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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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COLLAGEN AESTHETICS, INC.
(NAME OF SUBJECT COMPANY)
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COLLAGEN AESTHETICS, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
PREFERRED SHARE PURCHASE RIGHTS
(TITLE OF CLASS OF SECURITIES)
194194106
(CUSIP NUMBER OF CLASS OF SECURITIES)
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GARY S. PETERSMEYER
PRESIDENT & CHIEF EXECUTIVE OFFICER
COLLAGEN AESTHETICS, INC.
1850 EMBARCADERO ROAD
PALO ALTO, CALIFORNIA 94303
(650) 856-0200
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF
OF THE PERSON(S) FILING STATEMENT)
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WITH A COPY TO:
ELIAS BLAWIE, ESQ.
STEVEN J. TONSFELDT, ESQ.
VENTURE LAW GROUP
A PROFESSIONAL CORPORATION
2800 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
(650) 854-4488
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Collagen Aesthetics, Inc., a Delaware
corporation ("Collagen" or the "Company"). The address of the principal
executive offices of the Company is 1850 Embarcadero Road, Palo Alto, California
94303. The title of the class of equity securities to which this Statement
relates is the Company's Common Stock, par value $.01 per share ("Common Stock"
or the "Shares") 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"). Unless the
context otherwise requires, all references to Shares will include the associated
Rights.
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to the tender offer by Inamed Acquisition
Corporation (the "Purchaser"), a Delaware corporation and a wholly owned
subsidiary of Inamed Corporation, a Delaware corporation ("Inamed" or "Parent"),
to purchase all of the Shares held by the Company's stockholders (the
"Stockholders") at $16.25 per Share (the "Offer Price"), net to the seller in
cash, upon the terms and subject to the conditions set forth in the Purchaser's
Offer to Purchase dated August 4, 1999 and in the related Letter of Transmittal
(which together with the Offer to Purchase constitute the "Offer"), copies of
which are filed respectively as Exhibits 1 and 2 hereto and are incorporated
herein by reference. The Offer is disclosed in a Tender Offer Statement on
Schedule 14D-1 dated August 4, 1999 (the "Schedule 14D-1") filed with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules promulgated
by Commission thereunder.
The Offer is being made by the Purchaser pursuant to the Agreement and Plan
of Merger, dated as of July 31, 1999, among Parent, the Purchaser and the
Company (as the same may be amended from time to time, the "Merger Agreement").
The Merger Agreement provides that, among other things, as promptly as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction or waiver of the other conditions set forth in the Merger Agreement
and in accordance with the applicable provisions of the Delaware General
Corporation Law (the "DGCL"), Purchaser will be merged with and into the Company
(the "Merger"), the separate corporate existence of Purchaser will cease and the
Company will continue as the surviving corporation (the "Surviving Corporation")
and will be a wholly-owned subsidiary of Parent. At the effective time of the
Merger (the "Effective Time"), each remaining outstanding Share (other than
Shares held by stockholders who properly perfect their dissenters' rights under
the DGCL (the "Dissenting Shares")) will be converted automatically into the
right to receive the Offer Price or such higher amount as is paid in the Offer,
without interest.
On July 31, 1999, the Company entered into the Merger Agreement with Parent
and the Purchaser. A summary of the Merger Agreement is set forth in the Offer
to Purchase filed as an exhibit to the Schedule 14D-1 (the "Offer to Purchase"),
which summary is incorporated herein by reference in its entirety.
According to Schedule 14D-1, the address of the principal executive offices
of each of the Purchaser and Parent is: 5541 Ekwill Street, Suite D, Santa
Barbara, California 93111-2919.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Statement, is set forth in Item 1 above. All information contained in this
Statement or incorporated herein by reference concerning the Purchaser or
Parent, or actions or events with respect to either of them, was provided by the
Purchaser or Parent, respectively, and the Company takes no responsibility for
such information. Information contained in this Statement with respect to the
Company and its advisors has been provided by the Company.
(b) Except as described herein, in Annex A hereto, and in exhibits hereto,
to the knowledge of the Company, as of the date hereof there are no material
contracts, agreements, arrangements or understandings, or any potential or
actual conflicts of interest between the Company or its affiliates and (1) the
Company, its
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executive officers, directors or affiliates or (2) the Purchaser, Parent, its
executive officers, directors or affiliates.
INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER.
In considering the recommendations of the Board of Directors of the Company
(the "Board"), the Stockholders should be aware that certain members of the
Board have interests in the Merger and the Offer which are described in Annex A
hereto and which may present them with certain conflicts of interest. Each of
the members of the Board were aware of these potential conflicts and considered
them along with the other factors described in Item 4(b)(2) below.
The Merger Agreement provides that upon the closing of the Merger, certain
officers will terminate their employment with the Company, be paid severance and
other benefits pursuant to their existing management continuity agreements (or,
in the case of Gary S. Petersmeyer, his employment agreement), enter into six-
month consulting arrangements, and receive an incentive bonus upon the
completion of such consulting arrangement. The management continuity agreements
or the employment agreement provide that upon termination in connection with a
change in control, the individual will continue to receive salary and benefits
for 18 months (24 months in the case of Mr. Petersmeyer), and one times his or
her target bonus (two times the target bonus in the case of Mr. Petersmeyer).
Also, the Merger Agreement provides that upon the closing of the Merger, each
stock option to purchase the Company's Common Stock whether vested or unvested
will be cancelled in exchange for cash equal to the excess of the $16.25
multiplied by the number of Shares under such option over the aggregate purchase
price under such option. The stock options held by the directors and officers of
the Company are listed on Annex A hereto.
THE MERGER AGREEMENT.
On July 31, 1999, the Company entered into the Merger Agreement with Parent
and the Purchaser. A summary of the Merger Agreement is set forth in the Offer
to Purchase, which summary is incorporated herein by reference in its entirety.
CONFIDENTIALITY AGREEMENT.
Inamed signed a Confidentiality Agreement with the Company effective April
23, 1999. Subject to certain exceptions, Inamed agreed that it would retain as
confidential any information received concerning the Company or the status of a
proposed transaction with the Company, unless such information no longer
qualifies as confidential information or is permitted to be disclosed by the
Company. In addition, Inamed agreed for a period of eighteen months from the
date of the foregoing agreement that neither it nor any of its affiliates or
advisors would, without the prior written approval of the Company's Board of
Directors, acquire or offer to acquire shares of the Company, or take certain
other actions.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) RECOMMENDATIONS WITH RESPECT TO THE OFFER.
RECOMMENDATION OF THE BOARD.
At a meeting held on July 31, 1999, the Company's Board of Directors, by
unanimous vote (a) determined that each of the Offer and the Merger is fair to
and in the best interests of the Stockholders, (b) approved the Offer and the
Merger, (c) approved and adopted the Merger Agreement, and the transactions
contemplated by the Merger Agreement, (d) adopted and approved amendments to the
Rights Agreement, (e) took certain actions with respect to the Company's option
plans and Employee Stock Purchase Plan, and (f) recommended that the
Stockholders accept the Offer and tender their Shares pursuant thereto.
THEREFORE, THE COLLAGEN AESTHETICS BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS TENDER ALL THEIR SHARES PURSUANT TO THE OFFER.
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A copy of a letter to all stockholders of the Company communicating the
recommendations of the members of the Board of Directors is filed as Exhibit 4
hereto and is incorporated herein by reference in its entirety.
(b) BACKGROUND; REASONS FOR THE RECOMMENDATION OF THE COMPANY'S BOARD OF
DIRECTORS; OPINION OF LEHMAN BROTHERS.
(1) BACKGROUND.
Over a period of approximately four months prior to March 1999, the Company
had various unsolicited contacts with Mentor Corporation ("Mentor") regarding a
possible acquisition of the Company by Mentor. The discussions between the
Company and Mentor did not result in any agreement regarding such potential
acquisition during this period.
