
Proposal, including, any break-up fees, expense reimbursement provisions and
conditions to closing.
Parent will not disclose any information received from the Company pursuant
to this provision of the Merger Agreement to any other person, except for
disclosures to Parent's financial, legal and other advisors or persons
considering providing financing to Parent in connection with the transactions
contemplated by the Merger Agreement, and except for such disclosures required
in order that Parent not be in violation of or default under any applicable law,
regulation or governmental order. Nothing in this provision of the Merger
Agreement (x) permits the Company to terminate the Merger Agreement (except as
described in "Termination" below), (y) permits the Company to enter into any
written agreement with respect to an Acquisition Proposal for so long as the
Merger Agreement remains in effect (it being agreed that for so long as the
Merger Agreement remains in effect, the Company shall not enter into any written
agreement with any person that provides for, or in any way facilitates, an
Acquisition Proposal (other than a confidentiality agreement under the
circumstances described above)), or (z) affect any other obligation of the
Company under the Merger Agreement.
The Board of Directors of the Company shall be permitted to withdraw, or
modify in a manner adverse to Parent, its recommendation to its stockholders,
but only if (i) the Company has complied with the terms in the Merger Agreement
regarding solicitation of an Acquisition Proposal as described herein, (ii) a
Superior Proposal satisfying the conditions of clauses (v) and (vi) in the above
paragraph is pending at the time the Board of Directors of the Company
determines to take any such action, and (iii) the Board of Directors determines
in good faith by a majority vote, on the basis of advice from its outside legal
counsel, that, consistent with its fiduciary duties under applicable law, it
must take such action.
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ACCESS TO INFORMATION. The Merger Agreement provides that, until the
Effective Time and subject to applicable law and the Confidentiality Agreement,
the Company shall (i) give Parent, its counsel, financial advisors, auditors and
other authorized representatives full access to the offices, properties, books
and records of the Company and its subsidiaries, (ii) furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such persons may
reasonably request and (iii) instruct the employees, counsel, financial
advisors, auditors and other authorized representatives of the Company and its
subsidiaries to cooperate with Parent in its investigation of the Company and
its subsidiaries. Any investigation, however, shall be conducted in such manner
as not to interfere unreasonably with the conduct of the business of the Company
and its subsidiaries. No information or knowledge obtained by Parent in any
investigation shall affect or be deemed to modify any representation or warranty
made by the Company in the Merger Agreement. Notwithstanding the foregoing, the
Company shall not be required to permit any inspection or to disclose any
information, which in the reasonable judgment of the Company, 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 for such inspection
or disclosure.
EFFORTS. Subject to the terms and conditions provided in the Merger
Agreement, the Company and Parent will use their respective reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under any applicable laws to
consummate and make effective the transaction contemplated by the Merger
Agreement, including to (i) obtain all consents, approvals or actions of, make
all filings with and give all notices to, any governmental or regulatory
authorizes or any other public or private third parties required of Parent, the
Company or any of their subsidiaries to consummate the Offer, the Merger and the
other transactions contemplated by the Merger Agreement and (ii) provide any
information and communications to such other third parties as any such other
third party may reasonably request in connection therewith. In furtherance and
not in limitation of the foregoing, each of Parent and Company agrees to make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated by the Merger Agreement as
promptly as practicable and in any event within ten business days of the date of
the Merger Agreement and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the HSR
Act and to take all other actions necessary to cause the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
practicable.
PUBLIC ANNOUNCEMENTS. The Merger Agreement provides that the Company and
Parent will consult with each other before issuing any press release or
otherwise making any public statement with respect to the Merger Agreement or
the transactions contemplated by the Merger Agreement and except as may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any public statement
prior to consultation.
MERGER WITHOUT MEETING OF STOCKHOLDERS. Pursuant to the Merger Agreement,
if Parent, Purchaser or any other subsidiary of Parent shall acquire at least
90% of the outstanding Shares pursuant to the Offer, the parties have agreed,
subject to satisfaction or (to the extent permitted under the Merger Agreement)
waiver of all conditions to the Merger, to take all necessary and appropriate
action to cause the Merger to be effective as soon as practicable after the
acceptance for payment and purchase of Shares pursuant to the Offer without a
meeting of stockholders of the Company in accordance with Delaware law.
CERTAIN FILINGS. Pursuant to the Merger Agreement, the Company and Parent
have agreed to cooperate with one another (a) in connection with the preparation
of the Company Disclosure Documents and the Offer Documents, (b) in determining
whether any action by or in respect of, or filing with, any governmental body,
agency, official, or authority is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the Transactions and (c) in taking such
actions or making any such filings, furnishing information required in
connection therewith or with the Company Disclosure Documents or the Offer
Documents and seeking timely to obtain any such actions, consents, approvals or
waivers.
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INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Pursuant to the
Merger Agreement, Parent has agreed to indemnify and hold harmless, the present
and former officers and directors of the Company (each, an "Indemnified Person")
in respect of acts or omissions occurring at or prior to the Effective Time to
the fullest extent permitted by Delaware Law or any other applicable laws or
provided under the Company's certificate of incorporation and bylaws in effect
on the date hereof for a period of six years from the Effective Time, provided
that such indemnification shall be subject to any limitation imposed from time
to time under applicable law. The Parent has also agreed to cause the Surviving
Corporation to use commercially reasonable efforts to provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the Effective Time covering each such Indemnified Person currently covered by
the Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date hereof, for a period of six years from the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend more than an amount per year equal to 150% of current annual premiums
paid by the Company for such insurance (which premiums the Company represents
and warrants to be approximately $120,000 per year in the aggregate).
PRODUCTS LIABILITY INSURANCE. Pursuant to the Merger Agreement, Parent has
agreed to cause the Surviving Corporation to use commercially reasonable efforts
to maintain in force products liability insurance in respect of claims made with
respect to events occurring prior to the Effective Time on terms with respect to
coverage and amount no less favorable than certain Company liability policies
set forth in a schedule attached to the Merger Agreement.
EMPLOYEE MATTERS. Following the Effective Time, Parent has agreed to cause
employees of the Company ("Company Employees") to be covered under employee
benefit plans that are substantially comparable, in the aggregate, to the
employee benefit plans of the Company under which such Company Employees were
covered immediately prior to Effective Time. Notwithstanding anything to the
contrary contained in the previous sentence, Parent will not be obligated to
provide benefits to the Company Employees that are more favorable than the
employee benefit plans under which employees of Parent or any of its
subsidiaries are covered. Parent has agreed to cause service with the Company to
be recognized as service for purposes of all employee benefit and compensation
plans and arrangements applicable to Company Employees after the Effective Time,
to the extent such service was credited under comparable plans and arrangements
of the Company prior to the Effective Time. Service with the Company, however,
is not required to be taken into account for purposes of benefit accrual under
any defined benefit retirement or retiree medical plan. Parent is not required
to continue any particular Company employee benefit plan or to provide for the
continued employment of any Company Employees. Persons employed by the Company
immediately prior to the Effective Time shall be eligible to participate in the
employment severance programs provided by Parent or the Surviving Corporation
from time to time, and such persons will receive credit under such programs for
services with the Company prior to the Effective Time. In the absence of a
formal severance policy, such person will receive severance benefits comparable
to those provided by Parent in its prior restructuring practices.
Prior to acceptance for payment by Purchaser of Shares pursuant to the
Offer, Purchaser and Parent shall enter into agreements with the seven Company
employees listed on a schedule attached to the Merger Agreement providing for
(i) termination of employment on the date the Effective Time occurs (the
"Closing Date"), payment of lump sum severance in accordance with existing
employment or change of control agreements and engagement as a consultant from
the Closing Date through the date which is six months after the Closing Date,
during which time such person's compensation and benefits shall continue at the
same level as before the Closing Date, and (ii) payment of 1,000 shares of
Parent stock as a bonus upon completion of such six month period.
Following acceptance for payment by Purchaser of Shares pursuant to the
Offer, Parent will grant Company employees who are currently at the director
level or above who continue to be employees of the Company, Parent or an
affiliate of Parent, stock options according to its current stock option matrix
with an exercise price equal to Parent's stock price on the day prior to the
announcement of the transactions contemplated by the Merger Agreement, or will
provide an equivalent long term benefit to such employees. On the first
anniversary of the Closing Date, Parent will pay bonuses in the amounts and to
certain persons
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listed on a schedule attached to the Merger Agreement, to the extent such
persons are still employed by any affiliate of Parent on such date.
NOTIFICATION OF CERTAIN EVENTS. The Company has agreed promptly to notify
Parent of (i) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
transactions contemplated by the Merger Agreement, (ii) any notice or other
communication from any governmental or regulatory agency or authority in
connection with the transactions contemplated by the Merger Agreement, (iii) any
actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting
the Company or any of its subsidiaries that, if pending on the date of the
Merger Agreement, would have been required to have been disclosed pursuant to
the Merger Agreement, as the case may be, or that relate to the consummation of
the transactions contemplated by the Merger Agreement, and (iv) any notice or
other communication from any person, including without limitation any claim or
threatened claim, or other event or development with respect to the business of
LipoMatrix, Inc. (a former subsidiary of the Company).
RIGHTS AGREEMENT. Except to the extent required by applicable law or to
the extent that the Board of Directors of the Company, determines in good faith
that such action is required for the Company's Board of Directors to comply with
its fiduciary duties imposed by law, prior to the Effective Time, without the
prior written consent of Parent, the Company has agreed not to take any action
with respect to, or make any determination under, or amend the Company Rights
Agreement, including a redemption of the Rights that would adversely affect the
Merger.
THIRD PARTY STANDSTILL AGREEMENTS. The Merger Agreement provides that
during the period from the date of the Merger Agreement through the Effective
Time, neither the Company nor any of its subsidiaries shall terminate, amend,
modify or waive any provision of any confidentiality or standstill agreement to
which it is a party. During such period, the Company must enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreement, including, but not limited to, by obtaining injunctions to prevent
any breaches of such agreements and to enforce specifically the terms and
provisions thereof in any court having jurisdiction.
FURTHER ASSURANCES. At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Purchaser, any deeds, bills
of sale, assignments or assurances and to take and do, in the name and on behalf
of the Company or Purchaser, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or assets of
the Company acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
CONDITIONS TO CONSUMMATION OF THE MERGER. Pursuant to the Merger
Agreement, the obligations of the Company, Parent and Purchaser to consummate
the Merger are subject to satisfaction of the following conditions: (i) if
required by Delaware law, the Merger Agreement and the Merger shall have been
approved and adopted by the stockholders of the Company in accordance with such
law; (ii) any applicable waiting period under the HSR Act relating to the
transactions contemplated by the Merger Agreement shall have expired or been
terminated; (iii) no provision of any applicable law or regulation of the United
States (or any U.S. state) and no judgment, injunction, order or decree shall
prohibit the consummation of the Merger; and (iv) Purchaser shall have purchased
Shares pursuant to the Offer.
TERMINATION. The Merger Agreement provides that it may be terminated and
the Merger may be abandoned at any time prior to the Effective Time:
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if: (i) the Offer has not been
consummated on or before December 31, 1999, provided that the right to
terminate the Merger Agreement pursuant to this provision shall not be
available to any party whose breach of any provision of the Merger
Agreement results in the failure of the Offer to be consummated by such
time; (ii) there shall be any law or regulation that makes acceptance for
payment of, and payment for, the Shares pursuant to the Offer or
consummation of the
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Merger illegal or otherwise prohibited or any judgment, injunction, order
or decree of any court or governmental body having competent jurisdiction
enjoining Purchaser from accepting for payment of, and paying for, the
Shares pursuant to the Offer or Company or Parent from consummating the
Merger and such judgment, injunction, order or decree shall have become
final and nonappealable, (iii) there has been a material breach of any
representation, warranty, covenant or agreement on the part of the non-
terminating party set forth in the Merger Agreement, which breach is not
curable or, if curable, has not been cured within thirty (30) days
following receipt by the non-terminating party of notice of such breach
from the terminating party; or (iv) the Offer shall have terminated or
expired in accordance with its terms without Purchaser having accepted for
payment and paid for any Shares pursuant to the Offer; provided, however,
that Parent may not terminate the Merger Agreement pursuant to this
provision if Purchaser's termination of, or failure to accept for payment
or pay for any Shares tendered pursuant to, the Offer does not follow the
occurrence, or failure to occur, as the case may be, of any condition to
the Offer as described below in Section 14 (which occurrence or failure is
continuing) or is otherwise in breach of the terms of the Offer or the
Merger Agreement;
(c) by Parent, if, prior to the acceptance for payment of the Shares
under the Offer, (i) any person or group shall have entered into a
definitive agreement or an agreement in principle with the Company,
regarding an Acquisition Proposal; (ii) the Board of Directors of the
Company shall have withdrawn, or modified (including by amendment of the
Schedule 14D-9) in a manner adverse to Parent, its approval or
recommendation of the Merger Agreement, the Offer or the Merger, shall have
recommended, or publicly announced its intention to enter into, an
agreement or an agreement in principle with respect to an Acquisition
Proposal or shall have failed to publicly affirm its approval or
recommendation of the Merger Agreement, the Offer and the Merger within ten
(10) business days following a public announcement of an Acquisition
Proposal from a third party (or shall have resolved to do any of the
foregoing); or (iii) the Company shall have amended, taken any action with
respect to or made any determination under, the Company Rights Agreement
which could reasonably be expected to be adverse to Parent, the Surviving
Corporation or any of their respective subsidiaries or on the ability of
the Company, Parent or Purchaser to consummate the transactions
contemplated by the Merger Agreement; or
(d) by the Company, if prior to the purchase of any Shares pursuant to
the Offer, and subject to compliance with the provisions in the Merger
Agreement regarding solicitation as described above in "No Solicitation,"
the Board of Directors of the Company shall have withdrawn or modified in a
manner adverse to Parent its approval or recommendation of the Merger
Agreement or the Merger and shall have recommended a Superior Proposal
satisfying the conditions described above in clauses (v) and (vi) of the
second paragraph in "No Solicitation"; provided that prior to any such
termination, the Company shall, and shall cause its respective financial
and legal advisors to, negotiate with Parent to make such adjustment in the
terms and conditions of the Merger Agreement as would enable the Company to
proceed with the transactions contemplated by the Merger Agreement on such
adjusted terms; and provided, further, that the Company's ability to
terminate the Merger Agreement pursuant to this paragraph is conditioned
upon the prior payment by the Company to Parent of any amounts owed by it
under the Merger Agreement as described below in paragraph (b) of "Fees and
Expenses."
Other than with respect to paragraph (a) above, any party desiring to terminate
the Merger Agreement shall give notice of such termination to the other party.
FEES AND EXPENSES. The Merger Agreement provides that:
(a) In the event that the Merger Agreement is terminated pursuant to
the provisions described above in "Termination," the Merger Agreement shall
become void and of no effect with no liability on the part of any party (or
any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other party thereto except as
described in paragraph (b) below, provided that, if such termination shall
result from (a) the willful failure of either party to fulfill a condition
to the performance of the obligations of the other party, (b) the willful
failure of either party to perform a covenant hereof or (c) a material
breach by either party of any representation or warranty or agreement
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contained therein, such party shall be fully liable for any and all
liabilities and damages incurred or suffered by the other party as a result
of such failure or breach.
(b) In the event that (i) the Merger Agreement is terminated by the
Company pursuant to paragraph (d) of "Termination" as described above or by
Parent pursuant to paragraph (c) of "Termination" as described above or
(ii) any person shall have made an Acquisition Proposal and thereafter the
Merger Agreement is terminated by Parent pursuant to subparagraphs (b)(i),
(iii) or (iv) of "Termination" as described above (other than as a result
of the failure of any of the conditions in paragraphs (a), (b) and (i) of
Section 14 to be satisfied) and any person and the Company enter into a
definitive agreement with respect to an Acquisition Proposal within one
year of such termination at a price per Share in excess of the Merger
Consideration, then the Company shall pay to Parent, by wire transfer of
same day funds, within two (2) business days after such amount becomes due,
(x) a termination fee of $7,000,000 and (y) an amount, up to $2,500,000,
equal to all documented out-of-pocket expenses and fees actually paid or
payable by Parent and Purchaser (including, without limitation, the
expenses and fees of Hambrecht & Quist LLC, Cerberus Capital Management,
L.P. and U.S. Bancorp Libra) and not refundable.
(c) In the event that the Merger Agreement is terminated by the
Company or Parent pursuant to subparagraph (b)(i) of "Termination" as
described above due solely to the failure of Parent and Purchaser to obtain
the funds necessary to purchase all Shares outstanding in the Offer and
Merger (determined without reference to whether the Minimum Condition has
been satisfied) at the time when all of the conditions described below in
Section 14 (other than the Minimum Condition) have been satisfied, then
Parent shall pay to the Company, by wire transfer of same day funds, within
two (2) business days after such amount becomes due, a termination fee of
$5,000,000. The amount payable pursuant to this provision constitutes
liquidated damages and not a penalty, and assuming such amount is actually
paid when due, is the sole and exclusive remedy of the Company with respect
to events giving rise to an obligation to make such payment, and the
Company shall not be entitled to any direct or indirect damages, including
without limitation any incidental, special, exemplary or consequential
damages, in connection with any such event if such amount is paid when due.
AMENDMENT; NO WAIVERS. Any provision of the Merger Agreement may be
amended or waived prior to the Effective Time if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each party
to the Merger Agreement or, in the case of a waiver, by each party against whom
the waiver is to be effective, provided that, after the adoption of the Merger
Agreement by the stockholders of the Company and without their further approval,
no such amendment or waiver shall reduce the amount or change the kind of
consideration to be received in exchange for the Shares. No failure or delay by
any party in exercising any right, power or privilege hereunder 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. These rights and remedies are cumulative and not exclusive of any
rights or remedies provided by law.
(C) Appraisal Rights.
No appraisal rights are available in connection with the Offer. If the
Merger is consummated, however, stockholders of the Company who have not
tendered their Shares will have certain rights under the GCL to dissent and
demand appraisal of, and to receive payment in cash of the fair value of, their
Shares. Stockholders who perfect such rights by complying with the procedures
set forth in Section 262 of the GCL ("Section 262") will have the fair value of
their Shares (exclusive of any element of value arising from the accomplishment
or expectation of the Merger) determined by the Delaware Court of Chancery and
will be entitled to receive a cash payment equal to such fair value from the
Surviving Corporation. In addition, such dissenting stockholders would be
entitled to receive payment of a fair rate of interest from the date of
consummation of the Merger on the amount determined to be the fair value of
their Shares. In determining the fair value of the Shares, the court is required
to take into account all relevant factors. Accordingly, such determination could
be based upon considerations other than, or in addition to, the market value of
the Shares, including, among other things, asset values and earning capacity. In
WEINBERGER v. UOP, INC., the
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Delaware Supreme Court stated that "proof of value by any techniques or methods
which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered in an appraisal proceeding.
The WEINBERGER court also noted that under Section 262, fair value is to be
determined "exclusive of any element of value arising from the accomplishment of
exception of the merger." In CEDE & CO. v. TECHNICOLOR, INC., however, the
Delaware Supreme Court stated that, in the context of a two-step cash merger,
"to the extent that value has been added following a change in majority control
before cash-out, it is still value attributable to the going concern," to be
included in the appraisal process. As a consequence, the fair value determined
in any appraisal proceeding could be more or less than the consideration to be
paid in the Offer and the Merger.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any stockholder and the demand
for appraisal of, and payment in cash for the fair value of, the Shares. Parent
intends, however, to cause the Surviving Corporation to argue in an appraisal
proceeding that, for purposes of such proceeding, the fair value of each Share
is less than the price paid in the Merger. In this regard, stockholders should
be aware that opinions of investment banking firms as to the fairness from a
financial point of view (including the Financial Advisor's opinion described
herein) are not necessarily opinions as to "fair value" under Section 262.
THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE GCL.
(D) Plans for the Company.
During the pendency of this Offer, and possibly for several months
thereafter, Parent intends to study the most appropriate means of transitioning
and integrating the Company's business with its own. Depending on the outcome of
that study, Parent will take such actions as are deemed necessary to change the
Company's management reporting structure and the level of overhead expenses
needed to support the business. Promptly following the consummation of this
Offer, Parent intends to elect at least a majority of the Board of Directors of
the Company in accordance with the terms of the Merger Agreement. See Section
11(B) "The Merger Agreement -- Directors." Except as indicated in this Offer to
Purchase, Parent does not have any present plans or proposals which relate to or
would result in any material change in the Company's capitalization or dividend
policy or the composition of the Company's Board of Directors or management.
(E) The Rights.
According to the Company's Current Report on Form 8-A, dated November 29,
1994 (together with Amendment No. 1 to the Company's Current Report on Form 8-A,
dated August 2, 1999, the "Company 8-A"), on November 28, 1994, the Company
declared a dividend distribution of one Right for each outstanding Share of the
Company. The dividend entitles the registered holder to purchase from the
Company one one-thousandth of a share of a Series A Participating Preferred
Stock, par value $0.01 per share, of the Company (the "Preferred Stock") at an
exercise price of $110 per one one-thousandth of a share of Preferred Stock (the
"Purchase Price"), subject to adjustment.
The Rights Agreement provides that the Rights will become exercisable upon
the earlier of: (i) the close of business on the tenth day (or such later date
as may be determined by a majority of the Board of Directors, excluding
directors affiliated with the Acquiring Person, as defined below (the
"Continuing Directors")) following a public announcement that a person or group
affiliated or associated persons has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding Shares (an "Acquiring
Person") or (ii) the close of business on the tenth day (or such later date as
may be determined by a majority of the Continuing Directors) following the
commencement of a tender offer or exchange offer, the consummation of which
would result in the beneficial ownership by a person or group of 20% or more of
the outstanding Shares. The earlier of such dates is referred to as the
"Distribution Date."
Following the Distribution Date, and until the occurrence of one of the
subsequent events described below, holders of the Rights will be entitled to
receive, upon exercise and the payment of $110 (the "Purchase Price") per Right,
one one-thousandth of a Preferred Share. Once an Acquiring Person has become
such and
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prior to the Acquiring Person beneficially owning 50% or more of the outstanding
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by the Acquiring Person or its affiliates), in whole or in
part, at an exchange ratio of one Share per Right (subject to adjustment).
Unless the Rights are earlier redeemed or exchanged, in the event that an
Acquiring Person becomes such, other than pursuant to a tender offer which is
made for all of the outstanding Shares and approved by a majority of the
Continuing Directors after determining that the offer is both adequate and
otherwise in the best interests of the Company and its stockholders (a
"Permitted Offer"), proper provision will be made so that each holder of a Right
which has not theretofore been exercised (other than Rights beneficially owned
by the Acquiring Person, which will thereafter be void) will thereafter have the
right to receive, upon exercise of a Right, a number of Shares having a then
current value equal to two times the Purchase Price. In the event that the
Company does not have a sufficient number of Shares available, or the Board of
Directors of the Company decides that such action is necessary or appropriate
and not contrary to the interests of Rights holders, the Company may, among
other things, instead substitute cash, assets or other securities for the Shares
into which the Rights would have otherwise been exercisable.
Similarly, in the event that, after the 10th day following the date of
public announcement that an Acquiring Person has become such or such later date
as may be determined by a majority of the Continuing Directors and publicly
announced by the Company, (i) the Company consolidates with or merges into
another entity, (ii) another entity consolidates with or merges into the Company
or (iii) the Company sells or otherwise transfers 50% or more of its
consolidated assets or earning power, proper provision must be made so that each
holder of a Right which has not theretofore been exercised (other than Rights
beneficially owned by the Acquiring Person, which will thereafter be void) will
thereafter have the right to receive, upon exercise, a number of shares of
common stock of the acquiring company having a then current value equal to two
times the Purchase Price (unless the shares are acquired pursuant to a Permitted
Offer).
The foregoing summary of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Company 8-A and
the text of the Rights Agreement as set forth as an exhibit to the Company 8-A
which was filed with the Commission, copies of which may be obtained in the
manner set forth in Section 8. Pursuant to the Merger Agreement, the Company has
taken all actions necessary to make the Rights inapplicable to the Offer and the
Merger.
STOCKHOLDERS ARE REQUIRED TO TENDER ONE ASSOCIATED RIGHT FOR EACH SHARE
TENDERED IN ORDER TO EFFECT A VALID TENDER OF SUCH SHARE. IF THE DISTRIBUTION
DATE (AS DEFINED IN THE RIGHTS AGREEMENT) DOES NOT OCCUR PRIOR TO THE EXPIRATION
DATE, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS.
SEE SECTIONS 1 AND 3.
12. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by Purchaser to purchase all Shares and
to cancel all of the Options pursuant to the Offer and the Merger and to pay
related fees and expenses is expected to be in an aggregate amount of
approximately $150 million.
BRIDGE FACILITY AND USE OF PROCEEDS. Parent expects to obtain financing to
fund the Offer, the Merger and the related fees and expenses through Parent's
issuance of senior secured bridge notes in an aggregate principal amount of
$155,000,000 (the "Bridge Loan"). Pursuant to the Commitment Letter, dated July
23, 1999, from Cerberus Capital Management, L.P. to Parent together with the
Amendment to the Commitment Letter, dated July 30, 1999, from Parent and
acknowledged and confirmed by Cerberus Capital Management, L.P. (the "Commitment
Letter"), Cerberus Capital Management, L.P., or one or more of its affiliates
(the "Lender"), has agreed to purchase from Parent the Bridge Loan, subject in
all respects to the satisfaction of each of the terms and conditions contained
in the Commitment Letter and the Outline of the Proposed Terms and Conditions
attached thereto (the "Term Sheet"). The Lender and Parent agreed that if other
investors or lenders reasonable acceptable to the Lender agree to purchase the
Bridge Loan in an aggregate principal amount of up to $80,000,000, Parent or the
Lender would have the right to reduce, on a dollar-for-dollar basis, the
aggregate principal amount of the Bridge Loan committed to be purchased by the
Lender to an amount
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not less than $75,000,000. U.S. Bancorp Libra, a division of U.S. Bancorp
Investments, Inc., the arranger of the loan, has arranged for $80,000,000 of the
Bridge Loan to be made by the following financial institutions or funds managed
by same: TCW Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P.,
William E. Simon & Sons Special Situation Partners, L.P., Continental Casualty
Company, Goldman Sachs Credit Partners, U.S. Bancorp Investments, Inc., Foothill
Partners III, L.P. and MacKay-Shields Financial Corporation.
COLLATERAL AND SECURITY. The Bridge Loan will be secured by perfected
first priority liens on, and security interests in, (i) substantially all of the
assets of Parent, (ii) substantially all of the stock and assets of Parent's
U.S. subsidiaries, (iii) 65% of the outstanding capital stock of Parent's
foreign subsidiaries, (iv) prior to the consummation of the Merger, all of the
shares of stock of the Company purchased by Parent or its subsidiary, whether in
the Offer or otherwise, (v) prior to the consummation of the Merger, the
contents of the Escrow Account (as defined below), and (vi) upon and following
consummation of the Merger, all of such shares of stock and all of the assets of
the Company and its subsidiaries, or the stock and assets of the surviving
entity.
GUARANTEE. The Bridge Loan will be guaranteed on a senior basis by (i)
prior to consummation of the Merger, all of the Parent's material direct and
indirect U.S. subsidiaries, and (ii) upon and following consummation of the
Merger, all of such material U.S. subsidiaries and the Surviving Corporation and
its material U.S. subsidiaries. Such guarantees will be collateralized to the
extent provided under "Collateral and Security" as described above.
USE OF PROCEEDS. The proceeds of the Bridge Loan will be used only (i) to
finance the purchase price of Shares purchased pursuant to the Offer, at a price
not in excess of $16.25 per share, (ii) in the event that the Bridge Loan
remaining outstanding upon consummation of the Merger is converted into the
right to receive cash in an amount equal to the price per share paid in the
Offer, to finance such cash price, (iii) to fund the Escrow Account as defined
below, and (iv) to pay transaction-related fees and expenses.
INTEREST RATE. The Bridge Loan will bear interest at a margin (the
"Margin") of 600 basis points over 30-day London Interbank Offered Rate
("LIBOR"). The Margin will increase every three months by 100 basis points.
Interest will be payable monthly in cash in arrears. The default rate will be
the applicable interest rate plus 200 basis points per annum.
FEES. Parent paid (a) an initial commitment fee of $775,000.00, which is
non-refundable, and (b) a fee equal to 1.0% of the maximum principal amount of
the Bridge Loan ($1,550,000.00), to the Lender upon the execution and delivery
of the Merger Agreement. The 1.0% commitment fee is refundable by the Lender
only in the event that the Lender does not fund the Bridge Loan due to a
material adverse change in the credit markets generally, or in the market for
high yield securities generally, or in the market for outstanding equity
securities of Parent. Parent has also agreed to pay a non-refundable fee of
1.375% of the principal amount of any Rollover Securities (as defined below).
In addition, Parent (a) has paid a fee equal to 0.5% of the maximum
principal amount of the Bridge Loan ($775,000.00), which is refundable to the
same extent as the 1% commitment fee described above to U.S. Bancorp Libra upon
the execution and delivery of the Merger Agreement; (b) has agreed to pay a fee
equal to 0.5% of the principal amount actually funded by the Lender under the
Bridge Loan, due and payable in cash to U.S. Bancorp Libra at the time of
funding of the Bridge Loan; and (c) has agreed to pay a fee equal to 1.5% of the
principal amount of any Rollover Securities issued, payable in cash to U.S.
Bancorp Libra at the time of issuance of such Rollover Securities. The 0.5% fee
set forth in clause (a) of the immediately preceding sentence is refundable only
in the event that the Lender does not fund the Bridge Loan due to a material
adverse change in the credit markets generally, or in the market for high yield
securities generally, or in the market for outstanding equity securities of
Parent.
MATURITY. The Bridge Loan will become due and payable nine (9) months from
the initial funding date.
AVAILABILITY; ESCROW ACCOUNT. The Bridge Loan will be available for one
draw at the closing of the Offer. In the event that Parent or any of its
subsidiaries purchases less than all of the outstanding Shares in the Offer,
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any excess of (a) the gross proceeds to Parent of the Bridge Loan, minus (b) the
amount needed to fund the uses contemplated by clauses (i) and (iv) under "Use
of Proceeds" above, will be placed in an escrow account (the "Escrow Account")
maintained with a commercial bank reasonably acceptable to the Lender under an
escrow agreement having customary terms, and which provides the Lender with a
first priority perfected security interest therein. The cash contained in the
Escrow Account shall be released to Parent only concurrently with the
consummation of the Merger and shall be used only to fund the cash payable to
stockholders of the Company upon such consummation and transaction-related fees
and expenses; provided, however, that if Parent's planned issuance of senior
unsecured debt securities (the "Take-out Notes") is consummated upon or prior to
the consummation of the Merger, then the cash contained in the Escrow Account
shall be released to the Lender and applied as repayment of the Bridge Loan. In
the event that the Merger is not consummated within nine (9) months following
funding of the Bridge Loan, then the cash contained in the Escrow Account shall
be released to the Lender.
