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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 11)*
FAULDING INC.
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(Name of Issuer)
Common Stock (par value $0.01 per share)
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(Title of Class of Securities)
312024 10 2
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(CUSIP Number)
Josephine Dundon
c/o FH Faulding & Co Limited
115 Sherriff Street
Underdale, South Australia 5032
Australia
011-618-8205-6500
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 29, 1997
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(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13D-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(A) for other parties to whom copies are to be
sent.
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* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
FH Faulding & Co. Limited
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) / /
(b) / /
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
OO, WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e): / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Australia
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
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7. SOLE VOTING POWER:
14,283,820
8. SHARED VOTING POWER:
9. SOLE DISPOSITIVE POWER:
14,283,820
10. SHARED DISPOSITIVE POWER:
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
15,848,770 (includes 1,564,950 shares issuable upon conversion of the
Issuer's Class B Preferred Stock)
12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*:
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
73.1%
14. TYPE OF REPORTING PERSON*:
CO
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Faulding Holdings Inc.
Fed. Emp. ID No. 52-1597982
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) / /
(b) / /
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e): / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
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7. SOLE VOTING POWER:
14,283,820
8. SHARED VOTING POWER:
9. SOLE DISPOSITIVE POWER:
14,283,820
10. SHARED DISPOSITIVE POWER:
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
15,848,770 (includes 1,564,950 shares issuable upon conversion of the
Issuer's Class B Preferred Stock)
12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*:
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
73.1%
14. TYPE OF REPORTING PERSON*:
CO
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* SEE INSTRUCTIONS BEFORE FILLING OUT. INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE
SIGNATURE ATTESTATION.
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This Statement amends and supplements the Statement on Schedule 13D
dated June 3, 1985 and filed with the Securities and Exchange Commission on
behalf of Faulding Holdings Inc., a Delaware corporation ("Holdings"), as
amended by Holdings and F.H Faulding & Co. Limited, a corporation organized
under the laws of the State of South Australia, Commonwealth of Australia (the
"Parent"), by Amendment Nos. 1-10 thereto (the "Schedule 13D"), relating to the
Common Stock, par value $0.01 per share (the "Common Stock"), of Faulding Inc.,
a Delaware corporation (the "Issuer"). Unless otherwise indicated, all
capitalized terms used but not defined herein shall have the respective meanings
assigned to such terms in the Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is hereby amended and supplemented by adding thereto the
following:
Parent will provide Holdings with the funds necessary to pay the
estimated US$82.5 million Transaction Consideration (as defined herein). Parent
will obtain such funds primarily from a rights offering to its shareholders,
pursuant to which it will raise approximately A$107 million (the "Rights
Offering"). A press release relating to the Rights Offering was issued by the
Parent on September 29, 1997 (the "Rights Offering Press Release"). A copy of
the Rights Offering Press Release is attached as Exhibit A hereto. Parent has
obtained a commitment letter from JB Were & Son ("JB Were"), dated September 29,
1997, relating to the Rights Offering (the "Commitment Letter"). A copy of the
Commitment Letter is attached as Exhibit B hereto, and any description contained
in this Statement relating to the Commitment Letter does not purport to be
complete and such description is qualified in its entirety by reference to the
Commitment Letter attached as Exhibit B hereto. Pursuant to the Commitment
Letter, JB Were may terminate its obligations thereunder if, inter alia, a
prospectus relating to the Rights Offering has not been lodged with the
Australian Securities Commission by October 8, 1997; there is a material adverse
change, or development involving a prospective material adverse change, in the
condition or financial or trading position of Parent, which, in the reasonable
opinion of JB Were, has a material adverse effect on the prospects of the Rights
Offering; or if legislation or financial policy is proposed, introduced or
adopted in Australia which, in the reasonable opinion of JB Were, would have a
material adverse effect on the prospects of the Rights Offering. Parent will
obtain the balance of the funds required for the Recapitalization from its
existing cash balances or from funds available to Parent from subsidiaries
through the repayment of inter-company advances.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 is hereby amended and supplemented by adding thereto the