On March 1, 1999, Mentor announced an unsolicited written proposal to
acquire all the capital stock of the Company for $14.50 per Share. In response
to this proposal, on March 3, 1999, the Company announced that it had received
such a proposal, and, 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.
Over the next six weeks the Company's Board of Directors met several times
to review the status of that evaluation and of any related strategic
transaction. During that time several parties expressed interest in evaluating a
potential combination with the Company.
At this point, upon execution of a confidentiality agreement, the Company
circulated a Confidential Descriptive Memorandum about the Company to certain
entities identified by Lehman and the Company as possible bidders. On April 26,
1999, the Company and Parent executed a confidentiality agreement similar to
that signed by other prospective bidders, following which Parent received a copy
of the Confidential Descriptive Memorandum on the Company.
On May 19, 1999, based on its review of the Confidential Descriptive
Memorandum, Parent submitted a written 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 and similar to the process
followed with several other interested prospective bidders, 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 selected interested
acquirors.
On June 8 and 9, 1999, Parent along with its legal advisors conducted its
due diligence meetings with the Company. Similar meetings were held with several
other interested prospective bidders. Following these meetings, Parent held
numerous telephonic meetings with the Company to discuss the information learned
through Parent's due diligence investigation.
On June 23, 1999, Parent submitted a bid of $15.75 per Share to the
Company, which was subsequently raised to $16.25 per Share in negotiations. On
June 30, 1999, Parent's legal advisors delivered a copy of the proposed merger
agreement supplied by the Company to interested prospective bidders that
reflected Parent's initial comments.
On June 28, 1999, the Company's Board of Directors met to review the status
of discussions and due diligence with a variety of parties who had expressed
interest in acquiring the Company. In the course of that review, the Board
specifically discussed Parent's bid and authorized negotiations with Parent
regarding that bid and the Merger Agreement.
On June 30, 1999, the Company's Board of Directors met and reviewed
Parent's bid, and authorized further negotiations with Parent regarding that bid
and the Merger Agreement.
On July 23, 1999, Parent advised the Company that it had 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 (which letter was modified by the receipt of a second letter on July
30, 1999 from Cerberus Capital Management, L.P.).
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During the weeks of July 19, 1999 and July 26, 1999, Parent, the Company
and their respective advisors negotiated the material terms of the definitive
merger agreement, including representations and warranties, covenants,
conditions to the Offer and the Merger, termination events, and termination
fees.
On Friday, July 30, 1999, the Company's Board of Directors convened a
telephone meeting to review the status of the negotiations with Parent and the
terms and conditions of the proposed transaction documents. At this meeting,
members of the Company's senior management team gave a general overview of the
transaction and representatives of Venture Law Group, a Professional
Corporation, counsel to the Company, gave a summary of the then-current
transaction documents. Following this discussion, representatives of Lehman
advised the Company's Board of Directors regarding its financial analysis of the
transaction and its terms and also reviewed the terms of Parent's financing
commitment from Cerberus Capital Management, L.P. A full discussion among the
members of the Company's Board of Directors regarding these presentations and
the proposed transaction ensued. At the conclusion of this discussion, the Board
concluded that it would reconvene the next day for further consideration of the
transaction.
On Saturday, July 31, 1999, the Company's Board of Directors reconvened to
consider the proposed transaction with Parent. At this meeting, representatives
of Venture Law Group and Lehman reviewed the terms of the transaction once
again. In connection with these discussions, Lehman delivered its opinion that
the consideration to be received by the Company's stockholders in the Offer and
the Merger was fair to such stockholders from a financial point of view.
Following a final review of the transaction, the Company's Board of Directors
unanimously approved the form of Merger Agreement and directed the Company's
management to proceed with the execution of the same. On that same day, the
definitive Merger Agreement by and among the Company, Parent and Purchaser was
executed.
On the following Monday, August 2, 1999, the parties each issued a press
release announcing the transaction, the text of which are attached hereto as
Exhibits 7 and 8.
(2) REASONS FOR THE RECOMMENDATION OF THE COMPANY'S BOARD OF
DIRECTORS.
In reaching its determinations referred to in Item 4(a)(1) above, the
Company's Board of Directors considered the following factors, each of which, in
the view of the Company's Board of Directors, supported these determinations:
(i) the amount of consideration to be received by Stockholders in the
Offer and the Merger pursuant to the Merger Agreement, as well as the fact
that Stockholders would receive a cash payment with no financing
contingency;
(ii) the Company's prospects if it were to remain independent,
including the risks inherent in remaining independent, and the prospects of
the Company going forward as an independent company;
(iii) the possible alternatives to the Offer and the Merger (including
the possibility of continuing to operate the Company as an independent
entity), the range of possible benefits to Stockholders of these
alternatives and the timing and the likelihood of accomplishing the goal of
any of such alternatives;
(iv) the current status of the market for biomedical devices for the
treatment of defective, diseased, traumatized or aging human tissues,
including the benefits of combining with a company so as to increase
distribution capacity, add compatible product and service offerings, and
add substantial financial resources;
(v) the financial condition, historical results of operations and
business and strategic objectives of the Company, as well as the risks
involved in achieving those objectives;
(vi) other historical information concerning the Company's business,
prospects, financial performance and condition, operations, technology,
management and competitive position;
(vii) the fact that the $16.25 per Share price to be paid in the Offer
and as the consideration in the Merger represents: a premium of
approximately 21.9% over the 30-day trading average of $13.33 per share
from July 30, 1999, a premium of approximately 20.1% over the 30-day
trailing average of $13.53
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per Share from July 28, 1999, and a premium of approximately 35.4% over the
$12.00 per share closing sale price for the Shares on the Nasdaq National
Market on July 30, 1999, and a premium of approximately 36.1% over the
$11.94 closing sale price for the Shares on the Nasdaq National Market on
July 28, 1999; a premium of approximately 45.3% over the $11.19 closing
sale price per share for the Shares on the Nasdaq National Market on
February 26, 1999 (the last trading day before the announcement of the
Mentor offer); and a premium of approximately 47.8% over the 30-day
trailing average of $10.99 per Share on February 26, 1999;
(viii) current financial market conditions, and historical market
prices, volatility and trading information with respect to the Common Stock
of the Company, and the difficulty that a company with the capitalization
of the Company has in obtaining analyst coverage;
(ix) the perceived resistance of other potential acquirors to accept
public relations, investor relations and/or business risk related to the
Company's ongoing regulatory obligations and potential product liability
from its former Lipomatrix breast implant business;
(x) the opinion of Lehman, dated July 31, 1999, that as of such date,
the proposed consideration to be received by holders of Shares in the Offer
and Merger pursuant to the Merger Agreement was fair to Stockholders from a
financial point of view. A copy of the Lehman opinion is attached to this
Schedule 14D-9 as Annex B. Such opinion should be read in its entirety for
a description of the procedures followed, assumptions and qualifications
made, matters considered and limitations of the review undertaken by
Lehman. In connection with delivering its opinion, Lehman advised the
Company's Board of Directors at its meetings on July 30, and July 31,
regarding various financial and other matters underlying such opinion;
(xi) the high likelihood that the proposed acquisition would be
consummated, in light of the experience, reputation and financial
capabilities of Parent;
(xii) the terms of the Merger Agreement, including the parties'
representations, warranties and covenants, and the conditions to their
respective obligations;
(xiii) the results of the extensive investment banking process
completed by Lehman and the Company over the past several months, which
resulted in Parent offering the highest price for the Common Stock of the
Company; and
(xiv) the fact that pursuant to the Merger Agreement, the Company is
not prohibited from responding to any unsolicited Superior Proposal (as
defined in the Merger Agreement) to acquire the Company in the manner
provided in the Merger Agreement, and the Company may terminate the Merger
Agreement and accept such Superior Proposal subject to the Company's
compliance with the terms of the Merger Agreement and the Company's
obligation to pay the termination fee in the amount and in the manner
described in the Merger Agreement.