MANDATORY PREPAYMENT; COMMITMENT REDUCTIONS. The Bridge Loan must be
repaid, at par plus accrued interest, from proceeds of the Take-out Notes. The
Bridge Loan outstandings will also be mandatorily reduced and prepaid (subject
to exceptions to be mutually agreed upon), at par plus accrued interest, by net
proceeds from asset sales, certain issuances of debt, equity issues and/or
capital contributions.
OPTIONAL PREPAYMENTS. Optional prepayment of the Bridge Loan is permitted
at any time at the option of Parent, at par plus accrued interest, subject to
LIBOR breakage and/or redeployment costs.
EXPIRATION DATE. The obligation of the Lender to fund the Bridge Loan will
expire upon the earliest of (i) termination of the Merger Agreement, (ii) the
issuance of the Take-out Notes or (iii) October 29, 1999.
EXCHANGE FEATURE; ROLLOVER SECURITIES. Upon maturity (the "Rollover
Date"), and in the event that no other suitable financing is arranged, each
Lender shall exchange its Bridge Loan for new securities (the "Rollover
Securities") having the terms described below, provided that the following
conditions are met: (i) no event of default as described below in "Events of
Default" under the Bridge Loan shall have occurred and be continuing; (ii) no
event or condition that, with the giving of notice or the passage of time or
both, would become an event of default (a "Default") under the Bridge Loan shall
have occurred and be continuing, provided that if such a default has occurred
but the applicable grace period has not expired, the Rollover Date shall be
deferred until the earlier to occur of (A) the cure of such default or (B) the
expiration of such grace period, which shall not exceed thirty (30) days; (iii)
all fees and expenses due to Lender as of such date shall have been paid in full
and in cash; and (iv) Parent's EBITDA for the trailing four quarters shall not
be less than $35,000,000.
TERMS OF ROLLOVER SECURITIES. The Rollover Securities, if issued, will
mature seven (7) years after issuance and will bear interest, payable
semiannually in arrears, at 15% per annum. Of such interest, 12% per annum will
be payable in cash, and the remaining 3% per annum will be payable through the
issuance of additional Rollover Securities. The Rollover Securities will be
senior secured notes and will be guaranteed on a senior secured basis by all of
Parent's material U.S. subsidiaries, including, following consummation of the
Merger, the Surviving Corporation. The security collateralizing the Rollover
Securities will be substantially the same as the security collateralizing the
Bridge Loan. Upon sale of Rollover Securities to third parties not affiliated
with Cerberus Capital Management, L.P., such transferred Rollover Securities
shall become non-callable until the fourth anniversary of issuance, and
thereafter will be redeemable at the option of the Parent at premiums customary
for high yield debt securities. Rollover Securities owned by Cerberus Capital
Management, L.P. or its affiliates shall remain callable at the option of Parent
without premium or penalty. The Rollover Securities will have covenants and
other terms substantially similar to and customary for high-yield debt
securities, including without limitation a debt incurrence covenant that
prohibits Parent and its subsidiaries from incurring more than $25 million of
secured debt (including sale-leasebacks) and that contains customary limitations
on other debt incurrence and assumption. The Rollover Securities will allow for
sharing of collateral, and be subordinate to such permitted secured debt,
subject to a customary intercreditor agreement reasonably satisfactory to the
Lender.
TERMS OF ROLLOVER SECURITIES-WARRANTS. Upon funding of the Bridge Loan,
Parent will issue and deliver to the escrow agent to hold in the Escrow Account
warrants (the "Warrants") representing in the aggregate
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the right to acquire 10.0% of the fully-diluted common stock of Parent
(calculated after giving affect to the exercise of such Warrants and all other
outstanding warrants, options and other equity equivalents). The Warrants will
expire five years after issuance. Each Warrant will be exercisable for cash at
an exercise price equal to the average closing price of the common stock of
Parent for the ten trading days preceding such issuance. The Warrants will be
released from escrow (a) to the Lender upon original maturity of the Bridge
Loan, if the Bridge Loan, or any portion of the principal or interest thereof,
remains outstanding after the original maturity date, whether or not the
Rollover Securities are thereupon issued in exchange for the Bridge Loan, or (b)
otherwise, to Parent for cancellation. Holders of the shares of common stock
issuable upon exercise of the Warrants shall be entitled to the benefits of a
registration rights agreement in customary form that provides for one demand
registration and unlimited "piggyback" registrations, subject to standard
cutbacks and "blackout" periods.
CONDITIONS. The Commitment Letter and Term Sheet contain certain customary
conditions precedent, including, without limitation, the following: the
preparation of definitive financing documentation by September 30, 1999; the
absence of a material adverse effect upon the results of operations, properties,
operations, financial condition or prospects of Parent or the Company since
March 31, 1999, except for the non-cash adjustment to the provision for
discontinued operations of LipoMatrix, Inc. and its breast implant business, not
to exceed $11.5 million; the preparation of definitive documents relating to the
Merger; the payment of fees in accordance with the Commitment Letter and Term
Sheet; the accuracy of all representations and warranties in all material
respects; the delivery of customary legal opinions, solvency opinions and
certificates in connection with the issuance of the Bridge Loan, the Offer and
the Merger; the maintenance of the full force and effect of the agreement
providing for the Offer and the Merger without any amendment or modification
thereof adverse in any material respect to the Lender; the absence of any
withdrawal or modification by the Company's Board of Directors, in any material
respect, of its recommendation that its stockholders tender their Shares
pursuant to the Offer and vote in favor of the Merger; the tender of a majority
of the outstanding Shares of the Company (including all shares issuable upon the
exercise of options, warrants and other equity equivalents) and the purchase by
Parent or its subsidiary of such shares pursuant to the Offer concurrently with
such initial funding; the execution of the Escrow and the Escrow Agreement,
which in substance is satisfactory to the Lender; the grant of first priority
liens on, and security interests in, substantially all of the assets of Parent
and the guarantors as contemplated above; the absence of any injunctions or
other material legal proceeding (which Lender reasonably believes is likely to
be determined adversely) challenging the Merger, the Offer, or the transactions
contemplated by the Commitment Letter and the Term Sheet; the absence of a
material adverse change in the credit markets generally, or in the market for
high yield securities generally, or in the market for outstanding equity
securities of Parent; and the satisfaction of the conditions to the obligations
of Parent to purchase Shares pursuant to the Offer.
REPRESENTATIONS AND WARRANTIES. The Commitment Letter and Term Sheet list
certain customary representations and warranties to be included in the
definitive loan documents, including, but not limited to, the event of default
(or event or condition that, with the giving of notice or the lapse of time or
both, would be an event of default); accuracy of, and absence of material
omissions in, all reports filed with the Commission by the Parent and Company
and all other information provided by Parent or Company to the Lender; absence
of material adverse change; compliance with laws; solvency; no conflicts with
laws, charter documents or agreements; ownership of properties; absence of liens
and security interests; and compliance with margin regulations. Each of the
above will contain customary qualifiers and mutually agreed upon enumerated
exceptions.
AFFIRMATIVE COVENANTS. The Commitment Letter and Term Sheet list certain
customary affirmative covenants to be included in the definitive loan documents,
including, but not limited to, compliance with laws; performance of obligations;
maintenance of properties in good repair; inspection of books and properties;
payments of taxes and other liabilities; notice of defaults; delivery of
financial statements, financial projections and compliance certificates;
compliance by Parent with all of its obligations under the agreement providing
for the Offer and the Merger; Parent's best efforts to consummate the Merger as
soon as practicable; compliance with Parent's obligation to issue and sell debt
securities as summarized above; and, for so long as Cerberus
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Capital Management, L.P. or one or more of its affiliates shall own Rollover
Securities, as respects Cerberus and such affiliate, maintenance of certain
financial ratios or operating results.
NEGATIVE COVENANTS. The Commitment Letter and Term Sheet list customary
negative covenants to be included in the definitive loan documents, including,
but not limited to, limitations on indebtedness, liens (including negative
pledges) sale-leaseback transactions, loans, investments, transactions with
affiliates, joint ventures, contingent obligations, restricted payments,
mergers, acquisitions, consolidations, assets sales, creation of subsidiaries,
and changes in business conducted. Each of the above contains customary
exceptions and qualifiers.
EVENTS OF DEFAULT. The Commitment Letter and Term Sheet list certain
customary events of default to be included in the definitive loan documents
(including materiality qualifiers and grace periods), including, but not limited
to, nonpayment of principal, interest, fees or other amounts when due; violation
of covenants; failure of any representation or warranty to be true in all
material respects; cross-acceleration; change in control; bankruptcy; material
judgments; invalidity of loan documents or guarantees.
ASSIGNMENTS AND PARTICIPATIONS. The Lender may assign or participate its
interest in the Bridge Loan or the Rollover Securities to qualified
institutional buyers or accredited investors in its discretion, without consent
of any third party.
INDEMNIFICATION; EXPENSES; FEES. The Company has agreed to indemnify and
hold harmless the Lender and each of its assignees, its affiliates and its
directors, officers, employees and agents (each an "Indemnified Party") from and
against any and all losses, claims, damages, liabilities or other expenses to
which such Indemnified Party becomes subject, insofar as such losses, claims,
damages, liabilities (or actions or other proceedings commenced or threatened in
respect thereof) or other expenses arise out of or in any way relate to or
result from the Commitment Letter, or in any way arise from any use or intended
use of the Commitment Letter or the Merger, and the Company agrees to reimburse
each Indemnified Party for any legal or other expenses incurred in connection
with investigating, defending or participating in any such loss, claim, damage,
liability or action or other proceeding (whether or not such Indemnified Party
is a party to any action or proceeding out of which indemnification expenses
arise), but excluding therefrom the fees of the Lender's in-house counsel and
other in-house advisors and all expenses, losses, claims, damages and
liabilities which are finally determined in a non-appealable decision of a court
of competent jurisdiction to have resulted from the gross negligence, willful
misconduct of, or breach of contractual undertaking by the Indemnified Party. In
the event of any litigation or dispute involving the Commitment Letter, the
Lender shall not be responsible or liable to the Company or any other person for
any special, indirect, consequential, incidental or punitive damages. The
obligations of the Company under this provision shall remain effective whether
or not definitive documentation in connection with the Offer and Merger is
executed and not withstanding any termination of the Commitment Letter.
Under the Commitment Letter, Parent has agreed that it will pay (i) all
reasonable fees, costs and expenses that are incurred by or on behalf of the
Lender in connection with the negotiation, preparation, execution and delivery
of the Commitment Letter, the Term Sheet and any and all definitive
documentation relating thereto, including, without limitation, the reasonable
fees and expenses of counsel to the Lender (regardless of whether the
transactions contemplated are consummated) which fees, costs and expenses are
reasonably estimated by the Lender to be approximately $100,000.00; (ii) in
immediately available funds a deposit of $50,000 (the "Deposit") to fund
out-of-pocket expenses referred to in clause (i) above incurred by the Lender;
and (iii) a non-refundable fee equal to $775,000 upon execution of the
Commitment Letter.
The foregoing summary of the Commitment Letter and Term Sheet is qualified
in its entirety by reference to the text of the Commitment Letter and Term Sheet
which have been filed together as an exhibit to the Schedule 14D-1 and are
incorporated herein by reference.
Because the financing is still under review, Parent may alter one or more
of the financing mechanisms described above.
Parent expects the Bridge Loan to be repaid from a combination of a new
financing of long-term debt (which it currently anticipates will occur prior to
the end of this year) and cash flow from operations.
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13. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides until the Effective Time, the Company will
not, and will not permit any of its subsidiaries to, (i) declare, set aside or
pay any dividend or distribution in respect of any capital stock of the Company
or redeem, purchase or make any other acquisition of any of its securities; or
(ii) issue, deliver or sell, or authorize the issuance, delivery or sale of, any
share of capital stock or any Option with respect thereto, other than the
issuance of Shares upon the exercise of Options outstanding on the date of the
Merger Agreement, or modify or amend any right of any holder of outstanding
shares of capital stock or Options with respect thereto.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, Parent and Purchaser
shall not be required to accept for payment or pay for any Shares, and may
subject to any applicable rules and regulations of the Commission, delay the
acceptance for payment of any tendered Shares, and may (except as provided in
the Merger Agreement) amend or terminate the Offer as to any Shares not then
paid for, if (i) the Minimum Condition has not been satisfied by the scheduled
expiration date, (ii) the applicable waiting period under the HSR Act shall not
have expired or been terminated by the expiration date of the Offer, (iii) at
any time on or after the day the Offer is commenced and prior to the expiration
date of the Offer, any of the following conditions exist:
(a) there shall be instituted or pending any action or proceeding by
any government or governmental authority or agency, domestic or foreign,
before any court or governmental authority or agency, domestic or foreign,
which would reasonably be expected to (1) prohibit the acquisition by
Parent or Purchaser of any Shares under the Offer, to restrain or prohibit
the making or consummation of the Offer or the Merger or the performance of
any of the other transactions contemplated by this or to require the
Company, Parent or Purchaser to pay any damages that will have a Material
Adverse Effect on the Company or Parent, (2) impose material limitations on
the ability of Purchaser, or to render Purchaser unable to accept for
payment, pay for or purchase some or all of the Shares pursuant to the
Offer and the Merger, (3) restrain or prohibit Parent's ownership or
operation (or that of its respective subsidiaries or affiliates) of all or
any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or of Parent and its subsidiaries, taken as
a whole, or compel Parent or any of its subsidiaries or affiliates to
dispose of or hold separate all or any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or of Parent
and its subsidiaries, taken as a whole, (4) impose material limitations on
the ability of Parent, Purchaser or any of Parent's other subsidiaries or
affiliates effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired or
owned by Parent, Purchaser or any of Parent's other subsidiaries or
affiliates on all matters properly presented to the Company's stockholders,
or (5) require divestiture by Parent, Purchaser or any of Parent's other
subsidiaries or affiliates of any Shares; or
(b) there shall have been any statute, rule, regulation, injunction,
order or decree proposed, enacted, enforced, promulgated, issued or deemed
applicable to the Offer or the Merger, by any court, government or
governmental authority or agency, domestic or foreign, other than the
application of the waiting period provisions of the HSR Act to the Offer or
the Merger, that would reasonably be expected, directly or indirectly, to
result in any of the consequences referred to in clauses (1) through (5) of
paragraph (a) above; or
(c) there shall have been any event, occurrence, development or state
of circumstances or facts that has had or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company; or
(d) any person shall have entered into a definitive agreement or an
agreement in principle with the Company, regarding an Acquisition Proposal;
or
(e) the Board of Directors of the Company shall have withdrawn, or
modified in a manner adverse to Parent, its approval or recommendation of
the Merger Agreement, the Offer or the Merger, or shall have recommended or
publicly announced its intention to enter into, a definitive agreement or
an
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agreement in principle with respect to an Acquisition Proposal or shall
have failed to publicly affirm its approval or recommendation of the Merger
Agreement, the Offer and the Merger within ten (10) business days following
a public announcement of an Acquisition Proposal from a third party (or
shall have resolved to do any of the foregoing); or
(f) the Company shall have breached or failed to perform in all
material respects any of obligations under the Merger Agreement, or any of
the representations and warranties of the Company contained in the Merger
Agreement shall not be true when made or as of the scheduled expiration of
the Offer as if made at and as of such time, except for such inaccuracies
which, when taken together (in each case without regard to any
qualifications as to materiality or Material Adverse Effect contained in
the applicable representations and warranties) would not reasonably be
expected to have a Material Adverse Effect on the Company; or
(g) the Company shall have amended, taken any other action with
respect to, or made any determination under, the Company Rights Agreement
which could reasonably be expected to be adverse to Parent, the Surviving
Corporation or any of their respective subsidiaries or on the ability of
the Company, Parent or Purchaser to consummate the Offer; or
(h) the Company shall not have delivered to Parent and Purchaser, at
least three (3) business days prior to the scheduled expiration of the
Offer, a copy of the Company's audited consolidated financial statements as
of and for the fiscal year ended June 30, 1999, together with the report
thereon from the Company's independent auditors, Ernst & Young LLP; or
(i) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may, subject to the terms of the Merger Agreement, be waived by Parent and
Purchaser in whole or in part at any time and from time to time in their
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances, and each
such right shall be deemed an ongoing right that may be asserted at any time and
from time to time prior to the Effective Time.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS.
GENERAL. Except as set forth in this Offer to Purchase, based on its
review of publicly available filings by the Company with the Commission, Parent
is not aware of any licenses or regulatory permits that appear to be material to
the business of the Company and its subsidiaries, taken as a whole, and that
might be adversely affected by Purchaser's acquisition of Shares (and the
indirect acquisition of the stock of the Company's subsidiaries) as contemplated
herein, or any filings, approvals or other actions by or with any domestic,
foreign or supranational governmental authority or administrative or regulatory
agency that would be required for the acquisition or ownership of the Shares (or
the indirect acquisition of the stock of the Company's subsidiaries) by
Purchaser pursuant to the Offer as contemplated herein. Should any such approval
or other action be required, it is presently contemplated that such approval or
action would be sought except as described below under "State Takeover Laws."
Should any such approval or other action be required, there can be no assurance
that any such approval or action would be obtained without substantial
conditions or that adverse consequences might not result to the Company's or its
subsidiaries' businesses, or that certain parts of the Company's, Parent's,
Purchaser's or any of their respective subsidiaries' businesses might not have
to be disposed of or held separate or other substantial conditions complied with
in order to obtain such approval or action or in the event that such approvals
were not obtained or such actions were not taken. Purchaser's obligation to
purchase and pay for Shares is subject to certain conditions, including
conditions with respect to litigation and governmental actions. See Introduction
and Section 14.
STATE TAKEOVER LAWS. A number of states (including Delaware where the
Company is incorporated) have adopted takeover laws and regulations which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets,
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stockholders, principal executive offices or principal places of business
therein. To the extent that certain provisions of certain of these state
takeover statutes purport to apply to the Offer or the Merger, Purchaser
believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in EDGAR v. MITE CORP., invalidated on constitutional grounds
the Illinois Business Takeovers Statute, which as a matter of state securities
law made takeovers of corporations meeting certain requirements more difficult.
The reasoning in such decision is likely to apply to certain other state
takeover statutes. In 1987, however, in CTS CORP. v. DYNAMICS CORP. OF AMERICA,
the Supreme Court of the United States held that the State of Indiana could as a
matter of corporate law and, in particular, those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, in TLX ACQUISITION CORP. v. TELEX
CORP., a Federal district court in Oklahoma ruled that the Oklahoma statutes
were unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma in that they would subject such corporations to inconsistent
regulations. Similarly, in TYSON FOODS, INC. v. MCREYNOLDS, a Federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a Federal district court in Florida held, in GRAND
METROPOLITAN PLC v. BUTTERWORTH, that the provisions of the Florida Affiliated
Transactions Act and Florida Control Share Acquisition Act were unconstitutional
as applied to corporations incorporated outside of Florida.
Section 203 of the GCL prevents certain "business combinations" with an
"interested stockholder" (generally, any person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock) for a period of
three years following the time such person became an interested stockholder,
unless, among other things, prior to the time the interested stockholder became
such, the board of directors of the corporation approved either the business
combination or the transaction in which the interested stockholder became such.
The Company's Board of Directors has unanimously approved the Offer, the Merger
and the Merger Agreement and the transactions contemplated thereby for the
purposes of Section 203 of GCL.
Purchaser has not attempted to comply with any state takeover statutes in
connection with the Offer or the Merger although, pursuant to the Merger
Agreement, the Company has represented that the Company's Board of Directors has
taken appropriate action to render Section 203 of the GCL inapplicable to the
Offer, the Merger and the transactions contemplated by the Merger Agreement.
Purchaser reserves the right to challenge the validity or applicability of any
state law allegedly applicable to the Offer or the Merger, and nothing in this
Offer to Purchase nor any action taken in connection herewith is intended as a
waiver of that right. In the event that it is asserted that one or more takeover
statutes apply to the Offer or the Merger, and it is not determined by an
appropriate court that such statute or statutes do not apply or are invalid as
applied to the Offer or the Merger, as applicable, Purchaser may be required to
file certain documents with, or receive approvals from, the relevant state
authorities, and Purchaser might be unable to accept for payment or purchase
Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer. In such case, Purchaser may not be obligated to accept
for purchase, or pay for, any Shares tendered. See Section 14.
UNITED STATES ANTITRUST APPROVALS. Under the HSR Act, and the rules and
regulations that have been promulgated thereunder by the United States Federal
Trade Commission (the "FTC"), certain acquisition transactions may not be
consummated until certain information and documentary material has been
furnished for review by the FTC and the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") and certain waiting period
requirements have been satisfied. The acquisition of Shares pursuant to the
Offer and the Merger is subject to such requirements.
Under the provisions of the HSR Act applicable to the Offer and the Merger,
the purchase of Shares pursuant to the Offer and the Merger may not be
consummated until the expiration of a 15-calendar-day waiting period following
the filing of certain required information and documentary material with respect
to the Offer with the FTC and the Antitrust Division, unless such waiting period
is earlier terminated by the FTC and the Antitrust Division. Parent expects to
file a Premerger Notification and Report Form with the FTC and
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the Antitrust Division in connection with the purchase of Shares pursuant to the
Offer and the Merger under the HSR Act on August 5, 1999, and the required
waiting period with respect to the Offer and the Merger would expire at 12:00
a.m., New York City time, on August 20, 1999, unless earlier terminated by the
FTC or the Antitrust Division or Parent receives a request for additional
information or documentary material prior thereto. If, within such
15-calendar-day waiting period either the FTC or the Antitrust Division were to
request additional information or documentary material from Parent, the waiting
period with respect to the Offer and the Merger would be extended for an
additional period of 10 calendar days following the date of substantial
compliance with such request by Parent. Only one extension of the waiting period
pursuant to a request for additional information is authorized by the rules
promulgated under the HSR Act. Thereafter, the waiting period could be extended
only by court order or with the consent of Parent. The additional
10-calendar-day waiting period may be terminated sooner by the FTC or the
Antitrust Division. Although the Company is required to file certain information
and documentary material with the FTC and the Antitrust Division in connection
with the Offer, neither the Company's failure to make such filings nor a request
made to the Company from the FTC or the Antitrust Division for additional
information or documentary material will extend the waiting period with respect
to the purchase of Shares pursuant to the Offer and the Merger.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by
Purchaser pursuant to the Offer and the Merger. At any time before or after
Purchaser's purchase of Shares or the Effective Time, the FTC or the Antitrust
Division could take such action under the antitrust laws as either deems
necessary or desirable in the public interest, including seeking to enjoin the
purchase of Shares pursuant to the Offer and the Merger, the divestiture of
Shares purchased pursuant to the Offer or the divestiture of substantial assets
of Parent, Purchaser, the Company or any of their respective subsidiaries or
affiliates. Private parties as well as state attorneys general may also bring
legal actions under the antitrust laws under certain circumstances. See Section
14.
Based upon an examination of publicly available information relating to the
businesses in which the Company is engaged, Purchaser believes that the
acquisition of Shares pursuant to the Offer and the Merger should not violate
the applicable antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer and the Merger on antitrust grounds will not be made, or,
if such challenge is made, what the result will be. See Section 14.
FOREIGN APPROVALS. According to publicly available information, the
Company conducts business in a number of other countries and jurisdictions. In
connection with the acquisition of the Shares pursuant to the Offer or the
Merger, the laws of certain of those countries and jurisdictions may require the
filing of information with, or the obtaining of the approval or consent of,
governmental authorities in such countries and jurisdictions. 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 or the Merger. If
such approvals or consents are found to be required the parties intend to make
the appropriate filings and applications. In the event such a filing or
application is made for the requisite foreign approvals or consents, there can
be no assurance that such approvals or consents will be granted and, if such
approvals or consents are received, there can be no assurance as to the date of
such approvals or consents. In addition, 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 noncompliance will not have adverse
consequences for the Company or any subsidiary after purchase of the Shares
pursuant to the Offer or the Merger.
"GOING PRIVATE" RULE. The Commission has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger. Rule 13e-3
under the Exchange Act requires, among other things, that certain financial
information concerning the fairness of the proposed transaction and the
consideration offered to minority stockholders in such transaction be filed with
the Commission and disclosed to stockholders prior to the consummation of the
transaction. Parent, however, believes that Rule 13e-3 under the Exchange Act
will not be applicable to the Merger because of the following exemptions. Rule
13e-3 would not apply if (i) the Shares are deregistered under the Exchange Act
prior to the Merger or other business combination or (ii) the Merger or other
business combination is consummated within one year after the purchase of the
Shares pursuant to
39
<PAGE> 43
the Offer and the amount paid per Share in the Merger or other business
combination is at least equal to the amount paid per Share in the Offer.
16. CERTAIN FEES AND EXPENSES.
Hambrecht & Quist LLC has been retained as financial advisor to Parent in
connection with the acquisition of the Company and as the Dealer Manager in
connection with the Offer. In connection with these services, Parent paid
Hambrecht & Quist a fee of $250,000 in cash upon the delivery of its fairness
opinion to Parent. Hambrecht & Quist will also be paid a fee, in cash at the
closing of the Merger, of 1% of all consideration paid by Parent, less any fees
previously paid by the Company in the Offer and the Merger, including the
$250,000 fee described above. In addition, Parent and Purchaser will pay
Hambrecht & Quist reasonable and customary compensation for its services in
connection with the Offer, will reimburse Hambrecht & Quist for its reasonable
out-of-pocket expenses in connection therewith and will indemnify Hambrecht &
Quist against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws.
Innisfree M&A Incorporated has been retained by Parent and Purchaser to act
as Information Agent and The Bank of New York to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee stockholders to forward material relating to
the Offer to beneficial owners of Shares. Parent and Purchaser will pay the
Information Agent and the Depositary reasonable and customary compensation for
all such services, reimburse the Information Agent and Depositary for reasonable
out-of-pocket expenses in connection therewith, and indemnify the Information
Agent and the Depositary against certain liabilities and expenses in connection
therewith, including certain liabilities under the federal securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees
or commissions to any broker, dealer or other person for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by Parent and
Purchaser for customary clerical and mailing expenses incurred by them in
forwarding offering materials 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 residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser may,
in its discretion, take such action as it may deem necessary to make the Offer
in any jurisdiction and extend the Offer to holders of Shares in 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 by one or more registered brokers or dealers that
are licensed under the laws of such jurisdiction.
Parent and Purchaser have filed with the Commission a Schedule 14D-1,
together with exhibits, 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 Schedule 14D-1
and any amendments thereto, including exhibits, may be examined and copies may
be obtained from the office of the Commission in the same manner as described in
Section 8 with respect to information concerning the Company, except that copies
will not be available at the regional offices of the Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
40
<PAGE> 44
Neither the delivery of this Offer to Purchase nor any purchase of Shares
pursuant to the Offer shall under any circumstances create any implication that
there has been no change in the affairs of Parent, Purchaser, the Company or any
of their respective subsidiaries since the date as of which information is
furnished or the date of this Offer to Purchase.
INAMED ACQUISITION CORPORATION
August 4, 1999
41
<PAGE> 45
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth below is the
name, age, present principal occupation or employment and five-year employment
history of each director and executive officer of Parent. Each person listed
below has his or her principal business address at Inamed Corporation, 700 Ward
Drive, Santa Barbara, California 93111-2919. Unless otherwise indicated, all
persons listed below are citizens of the United States of America.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME OFFICE HELD IN PARENT 5-YEAR EMPLOYMENT HISTORY AGE
- ---- ------------------------------ ------------------------------------------- ---
<S> <C> <C> <C>
Richard G. Babbitt Chairman of the Board and Mr. Babbitt has served as the Chief 73
Chief Executive Officer Executive Officer and President of Parent
since January 22, 1998, and Chairman since
February 6, 1998. He has been associated
with DNA Technologies, Inc., Ben Hogan
Company, B.I. Industries, American Safety
Equipment Corporation, Welsh Manufacturing
and Medical Supply Company in C.E.O. and
Board positions.
James E. Bolin Director Mr. Bolin has served as a director of 40
Parent since March 18, 1999. Mr. Bolin has
been a Vice President and Secretary of
Appaloosa Partners Inc. since 1995. He has
previously been a Vice President and
Director of Corporate Bond Research at
Goldman, Sachs & Co. He also worked at
Smith Barney, Harris Upham in the Fixed
Income Research Department. Mr. Bolin holds
a Bachelor of Arts from Washington
University in St. Louis and an MBA in
accounting and finance from University of
Missouri-St. Louis.
Malcolm R. Currie, Ph.D. Director Dr. Currie has served as the President and 72
CEO of Currie Technologies Incorporated, an
electric transportation company, since
1997. He has been the Chairman Emeritus of
Hughes Aircraft Company since his
retirement in 1992 as Chairman and CEO. He
has had an extensive career in high
technology research, engineering and
management. Dr. Currie currently serves on
the Boards of Directors of the following
publicly traded companies: Investment
Company of America, SMA Corporation, UNOCAL
Corporation and LSI Logic Corporation. Dr.
Currie also serves as the Chairman of the
University of Southern California Board of
Trustees. He has previously served as
President and CEO of Delco Electronics
Corporation and GM Hughes Electronics
Corporation. Dr. Currie holds a B.A. in
Physics and a Ph.D. in Engineering Physics
from the University of California at
Berkeley.
</TABLE>
<PAGE> 46
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME OFFICE HELD IN PARENT 5-YEAR EMPLOYMENT HISTORY AGE
- ---- ------------------------------ ------------------------------------------- ---
<S> <C> <C> <C>
John F. Doyle Director Mr. Doyle has served as a director of 69
Parent since March 18, 1999. He currently
performs marketing and management
consulting, primarily for start-up
companies, since 1992. Prior to 1992, Mr.
Doyle worked with IBM and Craig Corporation
in executive and sales and marketing
positions. He served as the Chairman and
Chief Executive Officer of Pioneer
Electronics (USA) Inc. from 1971 to 1986.
Mr. Doyle currently serves on the Board of
Directors of the Pomona Valley Hospital
Foundation, and has served on the Board of
various consumer groups as well as business
and philanthropic organizations. Mr. Doyle
holds a Bachelor of Arts from Miami
University of Ohio.
Ilan K. Reich President and Director Mr. Reich has served as a director of 44
Parent since January 22, 1998 and President
since December 22, 1998. Prior to becoming
President, he was Executive Vice President
since January 22, 1998. Until that time he
was a partner with the New York law firm of
Olshan Grundman Frome & Rosenzweig LLP,
specializing in corporate and securities
law. From 1988 to June 1996, Mr. Reich
served in various senior executive
positions with public and private companies
controlled by a private investor, including
Western Publishing Group, Inc., the largest
U.S. publisher of children's books, and
Rabco Health Services, Inc., a distributor
of medical/surgical products and a
wholesale pharmaceutical company. Mr. Reich
holds a Bachelor of Arts from Columbia
College and a J.D. from Columbia Law
School, and is a member of various bar
associations.