following:
On September 29, 1997, Parent, Holdings and the Issuer executed an
Agreement and Plan of Recapitalization (the "Recapitalization Agreement"). A
copy of the Recapitalization Agreement is attached as Exhibit C hereto, and any
description contained in this Statement relating to the Recapitalization
Agreement does not purport to be complete and such description is qualified in
its entirety by reference to the Recapitalization Agreement attached as Exhibit
C hereto. Pursuant to the Recapitalization Agreement, subject to stockholder
approval, the Issuer
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will amend its Certificate of Incorporation (the "Recapitalization Amendment")
to effect a reverse stock split (the "Recapitalization") whereby at the
Effective Time each 7,924,385 issued shares of Common Stock shall be combined
into one validly issued share of common stock of the Issuer, the par value per
share of which shall be the quotient obtained by dividing (i) the product of (a)
the total number of shares of Common Stock issued and outstanding immediately
prior to the Effective Time, multiplied by (b) .01, by (ii) the number of shares
of new common stock of the Issuer to be issued and outstanding immediately
following the Effective Time (the "New Common Shares"). No scrip or fractional
New Common Shares will be issued. In lieu thereof, each person who would
otherwise be entitled to receive a fractional New Common Share will be entitled
to receive an amount in cash equal to the product of (x) the number of shares of
Common Stock held by such person immediately prior to the Effective Time,
multiplied by (y) US$13.50 (the "Transaction Consideration"). A press release
relating to the Recapitalization was issued by the Parent on September 29, 1997
(the "Recapitalization Press Release"). A copy of the Recapitalization Press
Release is attached as Exhibit D hereto.
In addition, the Recapitalization Agreement provides that, except as
Parent or Holdings and the holder of any option ("Option Holder") to purchase
Common Stock ("Stock Option") otherwise agree, the Issuer will take all actions
necessary to provide that, upon the Effective Time, (i) each outstanding Stock
Option, whether or not then exercisable or vested, shall become fully
exercisable and vested, (ii) each outstanding Stock Option shall be cancelled
and (iii) in consideration of such cancellation the Issuer shall pay to each
Option Holder an amount in respect thereof equal to the product of (A) the
Applicable Amount, multiplied by (B) the number of shares subject thereto (the
"Stock Option Consideration"). The term "Applicable Amount" means the excess, if
any, of the Transaction Consideration over the applicable exercise price of each
such Stock Option.
Under the Recapitalization Agreement, prior to the closing of the
Recapitalization, the Issuer will also effect an amendment to its Certificate of
Incorporation, subject to stockholder approval, so as to change the par value of
its Class B Preferred Stock from US$0.01 per share to US$0.10433 per share (the
"Par Value Amendment"). Immediately following the effective time of the Par
Value Amendment, but prior to the Effective Time, Holdings intends to convert
all of the shares of Class B Preferred Stock that it owns into shares of Common
Stock.
As a result of the Recapitalization, the total number of shares of all
classes of stock which the Issuer shall have authority to issue will be
1,834,190, consisting of 2 New Common Shares and 1,834,188 shares of preferred
stock (the "Preferred Stock"). Holdings will own all of the outstanding New
Common Shares of the Issuer, and no shares of Preferred Stock will be issued and
outstanding. In addition, following the Effective Time, the Common Stock will
cease to be authorized to be quoted on the NASDAQ National Market and will
become eligible for termination of registration pursuant to Section 12(g)(4) of
the Exchange Act of 1934, as amended.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is hereby amended and supplemented by adding thereto the
following:
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(a) The number of issued and outstanding shares of Common Stock of the
Issuer is 20,127,188. The aggregate number and percentage of the class of
securities identified in Item 1 beneficially owned by each person named in Item
2 as of the date hereof is as follows:
(i) Holdings beneficially owns 15,848,770 shares of Common Stock,
including 1,564,950 shares issuable upon conversion of its 150,000 shares of
Class B Preferred Stock. Assuming the conversion of its B Preferred Stock,
Holding's ownership would be approximately 73.1% of the Issuer's then issued
and outstanding shares of Common Stock.
(ii) Mr. Piper, a Director of the Parent, beneficially owns 500 shares
of Common Stock of the Issuer, which shares comprise approximately 0.002% of
the Issuer's issued and outstanding shares of Common Stock.
(b) The number of shares of Common Stock as to which each person
listed in paragraph (a) above has sole power to vote or to direct the vote,
shared power to vote or to direct the vote, sole power to dispose or direct the
disposition of, or shared power to dispose or direct the disposition of, is as
follows:
(i) Holdings currently has the sole power to vote, direct the voting
of, dispose of and direct the disposition of 14,283,820 shares of the
Issuer's Common Stock as of the date hereof. These shares comprise
approximately 70.1% of the Issuer's issued and outstanding Common Stock.