The Company's Board of Directors did not assign relative weights to the
above factors or determine that any factor was of particular importance. Rather,
the Company's Board of Directors viewed its position and recommendations as
being based on the totality of the information presented to and considered by
it. In addition, it is possible that different members of the Board assigned
different weights to the various factors described above. The Company's Board of
Directors recognized that, while the consummation of the Offer gives
Stockholders the opportunity to realize a premium over the price at which the
Shares were traded during the period prior to the public announcement of the
Offer, tendering in the Offer would eliminate the opportunity for Stockholders
to participate in the future growth and profits of the Company. The Company's
Board of Directors believes that the loss of this opportunity was fully
reflected in the Offer price of $16.25 per Share. The Company's Board of
Directors recognized that there can be no assurance as to the level of growth or
profits to be attained by the Company, if it remained independent, or by the
corporation surviving the Merger in the future. It is expected that if the
Shares are not purchased by Parent in accordance with the terms of the Offer or
if the Merger is not consummated, the Company's current management, under the
general direction of the Company's Board of Directors, will continue to manage
the Company as an ongoing business.
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THE FULL TEXT OF THE WRITTEN OPINION OF LEHMAN IS ATTACHED HERETO AS ANNEX
B. STOCKHOLDERS ARE URGED TO, AND SHOULD, READ SUCH OPINION CAREFULLY AND IN ITS
ENTIRETY. SUCH OPINION IS DIRECTED TO THE COMPANY'S BOARD OF DIRECTORS IN
CONNECTION WITH THEIR CONSIDERATION OF THE MERGER AGREEMENT AND ADDRESSES ONLY
THE FAIRNESS (FROM A FINANCIAL POINT OF VIEW) OF THE CONSIDERATION TO BE
RECEIVED BY HOLDERS OF SHARES IN THE OFFER AND THE MERGER PURSUANT TO THE MERGER
AGREEMENT. SUCH OPINION DOES NOT ADDRESS ANY OTHER ASPECT OF THE OFFER OR THE
MERGER AND DOES NOT CONSTITUTE AN OPINION OR A RECOMMENDATION TO ANY STOCKHOLDER
AS TO WHETHER TO TENDER SHARES IN THE OFFER OR HOW TO VOTE WITH RESPECT TO THE
MERGER.
IN LIGHT OF THE FACTORS SET FORTH ABOVE, THE COMPANY'S BOARD OF DIRECTORS
RESOLVED UNANIMOUSLY TO APPROVE THE OFFER, THE MERGER, AND THE MERGER AGREEMENT,
AND DETERMINED THAT THE TERMS OF THE OFFER, THE MERGER, AND THE MERGER
AGREEMENT, ARE FAIR TO AND IN THE BEST INTERESTS OF, STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDED THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES TO THE PURCHASER.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
In connection with the Offer and other matters arising in connection
therewith, Lehman has been retained as the exclusive financial advisor to the
Company's Board of Directors.
The Company's Board of Directors and the Company have a long-standing
relationship with Lehman, which served as the Company's lead banker in its spin
off of Cohesion Technologies, Inc. (the "Spin-Off") and also as its advisor in
connection with potential corporate partners and acquirors. Lehman is an
internationally recognized investment banking firm and, as part of its
investment banking activities, is regularly engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
The Company selected Lehman as its financial advisor on the basis of its
experience and expertise in transactions similar to the Offer and the Merger,
its reputation in the biomedical and investment communities, and its knowledge
of and familiarity with the Company resulting from the investment banking
services it has previously provided to the Company.
Pursuant to an engagement letter dated March 3, 1999 (the "Engagement
Letter"), Lehman agreed to render financial advice and assistance to the Company
in connection with a possible merger, sale or other strategic combination
involving the Company (a "Transaction"), including advice and assistance with
respect to defining objectives, performing valuation analysis, and structuring,
planning and negotiating a Transaction. In addition, upon the Company's request,
Lehman would render a financial opinion letter to the Company in accordance with
Lehman's customary practice with respect to the consideration to be received in
a Transaction. Pursuant to the Engagement Letter, the Company has agreed to pay
Lehman the following fees: (i) a fee of $100,000 as a retainer, as reimbursement
for time and efforts spent; (ii) upon delivery of the fairness opinion letter
referred to above, a fee of $500,000; and (iii) upon consummation of a
Transaction, a fee equal to 1.7% of the total consideration involved in the
completed Transaction, less the $600,000 previously paid pursuant to (i) and
(ii) above.
Neither the Company nor any person acting on its behalf has employed,
retained or agreed to compensate any other person to make solicitations or
recommendations to Stockholders on behalf of the Company concerning the Offer
and the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) To the best knowledge of the Company, no transactions in Shares have
been effected during the past 60 days by the Company or any of its executive
officers, directors or affiliates.
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(b) The Company has not been advised by its executive officers, directors
and affiliates who own Shares, either directly or beneficially, whether they
intend to tender such Shares to Purchaser pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as described in Items 3 and 4 above, including as set forth in
the Offer, to the knowledge of the Company no negotiation is being undertaken or
is underway by the Company in response to the Offer which relates to or would
result in (1) any extraordinary transaction, such as a merger or reorganization,
involving the Company or any affiliate or subsidiary of the Company, (2) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company, (3) a tender offer for or other acquisition of
securities by or of the Company, or (4) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described in Items 3 and 4 above, there are no transactions,
board resolutions, agreements in principle, or signed contracts in response to
the Offer which relate to or would result in one or more of the matters referred
to in clauses (1) through (4) of paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
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Exhibit 1 Form of Offer to Purchase, dated August 4, 1999
(incorporated by reference to
Exhibit (a)(1) to the Schedule 14D-1).
Exhibit 2 Form of Letter of Transmittal (incorporated by reference to
Exhibit (a)(2) to the
Schedule 14D-1).
Exhibit 3 Agreement and Plan of Merger, dated as of July 31, 1999,
among Collagen Aesthetics, Inc., Inamed Corporation, and
Inamed Acquisition Corporation (incorporated by reference to
Exhibit (c)(1) to the Schedule 14D-1).
Exhibit 4 Letter to Stockholders of Collagen Aesthetics, Inc., dated
August 5, 1999.*
Exhibit 5 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 (incorporated by reference to the
Company's Form 8-A/A filed on August 2, 1999).
Exhibit 6 Amendment to Preferred Share Rights Agreement dated as of
July 30, 1999.
Exhibit 7 Text of Press Release issued by Inamed Corporation on August
2, 1999 (incorporated by reference to Exhibit (a)(7) to the
Schedule 14D-1).
Exhibit 8 Text of Press Release issued by Collagen Aesthetics, Inc. on
August 2, 1999 (incorporated by reference to Exhibit (a)(8)
to the Schedule 14D-1).
Exhibit 9 Confidentiality Agreement, dated as of April 23, 1999,
between Inamed Corporation and Collagen Aesthetics, Inc.
(incorporated by reference to Exhibit (c)(2) to the
Schedule 14D-1).
Annex A Information Statement.
Annex B Opinion of Lehman Brothers Inc.
</TABLE>
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* Included with Schedule 14D-9 mailed to Stockholders.
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SIGNATURE
After reasonable 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.
By: /s/ GARY S. PETERSMEYER
------------------------------------
Gary S. Petersmeyer
President & CEO
Dated: August 5, 1999
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ANNEX A
COLLAGEN AESTHETICS, INC.