Mitchell S. Rosenthal, M.D. Director Dr. Rosenthal is a psychiatrist and the 63
president of Phoenix House Foundation,
which he founded over 30 years ago and
which is the nation's largest non-profit
substance abuse treatment and prevention
system, with more than three dozen programs
in New York, California, Texas and Florida.
Dr. Rosenthal has been a White House
advisor on drug policy, a special
consultant to the Office of National Drug
Control Policy and serves on the New York
State Advisory Council on Alcoholism and
Substance Abuse, which he chaired from 1985
to 1997. Dr. Rosenthal is a lecturer in
psychiatry at Columbia University's College
of Physicians and Surgeons and a former
president of the American Association of
Psychoanalytic Physicians. He is a graduate
of Lafayette College and earned his M.D.
from the State University of New York. Dr.
Rosenthal is a member of the Council on
Foreign Relations and serves on the Board
of the Pro Musicis Foundation.
</TABLE>
<PAGE> 47
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME OFFICE HELD IN PARENT 5-YEAR EMPLOYMENT HISTORY AGE
- ---- ------------------------------ ------------------------------------------- ---
<S> <C> <C> <C>
David A. Tepper(a) Director Mr. Tepper has served as a director of 41
Parent since March 18, 1999. Mr. Tepper has
been President of Appaloosa Partners Inc.
since its formation in 1993. He was
previously head trader in the High Yield
Department of Goldman, Sachs & Co. He also
has been employed by Keystone Funds and
Republic Steel. Mr. Tepper holds an MBA
from Carnegie Mellon University and a
Bachelor of Arts with honors in Economics
from the University of Pittsburgh.
John E. Williams, M.D. Director Dr. Williams has served as a director of 78
Parent since March 31, 1997. Dr. Williams
is a plastic surgeon specializing in
aesthetic surgery. He is currently not
practicing. He is a Diplomat of the
American Board of Plastic Surgery and is a
Fellow of the American College of Surgeons.
Dr. Williams is a member of the American
Society of Plastic and Reconstructive
Surgeons and the American Society of
Aesthetic Plastic Surgeons. He holds
memberships in state, national and
international plastic surgery societies and
is a member of the American Medical
Association and the Los Angeles County
Medical Association.
Michael J. Doty Senior Vice President and Mr. Doty has served as Senior Vice 52
Chief Financial Officer President and Chief Financial Officer of
Parent since May 3, 1999. He is a certified
public accountant with more than 25 years
of experience in a wide range of financial
and administration planning positions at
companies such as 3M, Honeywell, Inc. and
Reckitt & Colman, PLC. Prior to his
employment with Parent, since 1997 Mr. Doty
was the Vice President and CFO of O-Cedar
Brands, Inc., a private consumer product
company based in Cincinnati. Prior to that,
since 1994 Mr. Doty was the Vice President
and CFO of White Systems, Inc., a
manufacturer and software developer. Mr.
Doty holds a B.S. and B.S.B.A from
University of Minnesota and an M.B.A. from
University of St. Thomas.
</TABLE>
- ---------------
<TABLE>
<S> <C> <C> <C>
(a) Mr. Tepper is the President and the sole stockholder of Appaloosa Partners, Inc., a Delaware
corporation, which is the general partner of Appaloosa Management L.P., a Delaware limited
partnership (the "Manager"). The Manager, whose principal business and principal office is located
at 26 Main Street, Chatham, New Jersey 07928, acts as an investment adviser to several funds and
an insurance company. Based on the Schedule 13D/A filed jointly in March 1999 by the Manager and
Mr. Tepper, the Manager and Mr. Tepper beneficially own 6,046,052 shares of common stock of
Parent, representing 36.8% of the total shares of common stock of Parent outstanding on a diluted
basis.
</TABLE>
<PAGE> 48
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME OFFICE HELD IN PARENT 5-YEAR EMPLOYMENT HISTORY AGE
- ---- ------------------------------ ------------------------------------------- ---
<S> <C> <C> <C>
David E. Bamberger Senior Vice President, Mr. Bamberger has served as Senior Vice 42
Secretary and General Counsel President and General Counsel of Parent
since June 1, 1999. Prior to joining
Parent, for approximately five years, Mr.
Bamberger was a partner at Olshan Grundman
Frome Rosenzweig & Wolosky LLP in New York,
specializing in corporate and general
litigation. Prior to 1994, he was vice
president and general counsel of TPI
Enterprises, Inc., then a Nasdaq NMS
company and before that, Senior Counsel
with MacAndrews & Forbes Holdings, Inc. He
was also an attorney at Simpson Thattcher &
Bartlett and Skadden Arps Slate Meagher &
Flom. Mr. Bamberger is a graduate of
Harvard Law School.
John P. Strohmeyer Vice President, Manufacturing Mr. Strohmeyer has served as Vice 55
President, Manufacturing since November 2,
1998. Mr. Strohmeyer has been involved in
the electronics and automotive industries,
including Nissan Motor Corporation and
Nippondenso (Japan). He has been involved
in start-ups, re-engineering of
manufacturing facilities, relocation and
development of international operations,
and is skilled in manufacturing and general
management of companies. Mr. Strohmeyer
holds a B.S. from Long Beach State
University, California.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. Unless otherwise
indicated below, all information concerning each person listed below is the same
as shown above.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME OFFICE HELD IN PURCHASER 5-YEAR EMPLOYMENT HISTORY AGE
- ---- ---------------------------------- ------------------------------------------- ---
<S> <C> <C> <C>
Ilan K. Reich President and Director Same description as provided above 44
David E. Bamberger Secretary, Treasurer and Director Same description as provided above 42
</TABLE>
<PAGE> 49
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 New York, NY 10286
For Confirmation Telephone:
(800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone number set forth below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below and will
be furnished promptly at Purchaser's expense. Stockholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
[INNISFREE M&A INCORPORATED LOGO]
501 Madison Avenue, 20th Floor
New York, NY 10022
Banks and Brokers Call Collect: (212) 750-5833
All Others Call Toll Free: (888) 750-5834
The Dealer Manager for the Offer is:
HAMBRECHT & QUIST LLC
230 Park Avenue
New York, NY 10169
(212) 207-1400
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
COLLAGEN AESTHETICS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED AUGUST 4, 1999
BY
INAMED ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
INAMED CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, AUGUST 31, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 New York, NY 10286
For Confirmation Telephone:
(800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR ON SHARE CERTIFICATE(S) TENDERED (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARE SHARES REPRESENTED NUMBER OF
CERTIFICATE BY SHARE SHARES
NUMBER(S)* CERTIFICATES(S)* TENDERED**
<S> <C> <C> <C>
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
Total Shares
- ---------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated it will be assumed that all Shares represented by Share Certificates delivered to the
Depositary are being tendered. See Instruction 4.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be completed by stockholders either if
certificates for Shares (as defined in the Offer to Purchase dated August 4,
1999 (the "Offer to Purchase")) are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, if tenders of
Shares are to be made by book-entry transfer to an account maintained by The
Bank of New York (the "Depositary") at The Depository Trust Company ("DTC") (the
"Book-Entry Transfer Facility"), pursuant to the procedures set forth in Section
3 of the Offer to Purchase. Stockholders who tender Shares by book-entry
transfer are referred to herein as "Book-Entry Stockholders."
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other required documents to the Depositary on or prior to
the Expiration Date (as defined in the Offer to Purchase) or who cannot complete
the procedures for book-entry transfer on a timely basis must tender their
Shares according to the guaranteed delivery procedures set forth in Section 3 of
the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
NOTE: SIGNATURES MUST BE PROVIDED ON THE INSIDE AND REVERSE BACK COVER.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
Name of Book-Entry Transfer Facility:
-----------------------------------------------------------------------------
Account Number: ------------- Transaction Code Number: -------------
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
-----------------------------------------------------------------------------
Window Ticket Number (if any):
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------------------------------------------------
Name of Institution which Guaranteed Delivery:
-------------------------------------------------------------------------
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Inamed Acquisition Corporation
("Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Inamed
Corporation, a Delaware corporation ("Parent"), the above described shares of
common stock, par value $.01 per share (the "Shares"), of Collagen Aesthetics,
Inc., a Delaware corporation (the "Company"), and the associated preferred share
purchase rights (the "Rights") issued pursuant to the Amended and Restated
Preferred Share Rights Agreement, dated as of May 6, 1999, between the Company
and The Bank of New York, as Rights Agent (as the same may be amended, the
"Rights Agreement"), pursuant to Purchaser's offer to purchase all outstanding
Shares at a price of $16.25 per Share, net to the seller in cash, without
interest thereon, 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"). Unless the context otherwise requires, all references to the Shares
shall include the associated Rights. The undersigned understands that Purchaser
reserves the right to transfer or assign, in whole or from time to time in part,
to one or more of its direct or indirect subsidiaries or affiliates the right to
purchase all or any portion of the Shares tendered pursuant to the Offer. As
used herein, the term "Purchaser" shall, if applicable, include any such
subsidiary and affiliate.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered hereby in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns, and transfers
to, or upon the order of, Purchaser all right, title and interest in and to all
of the Shares that are being tendered hereby and any and all dividends on the
Shares (including, without limitation, the issuance of additional Shares
pursuant to a stock dividend or stock split, the issuance of other securities,
the issuance of rights for the purchase of any securities, or any cash dividends
that are declared or paid by the Company on or after the date of the Offer to
Purchase and are payable or distributable to stockholders of record on a date
prior to the transfer into the name of Purchaser or its nominees or transferees
on the Company's stock transfer records of the Shares purchased pursuant to the
Offer (collectively, "Distributions")), and constitutes and irrevocably appoints
the Depositary the true and lawful agent, attorney-in-fact and proxy of the
undersigned to the full extent of the undersigned's rights with respect to such
Shares (and Distributions) with full power of substitution (such power of
attorney and proxy being deemed to be irrevocable and coupled with an interest),
to (a) deliver Share Certificates (and Distributions), or transfer ownership of
such Shares on the account books maintained by the Book-Entry Transfer Facility,
together in either such case with all accompanying evidences of transfer and
authenticity, to or upon the order of Purchaser upon receipt by the Depositary,
as the undersigned's agent, of the purchase price, (b) present such Shares (and
Distributions) for transfer on the books of the Company and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and Distributions), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints designees of Purchaser as such
stockholder's agents, attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by Purchaser and with respect to any and
all other Shares and other securities or rights issued or issuable in respect of
such Shares on or after the date of the Offer to Purchase. All such powers of
attorney and proxies will be considered irrevocable and coupled with an interest
in the tendered Shares. Such appointment will be effective upon the acceptance
for payment of such Shares by Purchaser in accordance with the terms of the
Offer. Upon such acceptance for payment, all other powers of attorney and
proxies given by such stockholder with respect to such Shares and such other
securities or rights prior to such payment will be revoked, without further
action, and no subsequent powers of attorney and proxies may be given by such
stockholder (and, if given, will not be deemed effective). The designees of
Purchaser will, with respect to the Shares and such other securities and rights
for which such 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 or special meeting of the Company's stockholders, or any
adjournment or postponement thereof, or by consent in lieu of any such meeting
or otherwise. The undersigned understands that in order for Shares to be deemed
validly tendered, immediately upon the acceptance for payment of such Shares,
Purchaser or its designee must be able to exercise full voting rights with
respect to such Shares and other securities, including voting at any meeting of
stockholders.
<PAGE> 4
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares (and
Distributions) tendered hereby, that the undersigned own(s) the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that such tender of
Shares complies with Rule 14e-4 under the Exchange Act and that when the same
are accepted for payment by Purchaser, Purchaser 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, upon request, will execute and deliver any additional documents
reasonably deemed by the Depositary or Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares tendered hereby (and
Distributions). In addition, the undersigned shall promptly remit and transfer
to the Depositary for the account of Purchaser any and all other Distributions
in respect of the Shares tendered hereby, accompanied by appropriate
documentation of transfer and, pending such remittance or appropriate assurance
thereof, Purchaser shall be entitled to all rights and privileges as owner of
such Distributions and may withhold the entire purchase price or deduct from the
purchase price of Shares tendered hereby the amount or value thereof, as
determined by Purchaser in its sole discretion.
All authority herein conferred or herein agreed to be conferred 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,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Tenders of Shares pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date and, unless theretofore accepted for payment
pursuant to the Offer, may also be withdrawn at any time after October 2, 1999
(or such later date as may apply in the case that the Offer is extended). See
Section 4 of the Offer to Purchase.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser 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 Share
Certificates not tendered or accepted for payment in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates not tendered or accepted for payment (and accompanying
documents as appropriate) to the undersigned at the address shown below the
undersigned's signature. 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 return any Share Certificates not
tendered or accepted for payment in the name(s) of, and deliver said check
and/or return certificates to, the person or persons so indicated. Stockholders
tendering Shares by book-entry transfer may request that any Shares not accepted
for payment be returned by crediting such account maintained at the Book-Entry
Transfer Facility as such stockholder may designate by making an appropriate
entry under "Special Payment Instructions." The undersigned recognizes that
Purchaser has no obligation pursuant to the "Special Payment Instructions" to
transfer any Shares from the name of the registered holder thereof if Purchaser
does not accept for payment any of such Shares.
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not tendered or not
purchased and/or the check for the purchase price of Shares purchased are
to be issued in the name of someone other than the undersigned, or if
Shares tendered by book-entry transfer which are not purchased are to be
returned by credit to an account maintained at a designated on the front
cover.
Issue check and/or certificates to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
[ ] Credit unpurchased Shares tendered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below:
------------------------------------------------------------
(ACCOUNT NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not tendered or not
purchased and/or the check for the purchase price of Shares purchased are
to be sent to someone other than the undersigned, or to the undersigned at
an address other than that shown on the front cover
Mail check and/or certificate to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
------------------------------------------------------------
<PAGE> 6
IMPORTANT -- SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated:
- --------------------------- ,
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(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 provide the necessary information.
See Instruction 5.)
Name(s):------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------------
Address:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ( )
------------------------------------------------
Tax Identification or Social Security Nos.:
------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
----------------------------------------------------------------
Name (Please print):
----------------------------------------------------------------
Name of Firm:
---------------------------------------------------------------------
Address:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-----------------------------------------------------
Dated: , 199
- ---------------------------
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of the Shares tendered
herewith, unless such holder(s) has completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on the
inside front cover hereof or (ii) if such Shares are tendered for the account of
a firm that is a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, 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. Share Certificates, or timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at the Book-Entry Transfer Facility, as well as this Letter
of Transmittal (or a facsimile hereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date. Stockholders whose Share Certificates
are not immediately available or who cannot deliver their Share Certificates and
all other required documents to the Depositary prior to the Expiration Date or
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis may tender their Shares by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures 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 made available by Purchaser, must be received by the Depositary on or prior
to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer
together with a properly completed and duly executed Letter of Transmittal (or a
facsimile hereof), with any required signature guarantees (or, in the case of a
book-entry delivery, an Agent's Message) and any other documents required by
this Letter of Transmittal, must be received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed Delivery.
A "trading day" is any day on which Nasdaq National Market is open for business.
If Share Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal (or facsimile hereof) must
accompany each such delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal or facsimile hereof, 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 and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
<PAGE> 8
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). 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 case, new certificate(s) for
the remainder of the Shares that were evidenced by your old certificate(s) will
be sent to you, unless otherwise provided in the appropriate box marked "Special
Payment Instructions" and/or "Special Delivery Instructions" 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 holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) 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 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-in-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 Purchaser of their authority to so act must be submitted.
When 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 purchased 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(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner(s) appear(s) on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If payment of the purchase price is to be made to, or if certificates for
Shares not tendered or purchased are to be registered in the name of, any person
other than the registered holder(s), 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 holder(s) or such person) payable on account of the transfer to such
person will be deducted from the purchase price received by such person(s)
pursuant to this Offer (i.e., such purchase price will be reduced) unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
<PAGE> 9
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for unpurchased Shares are to be returned
to, a person other than the person(s) signing this Letter of Transmittal or if a
check is to be sent and/or such certificates are to be returned to someone other
than the person(s) signing this Letter of Transmittal or to an address other
than that shown on the front cover hereof, the appropriate boxes on this Letter
of Transmittal should be completed. Book-Entry Stockholders may request that
Shares not purchased be credited to such account maintained at the Book-Entry
Transfer Facility as such Book-Entry Stockholder may designate hereon. If no
such instructions are given, such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated above. See
Instruction 1.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent at its addresses set forth below.
Requests for additional copies of the Offer to Purchase and this Letter of
Transmittal may be directed to the Information Agent or to brokers, dealers,
commercial banks or trust companies.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a stockholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, the Internal Revenue Service may subject the
stockholder or other payee to a $50 penalty, and payments that are made to such
stockholder or other payee with respect to Shares purchased pursuant to the
Offer may be subject to 31% backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding requirements.
In order for a foreign individual to qualify as an exempt recipient, it must
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 more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other 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.
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing a Substitute Form W-9 certifying (i) that the TIN provided on
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN), and
(ii) 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 a failure to report
all interest or dividends or (c) the Internal Revenue Service has notified such
stockholder that such stockholder is no longer subject to backup withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN but 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 Certificate of Awaiting
Taxpayer Identification Number below. Notwithstanding that the box in Part 3 is
checked and the Certificate of Awaiting Taxpayer Identification Number is
completed, the Depositary will withhold 31% of all payments made prior to the
time a properly certified TIN is provided to the Depositary.
The stockholder is required to give the Depositary the TIN of the holder of
the Shares. If the Shares are held in more than one name or are not held 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.
<PAGE> 10
10. LOST, DESTROYED, MUTILATED, OR STOLEN CERTIFICATES. If any
certificate(s) representing Shares has been lost, destroyed, mutilated, or
stolen, the stockholder should promptly notify the Depositary. The stockholder
will then be instructed as to the steps that must be taken in order to replace
the certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, mutilated, or destroyed
certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN
AGENT'S MESSAGE TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR
TO THE EXPIRATION DATE.
<PAGE> 11
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
<TABLE>
<S> <C> <C>
PAYOR'S NAME:
- -----------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- Please provide your name and
FORM W-9 address in this Part 1 and TIN in Part 3 and PART 3 -- Social Security Number
DEPARTMENT OF THE TREASURY certify by signing and dating below. or Employer Identification Number:
INTERNAL REVENUE SERVICE
Name: ----------------------------------
-------------------------------------------- Awaiting TIN [ ]
Address:
--------------------------------------------
--------------------------------------------
------------------------------------------------------------------------------------
PART 2 -- CERTIFICATIONS -- Under penalties of perjury, I certify that:
PAYER'S REQUEST FOR (1) The number shown on this form is my correct Taxpayer Identification Number (or
TAXPAYER IDENTIFICATION I am waiting for a number to be issued to me and have checked the box in Part 3)
NUMBER ("TIN") and
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, (b) 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 (c) the IRS has
notified me that I am no longer subject to backup withholding.
- -----------------------------------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) of Part 2 above if you have been notified by the IRS that
you are currently subject to backup withholding because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup withholding you received another
notification from the IRS that you are no longer subject to backup withholding, do not cross out such item (2).
- -----------------------------------------------------------------------------------------------------------------------
Signature: Date: ----------------------------
- -----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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 DETAILS. YOU MUST COMPLETE
THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE
FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) 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 (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld.
<TABLE>
<S> <C>
- ------------------------------------------------------------ ---------------------------, 199
-
Signature Date
</TABLE>
<PAGE> 12
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, Share Certificates and
any other required documents should be sent or delivered by each Stockholder of
the Company or his Broker, Dealer, Commercial Bank, Trust Company or other
nominee to the Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 New York, NY 10286
For Confirmation Telephone:
(800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone number listed below. Additional copies of the
Offer to Purchase, the Letter of Transmittal and other tender offer materials
may be obtained from the Information Agent as set forth below, and will be
furnished promptly at Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[INNISFREE M&A INCORPORATED LOGO]
501 Madison Avenue
20th Floor
New York, NY 10022
Banks and Brokers Call Collect: (212) 750-5833
All Others Call Toll Free: (888) 750-5834
The Dealer Manager for the Offer is:
HAMBRECHT & QUIST LLC
230 Park Avenue
New York, NY 10169
(212) 207-1400
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
COLLAGEN AESTHETICS, INC.
BY
INAMED ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
INAMED CORPORATION
AT
$16.25 NET PER SHARE IN CASH
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, AUGUST 31, UNLESS THE OFFER IS EXTENDED.
August 4, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Inamed Acquisition Corporation, a Delaware
corporation ("Purchaser"), and Inamed Corporation, a Delaware corporation
("Parent"), to act as Dealer Manager in connection with Purchaser's offer to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Shares"), of Collagen Aesthetics, Inc., a Delaware corporation (the "Company"),
and the associated preferred share purchase rights at a purchase price of $16.25
per Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated August
4, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which together constitute the "Offer"), in each case enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SHARES REPRESENTING AT
LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED
BASIS (ASSUMING EXERCISE OF ALL OPTIONS WITH AN EXERCISE PRICE BELOW $18.00 PER
SHARE) BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION
DATE FOR THE OFFER. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS
CONTAINED IN THE OFFER TO PURCHASE. SEE THE INTRODUCTION AND SECTIONS 1, 12, 14
AND 15 OF THE OFFER TO PURCHASE.
<PAGE> 2
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated August 4, 1999.
2. The Letter of Transmittal for your use to tender Shares and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if certificates for Shares ("Share Certificates") and all other
required documents are not immediately available or cannot be delivered to
The Bank of New York (the "Depositary") by the Expiration Date (as defined
in the Offer to Purchase) or if the procedure for book-entry transfer
cannot be completed by the Expiration Date.
5. A letter to stockholders from the Chief Executive Officer of the
Company accompanied by the Company's Solicitation/Recommendation Statement
on Schedule 14D-9.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, AUGUST 31, 1999,
UNLESS THE OFFER IS EXTENDED.
In order to accept the Offer, a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), together with any required signature
guarantees or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry delivery of Shares and any other documents required
by the Letter of Transmittal must be received by the Depositary and Share
Certificates representing the tendered Shares must be received by the Depositary
or tendered pursuant to the procedure for book-entry transfer as set forth in
the Offer to Purchase and Book-Entry Confirmation (as defined in the Offer to
Purchase) must be received by the Depositary.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and Innisfree M&A
Incorporated, the Information Agent, as described in Section 16 of the Offer to
Purchase) for soliciting tenders of Shares pursuant to the Offer. Purchaser
will, however, upon request, reimburse you for customary clerical and mailing
expenses incurred by you in forwarding any of the enclosed materials to your
clients. Purchaser will pay or cause to be paid any stock transfer taxes payable
on the transfer of Shares to it, except as otherwise provided in Instruction 6
of the Letter of Transmittal.
2
<PAGE> 3
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed material may be obtained from, the
undersigned.
Very truly yours,
HAMBRECHT & QUIST LLC
as Dealer Manager
230 Park Avenue
New York, NY 10169
(212) 207-1400
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE DEALER
MANAGER, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
COLLAGEN AESTHETICS, INC.
BY
INAMED ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
INAMED CORPORATION
AT
$16.25 NET PER SHARE IN CASH
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, AUGUST 31, 1999, UNLESS THE OFFER IS EXTENDED.
August 4, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated August 4,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by Inamed Acquisition
Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary
of Inamed Corporation, a Delaware corporation ("Parent"), to purchase all
outstanding shares of common stock, par value $.01 per share ("Shares"), of
Collagen Aesthetics, Inc., a Delaware corporation (the "Company"), and the
associated preferred share purchase rights (the "Rights"), at a purchase price
of $16.25 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer to Purchase and
in the related Letter of Transmittal enclosed herewith. Unless the context
otherwise requires, all references to Shares shall include the associated
Rights. Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available, or who cannot deliver their Share
Certificates and all other required documents to The Bank of New York, as
depositary (the "Depositary"), on or prior to the Expiration Date (as defined in
the Offer to Purchase), or who cannot complete the procedures for book-entry
transfer on a timely basis, must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
<PAGE> 2
Please note the following:
1. The tender price is $16.25 per Share, net to you in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer.
2. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED
THAT THE OFFER AND THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE), ARE
FAIR TO, ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS, HAS APPROVED THE OFFER AND ADOPTED THE MERGER AGREEMENT AND
RECOMMENDS ACCEPTANCE OF THE OFFER BY THE COMPANY'S STOCKHOLDERS.
3. The Offer is being made for all outstanding Shares.
4. The Offer is conditioned upon, among other things, Shares
representing at least a majority of the total number of outstanding Shares
on a fully diluted basis (assuming exercise of all Options with an exercise
price below $18.00 per share) being validly tendered and not properly
withdrawn prior to the expiration date for the Offer. The Offer is also
subject to other terms and conditions contained in the Offer to Purchase.
See the Introduction and Sections 1, 12, 14 and 15 of the Offer to
Purchase.
5. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by
Purchaser pursuant to the Offer.
6. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, August 31, 1999, unless the Offer is extended.
7. Payment for Shares purchased pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of (a) Share
Certificates or timely confirmation of the book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility"), pursuant to the procedures set forth in
Section 3 of the Offer to Purchase, (b) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase), in connection with a book-entry transfer, and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment might
not be made to all tendering stockholders at the same time and will depend
upon when Share Certificates are received by the Depositary or Book-Entry
Transfer Facility Confirmations of such shares are received into
Depositary's account at the Book-Entry Transfer Facility.
If you wish to have us tender any 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 set forth on the back page of this letter. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the back page of this letter. An envelope to return your
instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN
AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE
EXPIRATION OF THE OFFER.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser may,
in its 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.
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 is being made on
behalf of Purchaser by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
COLLAGEN AESTHETICS, INC.
BY
INAMED ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
INAMED CORPORATION
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase, dated August 4, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal (which together with the Offer to Purchase constitute the
"Offer") in connection with the offer by Inamed Acquisition Corporation, a
Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Inamed
Corporation, a Delaware corporation ("Parent"), to purchase all outstanding
shares of common stock, par value $.01 per share ("Shares"), of Collagen
Aesthetics, Inc., a Delaware corporation, and the associated preferred share
purchase rights, at a purchase price of $16.25 per Share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase.
This will instruct you to tender to Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
<TABLE>
<S> <C>
Number of Shares to Be Tendered: SIGN BELOW
--------------------- Shares* -----------------------------------------------------
SIGNATURE(S):
Account Number: ------------------------- -----------------------------------------------------
PLEASE TYPE OR PRINT NAME(S)
-----------------------------------------------------
PLEASE TYPE OR PRINT ADDRESS(ES) HERE
-----------------------------------------------------
Dated: , 199 AREA CODE AND TELEPHONE NUMBER
-----------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that you instruct us to tender
all Shares held by us for your account.
3
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
COLLAGEN AESTHETICS, INC.
TO
INAMED ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
INAMED CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates ("Share
Certificates") representing shares of common stock, par value $.01 per share
(the "Shares"), of Collagen Aesthetics, Inc., a Delaware corporation (the
"Company"), and the associated Rights (as defined in the Offer to Purchase) are
not immediately available, if time will not permit all required documents to
reach The Bank of New York (the "Depositary") on or prior to the Expiration Date
(as defined in the Offer to Purchase) or if the procedures for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or sent by facsimile transmission
or mail to the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 New York, NY 10286
For Confirmation Telephone:
(800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Inamed Acquisition Corporation, a
Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Inamed
Corporation., a Delaware corporation ("Parent"), upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated August 4, 1999 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares (including the associated preferred share purchase rights)
indicated below pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
Number of Shares:
--------------------------------
Certificate Nos. (if available):
-----------------------------------------------------
-----------------------------------------------------
Check box if Shares will be tendered by book-entry transfer (including through
DTC's ATOP):
[ ] The Depository Trust Company
Account Number:
---------------------------------
Dated:
---------------------------------------------
Name(s) of Record Holder(s):
- -----------------------------------------------------
- -----------------------------------------------------
(PLEASE PRINT)
Address(es):
- ---------------------------------------
- -----------------------------------------------------
(ZIP CODE)
Area Code and Tel. No.:
- -----------------------------------------------------
Signature(s):
- --------------------------------------
- -----------------------------------------------------
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, hereby guarantees to deliver to
the Depositary at one of its addresses set forth above either the certificates
representing all tendered Shares, in proper form for transfer, a Book-Entry
Confirmation (as defined in the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of book-entry delivery of
Shares, an Agent's Message (as defined in the Offer to Purchase), and any
other documents required by the Letter of Transmittal within three trading
days after the date of execution of this Notice of Guaranteed Delivery. A
"trading day" is any day on which The Nasdaq National Market is open for
business.
Name of Firm:
------------------------------------
-----------------------------------------------------
(AUTHORIZED SIGNATURE)
Address:
-------------------------------------------
-----------------------------------------------------
(ZIP CODE)
Title:
- -----------------------------------------------
Name:
- ---------------------------------------------
(PLEASE PRINT OR TYPE)
Area Code and Telephone No.: ----------------------
Dated:
- ---------------------------------------------
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU)
TO GIVE THE PAYER.--Social security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<C> <S> <C>
1. Individual The Individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under state law
5. Sole proprietorship The owner(3)
- ------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or pension The legal entity(4)
trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or
nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(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
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification 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 there is more than one name listed, the number
will be considered to be that of the first name listed.
<PAGE> 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number, obtain Form SS-5,
Application for a Social Security Card, at the local Social Security
Administration office, or Form SS-4, Application for Employer Identification
Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from withholding include:
- An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)(7), if
the account satisfies the requirements of Section 401(f)(2).
- The United States or a state thereof, the District of Columbia, a possession
of the United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
- An international organization or agency or instrumentality thereof.
- A foreign government and any political subdivision, agency or
instrumentality thereof.
Payees that may be exempt from backup withholding include:
- A corporation.
- A financial institution.
- A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
- A futures commission merchant registered with the Commodity Futures Trading
Commission.
- A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
- Payments to nonresident aliens subject to withholding under Section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
Payments of interest generally exempt from backup withholding include:
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- Payments described in Section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under Section 1451.
- Payments made by certain foreign organizations.
Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A and 6050N and the regulations thereunder.
Exempt payees should complete a substitute Form W-9 to avoid possible
erroneous backup withholding. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE
"EXEMPT" IN PART 2 OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE
PAYER.
PRIVACY ACT NOTICE.--Section 6109 requires you to provide your correct taxpayer
identification number to payers who must report the payments to the IRS. The IRS
uses the numbers for identification purposes and to help verify the accuracy of
your return and may also provide this information to various government agencies
for tax enforcement or litigation 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 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 that results in no backup
withholding, you are subject to a $500 penalty.
(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.
<PAGE> 1
- --------------------------------------------------------------------------------
INAMED INAMED Coporation
5540 Ekwill Street, Suite D
Santa Barbara, CA 93111
NEWS RELEASE (805) 692-5400 Telephone
FOR IMMEDIATE RELEASE (805) 692-5432 Facsimile
Inamed Contacts:
Ilan Reich, President or
Michael Doty, Chief Financial Officer
(212) 626-6800
INAMED CORPORATION AGREES TO ACQUIRE
COLLAGEN AESTHETICS, INC. FOR $16.25 PER SHARE
Santa Barbara, California--August 2, 1999--Inamed Corporation (OTC BB:IMDC)
announced today that it has agreed to acquire Collagen Aesthetics, Inc. (Nasdaq:
CGEN) for $16.25 per share in cash, for a total of approximately $142 million.