(ii) Mr. Piper has the sole power to vote, direct the voting of,
dispose of and direct the disposition of all 500 of the shares of Common
Stock that he beneficially owns.
(c) Other than as reported herein, Holdings is not aware of any
transaction in the Common Stock of the Issuer during the past sixty days by any
persons named in response to paragraph (a) above.
(d) None.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
Item 6 is hereby amended and supplemented by adding thereto the
following:
See Item 4 herein for a description of the Recapitalization Agreement
and certain of the terms thereof.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
A. Rights Offering Press Release.
B. Commitment Letter.
C. Recapitalization Agreement.
D. Recapitalization Press Release.
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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.
DATED: September 30, 1997
FH FAULDING & CO LIMITED
By: -----------------------------------
Edward D. Tweddell
Group Managing Director
FAULDING HOLDINGS INC.
By: -----------------------------------
Edward D. Tweddell
Director
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EXHIBIT A
29 September 1997
F H FAULDING & CO LIMITED 1 FOR 8 RIGHTS ISSUE TO RAISE $107 MILLION
As aforeshadowed in its 3 June 1997 release, F H Faulding & Co Limited today
announced a 1 for 8 renounceable rights issue at an issue price of $6.80 per
share. The issue will result in the issue of approximately 15.7 million new
shares, to raise approximately $107 million. The proceeds of the issue will be
used to maintain reasonable gearing levels and provide the Company with partial
funding for the acquisition of the remaining shares in Faulding Inc that the
Faulding Group does not already own. The Company expects to hedge its increased
US dollar assets by replacing some existing Australian dollar debt with US
dollar debt.
The new shares will not rank for the final dividend for the year ended 30 June
1997 (to be paid in November 1997), but will rank fully for all dividends after
that.
The issue is fully underwritten by J B Were & Son. Complete details of the issue
will be included in a prospectus expected to be lodged with the Australian
Securities Commission and Australian Stock Exchange within the next three
business days. Once it is lodged, the prospectus will be available for review at
the Company's registered office at 115 Sherriff Street, Underdale, South
Australia.
For further information please contact:
Dr Ed Tweddell
Group Managing Director/Chief Executive Officer
F H Faulding & Co Limited
Telephone: +61 8 8205 6500
Mr Peter Maloney
Chief Financial Officer
F H Faulding & Co Limited
Telephone: +61 8 8205 6500
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EXHIBIT B
J.B. WERE & SON
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STOCKBROKERS
PRIVATE & CONFIDENTIAL
Dr. E.D. Tweddell,
Chief Executive Officer
F.H. Faulding & Co. Limited,
Building B,
115 Sherriff Street
UNDERDALE S.A. 5032
Dear Dr. Tweddell,
UNDERWRITING OFFER
J B Were & Son is pleased to submit an offer to you to underwrite a new cash
issue ('Issue') of fully paid ordinary shares in F.H. Faulding & Co. Limited
('Faulding'). The terms and conditions of the offer are as follows:
1. NUMBER OF SHARES TO BE ISSUED
Approximately 15.73 million shares in Faulding, issued in the ratio of one
new Faulding share for every eight existing Faulding shares held.
2. ISSUE PRICE
$6.80 per Faulding share.
3. AMOUNT UNDERWRITTEN
Approximately 15.73 million shares at $6.80 each to raise a total of
$106.964 million ('Underwritten Amount') is to be underwritten by J B Were
& Son.
4. PAYMENT
The Faulding shares will be payable in full $6.80 per Faulding share on
application.
5. SHAREHOLDER ENTITLEMENT
Faulding will offer for subscription one new Faulding share for every
eight existing Faulding shares held by shareholders at 5.00 p.m. Adelaide
time on 17 October 1997. The rights will be renounceable. Fractions will
be disregarded.
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6. DIVIDEND RANKING
The new Faulding shares will not rank for the 10 cents per share dividend
announced on 1 September 1997.