1850 EMBARCADERO ROAD
PALO ALTO, CALIFORNIA 94303
INFORMATION STATEMENT PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
GENERAL
This Information Statement (this "Statement") is being mailed on or about
August 6, 1999 as part of the Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") of Collagen Aesthetics, Inc., a Delaware
corporation (the "Company", "Collagen Aesthetics" or "Collagen"), with respect
to the tender offer by Inamed Acquisition Corporation ("Purchaser"), a Delaware
corporation and a wholly owned subsidiary of Inamed Corporation, a Delaware
corporation ("Parent"), for shares of the Company's Common Stock, par value $.01
per share, together with the associated Preferred Share Purchase Rights
(collectively, the "Common Stock"). Capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Schedule 14D-9. This
Statement is being furnished in connection with the possible election of persons
designated by Parent to a majority of the seats on the Company's Board of
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 ("Parent Designees"),
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 Board of
Directors (giving effect to the election of any additional directors pursuant to
this sentence) 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 Board
of Directors of (i) each committee of the Board of Directors other than any
committee of the Board 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 Company's
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.
It is expected that the Parent Designees may assume office at any time
following the purchase by Parent of Shares pursuant to the Offer, which purchase
may not occur earlier than August 31, 1999, and that, upon assuming office, the
Parent Designees will thereafter constitute at least a majority of the Board of
Directors.
PARENT'S DESIGNEES
Any director or executive officer of Parent listed in Schedule I to the
Offer to Purchase may be designated by Parent as a Parent Designee. The
information with respect to the Parent Designees has been designated by Parent
for inclusion herein and is incorporated herein by reference from Schedule I to
the Offer to Purchase.
Parent has advised the Company that each of the individuals listed in
Schedule I of the Offer to Purchase has consented to act as a director, if so
designated. Parent has also advised the Company that, to the best knowledge of
Parent or Purchaser, none of such individuals (i) currently is a director of, or
holds, any position with, the Company, (ii) beneficially owns any equity
securities, or rights to acquire any equity securities, of the Company (except
as disclosed in the Offer to Purchase) or (iii) has been involved in any
transactions with the Company or any of its directors, executive officers,
affiliates or associates which are required to be disclosed pursuant to the
rules and regulations of the Commission. It is expected that the Parent
Designees may assume office at any time following the purchase by Parent or
Purchaser (as applicable) of the number of Shares pursuant to the Offer that
satisfies the Minimum Condition, which purchases cannot occur earlier than
August 31, 1999.
A-1
<PAGE> 11
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF COLLAGEN AESTHETICS
The directors and executive officers of Collagen Aesthetics and their ages
as of September 6, 1999 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Gary S. Petersmeyer............. 52 President, Chief Executive Officer, Chief Operating
Officer and Director
Michael A. Bates................ 41 Vice President, Finance and Chief Financial Officer
William R. Dimmer............... 55 Vice President, Human Resources and Administrative
Services
Charlene A. Friedman............ 42 Vice President, Legal and Regulatory Affairs, General
Counsel and Assistant Secretary
Dawn McGuire.................... 45 Vice President, Medical Affairs
Rebecca A. Stirn................ 46 Vice President, North American Sales and Marketing
Anne L. Bakar(1)(2)............. 42 Director
William G. Davis(1)(2).......... 66 Director
Gerald S. Lazarus, M.D.(1)(2)... 60 Director
</TABLE>
- ---------------
(1) Member of the Human Resources Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
Mr. Petersmeyer joined Collagen as President, Chief Operating Officer and
Director in February 1995. In February 1997, Mr. Petersmeyer became Collagen's
Chief Executive Officer. Prior to joining Collagen, Mr. Petersmeyer was employed
by Syntex Corporation, a pharmaceutical manufacturer ("Syntex"), from 1991 to
January 1995, where he served as Vice President of Managed Health Care from
March 1993 to January 1995, as well as serving at various times as National
Sales Director and Director of Corporate Development. From 1986 to 1990, he
served as President and Chief Executive Officer of Beta Phase, Inc., a medical
device manufacturer, and from 1982 to 1986 he was the Executive Vice President
and General Manager, Ophthalmic Products Division, of CooperVision, Inc., a
manufacturer and distributor of ophthalmic products ("CooperVision"). Mr.
Petersmeyer is also a director of Cardiometrics, Inc. Mr. Petersmeyer holds a
B.A. from Stanford University and an M.A. and M.B.A. from Harvard University.
Mr. Bates joined Collagen as Vice President, Finance and Chief Financial
Officer in December 1998. From 1995 to October 1998, Mr. Bates served Penederm
Inc., a dermatology pharmaceutical company, in a variety of financial management
positions, the most recent of which was Vice President of Finance and
Administration and CFO. In 1994, Mr. Bates served as Vice President, Finance and
Administration for De Novo, Inc., a dermatological research and development
company, and in 1993, Mr. Bates served as Director of Finance and Controller for
Pharmetrix Corporation, a drug delivery company. From 1988 to 1994, Mr. Bates
served in various financial management positions with Tandem Computers, a
computer manufacturer. From 1981 to 1988, Mr. Bates held various positions with
Deloitte & Touche, an independent public accounting firm. Mr. Bates holds a B.S.
from the University of California, Hayward and an M.B.A. in Finance from the
University of California, Berkeley. Mr. Bates is a Certified Public Accountant.
Mr. Dimmer joined Collagen as Vice President, Human Resources and
Administrative Services in July 1999. Prior to joining Collagen, Mr. Dimmer was
Principal/Consultant for PRAGMA International, a management consulting firm,
from 1994 to 1998. From 1991 to 1994 he was Vice President of Human Resources
for JAMONT, S.A., a paper products firm. Mr. Dimmer was Director of Human
Resources for Syntex from 1982 to 1991. Prior to joining Syntex, Mr. Dimmer was
the Managing Director/Principal Consultant for W.R. Dimmer & Associates
(1980-1982), a consulting firm, and Associate Director/Senior Consultant for
Kaiser Permanente Medical Care (1972-1980), a health maintenance organization
(HMO). Mr. Dimmer holds a B.A. and M.A. from Western Michigan University.
Ms. Friedman joined Collagen as General Counsel and Assistant Secretary in
February 1996. She is now Collagen's Vice President, Legal and Regulatory
Affairs, General Counsel, and Assistant Secretary. Prior to joining Collagen,
Ms. Friedman practiced law for thirteen years, representing corporate and
individual clients
A-2
<PAGE> 12
in the litigation of products liability, commercial and general liability cases.
Ms. Friedman joined Collagen from the law firm of Lillick and Charles in San
Francisco. From 1993 to 1995, she practiced with Warner & Stackpole in Boston.
Ms. Friedman practiced at Murphy, DeMarco & O'Neill in Boston from 1983 through
1993. She is a member of the California and Massachusetts bars. Ms. Friedman
holds a B.A. from Tufts University and a J.D. from Northeastern University
School of Law.
Dr. McGuire joined Collagen as Vice President, Medical Affairs in May 1999.
Prior to joining Collagen, Dr. McGuire was Vice President of Clinical Research
and Medical Affairs at Elan Pharmaceuticals, formerly Neurex Corporation, an
acute care and neurologic therapeutics company, from 1995 until 1997. From 1994
until 1995, Dr. McGuire was Associate Director, Medical Research at Syntex. Dr.
McGuire is Assistant Clinical Professor of Neurology and Medicine at University
of California at San Francisco (UCSF) Medical Center, and a member of the Board
of Directors of the Ischemia Research and Education Foundation. Dr. McGuire
holds a B.S. from Princeton University and received her Doctorate in Medicine
from Columbia University, College of Physicians and Surgeons.
Ms. Stirn joined Collagen as Vice President, Global Marketing Strategy in
January 1996. Prior to joining Collagen, Ms. Stirn provided consulting services
to Collagen from March 1995 to December 1995. From January 1988 to February
1995, Ms. Stirn consulted and served on the board of directors for several
non-profit institutions. From September 1986 to December 1987, Ms. Stirn served
as Vice President of Marketing at CEMAX, Inc., a customized head and face
implant manufacturer. From June 1981 to October 1989, Ms. Stirn was employed by
CooperVision where she served as Vice President of Marketing, Optics Division
and in various other positions in the Marketing department. Ms. Stirn holds a
B.A. in economics from Smith College and an MBA from Stanford Graduate School of
Business. She is currently serving as a Director of Safeway, Inc.