The directors of both companies have unanimously approved a definitive merger
agreement.
The combination of these two companies will create a global leader in plastic
surgery and aesthetic medicine, with over $225 million of annual sales and a
broad portfolio of products to address the needs of plastic and reconstructive
surgeons, dermatologists, cosmetic surgeons and other aesthetic practitioners
throughout the world. These products include Inamed's comprehensive line of
saline and silicone gel filled implants for breast augmentation and
reconstruction, as well as devices to treat obesity. Collagen Aesthetics'
products include the flagship Zyderm(R) and Zyplast(R) collagen implants for the
correction of facial wrinkles and scars.
Beginning later this week Inamed will commence a cash tender offer for all
outstanding shares of common stock of Collagen Aesthetics. Following completion
of the tender offer all remaining Collagen Aesthetics shares will be acquired in
a cash merger at the same price. It is anticipated that these transactions will
be completed by September 30, 1999.
The tender offer is subject to a majority of Collagen Aesthetics' fully diluted
shares (approximately 10.2 million shares as of July 30, 1999) being validly
tendered and not withdrawn, as well as the expiration of the Hart-Scott
premerger notification waiting period and other customary conditions.
Neither the tender offer nor the second step merger is subject to financing
contingencies. In that regard, Inamed has obtained a secured bridge loan
commitment for $155 million from a group of financial institutions, which was
arranged by U.S. Bancorp Libra. Inamed currently contemplates that the bridge
loan will be refinanced during 1999 with the proceeds of long-term debt
financing.
1
<PAGE> 2
Further details about the merger agreement, the tender offer and the financing
will be available later this week in the SEC filings to be made by both parties
at the time the tender offer commences.
Collagen Aesthetics had sales of $84 million for the twelve months ended March
31, 1999. It has no debt and over $17 million of cash. Collagen Aesthetics
expects to report its financial results for the fiscal year ended June 30, 1999
by mid-August.
For the twelve months ending June 30, 1999, Inamed had sales of $144 million and
cash flow (consisting of earnings before interest, taxes, depreciation and
amortization) of approximately $30.5 million. As of that date Inamed had $17
million of debt and $14 million of cash. Upon completion of the tender offer
Inamed will retire its existing debt, so that the combined company will have
only the $155 million of bridge debt outstanding. Inamed's current equity market
capitalization is approximately $375 million.
Richard G. Babbitt, Inamed's Chairman and CEO, stated: "This acquisition brings
together two of the strongest and largest franchises in plastic and
reconstructive surgery and aesthetic medicine. Both companies are dedicated to
devoting resources to new products and to sales and marketing initiatives which
will further enhance their position in the growing fields of aesthetic, plastic
and reconstructive medicine."
Ilan Reich, Inamed's President, said: "We anticipate that for the fiscal year
ending December 31, 2000 this acquisition will add at least $0.25 per share to
Inamed's earnings on a fully taxed, fully diluted basis. But more significantly,
this acquisition marks the culmination of a fifteen-month effort by Inamed to
implement its strategy of diversifying into the collagen business, while
leveraging its existing marketing, distribution and corporate infrastructure. We
are particularly excited about having Collagen Aesthetics be the platform for
accelerating the marketing of the human collagen products for facial and
incontinence uses which we recently licensed from Advanced Tissue Sciences Inc.
The value we see in Collagen Aesthetics reflects both its current franchise as
well as the unique benefit which Inamed hopes to derive by commercializing those
human collagen products faster than Collagen Aesthetics could have done based on
its current R&D program."
Collagen Aesthetics was advised by Lehman Brothers Inc., which also provided a
fairness opinion to the Collagen Board of Directors. Inamed was advised by
Hambrecht & Quist LLC, which will be acting as dealer manager in the tender
offer.
Collagen Aesthetics is maximizing its worldwide aesthetic medicine franchise and
nearly two decades of physician relationships with proprietary and in-licensed
products. Collagen's proprietary product line includes Zyderm(R) and Zyplast(R)
collagen implants and Contigen(R) Bard collagen implant, while in-licensed
products include Hylaform(R) viscoelastic gel, SoftForm(R) facial implant,
Refinity(TM) Medical Skin Solutions and the Coblation(TM) dermatologic surgery
system.
2
<PAGE> 3
Inamed is a global surgical and medical device company engaged in the
development, manufacturing and marketing of medical devices for the plastic,
reconstructive and aesthetic surgery markets, as well as devices to treat
obesity.
This release contains forward-looking statements that are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties
that may cause Inamed's actual results in future periods to differ materially
from that which is anticipated. Factors that may cause such differences include,
but are not limited to, those described in Inamed's Annual Report on Form 10-K
for the year ended December 31, 1998.
# # #
3
<PAGE> 1
COLLAGEN AESTHETICS, INC. TO BE ACQUIRED BY INAMED
CORPORATION FOR $16.25 IN CASH
Palo Alto, California -- (BUSINESS WIRE) -- Aug. 2, 1999 -- Collagen
Aesthetics, Inc. (NASDAQ NM: CGEN-news) announced today that Inamed Corporation
of Santa Barbara, California has agreed to acquire Collagen for $16.25 per share
in cash, for a total value of approximately $142 million. The price represents
approximately a 65% premium over the 90-day average Collagen stock price prior
to an unsolicited acquisition proposal from Mentor Corporation of $14.50 made on
March 1, 1999. The directors of both companies have unanimously approved a
definitive merger agreement.
The combination of these two companies will create a global leader in
plastic surgery and aesthetic medicine, with over $225 million of annual sales
and a broad portfolio of products to address the needs of plastic and
reconstructive surgeons, dermatologists, cosmetic surgeons and other aesthetic
practitioners throughout the world. These products include Inamed's
comprehensive line of saline and silicone gel filled implants for breast
augmentation and reconstruction, as well as devices to treat obesity. Collagen
Aesthetics' products include the flagship Zyderm(R) and Zyplast(R) collagen
implants for the correction of facial wrinkles and scars.
Beginning later this week Inamed will commence a cash tender offer for all
outstanding shares of common stock of Collagen Aesthetics. Following completion
of the tender offer all remaining Collagen Aesthetics shares will be acquired in
a cash merger at the same price. It is anticipated that these transactions will
be completed by September 30, 1999.
The tender offer is subject to a majority of Collagen Aesthetics' fully
diluted shares being validly tendered and not withdrawn, as well as the
expiration of the Hart-Scott premerger notification waiting period and other
customary conditions. The transaction is not subject to financing contingencies.
In that regard, Inamed has obtained a secured bridge loan commitment for $155
million from a group of financial institutions.
Collagen Aesthetics Inc. was advised by Lehman Brothers. Further details
about the merger agreement, the tender offer and the financing will be available
later this week in the SEC filings to be made by both parties at the time the
tender offer commences.
"The merger agreement with Inamed represents the successful completion of a
process Collagen Aesthetics initiated in March 1999 to explore strategic
alternatives and to maximize shareholder value" stated Gary S. Petersmeyer,
Collagen Aesthetics' President and CEO.
Collagen Aesthetics is maximizing the Company's worldwide aesthetic
medicine franchise and nearly two decades of physician relationships with
proprietary and in-licensed products. The Company's proprietary products include
Zyderm and Zyplast collagen implants and Contigen(R) Bard collagen implant,
while in-licensed products include Hylaform(R) viscoelastic gel, SoftForm(R)
facial implant, Refinity(TM) Medical Skin Solutions and the Coblation(TM)
dermatologic surgery system. For more information regarding Collagen Aesthetics,
please visit the Company's Web site at www.collagen.com. In addition, Collagen
Aesthetics' press releases can be viewed at www.businesswire.com/cnn/cgen.htm.
Except for the historical information contained herein, the matters
discussed in this press release are forward-looking statements, the accuracy of
which is necessarily subject to risks and uncertainties including the tender of
sufficient Collagen shares to
<PAGE> 2
\
complete the transaction, receipt of regulatory approvals, potential unfavorable
publicity regarding Collagen Aesthetics or its products and possible reversal of
sales trends, among other matters discussed in this release. Actual results are
subject to risks and uncertainties, and actual events and results may differ
significantly from the discussion of such matters in the forward-looking
statements. Such differences may be based upon factors within Collagen
Aesthetics' control, such as strategic planning decisions by management and
reallocation of internal resources, or on factors outside of the Company's
control, such as actions or delays by regulatory authorities or other third
parties, as well as those factors set forth under the heading "Factors That May
Affect Future Results of Operations" in Collagen Aesthetics' Form 10-K filed for
the year ended June 30, 1998 and Form 10-Q for the quarter ended March 31,
1999.
Contact:
Company Contact:
Michael A. Bates
Collagen Aesthetics, Inc.
(650) 856-0200
Investor Relations:
Bruce Voss ([email protected])
Lippert/Heilshorn & Associates, Inc.
(310) 575-4848
www.lhai.com
<PAGE> 1
Inamed Contacts:
Ilan Reich, President or
Michael Doty, Chief Financial Officer
(212) 626-6800
INAMED COMMENCES TENDER OFFER TO
PURCHASE ALL OUTSTANDING SHARES OF COLLAGEN
AESTHETICS AT $16.25 PER SHARE
Santa Barbara, California - August 4, 1999 - Inamed Corporation (OTC BB:IMDC)
announced today that its wholly-owned subsidiary has commenced a cash tender
offer for all outstanding shares of common stock of Collagen Aesthetics, Inc.
(Nasdaq: CGEN) at $16.25 per share. The offer is being made pursuant to the
previously announced Agreement and Plan of Merger between Inamed and Collagen
Aesthetics. The Board of Directors of Collagen Aesthetics has unanimously
recommended that Collagen Aesthetics stockholders accept Inamed's offer.
The offer and withdrawal rights are scheduled to expire at 12:00 midnight, New
York City time, on Tuesday, August 31, 1999, unless extended. The offer is
conditioned upon, among other things, the valid tender of a number of Collagen
Aesthetics shares which represent a majority of Collagen Aesthetics' outstanding
shares on a fully diluted basis, and the expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act. Other terms and conditions of the offer are set forth in the definitive
tender offer documents being filed with the Securities and Exchange Commission
and mailed to Collagen Aesthetics stockholders. Following the consummation of
the offer, Inamed intends to complete a second-step merger to acquire all of the
remaining shares of Collagen Aesthetics common stock that are not tendered in
the offer at the same price paid in the offer.
Questions and requests for assistance regarding the tender offer, including for
additional copies of the tender offer materials, may be directed to the Dealer
Manager, Hambrecht & Quist LLC, or the Information Agent, Innisfree M&A
Incorporated. Hambrecht & Quist LLC can be contacted at (212) 207-1400.
Innisfree can be contacted toll free at (888) 750-5834. The Bank of New York is
acting as the Depositary for the tender offer.
Collagen Aesthetics is maximizing its worldwide aesthetic medicine franchise and
nearly two decades of physician relationships with proprietary and in-licensed
products. Collagen's proprietary product line includes Zyderm(R) and Zyplast(R)
collagen implants and Contigen(R) Bard collagen implant, while in-licensed
products include Hylaform(R) viscoelastic gel, SoftForm(R) facial implant,
Refinity(TM) Medical Skin Solutions and Coblation(TM) dermatologic surgery
system.
Inamed is a global surgical and medical device company engaged in the
development, manufacturing and marketing of medical devices for the plastic,
reconstructive and aesthetic surgery markets, as well as devices to treat
obesity.
<PAGE> 2
This release is neither an offer to purchase nor a solicitation of an offer to
sell securities. The tender offer is made only through the Offer to Purchase and
the related Letter of Transmittal which are being mailed to stockholders. This
release contains forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties
that may cause Inamed's actual results in future periods to differ materially
from that which is anticipated. Factors that may cause such differences include,
but are not limited to, those described in Inamed's Annual Report on Form 10-K
for the year ended December 31, 1998.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer is made solely by the Offer to
Purchase, dated August 4, 1999, and the related Letter of Transmittal, 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 Inamed Acquisition Corporation by one or
more registered brokers or dealers that
are licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
COLLAGEN AESTHETICS, INC.
BY
INAMED ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
INAMED CORPORATION
AT
$16.25 NET PER SHARE IN CASH
Inamed Acquisition Corporation ("Purchaser"), a Delaware corporation
and a wholly-owned subsidiary of Inamed Corporation, a Delaware corporation
("Parent"), is offering to purchase all outstanding shares of Common Stock, par
value $.01 per share (the "Shares"), of Collagen Aesthetics, Inc., a Delaware
corporation (the "Company"), and the associated preferred share purchase rights
(the "Rights") issued pursuant to the Amended and Restated Preferred Share
Rights Agreement, dated as of May 6, 1999, between the Company and The Bank of
New York, as Rights Agent (as the same may be amended, the "Rights Agreement"),
at a purchase price of $16.25 per Share (and associated Right), net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated August 4, 1999 (the "Offer
to Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer"). Unless the context otherwise requires, all references
to Shares herein and in the Offer to Purchase shall include the associated
Rights.
<PAGE> 2
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY AUGUST 31, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of July 31, 1999, by and among the Company, Purchaser and Parent (the
"Merger Agreement") pursuant to which, following the consummation of the Offer
and the satisfaction of certain conditions, Purchaser will be merged with and
into the Company (the "Merger"), with the Company continuing as the surviving
corporation. On the effective date of the Merger, each outstanding Share (other
than Shares held by Parent or any of its subsidiaries, which Shares will be
canceled with no payment being made with respect thereto, and other than Shares,
if any, held by stockholders who perfect their appraisal rights under Delaware
law) will, by virtue of the Merger and without any action by the holder thereof,
be converted into the right to receive an amount equal to $16.25 in cash
(without interest).
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY
AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND ADOPTED THE MERGER AGREEMENT
AND RECOMMENDS ACCEPTANCE OF THE OFFER BY THE COMPANY'S STOCKHOLDERS.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SHARES REPRESENTING
AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED
BASIS (ASSUMING EXERCISE OF ALL OPTIONS WITH AN EXERCISE PRICE BELOW $18.00 PER
SHARE) BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION
DATE FOR THE OFFER, AND CERTAIN OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION
AND SECTIONS 1, 12, 14 AND 15 OF THE OFFER TO PURCHASE.
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when Purchaser gives oral or written notice to The Bank of New York,
as depositary (the "Depositary") of Purchaser's acceptance of such Shares for
payment pursuant to the Offer. In all cases, upon the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering stockholders for the purpose of receiving
payment from Purchaser and transmitting payment to validly tendering
stockholders. Under no circumstances will interest on the purchase price for
Shares be paid by Purchaser. In all cases, payment for Shares purchased pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing Shares (the "Share Certificates") for such Shares or
timely confirmation of the book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 3 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 an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer and (iii) any other documents required by the Letter of
Transmittal.
2
<PAGE> 3
Purchaser expressly reserves the right, in its sole discretion (subject
to the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend the period during which the Offer is open for any reason,
including the existence of any of the conditions specified in Section 14 of the
Offer to Purchase, 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, and such announcement will be made no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date (as defined below).
Tenders of Shares made pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date and, unless theretofore accepted for payment as
provided in the Offer to Purchase, may also be withdrawn at any time after
October 2, 1999 (or such later date as may apply in the case that the Offer is
extended). The term "Expiration Date" means 12:00 midnight, New York City time,
on August 4, 1999, unless and until Purchaser, subject to the terms of the
Merger Agreement, shall have further extended the period of time for which the
Offer is open, in which event the term "Expiration Date" shall mean the time and
date at which the Offer, as so extended by Purchaser, shall expire. In order for
a withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of the Offer to Purchase. Any such notice of withdrawal
must specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn, and (if Share Certificates have been tendered)
the name of the registered holder of the Shares as set forth in the Share
Certificate, if different from that of the person who tendered such Shares. If
Share Certificates have been delivered or otherwise identified to the
Depositary, then prior to the physical release of such certificates, the
tendering stockholder must submit the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by a firm that is a bank, broker,
dealer, credit union, savings association or other entity which is a member in
good standing of the Securities Transfer Agents Medallion Program (an "Eligible
Institution"), except in the case of Shares tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3 of the Offer to Purchase, the
notice of withdrawal must specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares, in which case a notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in this paragraph. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by Purchaser, in its sole discretion, whose
determination shall be final and binding. Any Shares properly withdrawn will be
deemed not validly tendered for purposes of the Offer, but may be tendered at
any subsequent time prior to the Expiration Date by following any of the
procedures described in Section 3 of the Offer to Purchase.
The information required to be disclosed pursuant to Rule
14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, is contained in the Offer to Purchase, and is
incorporated herein by reference.
The Company is providing Purchaser 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 related Letter of Transmittal
and, if required, other relevant materials will be
3
<PAGE> 4
mailed 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 stockholder list or who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance may be directed to Innisfree M&A
Incorporated as Information Agent (the "Information Agent") at the address and
telephone number listed below. Additional copies of the Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and other related
materials may be obtained at Purchaser's expense from the Information Agent or
from brokers, dealers, commercial banks and trust companies. Neither Parent nor
Purchaser will pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
Innisfree M&A Incorporated
501 Madison Avenue
20th Floor
New York, NY 10022
Bankers and Brokers Call Collect: (212) 750-5833
All Others Call Toll Free: (888) 750-5834
The Dealer Manager for the Offer is:
Hambrecht & Quist LLC
230 Park Avenue
New York, NY 10169
(212)207-1400
August 4, 1999
4
<PAGE> 1
July 23, 1999
Inamed Corporation
1120 Avenue of the Americas, 4th Floor
New York, NY 10036
Attention: Ilan Reich
Re: Commitment Letter-Inamed Corporation
Dear Mr. Reich:
You have advised us that Inamed Corporation (the "Company") intends to
consummate a transaction (the "Acquisition") pursuant to which the Company will
acquire substantially all of the stock of Collagen Aesthetics Inc. ("CGEN"). We
understand that the Acquisition will be accomplished pursuant to a Tender Offer
and Merger Agreement which is expected to be executed on or before August 6,
1999 among CGEN and the Company (the "Purchase Agreement").
You have further advised us that a portion of the funds necessary to
consummate the Acquisition and to pay certain related fees and expenses will be
provided through the Company's issuance of senior secured bridge notes in an
aggregate principal amount of $155,000,000 (the "Bridge Notes"), the principal
terms of which are set forth in the Outline of Proposed Terms and Conditions
attached hereto as Exhibit A (the "Term Sheet"). The Company has requested that
Cerberus Capital Management, L.P., or one or more of its affiliates (the
"Lender") provide the financing contemplated by the Bridge Notes. The Lender is
pleased to advise you that it is willing to purchase from the Company all of the
Bridge Notes, subject in all respects to the satisfaction of each of the terms
and conditions contained in this commitment letter and in the Term Sheet.
The Lender and the Company agree that (i) if other investors or lenders
reasonably acceptable to the Lender agree to purchase Bridge Notes in an
aggregate principal amount of up to $80,000,000, the Company or the Lender shall
have the right to reduce, on a dollar-for-dollar basis, the aggregate principal
amount of Bridge Notes committed to be purchased by the Lender hereunder to an
amount not less than $75,000,000 (with the exact principal amount of Bridge
Notes to be issued by the Company hereunder being conveyed to the Lender no
later than 5:00 p.m. Eastern time on August 31, 1999) under the terms and
conditions set forth in this commitment letter and the Term Sheet. The proceeds
from the sale of the Bridge Notes shall be used by the Company solely for the
purpose of financing the Acquisition, paying certain fees and expenses incurred
in connection herewith and therewith and for other purposes described in the
Term Sheet. The Company agrees and acknowledges that this letter and the Term
Sheet are intended as an outline only and do not purport to summarize all of the
conditions, covenants, representations, warranties and other provisions to be
contained in the definitive legal documentation for the Bridge Notes and that
the terms and conditions of the Lender's commitment hereunder and the Bridge
Notes are not limited to those set forth herein and in the Term Sheet but shall
be, in the opinion of the Lender, customary or typical for this type of
<PAGE> 2
financing and consistent in all material respects with the terms of this
commitment letter and the Term Sheet.
By its execution hereof, and its acceptance of the commitment contained
herein, the Company agrees to indemnify and hold harmless the Lender and each of
its assignees, its affiliates and its directors, officers, employees and agents
(each an "Indemnified Party") from and against any and all losses, claims,
damages, liabilities or other expenses to which such Indemnified Party becomes
subject, insofar as such losses, claims, damages, liabilities (or actions or
other proceedings commenced or threatened in respect thereof) or other expenses
arise out of or in any way relate to or result from this letter, or in any way
arise from any use or intended use of this letter or the Acquisition, and the
Company agrees to reimburse each Indemnified Party for any legal or other
expenses incurred in connection with investigating, defending or participating
in any such loss, claim, damage, liability or action or other proceeding
(whether or not such Indemnified Party is a party to any action or proceeding
out of which indemnification expenses arise), but excluding therefrom the fees
of the Lender's in-house counsel and other in-house advisors and all expenses,
losses, claims, damages and liabilities which are finally determined in a
non-appealable decision of a court of competent jurisdiction to have resulted
from the gross negligence, willful misconduct of, or breach of contractual
undertaking by the Indemnified Party. In the event of any litigation or dispute
involving this commitment letter, the Lender shall not be responsible or liable
to the Company or any other person for any special, indirect, consequential,
incidental or punitive damages. The obligations of the Company under this
paragraph shall remain effective whether or not definitive documentation is
executed and not withstanding any termination of this commitment letter.
The Lender's obligation to purchase the Bridge Notes, and the Company's
obligation to sell such Bridge Notes to the Lender, are subject to the
fulfillment of the following conditions precedent (in addition to those
conditions set forth in the Term Sheet):
(1) definitive documentation evidencing the transactions contemplated by
this commitment letter and the Term Sheet shall have been executed and
delivered on or before September 30, 1999, the Lender and the Company
agreeing to act in good faith and in a commercially reasonable manner
to prepare and execute definitive documentation containing terms and
conditions consistent in all material respects with this commitment
letter and the Term Sheet;
(2) since March 31, 1999, there shall not have been a material adverse
effect upon the results of operations, properties, operations,
financial condition or prospects or the Company or CGEN;
(3) the definitive documents relating to the Acquisition, including the
Purchase Agreement, shall have been fully executed and delivered, and
shall be in form and substance reasonably satisfactory to the Lender;
and
(4) the Company shall have paid to the Lender all fees payable hereunder
and under the Term Sheet in accordance with the terms of this letter
and the Term Sheet.
2
<PAGE> 3
By its execution hereof and acceptance of the terms of the commitment
contained herein, the Company agrees that it will pay (i) all reasonable fees,
costs and expenses that are incurred by or on behalf of the Lender in connection
with the negotiation, preparation, execution and delivery of this commitment
letter, the Term Sheet and any and all definitive documentation relating hereto
and thereto, including, without limitation, the reasonable fees and expenses of
counsel to the Lender (regardless of whether the transactions contemplated
hereby are consummated) which fees, costs and expenses are reasonably estimated
by the Lender to be approximately $100,000.00; (ii) in immediately available
funds a deposit of $50,000 (the "Deposit") to fund out-of-pocket expenses
referred to in clause (i) incurred by the Lender; and (iii) a non-refundable fee
equal to $775,000 upon execution of this letter (the "Initial Commitment Fee").
The Company represents and warrants that (i) subject to clause (ii) below,
all written information and other materials concerning the Company and CGEN
(collectively, the "Information") which has been or is hereafter made available
by or on behalf of the Company is, or when delivered will be, when considered as
a whole, complete and correct in all material respects and does not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances under which such statement has been made and (ii) to
the extent that any such Information contains projections, such projections were
prepared in good faith on the basis of (A) assumptions, methods and tests stated
therein which are believed by the Company to be reasonable and (B) information
believed by the Company to have been accurate based upon the information
available to the Company at the time such projections were furnished to the
Lender.
The Company agrees that (other than disclosure required by judicial or
administrative order or otherwise required by law, including public disclosure
documents) it will (i) consult with the Lender prior to the making of any filing
in which reference is made to the Lender or the commitment contained herein,
(ii) obtain the prior approval (which approval shall not be unreasonably
withheld) of the Lender prior to releasing any public announcement in which
reference is made to the Lender or to the commitment contained herein and (iii)
refrain from disclosing the existence of this commitment letter or any of its
terms or substances, directly or indirectly, to any other person except to its
officers, employees, agents (including solvency firms) and advisors who are
directly involved in the consideration of this matter.
Notwithstanding the provisions of the immediately preceding paragraph, this
commitment letter and its terms and substance may be disclosed to CGEN and its
advisors.
The offer made by the Lender in this commitment letter shall expire, unless
otherwise agreed by the Lender in writing by 6:00 p.m. (New York City time) on
July 23, 1999, unless prior thereto the Lender has received (i) a copy of this
commitment letter signed by the Company accepting the terms and conditions of
this commitment letter and the Term Sheet, (ii) the Deposit, in immediately
available funds and (iii) the Initial Commitment Fee, in immediately available
funds. The commitment by the Lender to purchase the Bridge Notes shall expire at
5:00 p.m. (New York City time) on October 29, 1999, unless on or prior to such
date, definitive documentation shall have been agreed to in writing by all
parties, and all conditions thereunder
3
<PAGE> 4
shall have been satisfied or waived by the Lender, or at such other time as
specified in the Term Sheet.
This commitment letter and the Lender's commitment hereunder shall not be
assignable by you without the prior written consent of the Lender any may not be
amended or any provision thereof waived or modified except by an instrument in
writing signed by you and the Lender. This commitment letter shall be governed
by, and construed in accordance with, the laws of the State of New York.
This commitment letter may be executed in any number of counterparts, each
of which shall be an original and all of which, when taken together, shall
constitute one agreement.
If you are in agreement with the foregoing, please so indicate by signing
in the place indicated below and returning a copy to the undersigned by
facsimile at the facsimile number set forth below.
- --------------------------------------------------------------------------------
CERBERUS CAPITAL MANAGEMENT, L.P.
By: $155,000,000
------------------------------ ----------------------------
Title: Amount of Bridge Notes Commitment
---------------------------
Date: July 22, 1999
Facsimile No.: (212) 935-2874
Telephone No.: (212) 891-2100
- --------------------------------------------------------------------------------
Agreed and Accepted:
INAMED CORPORATION
By:
------------------------------
Title:
---------------------------
Date: 7/22/99
- --------------------------------------------------------------------------------
4
<PAGE> 5
EXHIBIT A
INAMED CORPORATION
OUTLINE OF PROPOSED TERMS AND CONDITIONS
FOR PURCHASE OF
BRIDGE NOTES
This Outline of Proposed Terms and Conditions is part of the commitment letter,
dated July 21, 1999, addressed to Inamed Corporation by Cerberus Capital
Management, L.P., and is subject to the terms set forth therein. Capitalized
terms used herein shall have the meanings set forth in the commitment letter
unless otherwise defined herein.
BORROWER: Inamed Corporation (the "Borrower").
LENDERS: Cerberus Capital Management, L.P. or one or more
of its affiliates or other lenders arranged by
Cerberus Capital Management, L.P. (each a "Lender"
and together the "Lenders").
LENDERS' COUNSEL: Schulte Roth & Zabel LLP and Latham & Watkins.
BRIDGE NOTES: Up to $155,000,000 principal amount of Senior
Secured Bridge Notes.
COLLATERAL AND SECURITY: The Bridge Notes will be secured by perfected
first priority liens on, and security interests
in, (i) substantially all of the assets of the
Borrower, (ii) substantially all of the stock and
assets of Borrower's U.S. subsidiaries, (iii) 65%
of the outstanding capital stock of the Borrower's
foreign subsidiaries, (iv) prior to the
consummation for the Merger (as defined below),
all of the shares of stock of CGEN purchased by
Borrower or its subsidiary, whether in the Tender
Offer (as defined below) or otherwise, (v) prior
to the consummation of the Merger, the contents of
the Escrow Account (as defined below), and (vi)
upon and following consummation of the Merger, all
of such shares of stock and all of the assets of
CGEN and its subsidiaries, or the stock and assets
of the surviving entity.
GUARANTEE: The Bridge Notes will be guaranteed on a senior
basis by (i) prior to consummation of the Merger,
all of the Borrower's material direct and indirect
U.S. subsidiaries, and (ii)
<PAGE> 6
upon and following consummation of the Merger, all
of such material U.S. subsidiaries and CGEN and
its material U.S. subsidiaries (or the surviving
entity and its subsidiaries). Such guarantees will
be collateralized to the extent provided under
"Collateral and Security above.
USE OF PROCEEDS: The proceeds of the Bridge Notes will be used only
(i) to finance the purchase price of shares of
common stock of CGEN purchased pursuant to the
contemplated cash tender offer (the "Tender
Offer") to be made by the Borrower or its
subsidiary for any or all of the shares of common
stock of CGEN, at a price not in excess of $16.25
per share, (ii) to refinance certain existing
indebtedness of the Borrower, (iii) in the event
that any of the Bridge Notes remain outstanding
upon consummation of the merger of CGEN with
Borrower or a subsidiary of Borrower (the
"Merger") in which all shares of common stock of
CGEN not acquired pursuant to the Tender Offer are
converted into the right to receive cash in an
amount equal to the price per share paid in the
Tender Offer, to finance such cash price, (iv) to
fund the Escrow Account, and (v) to pay
transaction-related fees and expenses.
INTEREST RATE: The Bridge Notes will bear interest at a margin
(the "Margin") of 600 bps over 30-day LIBOR. The
Margin will increase every three months by 100
bps. Interest will be payable monthly in cash in
arrears. The default rate will be the applicable
interest rate plus 200 bps per annum.
FEES:
COMMITMENT FEES: A fee equal to (a) the Initial Commitment Fee
described in the Commitment Letter ($775,000.00),
which shall be non-refundable, and shall be due
and payable in cash to the Lenders upon the
execution by the Borrower of the commitment
letter, and (b) 1.0% of the maximum principal
amount of the Bridge Notes ($1,550,000.00), shall
be due and
2
<PAGE> 7
payable in cash to the Lenders upon the execution
and delivery of the Purchase Agreement, and which
shall be refundable as set forth in the
immediately succeeding sentence. The 1.0%
commitment fee shall be refundable by the Lenders
only in the event that the Lenders do not fund the
Bridge Notes due to a material adverse change in
the credit markets generally, or in the market for
high yield securities generally, or in the market
for outstanding equity securities of the Borrower.
FUNDING FEES: A non-refundable fee equal to 1.0% of the
principal amount of Bridge Notes actually funded
by Lenders, due and payable in cash to the
Lenders, at the time of funding of the Bridge
Notes.
ROLLOVER FEES: A non-refundable fee of 1.375% of the principal
amount of any Rollover Securities (as defined
below) issued, payable to the Lenders in cash at
the time of the issuance of such Rollover
Securities.