7. TIMETABLE
The timetable for the Issue shall be as follows:
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Issue Announced/Underwriting Agreement 29 September 1997
Signed
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Prospectus lodged with ASC: 1 October 1997
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Rights trading commences: 9 October 1997
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Books close for determination of 17 October 1997
entitlements:
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Prospectus despatched to shareholders: 22 October 1997
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Rights trading concludes: 6 November 1997
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Closing date for acceptances: 17 November 1997
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J B Were & Son notified of shortfall: 25 November 1997
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Shortfall applications and monies lodged: 4 December 1997
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It is noted that this timetable may change by mutual agreement.
However, unless otherwise agreed and notwithstanding anything to the
contrary in this letter, J B Were & Son's obligations shall cease if a
prospectus relating to the Issue has not been lodged with the Australian
Securities Commission (ASC) by 8 October 1997, or the new Issue documents
have not been despatched to Faulding shareholders by 29 October 1997.
8. J B WERE & SON'S OBLIGATIONS AS UNDERWRITER
If the Underwritten Amount, as set out in point 3, is not fully subscribed
on or before 17 November 1997 ('Subscription Date') or such later date as
may be mutually agreed, J B Were & Son, will, within seven business days
of being accurately advised in writing of the Shortfall, which advice must
be received not later than 5 business days after and including the
Subscription Date, lodge or cause to be lodged with Faulding, applications
in proper form and in terms of the prospectus together with the
appropriate application monies for the number of Faulding shares as will
make up the Shortfall. When completed application forms for the full
number of Faulding shares of this Issue together with the application
monies have been lodged with Faulding, whether on or before the
Subscription Date or under this clause, the liability of J B Were & Son as
underwriter shall cease.
For the purposes of this clause, 'Shortfall' means the difference between
15.73 million and the number of Faulding shares subscribed for.
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9. UNDERWRITING COMMISSION
On the day on which the last of the Underwritten Shares is issued, but in
any event no later than 9 December 1997, Faulding must pay to J B Were &
Son a commission of 1.0 per cent of the Underwritten Amount, representing
$1,069,640.
10. MANAGEMENT FEE
On the day on which the last of the Underwritten Shares are issued, but in
any event no later than 9 December 1997, Faulding in addition to the
underwriting commission must pay to J B Were & Son a management fee of 0.5
per cent of the Underwritten Amount, representing $534,820.
If for any reason (other than default by J B Were & Son under this letter)
the Issue does not proceed or is terminated, Faulding shall immediately
pay to J B Were & Son, upon request, a fee equal to 0.125 per cent of the
Underwritten Amount and all costs of the Issue in accordance with point 11
below.
11. ISSUE COSTS
Faulding must pay all costs of the Issue, including J B Were & Son's
reasonable out-of-pocket expenses, such as those related to travel and
accommodation and legal fees incurred by J B Were & Son in relation to
this agreement, due diligence inquiries and prospectus preparation. The
reasonable out of pocket expenses of J B Were & Son will be subject to a
maximum of $25,000.
12. TERMINATION
J B Were & Son may withdraw from and determine this agreement without cost
or liability (but only after consultation between J B Were & Son and
Faulding) at any time after any one or more of the following occur:
(a) there is an outbreak of hostilities and/or existing
hostilities extend involving any of the armed forces or
civilians of Australia, New Zealand, the United Kingdom,
Germany, the U.S.A., the states formerly constituting the
U.S.S.R., Indonesia, Japan, the Peoples Republic of China or
Israel;
(b) there is any material adverse change, or development
involving a prospective material adverse change, after signing
of the prospectus in the condition or financial or trading
position of Faulding which, in the reasonable opinion of J B
Were & Son, has a material adverse effect on the prospects of
the Issue;
(c) there is introduced into the Parliament of Australia
or any State of Australia or there is a public announcement of
a proposal to introduce a new law or the Reserve Bank of
Australia or any Commonwealth or other financial authority
adopts or announces an intention to adopt a policy which in
the reasonable opinion of J B Were & Son would have a
materially adverse effect on the prospects of the Issue being
fully subscribed;
(d) J B Were & Son reasonably forms the opinion that
there is a material omission from, or a material statement
which is, or has become, false or mislead-
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ing in the prospectus (except any material statement that is
false or misleading in, or any material omission from, the
prospectus where J B Were & Son knew the information was false
or misleading or omitted or J B Were & Son caused the
appearance of the false or misleading statement in or the
material omission from the prospectus) or any person, other
than J B Were & Son, who has previously consented to be named
in the prospectus withdraws that consent.
e) The ASC issues a stop order under section 1033 of the
Corporations Law or commences a hearing in relation to the
Prospectus pursuant to section 1033 and the issues giving rise
to the holding of that hearing are not resolved to the
Underwriters' reasonable satisfaction within 10 business days
of that hearing commencing.