Ms. Bakar has been President and Chief Executive Officer of Telecare
Corporation, the largest private provider of psychiatric services in the state
of California, since 1987. Previously, Ms. Bakar spent seven years in the
investment banking industry. Ms. Bakar holds a B.A. from the University of
California at Berkeley.
Mr. Davis was associated with Eli Lilly and Company, a large pharmaceutical
manufacturer and medical products supplier, from 1957 to 1984. He served there
as Executive Vice President, Eli Lilly International Corporation, from 1972 to
1975, Executive Vice President, Pharmaceutical Division, from 1975 to 1982 and
President, Medical Instrument Systems Division, from 1982 until his retirement
in 1984. Mr. Davis is also a director of Radiance Medical Systems, Inc.
Dr. Lazarus is an Adjunct Professor of Dermatology at UCSF, a Fellow at
Institute of Health Policy Studies, UCSF and a Professor at Peking Union Medical
College in Beijing, China. From 1993 to 1997, Dr. Lazarus served as Dean
Emeritus of the School of Medicine at the University of California, Davis and
Professor in the Departments of Dermatology and Biological Chemistry. Prior to
that time, Dr. Lazarus' career included the Harvard Medical School, the
University of Cambridge (England), the Montefiore Hospital and Medical Center
and Distinguished Professor and Chairman of Dermatology at both Duke University
Medical Center and the University of Pennsylvania School of Medicine. Dr.
Lazarus holds a B.S. from Colby College, an M.D. from George Washington
University, and an M.A. from University of Pennsylvania, Philadelphia.
CORPORATE GOVERNANCE
The Board of Directors of the Company held a total of twenty-two meetings
during the fiscal year ended June 30, 1999, including meetings held by
conference telephone call. The Board of Directors has an Audit Committee and a
Human Resources Committee. There is no committee performing the functions of a
nominating committee.
The Audit Committee recommends engagement of the Company's independent
auditors, reviews the scope of the audit, considers comments made by the
independent auditors with respect to the Company's internal control structure,
including systems, procedures and internal accounting controls and the
consideration given thereto by management, and reviews the Company's internal
control structure, including
A-3
<PAGE> 13
systems, procedures and internal accounting controls, with the Company's
financial and accounting staff. This Committee consisted of directors Bakar and
former director Fulton Collins as of the beginning of the most recent fiscal
year. Following Mr. Collins' resignation on March 7, 1999, directors Davis and
Lazarus were appointed to the Audit Committee effective May 7, 1999. The Audit
Committee held one meeting during fiscal 1999.
The Human Resources Committee provides guidance and commentary for all
corporate compensation, benefits, perquisite and employee (and director) equity
programs. It reviews and makes recommendations to the Board of Directors
regarding such matters as the Company's compensation of its officers, all
employee equity plans and individual equity grants and bonus plans and bonus
payments. The Committee is also empowered to approve and modify individual
equity grants. This Committee consisted of directors Davis and Bakar and former
director Reid W. Dennis (who resigned from the Board in August 1998 in
connection with the Spin-Off). Following Mr. Dennis' resignation, the Human
Resources Committee continued forward with directors Bakar and Davis until May
7, 1999, when director Lazarus was also appointed. The Human Resources Committee
held five meetings during fiscal 1999.
No incumbent director attended fewer than 75% of the aggregate number of
meetings held while such director was a member of the Board of Directors and of
the committees, if any, upon which such director served during fiscal 1999.
COMPENSATION OF DIRECTORS
The Company currently pays each director who is not an employee (currently
three persons) a monthly retainer of $1,000, a fee of $1,000 for each meeting of
the Board of Directors attended by such director, a fee of $250 for each
telephonic meeting of the Board of Directors in which such director participates
and a fee of $500 for each committee meeting attended by such director on a date
not coinciding with a meeting of the Board of Directors. Prior to August 18,
1998, each nonemployee director participated in the Company's 1990 Directors'
Stock Option Plan, pursuant to which nonemployee directors are automatically
granted options to purchase shares of Common Stock of the Company on the terms
and conditions set forth in such plan. On July 1, 1997, each of the Company's
nonemployee directors on such date were granted a 3,000 share option at an
exercise price of $19.25 per share, all pursuant to the terms of the Company's
1990 Directors' Stock Option Plan. On July 1, 1998, each of the Company's
nonemployee directors on such date were granted a 3,000 share option at an
exercise price of $18.09 per share pursuant to the Company's 1990 Directors'
Stock Option Plan. On August 12, 1998 Messrs. Collins and Lazarus were each
granted a 15,000 share option at an exercise price of $18.88 per share. In
connection with the Spin-Off, this price was adjusted to $13.40. This adjusted
price was determined in accordance with the Emerging Issues Task Force Issue
90-9 as agreed upon by the Company's Board. On August 18, 1998, the 1998
Directors' Stock Option Plan took effect and, as described under the heading
"Proposal No. 5: Adoption of the Company 1998 Directors' Stock Option Plan" in
the Company's Proxy Statement for its Special Meeting of Stockholders held
August 12, 1998, each nonemployee director has been granted options to purchase
shares of the Company's Common Stock on the terms and conditions set forth
therein.
REPORT OF THE HUMAN RESOURCES COMMITTEE
GENERAL
The Human Resources Committee of the Board of Directors (the "Committee")
is currently comprised of directors Bakar, Davis and Lazarus. The Committee
oversees the administration of the Company's benefits and compensation plans,
reviews corporate human resources programs and establishes policies governing
the annual compensation of the executive officers of the Company. The Committee
is also empowered to approve and modify individual equity grants. The following
is a report submitted by the Committee members in their capacity as the Board's
Human Resources Committee, addressing the Company's compensation policy as it
related to the Company's executive officers for fiscal 1999.
A-4
<PAGE> 14
COMPENSATION OF EXECUTIVE OFFICERS
The goal of the Company's executive compensation policy is to ensure that
an appropriate relationship exists between executive pay and the creation of
stockholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policies
integrate annual base compensation, bonuses based on corporate performance and
stock option grants. All executive officers, as well as senior-level managerial
and technical employees, are eligible for and participate in these compensation
plans.
SALARY
The Committee evaluates the performance and sets the salary of the
Company's Chief Executive Officer, Gary S. Petersmeyer, on an annual basis. Mr.
Petersmeyer evaluates the performance of all other executive officers and
recommends salary adjustments which are reviewed and approved by the Committee.
Survey data is drawn from comparable companies participating in medical device,
biotechnology, and/or pharmaceutical executive compensation surveys, several of
which are included in the peer group index in the Company's Performance Graph.
Within this framework, executive salaries are determined based on individual
performance, level of responsibility, the Company's overall salary structure and
the financial condition of the Company. The Company's compensation policy is
designed to maintain executive officer base salaries within a range
approximating the median of such salary data for like characteristics.
BONUSES
The Company seeks to provide annual incentives and rewards to executives
who make contributions of outstanding value, contingent upon the performance of
the Company as a whole. The Company's annual bonus program is funded by the
attainment of a specific operating goal, with individual payouts based on
performance relative to both additional corporate objectives and specific
objectives for each executive's functional area of responsibility. The operating
goal and the corporate objectives are recommended by the Chief Executive Officer
and approved by the Committee and the full Board of Directors. Both the target
amount and potential range of bonuses available to executive officers are set
annually by the Committee. Bonus awards are weighted so that high-end bonuses
are available when the Company's performance exceeds corporate target, up to a
defined maximum, and proportionally smaller or no awards are made when the
Company does not meet corporate targets.