BROKERAGE FEES: Fees equal to: (a) 0.5% of the maximum principal
amount of the Bridge Notes ($775,000.00), which
shall be refundable to the extent set forth in the
immediately succeeding sentence and shall be
payable in cash to U.S. Bancorp Libra ("USBL")
upon the execution and delivery of the Purchase
Agreement; (b) 0.5% of the principal amount
actually funded by the Lenders under the Bridge
Notes, due and payable in cash to USBL at the time
of funding of the Bridge Notes; and (c) 1.5% of
the principal amount of any Rollover Securities
issued, payable in cash to USBL at the time of
issuance of such Rollover Securities. The 0.5% fee
set forth in clause (a) of the immediately
preceding sentence shall be refundable only in the
event that the Lenders do not fund the Bridge
Notes due to a material adverse change in the
credit markets generally, or in the market for
high yield securities generally, or in the market
for outstanding equity securities of the Borrower.
3
<PAGE> 8
MATURITY: Nine (9) months from the initial funding date.
AVAILABILITY: The Bridge Notes will be available for one draw at
the closing of the Tender Offer.
ESCROW ACCOUNT: In the event that the Borrower or its subsidiary
purchases less than all of the outstanding shares
of capital stock (including all shares issuable
upon the exercise of options, warrants and other
equity equivalents) of CGEN in the Tender Offer,
any excess of (a) the gross proceeds to the
Borrower of the Bridge Notes, minus (b) the amount
needed to fund the uses contemplated by clauses
(i), (ii) and (v) under "Use of Proceeds" above,
will be placed in an escrow account (the "Escrow
Account") maintained with a commercial bank
reasonably acceptable to the Lenders under an
escrow agreement having customary terms, and which
provides the Lenders with a first priority
perfected security interest therein. The cash
contained in the Escrow Account shall be released
to the Borrower only concurrently with the
consummation of the Merger and shall be used only
to fund the cash payable to shareholders of CGEN
upon such consummation and transaction-related
fees and expenses; provided, however, that if the
Company's planned issuance of senior unsecured
debt securities (the "Take-out Notes") is
consummated upon or prior to the consummation of
the Merger, then the cash contained in the Escrow
Account shall be released to the Lenders and
applied as repayment of the Bridge Notes. In the
event that the merger is not consummated within
nine (9) months following funding of the Bridge
Notes, then the cash contained in the Escrow
Account shall be released to the Lenders.
MANDATORY PRE-PAYMENT
AND COMMITMENT REDUCTIONS: The Bridge Notes will be repaid, at par plus
accrued interest, from proceeds of the Take-out
Notes. Bridge Note outstandings will also be
mandatorily reduced and prepaid (subject to
exceptions to be mutually agreed upon), at par
4
<PAGE> 9
plus accrued interest, by net proceeds from asset
sales, certain issuances of debt, equity issues
and/or capital contributions.
OPTIONAL PREPAYMENTS: Optional prepayments of the Bridge Notes are
permitted at any time at the option of the
Borrower, at par plus accrued interest, subject to
LIBOR breakage and/or redeployment costs.
EXPIRATION DATE: The obligation of the Lenders to fund the Bridge
Notes will expire upon the earliest of (i)
termination of the agreement providing for the
Tender Offer and the Merger, (ii) the issuance of
the Take-out Notes or (iii) October 29, 1999.
EXCHANGE FEATURE --
ROLLOVER SECURITIES: Upon maturity (the "Rollover Date"), each Lender
shall exchange its Bridge Notes for new securities
(the "Rollover Securities") having the terms
described below, provided that the following
conditions are met: (i) no Event of Default under
the Bridge Notes shall have occurred and be
continuing; (ii) no event or condition that, with
the giving of notice or the passage of time or
both, would become an Event of Default (a
"Default") under the Bridge Notes shall have
occurred and be continuing, provided that if such
a default has occurred but the applicable grace
period has not expired, the Rollover Date shall be
deferred until the earlier to occur of (A) the
cure of such default or (B) the expiration of such
grace period, which shall not exceed thirty (30)
days; (iii) all fees and expenses due to Lenders
as of such date shall have been paid in full and
in cash; and (iv) the Borrower's EBITDA for the
trailing four quarters shall not be less than
$35,000,000.00.
TERMS OF ROLLOVER
SECURITIES: The Rollover Securities will mature seven (7)
years after issuances and will bear interest,
payable semiannually in arrears, at 15% per annum.
Of such interest, 12% per annum will be payable in
cash, and the remaining 3% per annum will be
payable through the issuance of
5
<PAGE> 10
additional Rollover Securities. The Rollover
Securities will be senior secured notes and will
be guaranteed on a senior secured basis by all of
Borrower's material U.S. subsidiaries, including,
following consummation of the Merger, CGEN. The
security collateralizing the Rollover Securities
will be substantially the same as the security
collateralizing the Bridge Notes. Upon sale of
Rollover Securities to third parties not
affiliated with Cerberus Capital Management, L.P.,
such transferred Rollover Securities shall become
non-callable until the fourth anniversary of
issuance, and thereafter will be redeemable at the
option of the Borrower at premiums customary for
high yield debt securities. Rollover Securities
owned by Cerberus Capital Management, L.P. or its
affiliates shall remain callable at the option of
the Borrower without premium or penalty. The
Rollover Securities will have covenants and other
terms substantially similar to and customary for
high-yield debt securities, including without
limitation a debt incurrence covenant that
prohibits the Borrower and its subsidiaries from
incurring more than $25 million of secured debt
(including sale-leasebacks) and that contains
customary limitations on other debt incurrence and
assumption. The Rollover Securities will allow for
sharing of collateral, and be subordinate to such
permitted secured debt, subject to a customary
intercreditor agreement reasonably satisfactory to
the Lenders.
TERMS OF ROLLOVER Upon funding of the Bridge Notes, the Borrower
SECURITIES-WARRANTS: will issue and deliver to the escrow agent to hold
in the Escrow Account warrants (the "Warrants")
representing in the aggregate the right to acquire
10.0% of the fully-diluted common stock of the
Borrower (calculated after giving affect to the
exercise of such Warrants and all other
outstanding warrants, options and other equity
equivalents). The Warrants will expire five years
after issuance. Each Warrant will be exercisable
for cash at an exercise price equal to the average
closing price of the common stock of the Borrower
for
6
<PAGE> 11
the ten trading days preceding such issuance. The
Warrants will be released from escrow (a) to the
Lenders upon original maturity of the Bridge
Notes, if the Bridge Notes, or any portion of the
principal or interest thereof, remains outstanding
after the original maturity date, whether or not
the Rollover Securities are thereupon issued in
exchange for the Bridge Notes, or (b) otherwise,
to the Borrower for cancellation. Holders of the
shares of common stock issuable upon exercise of
the Warrants shall be entitled to the benefits of
a registration rights agreement in customary form
that provides for one demand registration and
unlimited "piggyback" registrations, subject to
standard cutbacks and "blackout" periods.
CONDITIONS PRECEDENT: In addition to the conditions set forth in the
commitment letter, the Lenders' obligations to
fund the Bridge Notes will be subject to customary
conditions, including without limitation the
following:
(i) Accuracy of all representations and
warranties in all material respects;
(ii) No material adverse change or
development reasonably likely to result
in a material adverse change in the
condition (financial or otherwise),
results of operations, properties,
assets, management, operations, business
or prospects of the Borrower or CGEN;
(iii) Delivery of customary legal opinions,
solvency opinions and certificates in
connection with the issuance of the
Bridge Notes, the Tender Offer and the
Merger;
(iv) The agreement providing for the Tender
Offer and the Merger remaining in full
force and effect without any amendment
or modification thereof adverse in any
material respect to the Lenders;
(v) CGEN's Board of Directors not
withdrawing or modifying, in any
material respect, its recommendation
that CGEN shareholders tender their
shares of common stock pursuant to the
Tender
7
<PAGE> 12
Offer and vote in favor of the Merger;
(vi) A majority of the outstanding shares of
common stock of CGEN (including all
shares issuable upon the exercise of
options, warrants and other equity
equivalents) are validly tendered and
not withdrawn, and the Borrower or its
subsidiary purchases such shares
pursuant to the Tender Offer
concurrently with such initial funding;
(vii) The Escrow and the Escrow Agreement
shall be executed and delivered in form
and substance satisfactory to the
Lenders;
(viii) The Lenders shall receive first priority
liens on, and security interests in,
substantially all of the assets of the
Borrower and Guarantors as contemplated
above;
(ix) There being no issued injunctions or
other material legal proceeding (which
Lenders reasonably believe is likely to
be determine adversely) challenging the
Acquisition, the Tender Offer, the
Merger or the transactions contemplated
by the commitment letter and this Term
Sheet;
(x) No material adverse change in the credit
markets generally, or in the market for
high yield securities generally, or in
the market for outstanding equity
securities of the Borrower; and
(xi) All conditions to the obligations of the
Borrower to purchase shares of common
stock pursuant to the Tender Offer shall
be satisfied in accordance with their
terms, with no material waiver or
modification thereof.
REPRESENTATIONS AND
WARRANTIES: Usual and customary for transactions of this type,
including, but not limited to, no Event of Default
(or event or condition that, with the giving of
notice or the lapse of time or both, would be an
Event of Default); accuracy of, and absence of
material omissions in, all reports filed with the
SEC by the Borrower and CGEN and all other
information provided by Borrower or CGEN to the
Lenders; absence of material adverse change;
compliance with
8
<PAGE> 13
laws; solvency; no conflicts with laws,
charter documents or agreements;
ownership of properties; absence of
liens and security interests; and
compliance with margin regulations. Each
to contain customary qualifiers and
mutually agreed upon enumerated
exceptions.
AFFIRMATIVE COVENANTS: Usual and customary for transactions of
this type, including, but not limited
to, compliance with laws; performance of
obligations; maintenance of properties
in good repair; inspection of books and
properties; payments of taxes and other
liabilities; notice of defaults;
delivery of financial statements,
financial projections and compliance
certificates; compliance by Borrower
with all of its obligations under the
agreement providing for the Tender Offer
and the Merger; Borrower's best efforts
to consummate the Merger as soon as
practicable; compliance with Borrower's
obligation to issue and sell debt
securities as summarized above; and, for
so long as Cerberus Capital Management,
L.P. or one or more of its affiliates
shall own Rollover Securities, as
respects Cerberus and such affiliate,
maintenance of certain financial ratios
or operating results.
NEGATIVE COVENANTS: Usual and customary for transactions of
this type, including, but not limited
to, limitations on indebtedness, liens
(including negative pledges)
sale-leaseback transactions, loans,
investments, transactions with
affiliates, joint ventures, contingent
obligations, restricted payments,
mergers, acquisitions, consolidations,
assets sales, creation of subsidiaries,
and changes in business conducted. Each
to contain customary exceptions and
qualifiers.
EVENTS OF DEFAULT: Usual and customary for transactions of
this type (including materiality
qualifiers and grace periods),
including, but not limited to,
nonpayment of principal, interest, fees
or other amounts when due; violation of
covenants; failure of any representation
or warranty to be
9
<PAGE> 14
true in all material respects;
cross-acceleration; change in control;
bankruptcy; material judgments;
invalidity of loan documents or
guarantees.
ASSIGNMENTS AND PARTICIPATIONS: Lenders may assign or participate their
interests in the Bridge Notes or the
Rollover Securities to qualified
institutional buyers or accredited
investors in their discretion, without
consent of any third party.
10
<PAGE> 1
INAMED CORPORATION
1120 Avenue of the Americas, 4th Floor
New York, New York 10036
(212) 626-6800
July 30, 1999
Cerberus Capital Management, L.P.
450 Park Avenue, 28th Floor
New York, New York 10022
Re: Inamed Corporation - Bridge Commitment Letter
Ladies and Gentlemen:
Reference is made to that certain Commitment Letter dated July
23, 1999 (the "Commitment Letter") between Inamed Corporation (the "Company")
and Cerberus Capital Management, L.P. (the "Lender"). Capitalized terms used
herein without definition have the meanings ascribed to such terms in the
Commitment Letter.
The Commitment Letter provides that as a condition precedent
to the Lender's obligation to purchase the Bridge Notes, since March 31, 1999,
there shall not have occurred a material adverse effect upon the results of
operations, properties, operations, financial condition or prospects of the
Company or CGEN.
As you know, CGEN intends to book a non-cash adjustment to the
provision for discontinued operations of LipoMatrix and its breast implant
business, not to exceed $11.5 million, in its financial statements for the
fiscal year ended June 30, 1999 (the "Adjustment"). The Adjustment is solely for
contingent liabilities arising over the next five (5) years solely from the
LipoMatrix business and, in particular, for clinical studies, consultant
services and legal fees to monitor LipoMatrix's Trilucent breast implants.
The Company hereby requests that the Lender expressly
acknowledge and confirm that it shall not hereafter claim that the Adjustment
has or had a material adverse affect upon the results of operations, properties,
operations, financial condition or prospectus of the Company or CGEN, so long as
the Adjustment does not exceed $11.5 million, and so long as the basis for the
Adjustment relates solely to the LipoMatrix business as described above.
<PAGE> 2
If you are in agreement with the foregoing, please so indicate
by signing in the place indicated below and returning a copy to the undersigned
by facsimile at the facsimile number set forth below.
Very truly yours,
INAMED CORPORATION
By:
----------------------------
Name: David E. Bamberger
Title: Senior Vice President and
General Counsel
Facsimile: (810) 963-5234
Acknowledged and confirmed:
CERBERUS CAPITAL MANAGEMENT, L.P.
By:
-----------------------------
Name:
Title:
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 31, 1999
AMONG
INAMED CORPORATION,
INAMED ACQUISITION CORPORATION
AND
COLLAGEN AESTHETICS, INC.
<PAGE> 2
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE 1 - DEFINITIONS......................................................................1
SECTION 1.01. Definitions...........................................................1
ARTICLE 2 - THE OFFER........................................................................6
SECTION 2.01. The Offer.............................................................6
SECTION 2.02. Company Action........................................................7
SECTION 2.03. Directors.............................................................8
ARTICLE 3 - THE MERGER.......................................................................9
SECTION 3.01. The Merger............................................................9
SECTION 3.02. Conversion of Securities.............................................10
SECTION 3.03. Surrender and Payment................................................10
SECTION 3.04. Dissenting Shares....................................................11
SECTION 3.05. Stock Options........................................................12
SECTION 3.06. Employee Stock Purchase Plan.........................................12
SECTION 3.07. Withholding Rights...................................................13
SECTION 3.08. Lost Certificates....................................................13
ARTICLE 4 - THE SURVIVING CORPORATION.......................................................13
SECTION 4.01. Certificate of Incorporation.........................................13
SECTION 4.02. Bylaws...............................................................13
SECTION 4.03. Directors and Officers...............................................13
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................14
SECTION 5.01. Corporate Existence and Power........................................14
SECTION 5.02. Corporate Authorization..............................................14
SECTION 5.03. Governmental Authorization...........................................14
SECTION 5.04. FDA and Other Regulatory Compliance; Compliance with Laws............14
SECTION 5.05. Non-contravention....................................................15
SECTION 5.06. Capitalization.......................................................16
SECTION 5.07. Subsidiaries.........................................................16
SECTION 5.08. SEC Filings..........................................................17
SECTION 5.09. Financial Statements.................................................18
SECTION 5.10. Disclosure Documents.................................................18
SECTION 5.11. Absence of Certain Changes...........................................19
SECTION 5.12. No Undisclosed Material Liabilities..................................20
SECTION 5.13. Litigation...........................................................20
SECTION 5.14. Material Contracts...................................................20
SECTION 5.15. Environmental Matters................................................21
SECTION 5.16. Taxes................................................................21
SECTION 5.17. Employee Benefit Plans...............................................23
SECTION 5.18. Termination Benefits.................................................24
SECTION 5.19. Patents and Other Proprietary Rights.................................25
SECTION 5.20. Year 2000............................................................26
</TABLE>
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<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SECTION 5.21. Products Liability Insurance.........................................26
SECTION 5.22. Rights Agreement.....................................................26
SECTION 5.23. Section 203..........................................................27
SECTION 5.24. Finders' Fees........................................................27
SECTION 5.25. Opinion of Financial Advisor.........................................27
SECTION 5.26. Transaction Expenses.................................................27
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF PARENT........................................27
SECTION 6.01. Corporate Existence and Power........................................27
SECTION 6.02. Corporate Authorization..............................................28
SECTION 6.03. Governmental Authorization...........................................28
SECTION 6.04. Non-contravention....................................................28
SECTION 6.05. Disclosure Documents.................................................29
SECTION 6.06. Finders' Fees........................................................29
SECTION 6.07. Financing............................................................29
SECTION 6.08. Surviving Corporation After the Merger...............................29
ARTICLE 7 - COVENANTS OF THE COMPANY........................................................30
SECTION 7.01. Conduct of the Company...............................................30
SECTION 7.02. Stockholder Meeting; Proxy Material..................................31
SECTION 7.03. Access to Information................................................31
SECTION 7.04. No Solicitation; Other Offers........................................32
SECTION 7.05. Notices of Certain Events............................................33
SECTION 7.06. Company Rights Agreement.............................................34
SECTION 7.07. Third Party Standstill Agreements....................................34
ARTICLE 8 - COVENANTS OF PARENT.............................................................34
SECTION 8.01. Obligations of Purchaser.............................................34
SECTION 8.02. Voting of Shares.....................................................34
SECTION 8.03. Director and Officer Liability.......................................35
SECTION 8.04. Employee Matters.....................................................35
SECTION 8.05. Products Liability Insurance.........................................36
ARTICLE 9 - COVENANTS OF PARENT AND THE COMPANY.............................................36
SECTION 9.01. Actions of Parent and the Company....................................36
SECTION 9.02. Certain Filings......................................................37
SECTION 9.03. Public Announcements.................................................37
SECTION 9.04. Further Assurances...................................................37
SECTION 9.05. Merger without Meeting of Stockholders...............................38
ARTICLE 10 - CONDITIONS TO THE MERGER.......................................................38
SECTION 10.01. Conditions to Obligations of Each Party.............................38
ARTICLE 11 - TERMINATION....................................................................38
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SECTION 11.01. Termination.........................................................38
SECTION 11.02. Effect of Termination...............................................40
ARTICLE 12 - MISCELLANEOUS..................................................................41
SECTION 12.01. Notices.............................................................41
SECTION 12.02. Survival of Representations and Warranties..........................42
SECTION 12.03. Amendments; No Waivers..............................................42
SECTION 12.04. Expenses............................................................42
SECTION 12.05. Successors and Assigns; Mergers.....................................42
SECTION 12.06. Governing Law.......................................................43
SECTION 12.07. Counterparts; Effectiveness; Benefit................................43
SECTION 12.08. Entire Agreement....................................................43
SECTION 12.09. Captions............................................................43
SECTION 12.10. Severability........................................................43
SECTION 12.11. Specific Performance................................................43
SECTION 12.12. Interpretation......................................................43
</TABLE>
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<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 31, 1999 (the
"Agreement"), by and among Inamed Corporation, a Delaware corporation
("Parent"), Inamed Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Purchaser") and Collagen Aesthetics, Inc., a Delaware
corporation (the "Company"). Certain capitalized terms used in this Agreement
have the meanings ascribed to them in Article I hereof.
WHEREAS, the Boards of Directors of each of Parent, Purchaser and the
Company have approved and deem it advisable and in the best interests of their
respective stockholders for Parent to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser make a cash tender offer, as described in Section 2.01 hereof, to
acquire all of the outstanding common stock, par value $.01 per share, of the
Company (the "Company Common Stock" or "Shares") at a price of $16.25 per
Share, net to each seller in cash, upon the terms and conditions of this
Agreement;
WHEREAS, the Boards of Directors of each of Parent and the Company have
approved this Agreement and the Merger, following the consummation of the
Offer, of Purchaser with and into the Company in accordance with the Delaware
General Corporation Law and upon the terms and subject to the conditions set
forth herein;
WHEREAS, the Board of Directors of the Company has (i) determined that
the consideration to be paid for each Share in the Offer and the Merger is fair
to the holders of such Shares, (ii) approved the making of the Offer and (iii)
resolved and agreed to recommend that holders of such Shares tender their
Shares pursuant to the Offer and approve this Agreement and each of the
Transactions (as defined in Section 1.01 hereof) upon the terms and subject to
the conditions set forth herein and therein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.
(a) The following terms, as used herein, have the following meanings:
"Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following events involving the Company or any of its
Subsidiaries: (w) any merger, consolidation, share exchange, share purchase,
recapitalization, business combination or other similar transaction, (x) any
sale, lease, exchange, transfer or other disposition of all or substantially
all the assets of the Company and its Subsidiaries, taken as a whole, in a
single
<PAGE> 6
transaction or series of related transactions, (y) any tender offer or
exchange offer for 20 percent or more of the outstanding Shares or the filing
of a registration statement under the 1933 Act in connection therewith, or (z)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing; provided that an
"Acquisition Proposal" shall not be deemed to include any inquiry, offer or
proposal (or sale) regarding the Company's LipoMatrix Business or the
liabilities or assets associated therewith (the "LipoMatrix Sale").
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person. As used in this definition, the term "control" (including the
terms "controlling," "controlled by" and "under common control with") means
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Antitrust Law" means the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other federal, state and foreign statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or lessening of competition
through merger or acquisition.
"Balance Sheet Date" means March 31, 1999.
"Board of Directors of the Company" means the board of directors
of the Company.
"Certificate of Merger" means the certificate of merger, in form
and substance mutually satisfactory to Parent and the Company, filed with the
Secretary of State of the State of Delaware pursuant to Section 3.01 hereof.
"Closing Date" means the date on which the Effective Time
occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Balance Sheet" means the consolidated balance sheet of
the Company as of June 30, 1998 and the footnotes thereto set forth in the
Company 10-K.
"Company 10-K" means the Company's annual report on Form 10-K,
as amended, for the fiscal year ended June 30, 1998.
"Delaware Law" means the General Corporation Law of the State of
Delaware.
"Environmental Laws" means any federal, state, local or foreign
law (including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any governmental authority or
other third party, relating to human health and safety, the environment
-2-
<PAGE> 7
or to pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials.
"Environmental Permits" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of the Company or any Subsidiary as
currently conducted.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA Affiliate" of any entity means any other entity that,
together with such entity, would be treated as a single employer under Section
414 of the Code.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976.
"knowledge" of any Person that is not an individual means the
actual knowledge of such Person's executive officers (which, in the case of the
Company, shall mean the knowledge of Messrs. Petersmeyer, Bates, Yamamoto, and
Dimmer and Dr. McGuire and Ms. Friedman and Ms. Stirn).
"LipoMatrix Business" means all business carried on by the
Company's former subsidiary LipoMatrix, Inc., and all business related to
Trilucent breast implant as well as the liabilities or assets associated
therewith.
"Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, encumbrance or other adverse
claim of any kind in respect of such property or asset.
"Market Disruption" shall be deemed to occur as long as any of
the following situations exist (i) any general suspension of trading in, or
limitation on prices for, debt securities on any United States national
securities exchange or in the over-the-counter market, (ii) the yield on
30-year U.S. Treasury Bond exceeds 8.11%, (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory); (iv) any limitation (whether or not
mandatory) by any U.S. federal or state governmental or regulatory authority on
the extension of credit by banks or other financial institutions; or (v) war or
armed hostilities or other national or international crisis directly or
indirectly involving the United States having a significant adverse effect on
the functionality of the financial markets in the United States.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the condition (financial or otherwise), business,
assets or results of operations of such Person and its Subsidiaries, taken as a
whole; provided, however, that in determining whether there has been a Material
Adverse Effect with respect to any Person, any adverse effect attributable to
or resulting from the following shall be disregarded: (i) changes in general
economic conditions or changes affecting the industry generally in which such
Person operates, (ii) the effect of the public announcement or pendency of the
transactions contemplated hereby on current or prospective customers or
revenues of the Person, (iii) stockholder class action
-3-
<PAGE> 8
litigation arising out of this Agreement or the transactions contemplated
hereby, and (iv) any factor relating to the Company's LipoMatrix Business.
"1933 Act" means the Securities Act of 1933.
"1934 Act" means the Securities Exchange Act of 1934.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Rights" means the rights issued pursuant to the Rights
Agreement.
"Rights Agreement" means the Amended and Restated Preferred
Share Rights Agreement dated as of May 6, 1999 between the Company and The Bank
of New York, a New York banking corporation.
"SEC" means the Securities and Exchange Commission.
"Specified Compensation and Benefit Programs" means all
employment agreements, change in control agreements, severance or special
termination agreements, severance plans, pension, retirement or deferred
compensation plans for non-employee directors, supplemental executive
retirement programs, tax indemnification agreements, outplacement programs,
cash bonus programs, stock appreciation rights, phantom stock or stock unit
plans, and health, life, disability and other contractual insurance or welfare
plans or other contractual arrangements, in each case, created by contract
rather than by operation of law, but shall not include any tax-qualified
pension, profit-sharing or employee stock ownership plan, employee stock
purchase plan or any stock option plan.
"Subsidiary" means, with respect to any Person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at any time directly or indirectly owned by such Person.
"Superior Proposal" means any bona fide, unsolicited written
Acquisition Proposal on terms that the Board of Directors of the Company
determines in good faith by a majority vote is more favorable and provides
greater value to all the Company's stockholders than is provided hereunder,
which decision takes into account the advice of a financial advisor of
nationally recognized reputation and all the terms and conditions of the
Acquisition Proposal, including any break-up fees, expense reimbursement
provisions and conditions to closing.
"Transactions" means the transactions contemplated by this
Agreement, including the Offer and the Merger.
Any reference in this Agreement to a statute shall be to such
statute, as amended from time to time, and to the rules and regulations
promulgated thereunder.
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<PAGE> 9
(b) Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Agreement Recitals
Antitrust Law 9.01(b)
Certificates 3.03(a)
Closing 3.01(d)
Commencement Date 2.01(a)
Commitment Letter 6.07
Company Recitals
Company Common Stock Recitals
Company Disclosure Documents 5.10(a)
Company Employees 8.04
Company Material Contract 5.14
Company Proxy Statement 5.10(a)
Company SEC Document 5.08(a)
Company Securities 5.06(b)
Company Subsidiary Securities 5.07(b)
Company Stockholder Meeting 7.02
Compensation Options 3.05(a)
Confidentiality Agreement 7.03(a)
Continuing Director 2.03(a)
DOJ 9.01(b)
Effective Time 3.01(b)
Employee Plans 5.17(a)
ESPP 3.06(a)
Exchange Agent 3.03(a)
FTC 9.01(b)
GAAP 5.09
Indemnified Person 8.03(a)
Intellectual Property 5.18(b)
LipoMatrix Policies 5.21
LipoMatrix Sale 1.01(a)
March 31, 1999 Balance Sheet 5.12
Merger 3.01(a)
Merger Consideration 3.02(a)
Minimum Condition 2.01(a)
Offer 2.01(a)
Offer Price 2.01(a)
Offer Documents 2.01(b)
Option 3.02(d)
Option Amount 3.05
Parent Recitals
Pre-Closing Tax Period 5.16(e)
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C>
Press Release 5.09
Products Liability Policies 5.21
Purchaser Recitals
Returns 5.16(a)
Schedule 14D-1 2.01(b)
Schedule 14D-9 2.02(b)
Shares Recitals
Stock Option Plan 3.02(d)
Surviving Corporation 3.01(a)
Tax 5.16(e)
Tax Asset 5.16(e)
Taxing Authority 5.16(e)
Transaction Expenses 5.27
</TABLE>
ARTICLE 2
THE OFFER
SECTION 2.01. The Offer.
(a) Provided that nothing shall have occurred and be continuing that
would result in a failure to satisfy any of the conditions set forth in Annex I
hereto, as promptly as practicable after the date hereof, but in no event later
than five business days following the public announcement of this Agreement,
Purchaser shall commence an offer (within the meaning of Rule 14d-2 promulgated
under the Exchange Act) (the "Offer") to purchase all of the outstanding Shares
and the associated Rights at a price of $16.25 per Share (and associated
Right), net to each seller in cash (the "Offer Price"). The date on which the
Offer shall actually commence is referred to herein as the "Commencement Date."
The Offer shall be subject to the condition that there shall be validly
tendered in accordance with the terms of the Offer, prior to the expiration
date of the Offer and not withdrawn, a number of Shares that, together with the
Shares then owned by Parent and Purchaser, represents at least a majority of
the Shares outstanding on a fully diluted basis, assuming exercise of all
Options with an exercise price below $18.00 per share (the "Minimum Condition")
and to the other conditions set forth in Annex I hereto. Purchaser expressly
reserves the right to waive any of the conditions to the Offer and to make any
change in the terms or conditions of the Offer, provided that, no change or
waiver may be made that, without the prior written consent of the Company,
waives the Minimum Condition, changes the form of consideration to be paid,
decreases the price per Share or the number of Shares sought in the Offer,
imposes conditions to the Offer in addition to those set forth in Annex I, or
is otherwise adverse to the holders of the Shares. Notwithstanding the
foregoing, without the consent of the Company, Purchaser shall have the right
to extend the Offer (i) from time to time if, at the scheduled or extended
expiration date of the Offer, any of the conditions to the Offer shall not have
been satisfied or waived, until such conditions are satisfied or waived or (ii)
for any period required by any rule, regulation, interpretation or position of
the SEC or the staff thereof applicable to the Offer or any period required by
applicable law or (iii) for a period of not more than 10 business days in order
to finalize Purchaser's financing arrangements for the purchase of Shares
pursuant to the Offer and the Merger, or (iv) during the pendency of a Market
Disruption
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until December 31, 1999, or (v) on one or more occasions for an aggregate
period of not more than 15 business days beyond the latest expiration date that
would otherwise be permitted under clause (i), (ii), (iii) or (iv) of this
sentence, if on such expiration date there shall not have been tendered at
least 90% of the outstanding Shares. If all of the conditions to the Offer are
not satisfied or waived on any scheduled expiration date of the Offer,
Purchaser shall extend the Offer from time to time until such conditions are
satisfied or waived, provided that Purchaser shall not be required to extend
the Offer beyond December 31, 1999; and provided further, that Purchaser shall
not be obligated to extend the Offer hereunder beyond October 29, 1999 in the
event the Minimum Condition or any of the conditions to the Offer contained in
subclause (c) and (h) of clause (iii) of Annex I hereto has not been satisfied
or waived on or before such date. Subject to the foregoing and to the terms and
conditions of the Offer, Purchaser shall, and Parent shall cause it to, accept
for payment and pay for, as promptly as practicable after the expiration of the
Offer, all Shares properly tendered and not withdrawn pursuant to the Offer.
The Offer shall have an initial scheduled expiration date 20 business days
following commencement thereof.
(b) As soon as practicable on the date of commencement of the Offer,
Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1") with respect to the Offer, which will contain the offer
to purchase and form of the related letter of transmittal and summary
advertisement (such Schedule 14D-1 and such documents included therein pursuant
to which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents"). Parent and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect. Purchaser agrees to take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. The
Company and its counsel shall be given an opportunity to review and comment on
the Offer Documents prior to their being filed with or sent to the SEC or
disseminated to the holders of Shares. Parent and Purchaser agree to provide
the Company and its counsel any comments Parent, Purchaser or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Purchaser on a
timely basis, the funds necessary to purchase the Shares that Purchaser becomes
obligated to purchase pursuant to the Offer.