STOCK OPTIONS
The Committee believes that equity ownership provides significant
additional motivation to executives to maximize value for the Company's
stockholders, and therefore approves both annual and periodic grants of stock
options under the Company's 1994 Stock Option Plan. The Company's primary option
grants are generally approved on an annual basis largely in recognition of
individual performance during the fiscal year. The amounts of the annual grants
are determined relative to guidelines derived from an industry survey of
executive stock compensation provided by an outside consultant. In determining
individual grants, the Committee also considers individual performance, current
stock option holdings and grants to others within the Company. Additional grants
may be given during the fiscal year in recognition of promotions or exemplary
performance achievements. Stock options are granted at the prevailing market
price and will only have value if the Company's stock price increases over the
exercise price. The Committee believes that the performance-based value of stock
options serves to align the interests of executive officers closely with those
of other stockholders. In accordance with this philosophy, the Company does not
have a discounted option or restricted stock program for its executive officers.
In addition to providing an opportunity for increased equity ownership, stock
options also create an incentive for officers and key employees to remain with
the Company for the long term, as such options become exercisable over time for
so long as the officer or key employee continues his or her employment
relationship with the Company.
A-5
<PAGE> 15
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Committee has considered the impact of Section 162(m) of the Internal
Revenue Code, which disallows a deduction for any publicly held corporation for
individual compensation exceeding $1 million in any taxable year for the Chief
Executive Officer and the four other most highly compensated executive officers,
unless such compensation meets the requirements for the "performance-based"
exception to the general rule. Since the cash compensation paid by the Company
to each of its executive officers is expected to be well below $1 million and
the Committee believes that options granted under the 1994 Stock Option Plan
will meet the requirements for qualifying as performance-based, the Committee
believes that this section will not affect the tax deductions available to the
Company. It is the Committee's policy to qualify, to the extent reasonable, the
executive officers' compensation for deductibility under applicable tax law.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
During fiscal 1999, the compensation of Gary S. Petersmeyer, the Chief
Executive Officer of the Company, consisted of base salary and a bonus. Mr.
Petersmeyer did not participate in any decisions related to his compensation.
Mr. Petersmeyer's annual base salary was increased from $309,040 to $323,642 at
the end of fiscal 1998 and he was granted an option to purchase 100,000 shares
of Common Stock at an exercise price of $9.8440 per share, the fair market value
of the Company's Common Stock on the date of grant. In addition, options which
Mr. Petersmeyer held for 60,000 shares were repriced and subjected to new
vesting effective December 15, 1998, as described in the table included in this
Annex A entitled "Ten Year Option Repricings" (the "Repricing Table"). As of the
date of filing of the Schedule 14D-9 to which this is attached, the Committee
has not yet completed its compensation review for fiscal year-end 1999.
REPRICING OF OPTIONS
In order to reincentivize its employees, the Human Resources Committee
approved an option repricing program in December 1998 pursuant to which
employees could surrender options granted by the Company having exercise prices
greater than $14.50 per share and receive in the place of such surrendered
options new options having an exercise price of $8.875 per share, the fair
market value of the Common Stock on the date the Human Resources Committee
approved the repricing and replacement grants. The new options issued pursuant
to this repricing program were unvested and subject to the same vesting schedule
as the surrendered options. The Repricing Table sets forth certain information
as of June 30, 1999 with respect to the repricing of stock options held by the
Company's executive officers during the last ten completed fiscal years.
SUBMITTED BY THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS
Anne L. Bakar
William G. Davis
Gerald S. Lazarus
HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The members of
the Human Resource Committee of the Company's Board are currently directors
Bakar, Davis and Lazarus, none of the members of the Human Resources Committee
has at any time been an officer or employee of the Company or any subsidiary of
the Company.
A-6
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of July 1, 1999 as to (i) each person who is known by the
Company to beneficially own more than five percent of the Company's Common
Stock, (ii) each of the Company's directors, (iii) each of the executive
officers named in the Summary Compensation Table of this Statement and (iv) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
NAME(1) NUMBER PERCENT(2)
- ------- --------- ----------
<S> <C> <C>
Heartland Advisors, Inc.(3)................................. 1,300,400 15.13%
75 State Street
Boston, MA 02109
Wellington Management Company(4)............................ 1,153,300 13.42%
75 State Street
Boston, MA 02109
Dimensional Fund Advisors, Inc.(5).......................... 564,850 6.57%
790 North Milwaukee Street
Milwaukee, WI 53202
Gary S. Petersmeyer......................................... 372,573 4.16%
Michael A. Bates............................................ 52,500 0.61%
William R. Dimmer........................................... 40,759 0.47%
Charlene A. Friedman........................................ 54,500 0.63%
Dawn McGuire................................................ 50,000 0.58%
Rebecca A. Stirn............................................ 62,339 0.72%
Anne L. Bakar............................................... 33,000 0.38%
William G. Davis............................................ 37,000 0.43%
Gerald S. Lazarus........................................... 18,000 0.21%
All directors and officers as a group (9 persons)........... 720,671 7.74%
</TABLE>
- ---------------
(1) To the Company's knowledge, the persons named in this table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and except as indicated in the other footnotes to this table.
Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a person
and the percentage ownership of that person, shares of Common Stock subject
to options or warrants held by that person that are currently exercisable or
exercisable within 60 days after June 30, 1999 are deemed outstanding. Given
the provisions of the Merger Agreement regarding the payment of cash for all
vested and unvested options, all options have been treated as currently
exercisable. Such shares, however, are not deemed outstanding for the
purpose of computing the percentage ownership of any other person.
(2) As of July 1, 1999, 8,592,359 shares were issued and outstanding.
(3) This information is based solely on the information contained in Schedule
13G filed by Heartland Advisors, Inc. on January 19, 1999.
(4) This information is based solely on the information contained in Schedule
13G filed by Vanguard Specialized Portfolio on February 10, 1999.
(5) This information is based solely on the information contained in Schedule
13G filed by Dimension Fund Advisors, Inc. on February 11, 1999.
A-7
<PAGE> 17
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table illustrates the compensation for the preceding three
fiscal years received from the Company by (a) the individual who served as the
Company's Chief Executive Officer during the fiscal year ended June 30, 1999 and
(b) the four other most highly compensated individuals who served as an
executive officer of the Company during the fiscal year ended June 30, 1999 (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
----------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)
--------------------------- ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Gary S. Petersmeyer................ 1999 $323,642 (2) 160,000
President, Chief Executive
Officer 1998 $309,040 $138,376 35,000 $ 3,254
and Director 1997 $262,777 $108,000 150,000 $ 2,238
Rebecca A. Stirn................... 1999 $171,385 (2) 50,000
Vice President, North American 1998 $155,478 $ 54,092 6,500
Sales and Marketing 1997 $149,989 $ 42,014 3,000
Charlene A. Friedman............... 1999 $161,146 (2) 43,000
Vice President, Legal and
Regulatory 1998 $143,477 $ 49,734 7,500
Affairs, General Counsel and 1997 $131,514 $ 36,960 4,000
Assistant Secretary
William R. Dimmer(1)............... 1999 $155,004 (2) 40,000
Vice President, Human Resources &
Administrative Services
Michael A. Bates(1)................ 1999 $ 82,600 (2) 50,000
Vice President, Finance and Chief
Financial Officer
</TABLE>
- ---------------
(1) Mr. Dimmer and Mr. Bates joined the Company in July 1998 and December 1998,
respectively.
(2) Not determined as of August 5, 1999.
A-8
<PAGE> 18
STOCK OPTION GRANTS IN FISCAL YEAR 1999
The following table sets forth information for the Named Executive Officers
with respect to grants of options to purchase Common Stock of the Company made
during the fiscal year ended June 30, 1999.
STOCK OPTION GRANTS IN FISCAL 1999
INDIVIDUAL GRANTS (1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
NUMBER OF STOCK PRICE
OF SECURITIES % OF TOTAL FOR 10 YEAR
UNDERLYING OPTIONS GRANTED OPTION TERM(3)
OPTIONS TO EMPLOYEES EXERCISE PRICE EXPIRATION ---------------------------
GRANTED IN FISCAL YEAR(2) $/SHARE DATE 5% 10%
------------- ----------------- -------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary S. Petersmeyer...... 100,000 17.32% $9.8440 9/23/08 $619,084 $1,568,880
60,000 10.39% $8.8750 12/15/08 $334,886 $ 848,668
Rebecca A. Stirn......... 25,000 4.33% $9.8440 9/23/08 $154,771 $ 392,220
25,000 4.33% $8.8750 12/15/08 $139,533 $ 353,611
Charlene A. Friedman..... 25,000 4.33% $9.8440 9/23/08 $154,771 $ 353,611
18,000 3.12% $8.8750 12/15/08 $ 94,299 $ 254,600
William R. Dimmer........ 20,000 3.46% $9.8440 9/23/08 $123,817 $ 313,776
Michael A. Bates......... 50,000 8.66% $8.6250 12/28/08 $271,211 $ 667,301
</TABLE>
- ---------------
(1) Consist of stock options granted pursuant to the Company's stock option
plans, which generally become exercisable at a rate of two percent of the
shares subject to the option per month for 50 months as long as the optionee
remains an employee with, consultant to or director of the Company. The
maximum term of each option granted is ten years from the date of grant. The
exercise price is equal to the fair market value of the stock on the grant
date.
(2) Out of a total of 577,367 options granted to employees during the last
fiscal year to purchase Company common stock.
(3) These amounts represent certain assumed rates of appreciation for a given
exercise price only.
A-9
<PAGE> 19
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF EXERCISE LENGTH OF
SECURITIES MARKET PRICE AT ORIGINAL
UNDERLYING PRICE OF TIME OF OPTION TERM
OPTIONS/SAR'S STOCK AT REPRICING NEW REMAINING AT
REPRICED OR TIME OF OR EXERCISE DATE OF
AMENDED REPRICING OR AMENDMENT PRICE REPRICING OR
NAME AND PRINCIPAL POSITION DATE (#) AMENDMENT($) ($) ($) AMENDMENT
--------------------------- -------- ------------- ------------ ------------ -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Gary S. Petersmeyer.................. 12/15/98 16,500 $8.875 $ 17.75 $8.875 6 yrs, 57 days
12/15/98 43,500 $8.875 $ 17.75 $8.875 6 yrs, 57 days
Rebecca A. Stirn..................... 12/15/98 20,000 $8.875 $14.555 $8.875 7 yrs, 56 days
12/15/98 5,000 $8.875 $14.555 $8.875 7 yrs, 56 days
Charlene A. Friedman................. 12/15/98 16,894 $8.875 $14.555 $8.875 7 yrs, 56 days
12/15/98 1,106 $8.875 $14.555 $8.875 7 yrs, 56 days
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999 AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information for the Named Executive Officers
with respect to exercises of options to purchase Common Stock of the Company for
the fiscal year ended June 30, 1999, as well as fiscal year-end option values.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY OPTIONS
UNDERLYING UNEXERCISED AT
OPTIONS AT FISCAL FISCAL YEAR-END
SHARES YEAR-END(#) (EXERCISABLE/
ACQUIRED ON VALUE (EXERCISABLE/ UNEXERCISABLE)
NAME EXCHANGE(#) REINVESTED($) UNEXERCISABLE) ($)(1)
---- ----------- ------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Gary S. Petersmeyer.............. -- -- 151,800/218,200 $188,283/$612,575
Rebecca A. Stirn................. -- -- 12,401/47,099 $39,150/$193,117
Charlene A. Friedman............. -- -- 12,620/41,880 $36,413/$163,847
William R. Dimmer................ -- -- 8,400/31,600 $19,143/$80,150
Michael A. Bates................. -- -- 6,000/44,000 $30,750/$225,500
</TABLE>
- ---------------
(1) The fair market value of the Company's Common Stock at the close of business
on June 30, 1999 was $13.75 per share.
A-10
<PAGE> 20
PERFORMANCE GRAPH
The following graph summarizes cumulative total stockholder return data
(assuming reinvestment of dividends) for the five year period ending June 30,
1999. The graph assumes that $100 was invested (i) on June 30, 1994 in the
Common Stock of Collagen Corporation at a price per share of $18.75, (ii) on
June 30, 1994 in NASDAQ Market Index, and (iii) on June 30, 1994 in Standard &
Poor's Health Care (Medical Products & Supplies) Index. The stock price
performance on the following graph is not necessarily indicative of future stock
price performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG COLLAGEN AESTHETICS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) INDEX
COLLAGEN AESTHETICS, INC. PERFORMANCE GRAPH
<TABLE>
<CAPTION>
S & P HEALTH CARE
COLLAGEN NASDAQ STOCK (MEDICAL PRODUCTS
AESTHETICS, INC. MARKET (U.S.) & SUPPLIES)
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<S> <C> <C> <C>
6/94 100.00 100.00 100.00
6/95 92.00 133.00 153.00
6/96 104.00 171.00 202.00
6/97 96.00 208.00 267.00
6/98 100.00 274.00 357.00
6/99 106.00 393.00 425.00
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Except as described above, to date, the Company has made no loans to
officers, directors, principal stockholders or other affiliates or other than
advances of reimbursable expenses. All future transactions, including loans (if
any), between the Company and its officers, directors and principal stockholders
and their affiliates will be approved by a majority of the Company's Board of
Directors, including a majority of the independent and disinterested outside
directors of the Board of Directors, and will be on terms no less favorable to
the Company than could have been obtained from unaffiliated third parties.
The Company has entered into indemnification agreements with its officers
and directors containing provisions which may require the Company, among other
things, to indemnify its officers and directors against
A-11
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certain liabilities that may arise by reason of their status or service as
officers or directors (other than liabilities arising from willful misconduct of
a culpable nature) and to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities
to file with the Securities and Exchange Commission (the "SEC") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and holders of more than
ten percent of the Company's Common Stock are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge and based solely upon review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 30, 1999, the Company's
officers, directors and holders of more than ten percent of the Company's Common
Stock complied with all Section 16(a) filing requirements.
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LEHMAN BROTHERS
Board of Directors
Collagen Aesthetics, Inc.
1850 Embercadero Road
Palo Alto, CA 94303
July 31, 1999
Members of the Board:
We understand that Collagen Aesthetics, Inc. ("Collagen" or the "Company")
is proposing to enter into an agreement with Inamed Corporation ("Inamed" or the
"Acquiror") which provides for Inamed to purchase all the outstanding shares of
Collagen for $16.25 per share in cash (the "Proposed Transactions"). The terms
and conditions of the Transaction are set forth in more detail in the Agreement
and Plan of Merger dated July 31, 1999 between Inamed and the Company (the
"Agreement").
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to the
Company's stockholders of the consideration to be offered to such stockholders
in the Proposed Transaction. We have not been requested to opine as to, and our
opinion does not in any manner address, the Company's underlying business
decision to proceed with or effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the specific terms of the Proposed Transaction, (2) such other publicly
available information concerning the Company that we believe to be relevant to
our analysis, including its Annual Report on Form 10-K for the fiscal year ended
June 30, 1998, Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999 and unaudited financial statements for the fiscal year ended June 30, 1999,
(3) financial and operating information with respect to the business, operations
and prospects of the Company furnished to us by the Company, (4) a trading
history of the Company's common stock from August, 1998 to the present and a
comparison of that trading history with those of other companies that we deemed
relevant, (5) a comparison of the historical financial results and present
financial condition of the Company with those of other companies that we deemed
relevant, (6) a comparison of the financial terms of the Proposed Transaction
with the financial terms of certain other recent transactions that we deemed
relevant, and (7) the results of our efforts to solicit indications of interest
from third parties with respect to a purchase of the Company. In addition, we
have had discussions with the management of the Company concerning its business,
operations, assets, financial condition and prospects and have undertaken such
other studies, analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of management of the Company that they
are not aware of any facts or circumstances that would make such information
inaccurate or misleading. With respect to the financial projections of the
Company, upon advice of the Company we have assumed that such projections have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of the Company as to the future
financial performance of the Company and that the Company will perform
substantially in accordance with such projections. In arriving at our opinion,
we have not conducted a physical inspection of the properties and facilities of
the Company and have not
LEHMAN BROTHERS
555 CALIFORNIA STREET 30TH FLOOR SAN FRANCISCO CA 94104 TELEPHONE (415)
274-5200 FACSIMILE (415) 274-5381
<PAGE> 23
Collagen Anesthetics
July 31, 1999
Page 2 of 2
made or obtained any evaluations or appraisals of the assets or liabilities of
the Company. Our opinion necessarily is based upon market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
offered to the stockholders of the Company in the Proposed Transaction is fair
to such stockholders.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services which is contingent
upon the consummation of the Proposed Transaction. In addition, the Company has
agreed to indemnify us for certain liabilities that may arise out of the
rendering of this opinion. We also have performed various investment banking
services for the Company in the past (including in connection with the spin-off
of Cohesion Technologies, Inc.) and have received customary fees for such
services. In the ordinary course of our business, we actively trade in the
equity securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Board of Directors in connection with its
consideration of the Proposed Transaction. This opinion is not intended to be
and does not constitute a recommendation to any stockholder of the Company as to
whether to accept the consideration to be offered to the stockholders in
connection with the Proposed Transaction.