SECTION 2.02. Company Action.
(a) The Company hereby consents to the Offer and represents that its
Board of Directors, at a meeting duly called and held has:
(i) determined that this Agreement, including the Offer and the
Merger, are fair to and in the best interests of the Company's stockholders,
(ii) approved and adopted this Agreement and the Transactions,
including the Offer and the Merger, in accordance with the requirements of the
Delaware Law,
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(iii) subject to Section 7.04(c), resolved to recommend acceptance
of the Offer and approval and adoption of this Agreement and the Merger by its
stockholders, and
(iv) taken the actions referred to in Section 5.22 and 5.23
hereof.
The Company will cause its transfer agent to promptly furnish Parent with a
list of the Company's stockholders, mailing labels and any available listing or
computer file containing the names and addresses of all record holders of
Shares and lists of securities positions of Shares held in stock depositories
and to provide to Parent such additional information (including, without
limitation, updated lists of stockholders, mailing labels and lists of
securities positions) and such other assistance as Parent may reasonably
request in communicating to record and beneficial owners of Shares in
connection with the Offer. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Offer or the Merger, Parent and
Purchaser shall (i) hold in confidence the information contained in such
labels, listings and files, (ii) use such information only in connection with
the Offer and the Merger and (iii) if this Agreement is terminated in
accordance with Article 11, upon request of the Company, deliver or cause to be
delivered to the Company all copies of such information then in their
possession or the possession of its agents or representatives.
(b) As soon as practicable on the day that the Offer is commenced, the
Company shall file with the SEC and disseminate to holders of Shares, in each
case as and to the extent required by applicable federal securities laws, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that shall reflect the
recommendations of the Company's Board of Directors referred to above. The
Company and Parent each agree promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect. The Company agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given an opportunity to review and comment on the Schedule 14D-9 prior
to its being filed with the SEC or disseminated to the holders of Shares. The
Company agrees to provide Parent and its counsel any comments the Company or
its counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments.
SECTION 2.03. Directors.
(a) Effective upon the purchase pursuant to the Offer of a number of
Shares that satisfies the Minimum Condition, Parent shall be entitled to
designate the number of directors, rounded up to the next whole number, on the
Company's Board of Directors that equals the product of (i) the total number of
directors on the Company's Board of Directors (giving effect to the election of
any additional directors pursuant to this Section) and (ii) the percentage that
the number of Shares beneficially owned by Parent (including Shares accepted
for payment) bears to the total number of Shares outstanding; and the Company
shall take all action necessary to cause Parent's designees to be elected or
appointed to the Company's Board of Directors, including, without limitation,
increasing the number of directors, and seeking and accepting resignations of
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incumbent directors. At such time, if requested by Parent, the Company will
also use its best efforts to cause individual directors designated by Parent to
constitute the same percentage (rounded up to the next whole number) as such
individuals represent on the Company's Board of Directors of (i) each committee
of the Board other than any committee of the Board established to take action
under this Agreement and (ii) each board of directors of each Subsidiary of the
Company (and each committee thereof). Notwithstanding the foregoing, the
Company shall use its reasonable best efforts to ensure that at least one
member of the Board of Directors as of the date hereof who is not an employee
of the Company (the "Continuing Director") shall remain a member of the Board
of Directors until the Effective Time.
(b) The Company's obligations to appoint Parent's designees to the
Board of Directors shall be subject to Section 14(f) of the 1934 Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all actions, and
shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors, as Section 14(f) and Rule 14f-1 require
in order to fulfill its obligations under this Section. Parent shall supply to
the Company in writing and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees
pursuant to Section 2.03(a) and until the Effective Time, the approval of the
Continuing Director shall be required to authorize (and such authorization
shall constitute the authorization of the Board of Directors and no other
action on the part of the Company, including any action by any other director
of the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Board of Directors, any amendment of the certificate of incorporation or
bylaws of the Company, any extension of time for performance of any obligation
or action hereunder by Parent or Purchaser, any waiver of compliance with any
of the agreements or conditions contained herein for the benefit of the
Company, and the exercise of any of the Company's rights, remedies or benefits
hereunder.
ARTICLE 3
THE MERGER
SECTION 3.01. The Merger.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with Delaware Law, at the Effective Time,
Purchaser shall be merged (the "Merger") with and into the Company, whereupon
(i) the separate existence of Purchaser shall cease, and the Company shall be
the surviving corporation (the "Surviving Corporation"), (ii) the Company shall
succeed to and assume all the rights of Purchaser in accordance with Delaware
Law, and (iii) the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger.
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Purchaser will file the Certificate of Merger with the Secretary of State of
the State of Delaware and make all other filings or
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recordings required by Delaware Law in connection with the Merger. The Merger
shall become effective at such time (the "Effective Time") as the Certificate
of Merger is duly filed with the Secretary of State of the State of Delaware or
at such later time as is specified in the Certificate of Merger.
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Purchaser, all as provided under Delaware Law.
(d) Unless this Agreement has been terminated and the transactions
herein contemplated have been abandoned pursuant to Article 11 and subject to
the satisfaction or waiver of the conditions set forth in Article 10, the
closing of the Merger (the "Closing") will take place at 10:00 AM (PDT) as
promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article 10, at the
offices of Venture Law Group, A Professional Corporation, 2800 Sand Hill Road,
Menlo Park, California, unless another date, time or place is agreed to in
writing by the parties hereto.
SECTION 3.02. Conversion of Securities. At the Effective Time:
(a) except as otherwise provided in Section 3.02(b) or Section 3.04,
each Share outstanding immediately prior to the Effective Time shall be
converted into the right to receive $16.25 in cash or any higher price paid for
each Share in the Offer, without interest (the "Merger Consideration");
(b) each Share owned by Parent or any of its Subsidiaries immediately
prior to the Effective Time shall be canceled, and no payment shall be made
with respect thereto;
(c) each share of common stock of Purchaser outstanding immediately
prior to the Effective Time shall be converted into and become one share of
common stock of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation; and
(d) all options to purchase Company Common Stock pursuant to any
arrangement (a "Stock Option Plan") adopted by the Board of Directors of the
Company to provide options, warrants or other rights to purchase capital stock
of the Company (in any such case, an "Option") then outstanding shall be
subject to the provisions of Section 3.05 hereof.
SECTION 3.03. Surrender and Payment.
(a) Prior to the Effective Time, Parent shall appoint an agent (the
"Exchange Agent") for the purpose of exchanging certificates representing
Shares (the "Certificates") for the Merger Consideration. Parent or Purchaser
will make available to the Exchange Agent, as needed, the Merger Consideration
to be paid in respect of the Shares. Promptly after the Effective Time, Parent
will send, or will cause the Exchange Agent to send, to each holder of Shares
at the Effective Time (i) a letter of transmittal and instructions (which shall
specify that the delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery of the Certificates
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<PAGE> 15
to the Exchange Agent) for use in such exchange, and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration.
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration will be entitled to receive, upon surrender to
the Exchange Agent of a Certificate, together with a properly completed letter
of transmittal, the Merger Consideration payable for each Share represented by
such Certificate. Until so surrendered, each such Certificate shall represent
after the Effective Time for all purposes only the right to receive such Merger
Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name the surrendered Certificate is
registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such Certificate or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, they shall be canceled and exchanged for the
Merger Consideration provided for, and in accordance with the procedures set
forth, in this Article 3.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.03(a) (and any interest or other income
earned thereon) that remains unclaimed by the holders of Shares twelve months
after the Effective Time shall be returned to Parent, upon demand, and any such
holder who has not exchanged them for the Merger Consideration in accordance
with this Section prior to that time shall thereafter look only to the
Surviving Corporation for payment of the Merger Consideration in respect of
such Shares without any interest thereon. Notwithstanding the foregoing, the
Surviving Corporation shall not be liable to any holder of Shares for any
amount paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by holders of Shares
two years after the Effective Time (or such earlier date immediately prior to
such time when the amounts would otherwise escheat to or become property of any
governmental authority) shall become, to the extent permitted by applicable
law, the property of Parent and the Surviving Corporation free and clear of any
claims or interest of any Person previously entitled thereto.
SECTION 3.04. Dissenting Shares. Notwithstanding Section 3.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who
has not voted in favor of the Merger or consented thereto in writing and who
has demanded appraisal for such Shares in accordance with Delaware Law (if
Delaware Law provides for appraisal rights for such Shares in the Merger) shall
not be converted into a right to receive the Merger Consideration, unless such
holder fails to perfect, withdraws or otherwise loses its right to appraisal.
If, after the Effective Time, such holder fails to perfect, withdraws or loses
its right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
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<PAGE> 16
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and Parent shall have the
right to participate in all negotiations and proceedings with respect to such
demands. Except with the prior written consent of Parent, the Company shall not
make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 3.05. Stock Options.
(a) Schedule 3.05 lists, as of June 30, 1999 each holder of an Option,
the number of such shares subject to Options held by each such holder, and the
vesting schedule, exercise price and expiration date of each such Option, and
since June 30, 1999 no material amount of Options have been issued. At the
Effective Time, each Option outstanding under any Stock Option Plan, whether
vested or not vested (the "Compensation Options"), shall be changed into an
amount in cash in respect of each share of Company Common Stock subject to such
Option equal to the Merger Consideration less the purchase price thereof
pursuant to the Stock Option Plan and the applicable stock option agreements to
the extent such number is a positive number (the "Option Amount").
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of any option plan or
arrangement or obtaining all necessary consents or releases from optionees or
otherwise) that are necessary to give effect to the transactions contemplated
by Sections 3.05(a). Upon receipt by any Option holder of the Option Amount,
each Compensation Option held by such holder shall be canceled and the
surrender of a Compensation Option to the Company in exchange for the Option
Amount shall be deemed a release of any and all rights such holder had or may
have had in respect of such Compensation Option. Except as otherwise agreed to
by the parties herein: (i) each Stock Option Plan shall terminate as of the
Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or, any Subsidiary thereof, shall be canceled as
of the Effective Time; and (ii) no participant in any Stock Option Plan or
other plans, programs or arrangements, shall have any right thereunder to
acquire equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof and the Company will terminate all such plans as of the
Effective Time.
SECTION 3.06. Employee Stock Purchase Plan.
(a) After the date hereof, no new offering period shall commence under
the Company's 1998 Employee Stock Purchase Plan (the "ESPP"), and no Person who
was not an employee on the offering date with respect to the current offering
period, as those terms are used in the ESPP, shall be entitled to purchase
shares under the ESPP. As of the Effective Time, the ESPP shall be terminated.
The Company shall pay each participant in any current offering period under
such Plan in cash at the Effective Time, in cancellation of all rights under
such Plan, an amount determined by multiplying (i) the Merger Consideration per
Share by (ii) the number of Shares such participant could have purchased under
the ESPP based on his or her account balance under such Plan immediately prior
to the Effective Time (treating, for such purpose, the option price per Share
as equal to the lesser of 85% of the fair market value of a Share on the
offering date with respect to such offering period and 85% of the Merger
Consideration) (such
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<PAGE> 17
payment to be net of applicable withholding taxes); provided that with respect
to any fractional shares, the foregoing shall not apply and the balance of each
account attributable to such fractional shares shall be returned to the
participant in cash.
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the ESPP or obtaining
participant consents) that are necessary to give effect to the transactions
contemplated by Section 3.06(a).
SECTION 3.07. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise payable to any Person pursuant to this Article such amounts as it is
required to deduct and withhold with respect to the making of such payment
under any provision of federal, state, or local tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the Surviving Corporation or Parent,
as the case may be, made such deduction and withholding.
SECTION 3.08. Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will pay, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the Shares
represented by such Certificate, as contemplated by this Article.
ARTICLE 4
THE SURVIVING CORPORATION
SECTION 4.01. Certificate of Incorporation. The certificate of
incorporation of Purchaser in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, provided that, at the Effective Time, Article
First of such certificate of incorporation shall be amended to read as follows:
"The name of the corporation is Collagen Aesthetic, Inc.."
SECTION 4.02. Bylaws. The bylaws of Purchaser in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable law.
SECTION 4.03. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (a) the directors of Purchaser at the Effective
Time shall be the directors of the Surviving Corporation and (b) the officers
of the Company at the Effective Time shall be the officers of the Surviving
Corporation.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that, except as set forth
in the Company Disclosure Schedule:
SECTION 5.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not have,
individually or in the aggregate, a Material Adverse Effect on the Company. The
Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not have,
individually or in the aggregate, a Material Adverse Effect on the Company. The
Company has heretofore delivered to Parent true and complete copies of the
certificate of incorporation and bylaws of the Company as currently in effect.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the Transactions, are within the Company's corporate powers and,
except for the affirmative vote of the holders of a majority of the outstanding
Shares in connection with the consummation of the Merger (if required by law),
have been duly authorized by all necessary corporate action on the part of the
Company. The affirmative vote of the holders of a majority of the outstanding
Shares (if required by law) is the only vote of the holders of any of the
Company's capital stock necessary in connection with the consummation of the
Merger. This Agreement constitutes a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the Transactions, require no action by or in respect of, or filing
with, any governmental body, agency, official or authority, domestic or
foreign, other than (a) the filing of the Certificate of Merger with respect to
the Merger with the Delaware Secretary of State and appropriate documents with
the relevant authorities of other states in which the Company is qualified to
do business, (b) compliance with any applicable requirements of the HSR Act,
(c) compliance with any applicable requirements of the 1933 Act, the 1934 Act
and any other applicable securities or takeover laws, whether state or foreign,
and (d) any actions or filings the absence of which would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company or materially to impair the ability of the Company to consummate
the Transactions.
SECTION 5.04. FDA and Other Regulatory Compliance; Compliance with Laws.
Except for failures to comply or violations that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company (a) to its
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knowledge, the Company is in compliance with all federal, state or local laws,
ordinances, governmental rules or regulations relating to medical device
manufacturers and distributors or otherwise applicable to its business and has
no reason believe that any of the consents, approvals, authorizations,
registrations, certifications, permits, filings or notifications that it has
received or made to operate its business are invalid or have been or are being
suspended, cancelled, revoked or questioned; and (b) there is no investigation
or inquiry to which the Company is a party or, to the Company's knowledge,
pending or threatened relating to the operations of the Company's business and
its compliance with applicable federal, state or local laws, ordinances,
governmental rules or regulations.
SECTION 5.05. Non-contravention. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the Transactions, do not and will not (a) contravene, conflict with,
or result in any violation or breach of any provision of the certificate of
incorporation or bylaws of the Company, (b) assuming compliance with the
matters referred to in Section 5.03, contravene, conflict with, or result in a
violation or breach of any provision of any applicable law, statute, ordinance,
rule, regulation, judgment, injunction, order or decree, (c) require any
consent or other action by any Person under, constitute a default, or an event
that, with notice or lapse of time or both, would become a default, under, or
cause or permit the termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which the Company or any
of its Subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its Subsidiaries or any license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of the Company and
its Subsidiaries or (d) result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries, except for such
contraventions, conflicts and violations referred to in clause (b) and for such
failures to obtain any such consent or other action, defaults, terminations,
cancellations, accelerations, changes, losses or Liens referred to in clauses
(c) and (d) that would not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company or materially to impair
the ability of the Company to consummate the Transactions.
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SECTION 5.06. Capitalization.
(a) The authorized capital stock of the Company consists of 28,950,000
shares of Common Stock, par value $0.01 per share and 5,000,000 shares of
Preferred Stock, par value $0.01 per share. As of June 30, 1999, (i) 8,592,359
shares of Company Common Stock were issued and outstanding, (ii) no shares of
preferred stock were issued or outstanding, (iii) 2,454,000 Shares were held in
the treasury of the Company, and (iv) 1,656,600 Shares were issuable under
outstanding Options. Assuming that the Effective Time occurs on December 31,
1999, the number of additional shares of Company Common Stock that shall be
purchased pursuant to the ESPP referred to in Section 3.06 will be
approximately 20,000. All outstanding shares of capital stock of the Company
have been, and all shares that may be issued upon exercise of Options will be,
when issued in accordance with the respective terms thereof, duly authorized
and validly issued and will be fully paid and nonassessable. Schedule 5.06(a)
identifies (i) the holders of each of the Options, (ii) the number of Options
vested, for each holder, (iii) the option plan under which each Option was
issued, (iv) the number of Options held by such holder and (v) the exercise
price of each of the Options.
(b) Except for changes since June 30, 1999 resulting from the exercise
of Options issued by the Company outstanding on such date and other than as
described in Section 5.06(a) above, there are no outstanding (i) shares of
capital stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) options or other rights to acquire from the
Company or other obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company (the items in clauses (i), (ii) and (iii)
being referred to collectively as the "Company Securities"). There are no
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the Company Securities.
SECTION 5.07. Subsidiaries.
(a) Each Subsidiary of the Company is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not have, individually or in
the aggregate, a Material Adverse Effect on the Company. Each such Subsidiary
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not have,
individually or in the aggregate, a Material Adverse Effect on the Company. All
Subsidiaries of the Company and their respective jurisdictions of incorporation
are identified in the Company 10-K.
(b) All of the outstanding capital stock of, or other voting securities
or ownership interests in, each Subsidiary of the Company, is owned by the
Company, directly or indirectly, free and clear of any Lien and free of any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other voting securities or ownership interests. There are no
outstanding
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(i) securities of the Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary of the Company or (ii) options or other
rights to acquire from the Company or any of its Subsidiaries, or other
obligation of the Company or any of its Subsidiaries to issue, any capital
stock or other voting securities or ownership interests in, or any securities
convertible into or exchangeable for any capital stock or other voting
securities or ownership interests in, any Subsidiary of the Company (the items
in clauses (i) and (ii) being referred to collectively as the "Company
Subsidiary Securities"). There are no outstanding obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the
Company Subsidiary Securities.
(c) To the Company's knowledge, each partnership, limited liability
company or similar entity in which the Company directly or indirectly owns an
interest entitling it to 10% or more of the voting interests therein, and each
limited partnership, limited liability company or similar entity for which the
Company or a Subsidiary is general partner or manager, as applicable, has been
duly organized and is in good standing under the laws of its jurisdiction of
organization and has all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted and
is duly qualified to do business and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where failure to have such material governmental licenses, authorizations,
consents and approvals or to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. The Company has
previously delivered to Parent a list of all such partnerships, limited
liability companies and similar entities.
SECTION 5.08. SEC Filings.
(a) The Company has delivered to Parent (i) the Company's annual report
on Form 10-K for its fiscal year ended June 30, 1998, (ii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held since June 30, 1998, and (iii)
all of the other reports, statements, schedules and registration statements
filed by the Company with the SEC since June 30, 1998 (the documents referred
to in this Section 5.08(a), collectively, the "Company SEC Documents").
(b) As of the filing date, each Company SEC Document complied as to
form in all material respects with the applicable requirements of the 1933 Act
and the 1934 Act, as the case may be.
(c) As of its filing date (or, if amended or superceded by a filing
prior to the date hereof, on the date of such later filing), each Company SEC
Document filed pursuant to the 1934 Act did not, and each such Company SEC
Document filed subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
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(d) Each Company SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
SECTION 5.09. Financial Statements.
(a) The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the
Company SEC Documents fairly present, in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis (except as may be
indicated in the notes thereto and except that the unaudited financial
statements do not contain footnotes), the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements).
(b) To the best of the Company's knowledge, the unaudited income
statement and balance sheet attached hereto as Exhibit 5.09 fairly present the
consolidated financial position of the Company and its consolidated
Subsidiaries as of June 30, 1999 and their consolidated results of operations
for the period then ending.
(c) As of the date hereof the Company has, and as of the date of the
acceptance for payment by Purchaser of Shares pursuant to the Offer the Company
shall have, an aggregate amount of cash, cash equivalents and/or short term
liquid investments at least equal to $17 million, after giving effect to the
payment of all Transaction Expenses (as defined in Section 5.27), including the
fees and disbursements to Lehman Brothers and Venture Law Group, a Professional
Corporation.
SECTION 5.10. Disclosure Documents.
(a) Each document required to be filed by the Company with the SEC or
required to be distributed or otherwise disseminated to the Company's
stockholders in connection with the Transactions (the "Company Disclosure
Documents"), including, without limitation, the Schedule 14D-9, the proxy or
information statement of the Company (the "Company Proxy Statement"), if any,
to be filed with the SEC in connection with the Merger, and any amendments or
supplements thereto, when filed, distributed or disseminated, as applicable,
will comply as to form in all material respects with the applicable
requirements of the 1934 Act.
(b) (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, and (ii) any Company
Disclosure Document (other than the Company Proxy Statement), at the time of
the filing of such Company Disclosure Document or any supplement or amendment
thereto and at the time of any distribution or dissemination thereof, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to
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<PAGE> 23
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties contained in
this Section 5.10(b) will not apply to statements or omissions included in the
Company Disclosure Documents based upon information furnished to the Company in
writing by Parent specifically for use therein.
(c) The information with respect to the Company or any of its
Subsidiaries that the Company furnishes to Parent in writing specifically for
use in the Offer Documents, at the time of the filing thereof, at the time of
any distribution or dissemination thereof and at the time of the consummation
of the Offer, will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 5.11. Absence of Certain Changes. Since the Balance Sheet Date,
the business of the Company and its Subsidiaries has been conducted in the
ordinary course consistent with past practices and, except as disclosed in the
Company SEC Documents or in Schedule 5.11, there has not been:
(a) any change, event or development having, or that could be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company;
(b) any amendments or changes in the Certificate of Incorporation or
bylaws of the Company;
(c) any material damage to, destruction or loss of any assets of the
Company (whether or not covered by insurance);
(d) any change by the Company in its accounting methods, principles or
practices;
(e) any revaluation by the Company of any of its assets, including,
without limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business;
(f) any sale of a material amount of assets of the Company, except for
the sale of inventory in the ordinary course of business,
(g) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition of any of its securities;
(h) any entry by the Company into any commitment or transaction
material to the Company, including, without limitation, any long-term supply
agreements or partnership, joint venture or other similar arrangements;
(i) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension , profit sharing, stock option
(including without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
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<PAGE> 24
purchase or other employee benefit plan, or any increase in the compensation
payable to any officers or key employees of the Company except in the ordinary
course of business consistent with past practice, and except for a plan or
arrangement that calls for payment of between six and twelve months of base and
scheduled cash incentive compensation with respect to certain of the Company's
key employees (exclusive of executive officers) in the event of termination as
listed (by each such employee) on schedule 5.11(i);
(j) any issuance, delivery, or sale of, or authorization of the
issuance, delivery or sale of, any share of capital stock or any Option with
respect thereto, other than the issuance of Company Common Stock pursuant to
the Company Stock Option Plan or the ESPP outstanding on the date of this
Agreement, or modification or amendment of any right of any holder of
outstanding shares of capital stock or Options with respect thereto; or
(k) any incurring of (which shall be deemed to include entering into
credit agreements, line of credit or similar arrangements until borrowings are
made under such arrangements) any indebtedness for borrowed money or guarantee
of any such indebtedness other than in the ordinary course of business
consistent with past practice.
SECTION 5.12. No Undisclosed Material Liabilities. Except as is
disclosed in the Company SEC Reports, or to the extent the existence of such
liability would not have a Material Adverse Effect, neither the Company nor any
of its Subsidiaries has any liabilities of the type that are required to be
disclosed in financial statements, including the notes thereto, prepared in
accordance with GAAP which are, in the aggregate, material to the business,
operations or financial condition of the Company and its subsidiaries taken as
a whole, except liabilities, (a) adequately provided for or referred to in the
Company's balance sheet and the related notes thereto as of March 31, 1999
included in the Company's Form 10-Q for the quarter ended March 31, 1999 (which
is part of the Company SEC Reports) (the "March 31, 1999 Balance Sheet"), (b)
incurred in the ordinary course of business and not required under GAAP to be
reflected on the March 31, 1999 Balance Sheet, (c) any liability relating to
the Company's LipoMatrix Business; or (d) incurred since March 31, 1999 in the
ordinary course of business and consistent with past practice.
SECTION 5.13. Litigation. Except as set forth in the Company SEC
Documents filed prior to the date hereof and except with respect to the
LipoMatrix Business, there is no action, suit, investigation or proceeding
pending against, or, to the knowledge of the Company, threatened against or
affecting, the Company, any of its Subsidiaries, or any of their respective
properties before any court or arbitrator or before or by any governmental
body, agency or official, domestic or foreign, that, if determined or resolved
adversely in accordance with the plaintiff's demands, would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
either (i) on the Company or (ii) on the ability of the Company to consummate
the Transactions contemplated by this Agreement, including the Offer and the
Merger.
SECTION 5.14. Material Contracts. Each contract listed as an exhibit to
the Company 10-K (each, a "Company Material Contract") is a valid, binding and
enforceable obligation of the
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Company or its Subsidiary, as the case may be, and, to the knowledge of the
Company, of each other party thereto, and is in full force and effect, except
where the failure to be valid, binding and enforceable and in full force and
effect would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. None of the Company nor
any of its Subsidiaries nor, to the knowledge of the Company, any other party
thereto, is in breach, default or violation of any term, condition or provision
of any Company Material Contract, except for any breaches, defaults or
violations that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company.
SECTION 5.15. Environmental Matters.
(a) Except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company: (i) no notice,
notification, demand, request for information, citation, summons or order has
been received, no complaint has been filed, no penalty has been assessed, and
no investigation, action, claim, suit, proceeding or review is pending or, to
the knowledge of the Company, is threatened by any governmental entity or other
Person relating to or arising out of any Environmental Law; (ii) the Company is
in compliance with all Environmental Laws and all Environmental Permits; and
(iii) there are no liabilities of or relating to the Company or any of its
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise arising under or relating to any
Environmental Law, and there are no facts, conditions, situations or set of
circumstances that would reasonably be expected to result in any such
liability.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or any previous business of the Company or any of its
Subsidiaries or any property or facility now owned or leased by the Company or
any of its Subsidiaries that has not been delivered to Parent at least five
days prior to the date hereof.
SECTION 5.16. Taxes.
(a) Filing and Payment. Except with respect to items which are not
material in the aggregate, (i) all Tax returns, statements, reports and forms
(including estimated tax or information returns and reports) required to be
filed with any Taxing Authority with respect to any Pre-Closing Tax Period by
or on behalf of the Company or any Subsidiary (collectively, the "Returns")
have, to the extent required to be filed on or before the date hereof (taking
into account extensions), been filed when due in accordance with all applicable
laws; (ii) as of the time of filing, the Returns were true and complete; and
(iii) all Taxes shown thereon have been timely paid, or withheld and remitted
to the appropriate Taxing Authority or such person or entity, respectively or
have been appropriately reflected on the Company Balance Sheet.
(b) Financial Records. (i) The charges, accruals and reserves for Taxes
with respect to the Company and each of its Subsidiaries for any Pre-Closing
Tax Period (including any Pre-Closing Tax Period for which no Return has yet
been filed) reflected on the books of the Company and its Subsidiaries
(excluding any provision for deferred income taxes reflecting either
differences between the treatment of items for accounting and income tax
purposes or
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<PAGE> 26
carryforwards) are adequate in all material respects to cover Tax liabilities
accruing through the end of the last period for which the Company and its
Subsidiaries ordinarily record items on their respective books; (ii) since the
end of the last period for which the Company and its Subsidiaries ordinarily
record items on their respective books, neither the Company nor any of its
Subsidiaries has engaged in any transaction, or taken any other action, other
than in the ordinary course of business; and (iii) all information set forth in
the Company Balance Sheet (including notes thereto) relating to Tax matters is
true and complete in all material respects.
(c) Procedure and Compliance. (i) All Returns of the Company and its
Subsidiaries through the Tax year ended June 30, 1996 have been examined and
closed or are Returns with respect to which the applicable period for
assessment under applicable law, after giving effect to extensions or waivers,
has expired; (ii) neither the Company nor any Subsidiary is delinquent in the
payment of any Tax or has requested any extension of time within which to file
any Return and has not yet filed such Return; (iii) neither the Company nor any
Subsidiary has granted any extension or waiver of the statute of limitations
period applicable to any Return, which period (after giving effect to such
extension or waiver) has not yet expired; (iv) there is no claim, audit,
action, suit, proceeding, or investigation now pending or, to the Company's
knowledge, threatened against or with respect to the Company, any Subsidiary in
respect of any Tax or Tax Asset; (v) there are no requests for rulings or
determinations in respect of any Tax or Tax Asset pending between the Company
or any Subsidiary and any Taxing Authority; (vi) there are no liens or
encumbrances for Taxes upon the assets of the Company or any Subsidiary except
liens for current Taxes not yet due; and (vii) the Company has filed all claims
or requests for refunds of Taxes to which it is entitled, other than as may be
reflected in the Returns made available to Parent.
(d) Certain Agreements and Arrangements. None of the Company or any of
its Subsidiaries has been a member of an affiliated, consolidated, combined or
unitary group other than one of which the Company was the common parent, or
made any election or participated in any arrangement whereby any Tax liability
or any Tax Asset of the Company or any Subsidiary was determined or taken into
account for Tax purposes with reference to or in conjunction with any Tax
liability or any Tax Asset of any other person; and the Company is not a party
to, or bound by, any tax indemnity, tax sharing or tax allocation agreement or
arrangement.
(e) Definitions. The following terms, as used herein, have the
following meanings: "Pre-Closing Tax Period" means any Tax period ending on or
before the Closing Date; and, with respect to a Tax period that begins on or
before the Closing Date and ends thereafter, the portion of such Tax period
ending on the Closing Date. "Tax" means (i) any tax, governmental fee or other
like assessment or charge of any kind whatsoever (including, but not limited
to, withholding on amounts paid to or by any Person), together with any
interest, penalty, addition to tax or additional amount imposed by any
governmental authority (a "Taxing Authority") responsible for the imposition of
any such tax (domestic or foreign), (ii) in the case of the Company or any
Subsidiary, liability for the payment of any amount of the type described in
clause (i) as a result of being or having been before the Closing Date a member
of an affiliated, consolidated, combined or unitary group, or a party to any
agreement or arrangement, as a result of which liability of the Company or any
Subsidiary to a Taxing Authority is determined or taken into account with
reference to the liability of any other Person, and (iii) liability of the
Company
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or any Subsidiary for the payment of any amount as a result of being party to
any tax sharing agreement or with respect to the payment of any amount of the
type described in (i) or (ii) as a result of any existing express or implied
obligation (including, but not limited to, an indemnification obligation). "Tax
Asset" means any net operating loss, net capital loss, investment tax credit,
foreign tax credit, charitable deduction or any other credit or tax attribute
that could be carried forward or back to reduce Taxes (including without
limitation deductions and credits related to alternative minimum Taxes).
SECTION 5.17. Employee Benefit Plans.