Very truly yours,
LEHMAN BROTHERS
By: /s/ TED B. BRECK
------------------------------------
Managing Director
LEHMAN BROTHERS
555 CALIFORNIA STREET 30TH FLOOR SAN FRANCISCO CA 94104 TELEPHONE (415)
274-5200 FACSIMILE (415) 274-5381
2
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EXHIBIT INDEX
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EXHIBIT
NUMBER EXHIBIT NAME
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Exhibit 1 Form of Offer to Purchase, dated August 4, 1999
(incorporated by reference to
Exhibit (a)(1) to the Schedule 14D-1).
Exhibit 2 Form of Letter of Transmittal (incorporated by reference to
Exhibit (a)(2) to the
Schedule 14D-1).
Exhibit 3 Agreement and Plan of Merger, dated as of July 31, 1999,
among Collagen Aesthetics, Inc., Inamed Corporation, and
Inamed Acquisition Corporation (incorporated by reference to
Exhibit (c)(1) to the Schedule 14D-1).
Exhibit 4 Letter to Stockholders of Collagen Aesthetics, Inc., dated
August 5, 1999.*
Exhibit 5 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 (incorporated by reference to the
Company's Form 8-A/A filed on August 2, 1999).
Exhibit 6 Amendment to Preferred Share Rights Agreement dated as of
July 30, 1999.
Exhibit 7 Text of Press Release issued by Inamed Corporation on August
2, 1999 (incorporated by reference to Exhibit (a)(7) to the
Schedule 14D-1).
Exhibit 8 Text of Press Release issued by Collagen Aesthetics, Inc. on
August 2, 1999 (incorporated by reference to Exhibit (a)(8)
to the Schedule 14D-1).
Exhibit 9 Confidentiality Agreement, dated as of April 23, 1999,
between Inamed Corporation and Collagen Aesthetics, Inc.
(incorporated by reference to Exhibit (c)(2) to the
Schedule 14D-1).
Annex A Information Statement.
Annex B Opinion of Lehman Brothers Inc.
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* Included with Schedule 14D-9 mailed to Stockholders.
<PAGE> 1
[Collagen Logo]
August 6, 1999
To Our Stockholders:
I am pleased to inform you that on July 31, 1999, Collagen Aesthetics, Inc.
entered into an Agreement and Plan of Merger with Inamed Corporation and
Inamed's wholly owned acquisition subsidiary. Under the Agreement, Inamed
Corporation has commenced a cash tender offer to purchase all of the outstanding
shares of Collagen Aesthetics' Common Stock for $16.25 per share. The Offer will
be followed by a Merger in which any remaining shares of Collagen Aesthetics'
Common Stock will be converted into the right to receive $16.25 per share in
cash, without interest.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE OFFER AND THE MERGER ARE
FAIR TO AND IN THE BEST INTERESTS OF COLLAGEN AESTHETICS AND ITS STOCKHOLDERS,
HAS APPROVED THE OFFER AND THE MERGER, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors, which are described in the attached
Schedule 14D-9 that has been filed today with the Securities and Exchange
Commission. These factors include, among other things, the opinion of Lehman
Brothers Inc., Collagen Aesthetics' financial advisor, that the consideration to
be received by the Collagen Aesthetics' stockholders pursuant to the Agreement
and Plan of Merger is fair to stockholders from a financial point of view.
In addition to the attached Schedule 14D-9 relating to the Offer, also
enclosed is the Offer to Purchase, dated August 4, 1999, of Inamed Corporation,
together with related materials to be used for tendering your shares. These
documents set forth the terms and conditions of the Offer and the Merger and
provide instructions as to how to tender your shares. I urge you to read the
enclosed materials carefully.
Sincerely,
Gary S. Petersmeyer
President & CEO
<PAGE> 1
FIRST AMENDMENT TO RIGHTS AGREEMENT
This Amendment dated as of July 31, 1999 ("Amendment") to the
Preferred Shares Rights Agreement ("Agreement"), dated as of May 6, 1999, is
between Collagen Aesthetics, Inc., a Delaware corporation (the "COMPANY"), and
The Bank of New York, a New York banking corporation (the "RIGHTS AGENT").
Pursuant to Section 27 of the Agreement, this Amendment is
being executed by the Company and the Rights Agent for the purpose of amending
the Agreement as set forth below:
The Agreement is hereby amended as follows:
1. Section 1(a) shall be amended by inserting the
following at the end of Section 1(a):
"Notwithstanding the foregoing or any provision to
the contrary in this Agreement, none of Inamed
Corporation ("Parent"), Inamed Acquisition Corp.
("Sub"), or any of their respective subsidiaries,
Affiliates or Associates is an Acquiring Person
pursuant to this Agreement solely by virtue of the
execution of the Agreement and Plan of Merger of even
date herewith among Parent, Sub and the Company (the
"Merger Agreement"), commencement and consummation of
the Offer (as defined in the Merger Agreement), the
acquisition of Shares (as defined in the Merger
Agreement) by Sub pursuant to the Offer and the
consummation of the Merger (as defined in the Merger
Agreement)."
2. Section 1(h) shall be amended by inserting the
following at the end of Section 1(h):
"Notwithstanding the foregoing or any provision to
the contrary in this Agreement, a Distribution Date
shall not occur solely by reason of the Offer, the
execution of the Merger Agreement, the acquisition of
the Shares by Sub pursuant to the Offer or the
consummation of the Merger."
3. Section 1(j) shall be amended and restated in its
entirety to read as follows:
""EXPIRATION DATE" shall mean the earliest of (A)
immediately prior to the Effective Time (as defined
in the Merger Agreement), (B) the Close of Business
on the Final Expiration Date, (C) the Redemption
Date, (D) the time at which the Board of Directors
orders the exchange of the Rights as provided in
Section 24 hereof or (E) the consummation of a
transaction contemplated by Section 13(d) hereof."
<PAGE> 2
4. Section 1(u) shall be amended by inserting the
following at the end of Section 1(u):
"Notwithstanding the foregoing or any provision to
the contrary in this Agreement, a Shares Acquisition
Date shall not occur solely by reason of the Offer,
the execution of the Merger Agreement, the
acquisition of the Shares by Sub pursuant to the
Offer or the consummation of the Merger."
5. This Amendment shall be deemed to be entered into under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
6. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
7. As amended hereby, the Agreement shall remain in full force
and effect.
COLLAGEN AESTHETICS, INC.
By: /s/ Michael A. Bates
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Attest: /s/ Elias J. Blawie
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THE BANK OF NEW YORK
AS RIGHTS AGENT
By: /s/ James Dimino
---------------------------------
Signature of Authorized Signatory
Vice President