(a) Schedule 5.17(a) contains a correct and complete list identifying
each material "employee benefit plan," as defined in Section 3(3) of ERISA,
each employment, severance or similar contract, plan, arrangement or policy and
each other plan or arrangement (written or oral) providing for compensation,
bonuses, profit-sharing, stock option or other stock related rights or other
forms of incentive or deferred compensation, vacation benefits, insurance
(including any self-insured arrangements), health or medical benefits, employee
assistance program, disability or sick leave benefits, workers' compensation,
supplemental unemployment benefits, severance benefits or post- employment or
retirement benefits (including compensation, pension, health, medical or life
insurance benefits) which is maintained, administered or contributed to by the
Company or any ERISA Affiliate and covers any employee or former employee of
the Company or any of its ERISA Affiliates, or with respect to which the
Company or any of its ERISA Affiliates has any liability. Copies of such plans
(and, if applicable, related trust or funding agreements or insurance policies)
and all amendments thereto and written interpretations thereof have been made
available to Parent together with the most recent annual report (Form 5500
including, if applicable, Schedule B thereto) prepared in connection with any
such plan or trust. Such plans are referred to collectively herein as the
"Employee Plans".
(b) Neither the Company nor any ERISA Affiliate nor any predecessor
thereof sponsors, maintains or contributes to, or has in the past sponsored,
maintained or contributed to, any Employee Plan subject to Title IV of ERISA,
including a "multiemployer plan," as defined in Section 3(37) of ERISA.
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter, or has
pending or has time remaining in which to file, an application for such
determination from the Internal Revenue Service, and the Company is not aware
of any reason why any such determination letter should be revoked. The Company
has made available to Parent copies of the most recent Internal Revenue Service
determination letters with respect to each such Plan. Each Employee Plan has
been maintained in material compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including
but not limited to ERISA and the Code, which are applicable to such Employee
Plan. No material events have occurred with respect to any Employee Plan that
could result in payment or assessment by or against the Company of any material
excise taxes under Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E
or 5000 of the Code.
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(d) The consummation of the transactions contemplated by this Agreement
will not (either alone or together with any other event) entitle any employee
or independent contractor of the Company or any of its Affiliates to severance
pay or accelerate the time of payment or vesting or trigger any payment of
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any Employee Plan. There is no contract, agreement, plan or
arrangement covering any employee or former employee of the Company or any
Affiliate that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to the terms of Sections
162(m) or 280G of the Code.
(e) Neither the Company nor any of its Affiliates has any liability in
respect of post-retirement health, medical or life insurance benefits for
retired, former or current employees of the Company or its Affiliates except as
required to avoid excise tax under Section 4980B of the Code, or except as
required under COBRA.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its ERISA
Affiliates relating to, or change in employee participation or coverage under,
an Employee Plan which would increase materially the expense of maintaining
such Employee Plan above the level of the expense incurred in respect thereof
for the fiscal year ended June 30, 1998.
(g) Neither the Company nor any of its Affiliates is a party to or
subject to, or is currently negotiating in connection with entering into, any
collective bargaining agreement or other contract or understanding with a labor
union or labor organization.
(h) All contributions and payments accrued under each Employee Plan,
determined in accordance with prior funding and accrual practices, as adjusted
to include proportional accruals for the period ending as of the date hereof,
have been discharged and paid on or prior to the date hereof except to the
extent reflected as a liability on the Company Balance Sheet.
(i) There is no action, suit, investigation, audit or proceeding
pending against or involving or, to the knowledge of the Company, threatened
against or involving, any Employee Plan before any court or arbitrator or any
state, federal or local governmental body, agency or official.
SECTION 5.18. Termination Benefits.
Schedule 5.18 contains the Company's good faith estimate of the
monetary amounts that would become payable (including tax indemnification
payments in respect of income and/or excise taxes), and identifying the in-kind
benefits that would become due as a result of the consummation of the Merger
under the Specified Compensation and Benefit Programs (but not pursuant to any
other right at law or otherwise which such employee may have) and the
subsequent termination of employment of each non-manufacturing employee of the
Company or any of its Subsidiaries (including, without limitation, employees
located outside of the United States). For purposes of preparing the Schedule,
it shall be assumed that: (i) a change of control of the Company occurs on
September 1, 1999 and that each person entitled to benefits under the
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Specified Compensation and Benefit Programs is discharged as of December 31,
1999; (ii) all compensation levels remain constant; (iii) each such employee's
employment is terminated in a manner so as to trigger the maximum amounts
payable to such employee under the Specified Compensation and Benefit Programs;
and (iv) all accrued benefits under all tax qualified plans are 100% vested.
SECTION 5.19. Patents and Other Proprietary Rights
(a) The Company and its Subsidiaries have not granted or promised to
grant any exclusive licenses or any material non-exclusive licenses or
covenants not to sue thereunder to any third party in respect of any
Intellectual Property (as defined below) used in or necessary for the conduct
of its business as currently conducted or as proposed to be conducted as
reflected in the Company's existing business plans (other than (A) to Parent or
its Subsidiaries, (B) trademark or service mark licenses entered into in the
ordinary course of business under distribution and supply agreements and (C)
technology transfer and technology access agreements substantially on the terms
of the Company's standard form agreements). The patents owned by the Company
and its Subsidiaries are valid and enforceable and any patent issuing from
patent applications of the Company and its Subsidiaries will be valid and
enforceable for the duration of its term other than any such lack of validity
or enforceability which, individually or in the aggregate. would not reasonably
be expected to have a Material Adverse Effect.
(b) To the best of the knowledge of the Company, and except as would
not have a Material Adverse Effect,
(i) the Company and each of its Subsidiaries owns, or is licensed
to use or otherwise possesses the legal right to use (in each case, free and
clear of any Liens (other than Liens arising out of payment obligations in
respect of such Intellectual Property) in respect of the Company's or any of
its Subsidiaries' interests therein) all Intellectual Property used in or
necessary for the conduct of its business as currently conducted;
(ii) the use of any Intellectual Property by the Company and its
Subsidiaries does not infringe on or otherwise violate the rights of any
Person;
(iii) no product (or component thereof or process) used, sold or
manufactured by the Company or any of its Subsidiaries infringes or otherwise
violates the Intellectual Property of any other Person; and
(iv) no Person is challenging, infringing on or otherwise violating
any right of the Company or any of its Subsidiaries with respect to any
Intellectual Property owned by and/or licensed to the Company and its
Subsidiaries.
For purposes of this Agreement "Intellectual Property" shall mean
trademarks, service marks, brand names, certification marks, trade dress,
assumed names, trade names and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, discoveries
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and ideas, whether patentable or not in any jurisdiction; manufacturing
know-how; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part, reissuances, reexaminations,
extensions and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; nonpublic information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works, whether
copyrightable or not in any jurisdiction; registration or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; or any similar intellectual property or proprietary rights.
(c) Except as disclosed in writing to Parent prior to the date hereof,
none of the processes, techniques and formulae, research and development
results and other know-how relating to the business of the Company and its
Subsidiaries, the value of which to the Company is contingent upon maintenance
of the confidentiality thereof has been disclosed by the Company or any
Affiliate thereof to any Person other than Persons who are bound to hold such
information in confidence pursuant to confidentiality agreements or by
operation of law, other than any such disclosure which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
SECTION 5.20. Year 2000. The Company and its Subsidiaries have put into
effect practices and programs which the Company believes will enable all
material software, hardware and equipment (including microprocessors) that are
owned or utilized by the Company or any of its Subsidiaries in the operations
of its or their respective business to be capable, by December 31, 1999, of
accounting for all calculations using a century and date sensitive algorithm
for the year 2000 and the fact that the year 2000 is a leap year and to
otherwise continue to function without any interruption caused by the
occurrence of the year 2000, except for those failures that would not
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 5.21. Products Liability Insurance. Schedule 5.21 contains a
true and complete list (including the names and addresses of the insurers, the
names of the Persons to whom such insurance policies have been issued, the
expiration dates thereof, the annual premiums and payment terms thereof,
whether each is a "claims made" or an "occurrence" policy and a brief
description of the interest insured thereby) of all material insurance policies
that are in effect as of the date hereof and as of the date hereof are expected
to provide insurance at least through the Closing Date against any claims that
have been or may be asserted against the Company or any of its Subsidiaries
arising out of or relating to products liability (the "Products Liability
Policies"). None of the Products Liability Policies will terminate or lapse by
reason of the Transactions, including the Offer and the Merger. As of the date
hereof, (i) each Products Liability Policy is valid and binding and in full
force and effect, (ii) no premiums due thereunder have not been paid and (iii)
the Company has not received any written notice of cancellation or termination
in respect of any such policy or that it is in default thereunder. All claims
previously made under the Products Liability Policies complied with the
applicable notice provisions under such policies.
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SECTION 5.22. Rights Agreement. As of the date hereof and after giving
effect to the execution and delivery of this Agreement, each Right is
represented by the certificate representing the associated Share and is not
exercisable or transferable apart from the associated Share, and the Company
has taken all action necessary to render the Rights inapplicable to this
Agreement, the Offer, the Merger and any other Transaction.
SECTION 5.23. Section 203 of Delaware Law Not Applicable. The Company
has taken all necessary actions so that the provisions of Section 203 of
Delaware Law will not, before the termination of this Agreement, apply to this
Agreement or the Transactions, including the Offer and the Merger.
SECTION 5.24. Finders' Fees. Except for Lehman Brothers, a copy of
whose engagement agreement has been provided to Parent, there is no investment
banker, broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of the Company or any of its Subsidiaries who might
be entitled to any fee or commission from the Company or any of its Affiliates
in connection with the Transactions.
SECTION 5.25. Opinion of Financial Advisor. The Company has received
the opinion of Lehman Brothers, dated the date hereof, to the effect that, as
of the date hereof, the consideration to be received in the Offer and the
Merger by the stockholders of the Company is fair from a financial point of
view to the stockholders of the Company, and a true and complete copy of such
opinion has been delivered to Parent prior to the execution of this Agreement.
SECTION 5.26. Transaction Expenses. Schedule 5.26 sets forth the
Company's good faith estimate of all material transaction expenses incurred and
to be incurred by the Company and its Subsidiaries in connection with the
Transactions, including, but not limited to, all material fees and expenses
paid or payable by or on behalf of the Company or any of its Subsidiaries to
any financial advisor, lawyer, accountant or other specialist (the "Transaction
Expenses").
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent and Purchaser each hereby represent and warrant to the Company
that:
SECTION 6.01. Corporate Existence and Power. Each of Parent and
Purchaser is a corporation (or other entity) duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
and has the requisite corporate power and authority and is in possession of all
approvals necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being
conducted, except where the
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failure to be so organized, existing and in good standing or to have such
power, authority and approvals would not have a Material Adverse Effect. Each
of Parent and Purchaser is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not reasonably be expected to have a Material Adverse Effect.
SECTION 6.02. Corporate Authorization. Each of Parent and Purchaser has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Purchaser and the consummation by Parent and Purchaser of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Parent and Purchaser, and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by Parent and
Purchaser and, assuming the due authorization, execution and delivery of this
Agreement by the Company, constitutes a legal, valid and binding obligation of
Parent and Purchaser, enforceable against Parent and Purchaser in accordance
with their respective terms.
SECTION 6.03. Governmental Authorization. The execution, delivery and
performance by Parent and Purchaser of this Agreement, and the consummation by
Parent and Purchaser of the Transactions, require no action by or in respect
of, or filing with, any governmental body, agency, official or authority,
domestic or foreign, other than (i) the filing of the Delaware Merger Agreement
with respect to the Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which Parent is
qualified to do business, (ii) compliance with any applicable requirements of
the HSR Act, (iii) compliance with any applicable requirements of the 1933 Act,
the 1934 Act and any other applicable securities or takeover laws, whether
state or foreign, and (iv) any actions or filings the absence of which would
not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent or materially to impair the ability of Parent
and Purchaser to consummate the Transactions.
SECTION 6.04. Non-contravention. The execution, delivery and
performance by Parent and Purchaser of this Agreement, and the consummation by
Parent and Purchaser of the Transactions, do not and will not (a) contravene,
conflict with, or result in any violation or breach of any provision of the
certificate of incorporation or bylaws of Parent or Purchaser, (b) assuming
compliance with the matters referred to in Section 6.03, contravene, conflict
with, or result in any violation or breach of any provision of any applicable
law, statute, ordinance, rule, regulation, judgment, injunction, order or
decree, (c) require any consent or other action by any Person under, constitute
a default, or an event that, with or without notice or lapse of time or both,
would become a default, under, or cause or permit the termination,
cancellation, acceleration or other change of any right or obligation or the
loss of any benefit to which Parent or Purchaser is entitled under any
provision of any agreement or other instrument binding upon Parent or Purchaser
or any license, franchise, permit, certificate, approval or other similar
authorization
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affecting, or relating in any way to, the assets or business of Parent or
Purchaser or (d) result in the creation or imposition of any Lien on any asset
of Parent or Purchaser, except for such contraventions, conflicts and
violations referred to in clause (b) and for such failures to obtain consent or
other action, defaults, terminations, cancellations, accelerations, changes,
losses or Liens referred to in clauses (c) and (d) that would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect
on Parent or materially to impair the ability of Parent and Purchaser to
consummate the Transactions.
SECTION 6.05. Disclosure Documents
(a) The information with respect to Parent and its Subsidiaries that
Parent furnishes to the Company in writing specifically for use in any Company
Disclosure Document will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading (i) in the case of the Company Proxy Statement, at the time the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to stockholders of the Company and at the time the stockholders vote on
adoption of this Agreement (if applicable), and (ii) in the case of any Company
Disclosure Document other than the Company Proxy Statement at the time of the
filing thereof, at the time of any distribution thereof, and at the time of
consummation of the Offer.
(b) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the 1934 Act and will not
at the time of the filing thereof, at the time of any distribution thereof or
at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading, provided, that this representation and warranty will
not apply to statements or omissions in the Offer Documents based upon
information furnished to Parent or Merger Subsidiary in writing by the Company
specifically for use therein.
SECTION 6.06. Finders' Fees. Except for Hambrecht & Quist LLC, whose
fees will be paid by Parent, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Parent who might be entitled to any fee or commission from the Company or
any of its Affiliates upon consummation of the Transactions.
SECTION 6.07. Financing. Concurrent with the execution and delivery of
this Agreement, Parent has delivered to the Company a true and complete copy of
a binding commitment letter and all binding amendments thereto (including any
such amendments, the "Commitment Letter") from Cerberus Capital Management,
L.P. to provide financing in accordance with the terms and subject to the
conditions thereof in an amount not less than $155 million to provide Parent
and Purchaser with the funds necessary to consummate the transactions,
including the Offer and the Merger. Parent represents that such amount,
together with its other sources of working capital, is sufficient to allow it
to close both the Offer and the Merger and to operate both its and the
Company's businesses immediately following the closing of the Offer and the
Merger in the ordinary course of business. Nothing contained in the Commitment
Letter shall affect Parent's obligation to close the Offer and the Merger in
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accordance with the terms of this Agreement. Purchaser has or will have, prior
to the expiration of the Offer and the Effective Time of the Merger, sufficient
cash or cash-equivalent funds available to purchase all of the Shares
outstanding in the Offer and the Merger, to provide adequate working capital
for the Company following the Effective Time and to pay all related fees and
expenses incurred in connection with the Offer and the Merger.
Section 6.08. Surviving Corporation After the Merger. At the Effective
Time and after giving effect to any changes in the Surviving Corporation's
assets and liabilities as a result of the Merger and after giving effect to the
financing contemplated by the Commitment Letter, the Surviving Corporation will
not (i) be insolvent (either because its financial condition is such that the
sum of its debts is greater than the fair value of its assets or because the
present fair saleable value of its assets will be less than the amount required
to pay its probable liability on its debts as they become absolute and
matured), (ii) have unreasonably small capital with which to engage in its
business or (iii) have incurred or plan to incur debts beyond its ability to
pay as they become absolute and matured.
ARTICLE 7
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 7.01. Conduct of the Company. Except as expressly permitted by
this Agreement, from the date hereof until the Effective Time, the Company and
its Subsidiaries shall conduct their business in the ordinary course consistent
with past practice and shall use their reasonable best efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and employees. Without
limiting the generality of the foregoing, from the date hereof until the
Effective Time:
(a) the Company will not adopt or propose any change to its certificate
of incorporation or bylaws;
(b) the Company will not, and will not permit any of its Subsidiaries
to, merge or consolidate with any other Person or acquire a material amount of
stock or assets of any other Person;
(c) the Company will not, and will not permit any of its Subsidiaries
to, sell, lease, license or otherwise dispose of any material Subsidiary or
material amount of assets, securities or property except (i) pursuant to
existing contracts or commitments, or (ii) dispositions of obsolete or
worthless assets;
(d) the Company will not, and will not permit any of its Subsidiaries
to, (i) take any action that would make any representation and warranty of the
Company hereunder inaccurate in any material respect at, or as of any time
prior to, the Effective Time or (ii) omit to take any action necessary to
prevent any such representation or warranty from being inaccurate in any
material respect at any such time;
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(e) the Company will not, and will not permit any of its Affiliates to
(i) adopt or amend any Employee Plan and/or related trust or fund (except as
required to maintain the qualified status of such Plan, trust or fund), (ii)
increase in any manner the compensation or fringe benefits of any director,
officer or employee (except for (x) increases in accordance with the Company's
normal officers and employees focal review previously disclosed to Parent or
(y) other normal increases in the ordinary course of business that are
consistent with past practice and that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company), or (iii)
pay any benefit not required by any currently existing Employee Plan
(including, without limitation, grant stock options or stock appreciation
rights or remove existing restrictions in any benefit plans or agreements);
(f) the Company will not, and will not permit any of its Subsidiaries
to, declare, set aside or pay any dividend or distribution in respect of any
capital stock of the Company or redeem, purchase or make any other acquisition
of any of its securities;
(g) the Company will not, and will not permit any of its Subsidiaries
to, enter into any commitment or transaction material to the Company or its
Subsidiaries, including, without limitation, any long-term supply agreements or
partnership, joint venture or other similar arrangements;
(h) the Company will not, and will not permit any of its Subsidiaries
to, issue, deliver or sell, or authorize the issuance, delivery or sale of, any
share of capital stock or any Option with respect thereto, other than the
issuance of Company Common Stock upon the exercise of Options outstanding on
the date of this Agreement, or pursuant to the ESPP, or modify or amend any
right of any holder of outstanding shares of capital stock or Options with
respect thereto;
(i) the Company will not, and will not permit any of its Subsidiaries
to, incur (which shall be deemed to include entering into credit agreements,
line of credit or similar arrangements until borrowings are made under such
arrangements) any indebtedness for borrowed money or guarantee any such
indebtedness other than in the ordinary course of business consistent with past
practice; or
(j) the Company will not, and will not permit any of its Subsidiaries
to, agree or commit to do any of the foregoing.
SECTION 7.02. Stockholder Meeting; Proxy Material. The Company shall
cause a meeting of its stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as reasonably practicable after consummation of
the Offer for the purpose of voting on the approval and adoption of this
Agreement and the Merger, unless Delaware Law does not require a vote of
stockholders of the Company for consummation of the Merger. Subject to the
terms of Section 7.04(c), the Board of Directors of the Company shall recommend
approval and adoption of this Agreement and the Merger by the Company's
stockholders. In connection with such meeting, the Company will (i) promptly
prepare and file with the SEC, will use its best efforts to have cleared by the
SEC and will thereafter mail to its stockholders as promptly as practicable the
Company Proxy Statement and all other proxy materials for such meeting, (ii)
use its best efforts to obtain the necessary approvals by its stockholders of
this Agreement and the
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Transactions and (iii) otherwise comply with all legal requirements applicable
to such meeting. The Company shall give Parent and its counsel the opportunity
to review the Company Proxy Statement and all responses to requests for
additional information by and replies to comments of the SEC before their being
filed with, or sent to, the SEC.
SECTION 7.03. Access to Information.
(a) From the date hereof until the Effective Time and subject to
applicable law and the Non-Disclosure Agreement dated as of April 23, 1999
between the Company and Parent (the "Confidentiality Agreement"), the Company
shall (i) give Parent, its counsel, financial advisors, auditors and other
authorized representatives full access to the offices, properties, books and
records of the Company and the Subsidiaries, (ii) furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such Persons may
reasonably request and (iii) instruct the employees, counsel, financial
advisors, auditors and other authorized representatives of the Company and its
Subsidiaries to cooperate with Parent in its investigation of the Company and
its Subsidiaries. Any investigation pursuant to this Section shall be conducted
in such manner as not to interfere unreasonably with the conduct of the
business of the Company and its Subsidiaries. No information or knowledge
obtained by Parent in any investigation pursuant to this Section shall affect
or be deemed to modify any representation or warranty made by the Company
hereunder.
(b) The Company shall not be required to permit any inspection or to
disclose any information, which in the reasonable judgment of the Company,
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
for such inspection or disclosure. All requests for information pursuant to
this Section 7.03 shall be directed to an executive officer of the Company or
such person as may be designated by any such executive officer. Upon
termination of this Agreement, Parent will collect and deliver to the Company
all such documents obtained by it or its representatives then in its possession
and any copies thereof.
SECTION 7.04. No Solicitation; Other Offers.
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(a) From the date hereof until the termination hereof, the Company will
not, and will cause its Subsidiaries and the officers, directors, employees,
investment bankers, attorneys, accountants, consultants or other agents or
advisors of the Company and its Subsidiaries not to, directly or indirectly,
(i) take any action to solicit, initiate, facilitate or encourage the
submission of any Acquisition Proposal, (ii) engage in discussions or
negotiations with, or disclose any nonpublic information relating to the
Company or any of its Subsidiaries or afford access to the properties, books or
records of the Company or any of its Subsidiaries to, any Person who the
Company has reason to believe may be considering making, or has made, an
Acquisition Proposal, or (iii) grant any waiver or release under any standstill
or similar agreement with respect to any class of equity securities of the
Company. The Company will notify Parent promptly after receipt by the Company
(or any of its advisors) of any Acquisition Proposal or any request for
nonpublic information relating to the Company or any of its Subsidiaries or for
access to the properties, books or records of the Company or any of its
Subsidiaries by any Person who the Company has reason to believe may be
considering making, or has made, an Acquisition Proposal. The Company shall,
and shall cause its Subsidiaries and the directors, employees and other agents
of the Company and its Subsidiaries to, cease immediately and cause to be
terminated all activities, discussions and negotiations, if any, with any
Persons conducted prior to the date hereof with respect to any Acquisition
Proposal. Nothing contained in this Agreement shall prevent the Board of
Directors of the Company from complying with Rule 14d-9 or Rule 14e-2 under the
1934 Act with respect to any Acquisition Proposal.
(b) Notwithstanding the foregoing, the Company may negotiate or
otherwise engage in substantive discussions with, and furnish nonpublic
information to, any Person who delivers a written Acquisition Proposal if (i)
two (2) business days prior to furnishing such information to, or entering into
discussions or negotiations with, such Person, the Company provides written
notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such Person, which notice shall
identify such Person in reasonable detail, (ii) the Company keeps Parent
reasonably informed of the status of any such discussion or negotiations, (iii)
the Board of Directors of the Company determines in good faith by a majority
vote, on the basis of advice from its outside legal counsel, that, consistent
with its fiduciary duties under applicable law, it must take such action, (iv)
such Person executes a confidentiality agreement with terms no less favorable
to the Company than those contained in the Confidentiality Agreement, (v) such
Acquisition Proposal is reasonably expected to be all cash and not explicitly
subject to any financing contingency, and that in the event that such
Acquisition Proposal is in the form of a tender offer or exchange offer, such
tender offer or exchange offer is for 50% or more of the outstanding Shares,
and (vi) the Board of Directors has concluded in good faith that the Person
making such Acquisition Proposal is reasonably expected to have adequate
sources of financing to consummate such Acquisition Proposal and is reasonably
expected not to encounter significant regulatory obstacles to consummating the
Transactions on a timely basis. Parent will not disclose any information
received from the Company pursuant to this Section 7.04 to any other Person,
except for disclosures to Parent's financial, legal and other advisors or
Persons considering providing financing to Parent in connection with the
Transactions, including the Offer and the Merger, and except for such
disclosures required in order that Parent not be in violation of or default
under any applicable law, regulation or governmental order. Nothing in this
Section 7.04(b) shall (x) permit the
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Company to terminate this Agreement (except as specifically provided in Section
11.01), (y) permit the Company to enter into any written agreement with respect
to an Acquisition Proposal for so long as this Agreement remains in effect (it
being agreed that for so long as this Agreement remains in effect, the Company
shall not enter into any written agreement with any Person that provides for,
or in any way facilitates, an Acquisition Proposal (other than a
confidentiality agreement under the circumstances described above)), or (z)
affect any other obligation of the Company under this Agreement.
(c) The Board of Directors of the Company shall be permitted to
withdraw, or modify in a manner adverse to Parent, its recommendation to its
stockholders referred to in Sections 2.01 and 7.02 hereof, but only if (i) the
Company has complied with the terms of this Section 7.04, including, without
limitation, the requirements in clauses (i), (ii) and (iv) of Section 7.04(b)
and the requirement in Section 7.04(a) that it notify Parent promptly after its
receipt of any Acquisition Proposal, (ii) a Superior Proposal consistent with
the conditions of clauses (v) and (vi) of Section 7.04(b) is pending at the
time the Board of Directors determines to take any such action, and (iii) the
Board of Directors determines in good faith by a majority vote, on the basis of
the advice of its outside legal counsel, that, consistent with its fiduciary
duties under applicable law, it must take such action.
SECTION 7.05. Notices of Certain Events. The Company shall promptly
notify Parent of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
Transactions;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the Transactions;
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge, threatened against, relating to or involving or otherwise
affecting the Company or any of its Subsidiaries that, if pending on the date
of this Agreement, would have been required to have been disclosed pursuant to
Section 5.12, 5.13, 5.16 or 5.19, as the case may be, or that relate to the
consummation of the Transactions; and
(d) any notice or other communication from any Person including without
limitation any claim or threatened claim, or other event or development with
respect to the LipoMatrix Business.
SECTION 7.06. Company Rights Agreement. Except to the extent required
by applicable law or to the extent that the Board of Directors of the Company
determines in good faith that such action is required for the Board of
Directors to comply with its fiduciary duties imposed by law, prior to the
Effective Time, without the prior written consent of Parent, the Company will
not take any action with respect to, or make any determination under, or amend
the Company Rights Agreement, including a redemption of the Rights in a manner
that would adversely affect the Transaction.
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SECTION 7.07. Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, neither the Company nor
any of its Subsidiaries shall terminate, amend, modify or waive any provision
of any confidentiality or standstill agreement to which it is a party. During
such period, the Company shall enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement, including, but not
limited to, by obtaining injunctions to prevent any breaches of such agreements
and to enforce specifically the terms and provisions thereof in any court
having jurisdiction.
ARTICLE 8
COVENANTS OF PARENT
Parent agrees that:
SECTION 8.01. Obligations of Purchaser. Parent will take all action
necessary to cause Purchaser to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 8.02. Voting of Shares. Parent agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Stockholder Meeting.
SECTION 8.03. Director and Officer Liability. Parent shall, and shall
cause the Surviving Corporation to, do the following:
(a) For six years after the Effective Time, Parent shall indemnify and
hold harmless the present and former officers and directors of the Company
(each an "Indemnified Person") in respect of acts or omissions occurring at or
prior to the Effective Time to the fullest extent permitted by Delaware Law or
any other applicable laws or provided under the Company's certificate of
incorporation and bylaws in effect on the date hereof, provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law.
(b) For six years after the Effective Time, the Surviving Corporation
shall use commercially reasonable efforts to provide officers' and directors'
liability insurance in respect of acts or omissions occurring prior to the
Effective Time covering each such Indemnified Person currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date hereof; provided, however, that in no event shall the
Surviving Corporation be required to expend pursuant to this Section 8.03(b)
more than an amount per year equal to 150% of current annual premiums paid by
the Company for such insurance (which premiums the Company represents and
warrants to be approximately $120,000 per year in the aggregate).
(c) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or
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substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may
be, shall assume the obligations set forth in this Section 8.03.
(d) The rights of each Indemnified Person under this Section 8.03 shall
be in addition to any rights such Person may have under the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, or under
Delaware Law or any other applicable laws. These rights shall survive
consummation of the Merger and are intended to benefit, and shall be
enforceable by, each Indemnified Person as an intended third party beneficiary.
SECTION 8.04. Employee Matters.
(a) Following the Closing Date, subject to the next succeeding
sentence, Parent shall cause employees of the Company ("Company Employees") to
be covered under employee benefit plans that are substantially comparable, in
the aggregate, to the employee benefit plans of the Company under which such
Company Employees were covered immediately prior to the Closing Date and which
are disclosed on Schedule 5.17(a). Notwithstanding anything to the contrary
contained in the previous sentence, Parent will not be obligated to provide
benefits to the Company Employees that are more favorable than the employee
benefit plans under which employees of Parent or any of its Subsidiaries are
covered. Parent shall cause service with the Company to be recognized as
service for purposes of all employee benefit and compensation plans and
arrangements applicable to Company Employees after the Closing Date, to the
extent such service was credited under comparable plans and arrangements of the
Company prior to the Closing Date; provided, that nothing herein shall be
construed to require service with the Company to be taken into account for
purposes of benefit accrual under any defined benefit retirement or retiree
medical plan. Nothing in this paragraph shall be construed to require Parent to
continue any particular Company employee benefit plan or to provide for the
continued employment of any Company Employees. Persons employed by the Company
immediately prior to the Effective Time shall be eligible to participate in the
employment severance programs provided by Parent or the Surviving Corporation
from time to time, and such persons shall receive credit under such programs
for services with the Company prior to the Effective Date. In the absence of a
formal severance policy, such Persons shall receive severance benefits
comparable to those provided by Parent in its prior restructuring practices.
(b) Prior to acceptance for payment by Purchaser of Shares pursuant to
the Offer, Purchaser and Parent shall enter into agreements with the seven
Company employees listed on Schedule 8.04(b) providing for (i) termination of
employment on the Closing Date, payment of lump sum severance in accordance
with existing employment or change of control agreements and engagement as a
consultant from the Closing Date through the date which is six months after the
Closing Date during which time, such Person's compensation and benefits shall
continue at the same level as before the Closing Date, and (ii) payment of
1,000 shares of Parent stock as a bonus upon completion of such six month
period.
(c) Following acceptance for payment by Purchaser of Shares pursuant to
the Offer, Parent will grant Company employees who are currently at the
director level or above who
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continue to be employees of the Company, Parent or an Affiliate of Parent,
stock options according to its current stock option matrix with an exercise
price equal to Parent's stock price on the day prior to the announcement of the
Transactions, or will provide an equivalent long term benefit to such
employees. On the first anniversary of the Closing Date, Parent will pay
bonuses in the amounts and to the Persons listed on Schedule 8.04(c), to the
extent such Persons are still employed by any Affiliate of Parent on such date.
SECTION 8.05. Products Liability Insurance. For six years after the
Effective Time, the Surviving Corporation shall use commercially reasonable
efforts to maintain in force products liability insurance in respect of claims
made with respect to events occurring prior to the Effective Time on terms with
respect to coverage and amount no less favorable than those of the Products
Liability Policies set forth on Schedule 5.21.
ARTICLE 9
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 9.01. Actions of Parent and the Company.
(a) Subject to the terms and conditions of this Agreement, Company and
Parent shall take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Transactions, including to (i) obtain all
consents, approvals or actions of, make all filings with and give all notices
to, any governmental or regulatory authorities or any other public or private
third parties required of Parent, the Company or any of their Subsidiaries to
consummate the Offer, the Merger and the other Transactions contemplated hereby
and (ii) provide any information and communications to such other third parties
as any such other third party may reasonably request in connection therewith.
In furtherance and not in limitation of the foregoing, each of Parent and
Company agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby as
promptly as practicable and in any event within ten business days of the date
hereof and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and to take
all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(b) In connection with the efforts referenced in Section 9.01(a) to
obtain all requisite approvals and authorizations for the Transactions under
the HSR Act or any other Antitrust Law, each of Parent and Company shall (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) keep the other party informed
in all material respects of any material communication received by such party
from, or given by such party to, the Federal Trade Commission (the "FTC"), the
Antitrust Division of the Department of Justice (the "DOJ") or any other
governmental authority and of any material communication received or
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given in connection with any proceeding by a private party, in each case
regarding any of the transactions contemplated hereby and (iii) permit the
other party to review any material communication given by it to, and consult
with each other in advance of any meeting or conference with, the FTC, the DOJ
or any such other governmental authority or, in connection with any proceeding
by a private party, with any other Person
SECTION 9.02. Certain Filings. The Company and Parent shall cooperate
with one another (a) in connection with the preparation of the Company
Disclosure Documents and the Offer Documents, (b) in determining whether any
action by or in respect of, or filing with, any governmental body, agency,
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the Transactions and (c) in taking such
actions or making any such filings, furnishing information required in
connection therewith or with the Company Disclosure Documents or the Offer
Documents and seeking timely to obtain any such actions, consents, approvals or
waivers.
SECTION 9.03. Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement or the Transactions and, except as may be
required by applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or make any such
public statement prior to such consultation.
SECTION 9.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Purchaser, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Purchaser, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and all right, title and interest in, to and under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
SECTION 9.05. Merger without Meeting of Stockholders. If Parent,
Purchaser or any other Subsidiary of Parent shall acquire at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, the parties hereto
agree, subject to satisfaction or (to the extent permitted hereunder) waiver of
all conditions to the Merger, to take all necessary and appropriate action to
cause the Merger to be effective as soon as practicable after the acceptance
for payment and purchase of Shares pursuant to the Offer without a meeting of
stockholders of the Company in accordance with Delaware Law.
ARTICLE 10
CONDITIONS TO THE MERGER
SECTION 10.01. Conditions to Obligations of Each Party. The
obligations of the Company, Parent and Purchaser to consummate the Merger are
subject to the satisfaction of the following conditions:
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(a) if required by Delaware Law, this Agreement and the Merger shall
have been approved and adopted by the stockholders of the Company in accordance
with such Law;
(b) any applicable waiting period under the HSR Act relating to the
Transactions shall have expired or been terminated;
(c) no provision of any applicable law or regulation of the United
States (or any U.S. state) and no judgment, injunction, order or decree shall
prohibit the consummation of the Merger; and
(d) Purchaser shall have purchased Shares pursuant to the Offer.
ARTICLE 11
TERMINATION
SECTION 11.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if: (i) the Offer has not been
consummated on or before December 31, 1999, provided that the right to
terminate this Agreement pursuant to this Section 11.01(b)(i) shall not be
available to any party whose breach of any provision of this Agreement results
in the failure of the Offer to be consummated by such time; or (ii) there shall
be any law or regulation that makes acceptance for payment of, and payment for,
the Shares pursuant to the Offer or consummation of the Merger illegal or
otherwise prohibited or any judgment, injunction, order or decree of any court
or governmental body having competent jurisdiction enjoining Purchaser from
accepting for payment of, and paying for, the Shares pursuant to the Offer or
Company or Parent from consummating the Merger and such judgment, injunction,
order or decree shall have become final and nonappealable, (iii) there has been
a material breach of any representation, warranty covenant or agreement on the
part of the non-terminating party set forth in this Agreement, which breach is
not curable or, if curable, has not been cured within thirty (30) days
following receipt by the non-terminating party of notice of such breach from
the terminating party; or (iv) the Offer shall have terminated or expired in
accordance with its terms without Purchaser having been required to accept for
payment any shares of the Company Common Stock pursuant to the Offer; provided,
however, that Parent may not terminate this Agreement pursuant to this Section
11.01(b)(iv) if Purchaser's failure to accept for payment or pay for any shares
of the Company Common Stock tendered pursuant to the Offer does not follow the
occurrence, or failure to occur, as the case may be, of any condition to the
Offer set forth in Annex I hereto (which occurrence or failure to occur is
continuing) or is otherwise in breach of the terms of the Offer or this
Agreement;
(c) by Parent, if, prior to the acceptance for payment of the Shares
under the Offer, (i) any person or group shall have entered into a definitive
agreement or an agreement in principle with the Company, regarding an
Acquisition Proposal; (ii) the Board of Directors of the
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Company shall have withdrawn, or modified (including by amendment of the
Schedule 14D-9) in a manner adverse to Parent, its approval or recommendation
of this Agreement, the Offer or the Merger, shall have recommended, or publicly
announced its intention to enter into, an agreement or an agreement in
principle with respect to an Acquisition Proposal or shall have failed to
publicly affirm its approval or recommendation of this Agreement, the Offer and
the Merger within ten (10) business days following a public announcement of an
Acquisition Proposal from a third party (or shall have resolved to do any of
the foregoing); or (iii) the Company shall have amended, taken any action with
respect to or made any determination under, the Company Rights Agreement which
could reasonably be expected to be adverse to Parent, the Surviving Corporation
or any of their respective Subsidiaries or on the ability of the Company,
Parent or Purchaser to consummate the Transactions;
(d) by the Company, if prior to the purchase of any Shares pursuant to
the Offer, and subject to compliance with Section 7.04(c), the Board of
Directors of the Company shall have withdrawn or modified in a manner adverse
to Parent its approval or recommendation of this Agreement or the Merger and
shall have recommended a Superior Proposal satisfying the conditions of clauses
(v) and (vi) of Section 7.04(b); provided, that prior to any such termination,
the Company shall, and shall cause its respective financial and legal advisors
to, negotiate with Parent to make such adjustments in terms and conditions of
this Agreement as would enable the Company to proceed with the Transactions,
including the Offer and the Merger, on such adjusted terms; and provided,
further, that the Company's ability to terminate this Agreement pursuant to
this paragraph (d) is conditioned upon the prior payment by the Company to
Parent of any amounts owed by it pursuant to Section 11.02(b).
The party desiring to terminate this Agreement pursuant to this Section 11.01
(other than pursuant to Section 11.01(a)) shall give notice of such termination
to the other party.
SECTION 11.02. Effect of Termination.
(a) If this Agreement is terminated pursuant to Section 11.01, this
Agreement shall become void and of no effect with no liability on the part of
any party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party hereto except as provided
in paragraph (b) below, provided that, if such termination shall result from
the willful (a) failure of either party to fulfill a condition to the
performance of the obligations of the other party, (b) failure of either party
to perform a covenant hereof or (c) material breach by either party hereto of
any representation or warranty or agreement contained herein, such party shall
be fully liable for any and all liabilities and damages incurred or suffered by
the other party as a result of such failure or breach. The provisions of
Sections 9.03, 11.02, 12.04, 12.06 and 12.07 shall survive any termination
hereof pursuant to Section 11.01.
(b) In the event that: (i) this Agreement is terminated by the Company
pursuant to Section 11.01(d) or by Parent pursuant to Section 11.01(c); or (ii)
any Person shall have made an Acquisition Proposal and thereafter this
Agreement is terminated by Parent pursuant to Section 11.01(b)(i), (iii) or
(iv) (other than as a result of the failure of any of the conditions contained
in paragraphs (a), (b) and (i) of Annex I hereto to be satisfied) and any
Person and the Company enter into a definitive agreement with respect to an
Acquisition Proposal within one year of such
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termination at a price per Share in excess of the Merger Consideration, then
the Company shall pay to Parent, by wire transfer of same day funds, within two
(2) business days after such amount becomes due, (x) a termination fee of
$7,000,000 and (y) an amount, up to $2,500,000, equal to all documented
out-of-pocket expenses and fees actually paid or payable by Parent and
Purchaser (including without limitation, the expenses and fees of Hambrecht &
Quist LLC, Cerberus Capital Management, L.P. and U.S. Bancorp Libra) and not
refundable.
(c) In the event that this Agreement is terminated by the Company or
Parent pursuant to Section 11.01(b)(i) due solely to the failure of Parent and
Purchaser to obtain the funds necessary to purchase all Shares outstanding in
the Offer and the Merger (determined without reference to whether the Minimum
Condition has been satisfied) at the time when all of the conditions contained
in Annex I hereto (other than the Minimum Condition) have been satisfied); then
Parent shall pay to the Company, by wire transfer of same day funds, two (2)
business days after such amount becomes due, a termination fee of $5,000,000.
The amount payable pursuant to this Section 11.02(c) constitutes liquidated
damages and not a penalty, and, assuming such amount is actually paid when due,
is the sole and exclusive remedy of the Company with respect to events giving
rise to an obligation to make such payment, and the Company shall not be
entitled to any direct or indirect damages, including without limitation any
incidental, special, exemplary or consequential damages, in connection with any
such event if such amount is paid when due.
Each of the Company and Parent acknowledges that the agreements
contained in this Section 11.02(b) and (c) hereof are an integral part of the
transactions contemplated in this Agreement, and that, without these
agreements, neither Parent and Purchaser, on the one hand, nor the Company on
the other would enter into this Agreement; accordingly, in the event that the
Company or Parent, as the case may be, shall fail to pay the termination fee
or, in the case of the Company, any expenses, when due, the term "expenses"
under paragraph (b) above and the amount due to the Company under paragraph (c)
above, shall be deemed to include the costs and expenses actually incurred or
accrued by Parent and Purchaser on the one hand, or the Company, on the other
(including, without limitation, fees and expenses of counsel) in connection
with the collection under and enforcement of this Section 11.02 (b)and (c)
hereof, together with interest on such unpaid fee and, in the case of the
Company, such expenses, commencing on the date that the termination fee or such
expenses became due, at a rate equal to the rate of interest publicly announced
by Citibank, N.A., from time to time, in the City of New York, as such bank's
base rate plus 2.00%, and without regard to the $2,500,000 limitation on such
expenses.
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ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given, if to Parent or Purchaser, to:
Inamed Corporation
1120 Avenue of the Americas
New York, NY 10036
Fax: (212) 626-6799
Attention: David E. Bamberger, Esq.,
Senior Vice President and General Counsel
with a copy to:
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, NY 10005
Fax: (212) 530-5219
Attention: Lawrence Lederman, Esq.
if to the Company, to:
Collagen Aesthetics, Inc.
1850 Embarcadero Road
Palo Alto, CA 94303
Fax: (650) 856-0200
Attention: General Counsel
with a copy to:
Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Fax: (650) 233-8386
Attention: Elias Blawie, Esq.
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
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SECTION 12.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
set forth in Sections 8.03. 8.04 and 8.05 (each only after the Effective Time),
and Sections 9.03, 11.02, 12.04, 12.06 and 12.07.
SECTION 12.03. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to
the Effective Time if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this Agreement or, in
the case of a waiver, by each party against whom the waiver is to be effective,
provided that, after the adoption of this Agreement by the stockholders of the
Company and without their further approval, no such amendment or waiver shall
reduce the amount or change the kind of consideration to be received in
exchange for the Shares.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder 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 12.04. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
SECTION 12.05. Successors and Assigns; Mergers. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto, except that Parent or
Purchaser may transfer or assign, in whole or from time to time in part, to one
or more of its Affiliates, the right to purchase all or a portion of the Shares
pursuant to the Offer, but no such transfer or assignment will relieve Parent
or Purchaser of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer. Parent and Purchaser may, with the
consent of Company, which consent shall not be unreasonably withheld,
restructure the Merger in the form of a forward subsidiary merger of the
Company into Purchaser, with Purchaser being the surviving corporation, as a
merger of the Company into Parent, with Parent being the surviving corporation,
or as a series of mergers involving the Company and one or more of Parent's
Affiliates. In such event, this Agreement shall be deemed appropriately
modified to reflect such form of merger.
SECTION 12.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard
to the conflicts of law rules of such state.
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SECTION 12.07. Counterparts; Effectiveness; Benefit. 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 shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as provided in Section 8.03, no provision of this Agreement is intended
to confer any rights, benefits, remedies, obligations, or liabilities hereunder
upon any Person other than the parties hereto and their respective successors
and assigns.
SECTION 12.08. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.
SECTION 12.09. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 12.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent
possible.
SECTION 12.11. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in equity.
SECTION 12.12. Interpretation. Each party to this Agreement and its
legal counsel have reviewed and revised this Agreement. The rule of
construction that ambiguities are to be resolved against the drafting party or
in favor of the party receiving a particular benefit under an agreement may not
be employed in the interpretation of this Agreement or any amendment to this
Agreement.
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<PAGE> 49
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.
INAMED CORPORATION
By:
----------------------------------
Name: Ilan Reich
Title: President
INAMED ACQUISITION CORPORATION
By:
----------------------------------
Name: Ilan Reich
Title: President
COLLAGEN AESTHETICS, INC.
By:
----------------------------------
Name: Gary Petersmeyer
Title: President and Chief Executive Officer
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<PAGE> 50
ANNEX I
Notwithstanding any other provision of the Offer, Parent and Purchaser
shall not be required to accept for payment or pay for any Shares, and may
subject to any applicable rules and regulations of the SEC, delay the
acceptance for payment of any tendered shares of Company Common Stock, and may
(except as provided in the Agreement) amend or terminate the Offer as to any
shares of Company Common Stock not then paid for, if (i) the Minimum Condition
(as defined in the Merger Agreement) has not been satisfied (pursuant to the
Merger Agreement ) by the scheduled expiration date, (ii) the applicable
waiting period under the HSR Act shall not have expired or been terminated by
the expiration date of the Offer, (iii) at any time on or after the
Commencement Date and prior to the expiration date of the Offer, any of the
following conditions exist:
(a) there shall be instituted or pending any action or proceeding by
any government or governmental authority or agency, domestic or foreign, before
any court or governmental authority or agency, domestic or foreign, which would
reasonably be expected to (1) prohibit the acquisition by Parent or Purchaser
of any Shares under the Offer, to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other
transactions contemplated by this Agreement or to require the Company, Parent
or Purchaser to pay any damages that will have a Material Adverse Effect on the
Company or Parent, (2) impose material limitations on the ability of Purchaser,
or to render Purchaser unable to accept for payment, pay for or purchase some
or all of the Shares pursuant to the Offer and the Merger, (3) restrain or
prohibit Parent's ownership or operation (or that of its respective
Subsidiaries or Affiliates) of all or any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of Parent and
its Subsidiaries, taken as a whole, or compel Parent or any of its Subsidiaries
or Affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, (4) impose material limitations
on the ability of Parent, Purchaser or any of Parent's other Subsidiaries or
Affiliates effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired or owned
by Parent, Purchaser or any of Parent's other Subsidiaries or Affiliates on all
matters properly presented to the Company's stockholders, or (5) require
divestiture by Parent, Purchaser or any of Parent's other Subsidiaries or
Affiliates of any Shares; or
(b) there shall have been any statute, rule, regulation, injunction,
order or decree proposed, enacted, enforced, promulgated, issued or deemed
applicable to the Offer or the Merger, by any court, government or governmental
authority or agency, domestic or foreign, other than the application of the
waiting period provisions of the HSR Act to the Offer or the Merger, that would
reasonably be expected, directly or indirectly, to result in any of the
consequences referred to in clauses (1) through (5) of paragraph (a) above; or
(c) there shall have been any event, occurrence, development or state
of circumstances or facts that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company; or
<PAGE> 51
(d) any Person shall have entered into a definitive agreement or an
agreement in principle with the Company, regarding an Acquisition Proposal; or
(e) the Board of Directors of the Company shall have withdrawn, or
modified in a manner adverse to Parent, its approval or recommendation of the
Merger Agreement, the Offer or the Merger, or shall have recommended or
publicly announced its intention to enter into, a definitive agreement or an
agreement in principle with respect to an Acquisition Proposal or shall have
failed to affirm publicly its approval or recommendation of this Agreement, the
Offer and the Merger within ten (10) business days following a public
announcement of an Acquisition Proposal from a third party (or shall have
resolved to do any of the foregoing); or
(f) the Company shall have breached or failed to perform in all
material respects any of obligations under the Merger Agreement, or any of the
representations and warranties of the Company contained in the Merger Agreement
shall not be true when made or as of the scheduled expiration of the Offer as
if made at and as of such time, except for such inaccuracies which, when taken
together (in each case without regard to any qualifications as to materiality
or Material Adverse Effect contained in the applicable representations and
warranties) would not reasonably be expected to have a Material Adverse Effect
on the Company; or
(g) the Company shall have amended, taken any other action with respect
to, or made any determination under, the Company Rights Agreement which could
reasonably be expected to be adverse to Parent, the Surviving Corporation or
any of their respective Subsidiaries or on the ability of the Company, Parent
or Purchaser to consummate the Offer; or
(h) the Company shall not have delivered to Parent and Purchaser, at
least three business days prior to the scheduled expiration date of the Offer,
a copy of the Company's audited consolidated financial statements as of and for
the fiscal year ended June 30, 1999, together with the report thereon of the
Company's independent auditors, Ernst & Young LLP, or
(i) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may, subject to the terms of the Merger Agreement, be waived by
Parent and Purchaser in whole or in part at any time and from time to time in
their discretion. The failure by Parent or Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances,
and each such right shall be deemed an ongoing right that may be asserted at
any time and from time to time prior to the Effective Time.
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COLLAGEN AESTHETICS, INC.
1850 Embarcadero Road
Palo Alto, California 94303
April 23, 1999
Mr. Dan Reich
President
INAMED Corporation
3800 Howard Hughes Boulevard
Las Vegas, NV 89109
CONFIDENTIALITY AGREEMENT
Ladies and Gentlemen:
1. In connection with our mutual consideration of a possible
transaction (the "Transaction") between Collagen Aesthetics, Inc. ("Collagen")
and INAMED Corporation ("Potential Buyer"), Collagen may have delivered or may
deliver to Potential Buyer or its Representatives (as defined below) certain
oral and written Information (as defined below) concerning Collagen and the
Transaction.
2. As used herein, "Information" means (i) all data, reports, analyses,
compilations, studies, interpretations, forecasts, records and other materials
(in whatever form maintained, whether documentary, computer stored or otherwise)
that contain or otherwise reflect information concerning Collagen, any of its
subsidiaries or affiliates or the Transaction, or any portion thereof, that
Collagen (as defined below) or its Representatives may provide to the Potential
Buyer or its Representatives in the course of the evaluation of the Transaction
("Provided Information"), together with all data, reports, analyses,
compilations, studies, interpretations, forecasts, records or other materials
(in whatever form maintained, whether documentary, computer stored or otherwise)
prepared by the Potential Buyer receiving Provided Information or its
Representatives that contain or otherwise reflect or are based upon, in whole or
in part, any Provided Information ("Derived Information"), and (ii) the fact
that discussions or negotiations are taking place between Potential Buyer and
Collagen concerning the Transaction and all information related thereto with
respect to the Transaction, including the status thereof. As used herein,
"Representatives" means, collectively, the controlled affiliates of Potential
Buyer or Collagen, as the case may be, and the respective directors,
shareholders, employees, financial advisors, lenders, accountants, attorneys,
agents, equity investors or controlling persons of Potential Buyer or Collagen,
as the case may be, or their controlled affiliates. As used herein, the term
"person" shall be broadly interpreted to included, without limitation, any
corporation, partnership, trust or individual. Potential Buyer and Collagen are
sometimes referred to herein individually as a "Party" and collectively as the
"Parties."
<PAGE> 2
3. Potential Buyer agrees that, in consideration of being furnished
with the Information, all information shall be kept confidential and shall not,
without the prior written consent of Collagen, be disclosed by the Potential
Buyer or its Representatives in any manner whatsoever, in whole or in part,
other than to the Potential Buyer's Representatives, and shall not be used,
directly or indirectly, for any purpose other than in connection with evaluating
the Transaction and not in any way inherently detrimental to Collagen. Moreover,
Potential Buyer agrees to reveal Information only to its Representatives if and
to the extent that such Representatives, in the reasonable judgment of the
Potential Buyer, need to know any Information for the purpose of evaluating the
Transaction and are informed of the confidential nature of the Information and
agree to be bound by the terms and conditions of this Agreement. Potential Buyer
shall be responsible for any breach of this Agreement by its Representatives
(including Representatives who, subsequent to the first date of disclosure of
Information hereunder, become former Representatives). Moreover, Potential Buyer
shall take all reasonably necessary measures to restrain their respective
Representatives (or former Representatives) from unauthorized disclosure or use
of the Information.
4. Potential Buyer agrees that from the date hereof up to and including
the date of acceptance by Collagen of any written offer from the Potential Buyer
relating to the Transaction, Potential Buyer and its Representatives shall not,
without Collagen's written consent, identify Collagen by name or by identifiable
description to any other person in connection with the Transaction. The
Potential Buyer shall not take any action, without the written consent of
Collagen, that could be reasonably foreseen to result in a disclosure of any
Information in any filing or other required disclosure.
5. If a Transaction is not consummated or if Collagen so requests, the
Potential Buyer shall promptly return to Collagen all copies of the Information
in its possession and in the possession of its Representatives, and will destroy
all copies of any Derived Information, provided, however, that documents
reflecting the Potential Buyer's final evaluation of the Transaction and the
reasons for its decision not to proceed with such a Transaction will not need to
be returned or destroyed, provided further, however, that this Agreement will
continue to apply to documents reflecting such final evaluation and the
Potential Buyer will continue to be bound by its obligations of confidentiality
and other obligations hereunder.
6. The Potential Buyer shall not initiate or maintain contact (except
for those contacts made in the ordinary course of business) with any officer,
director, shareholder, employee or agent of Collagen or its subsidiaries
regarding its business, operations, prospects or finances, nor shall the
Potential Buyer solicit, encourage or attempt to solicit or encourage any of the
foregoing to cease their relationship with the Company for any reason, except
with the express written permission of Collagen. It is further understood that
all (i) communications regarding a possible Transaction, (ii) requests for
additional Information, (iii) requests for facility tours or management
meetings, and (iv) discussions or questions regarding procedures will be
submitted or directed to the Undersigned or a designee of Collagen specified in
writing by the Undersigned.
7. This Agreement shall not apply to such of the Information as (a) is
or becomes generally available to the public other than as a result of any
disclosure or other action or inaction
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by the Potential Buyer or anyone to whom the Potential Buyer or any of its
Representatives transmit or have transmitted any Information, (b) is or becomes
known or available to the Potential Buyer on a nonconfidential basis from a
source (other than Collagen or any of its subsidiaries or affiliates or any of
their respective Representatives or pursuant hereto) that, to the best of the
Potential Buyer's knowledge, after due inquiry, is not prohibited from
disclosing such Information to the Potential Buyer by a contractual, legal or
fiduciary obligation owed to Collagen or its Representatives, or (c) was
independently developed by the Potential Buyer without reference to the Provided
Information, provided such independent development can reasonably be proven by
the Potential Buyer's written records.
8. Potential Buyer (i) acknowledges that neither Collagen nor any of
its subsidiaries or affiliates or any of its Representatives make any
representation or warranty (express or implied) as to the accuracy or
completeness of any Information, and (ii) agrees to assume full responsibility
for all conclusions Potential Buyer derives from the Information. Potential
Buyer shall be entitled to, and shall, rely solely on representations and
warranties made in any final agreement, if any, relating to the Transaction.
Nothing contained in this Agreement nor the conveying of Information hereunder
shall be construed as granting or conferring any rights by license or otherwise
in any intellectual property.
9. In the event that the Potential Buyer or any person to whom it or
its Representatives transmit or have transmitted Information become legally
compelled (by oral questions, interrogatories, requests for Information or
documents, subpoenas, civil investigative demands or otherwise) to disclose any
such Information, the party under the legal compulsion (the "Compelled Party")
shall provide Collagen with prompt written notice so that Collagen may seek a
protective order or other appropriate remedy, or both, or waive compliance with
the provisions of this Agreement. In the event that Collagen is unable to obtain
a protective order or other appropriate remedy, or if it so directs the
Compelled Party, the Compelled Party shall furnish only that portion of the
Information that the Compelled Party is advised by its counsel is legally
required to be furnished by it and shall exercise its reasonable best efforts to
obtain reliable assurance that confidential treatment shall be accorded such
Information.
10. For a period of eighteen months from the date of this Agreement,
neither the Potential Buyer nor any of its affiliates (as such term is defined
under the Securities Exchange Act of 1934, as amended) or its Representatives
shall without the prior written approval of the Board of Directors of Collagen
(i) in any manner acquire, agree to acquire or make any proposal to acquire,
directly or indirectly, any voting securities or property of Collagen or any of
its subsidiaries, (ii) propose to enter into, directly or indirectly, any merger
or business combination involving Collagen or any of its subsidiaries or to
purchase, directly or indirectly, a material portion of the assets of Collagen
or any of its subsidiaries, (iii) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the Securities and Exchange Commission) to vote, or seek to
advise or influence any person with respect to the voting of any voting
securities of Collagen or any of its subsidiaries, (iv) form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934) or otherwise act, alone or in concert with
others, to seek to control or influence the management, Board of Directors or
policies of Collagen, (v) disclose any intention, plan or arrangement with
respect to any of the foregoing or (vi) advise, assist or
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encourage any other persons in connection with any of the foregoing. The
Potential Buyer also agrees during such period not to (x) request Collagen (or
its directors, shareholders, officers, employees or agents), directly or
indirectly, to amend or waive any provision of this paragraph or (y) take any
action which might require Collagen to make a public announcement regarding the
possibility of a business combination or merger.
11. The Potential Buyer hereby acknowledges that it is aware and that
its Representatives have been advised that the United States securities laws
prohibit any person who has material non-public information about a company from
purchasing or selling securities of such company.
12. The Potential Buyer also understands and agrees that no contract or
agreement providing for a Transaction with Collagen shall be deemed to exist
between the Parties unless and until a definitive Transaction agreement has been
executed and delivered, and the Potential Buyer hereby waives, in advance, any
claims (including, without limitation breach of contract) in connection with a
possible Transaction with Collagen unless and until the Parties shall have
entered into a definitive Transaction agreement. The Prospective Buyer also
agrees that unless and until a Transaction agreement between the Parties has
been executed and delivered, Collagen has no legal obligations of any kind
whatsoever with respect to any such Transaction by virtue of this Agreement or
any other written or oral expression with respect to such Transaction except, in
the case of this Agreement, for the matters specifically agreed to herein. The
Potential Buyer further understands that (i) Collagen shall be free to conduct
the process for a possible Transaction as it in its sole discretion shall
determine (including, without limitation, negotiating with any other prospective
parties and entering into a definitive Transaction agreement with any other
party without prior notice to the Potential Buyer or any other person), (ii) any
procedures relating to such possible Transaction may be changed at any time
without notice to the Potential Buyer or any other Person, (iii) Collagen
reserves the right, in its sole and absolute discretion, to reject any and all
proposals and to terminate discussions and negotiations with the Potential Buyer
at any time, and (iv) the Potential Buyer shall not have any claims whatsoever
against Collagen or any of its directors, officers, shareholders, owners,
affiliates or agents arising out of or relating to a possible Transaction with
the Potential Buyer (other than those as against the parties to a definitive
Transaction Agreement in accordance with the terms thereof).
13. This Agreement shall inure to the benefit of and be binding upon
Potential Buyer and Collagen and their respective successors and permitted
assigns.
14. The Parties agree that Collagen would be irreparably injured by a
breach of this Agreement by the Potential Buyer or its Representatives and that
Collagen shall be entitled to equitable relief, including injunctive relief and
specific performance, in the event of any breach of the provisions of this
Agreement. Such remedies shall not be deemed to be the exclusive remedies for a
breach of this Agreement by the Potential Buyer or its Representatives, but
shall be in addition to all other remedies available at law or in equity.
15. The Parties also hereby irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the courts of the State of California
for any actions, suits or proceedings arising out of or relating to this
Agreement and the Transactions contemplated hereby (and the
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Parties agree not to commence any action, suit or proceeding relating thereto
except in such courts), and further agree that service of any process, summons,
notice or document by U.S. registered mail to the other Party's address set
forth below shall be effective service of process for any action, suit or
proceeding brought in any such court. The Parties hereby irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the Transaction contemplated
hereby, in the courts of the State of California or the United States of America
located in the State of California, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
16. All notices required to be provided pursuant to this Agreement
shall be addressed and shall be sent either by overnight delivery by a courier
of national reputation (e.g., Federal Express) or by confirmed facsimile with
the original sent either by overnight delivery or by U.S. mail:
in the case of Collagen:
1850 Embarcadero Road
Palo Alto, California 94303
Attn: Gary Petersmeyer, CEO
Fax: (650) 354-4853
with a copy to:
Elias J. Blawie
Venture Law Group
2800 Sand Hill Road
Menlo Park, California 94025
Fax: (650) 854-1121
in the case of Potential Buyer:
------------------------------------
------------------------------------
Attn:
------------------------------------
Fax:
------------------------------------
with a copy to:
Vivek Jain, VP
Hambrecht & Quist
230 Park Avenue
New York, NY 10169
Fax: (212) 207-1519
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17. No failure or delay by either Party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise thereof preclude any other further exercise of any right,
power or privilege hereunder.
18. Any assignment of this Agreement by Potential Buyer or Collagen
without the prior written consent of the other Party shall be void.
19. Except as provided for in Section 10 hereof, this Agreement shall
terminate three years from the date hereof. After the termination of Section 10
hereof, the remaining provisions of this Agreement shall not be construed to
prohibit or limit either Party hereto from taking the actions described in
Section 10 hereof.
20. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California.
21. This Agreement contains the entire agreement between the Parties
concerning the confidentiality of the Information and related matters, and no
modifications of this Agreement or waiver of the terms and conditions hereof
shall be binding upon the Parties, unless approved in writing by each of
Potential Buyer and Collagen.
22. No written consent required by this Agreement shall be unreasonably
withheld.
If the foregoing reflects our agreement, kindly sign and return the
duplicate copy of this letter to us.
Sincerely,
COLLAGEN AESTHETICS, INC.
By:
-------------------------
Gary Petersmeyer
Chief Executive Officer
Agreed to as of the date set forth above:
-----------------------------
By:
Name:
Title:
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