Any determination under this point shall be made by notice in writing by
J B Were & Son to Faulding and shall not prejudice or nullify any claim
for damages which J B Were & Son may have against Faulding for or
arising out of any breach or failure as aforesaid.
J B Were & Son will not invoke these provisions unless the success of
the Issue is seriously threatened by the realisation of any of the
contingencies specified.
J B Were & Son agrees to immediately advise the Australian Stock
Exchange (ASX) in the event that any of these provisions is invoked.
13. INDEMNITIES
13.1 Faulding will indemnify J B Were & Son and keep it indemnified
from all losses incurred by J B Were & Son to third parties
(excluding the management fee in point 10 above or any loss of
profit by J B Were & Son), costs and expenses (including
reasonable legal expenses) whatever in respect of all or any of:
a) any non-compliance by Faulding, its officers or employees with
any applicable law in relation to the issue, including the
prospectus;
b) any statement, mis-statement, misrepresentation, or material
non-disclosure, inaccuracy in, or omission from, the
prospectus or any statement, advertising or publicity made or
issued by or with the authority of Faulding or any of its
officers in respect to the Issue or prospectus, or made or
issued by J B Were & Son to the extent it is made or issued in
reliance on the prospectus or information provided by
Faulding;
c) any breach or failure by Faulding to observe any of the terms
and conditions of the contract arising from the acceptance of
this offer.
13.2 If, and only if, J B Were & Son is advised prior to the
date of allotment of the new Faulding shares of dishonoured
cheques accompanying applications for new Faulding shares, J B
Were & Son will indemnify Faulding for the aggregate face
value of all such cheques.
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14. FAULDING UNDERTAKINGS
Faulding agrees that it will:
a) within 3 business days of the date of issue of the prospectus
make application to the ASX for permission for the Faulding
shares to be listed for quotation;
b) undertake continuing due diligence inquiries in a manner
acceptable to J B Were & Son until allotment of Faulding
shares is complete;
c) immediately notify J B Were & Son if a matter becomes known
which results in there being a material mis-statement in, or
material omission from, the prospectus and lodge a
supplementary or replacement prospectus as soon as
practicable, such document to be approved by J B Were & Son;
d) ensure that, to the best of its knowledge after due inquiry,
all information provided to J B Were & Son in relation to the
Issue is true, complete, accurate and not misleading or
deceptive.
15. ACCESS TO DUE DILIGENCE MATERIAL
By accepting this offer, Faulding:
a) acknowledges and agrees that, for a period of 7 years
commencing on the date of issue of the last of the
Underwritten Shares (such period, "Access Period"), Faulding
will provide and cause to be provided, to J B Were & Son and
its officers, advisors and agents from time to time
(collectively and individually in this clause 15, "Were
Entity") complete access to all places, including but not
limited to, all places of storage (within the meaning of
s.1301(2) of the Corporations Law) at which books (within the
meaning of s.9 of the Corporations Law) or documents (within
the meaning of that Section) or both in respect of or relating
directly or indirectly to any one or more of:
(i) the Issue, and
(ii) the prospectus; and
(iii) any inquiries or investigations conducted by or on
behalf of Faulding or any of its officers, advisors, or
agents (collectively and individually in this clause
15, Faulding Entity) or information relied on by any
Faulding entity for purposes including the purpose of
establishing any of the defences in Subdivision B of
Division 4 of Part 7.11 of the Corporations Law,
(collectively and individually, 'Due Diligence
Materials') are kept or stored;
b) undertakes that, during the Access Period in the event that
the registered office of Faulding changes, it will notify J B
Were & Son of that change;
c) undertakes that, during the Access Period, it will ensure that
each Were Entity is able on at least 24 hours notice to
Faulding to inspect and take copies of all
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or any of the Due Diligence Materials subject to the relevant
Were Entity undertaking to keep confidential any such copies
which comprise confidential information; and
d) waives, as between itself and J B Were & Son, all legal
professional or other privilege in respect of all or any of
the Due Diligence Materials.
ACCEPTANCE
Could you please confirm your acceptance of this offer by signing and returning
the duplicate copy of this letter.
Yours sincerely
/s/ Terry Campbell
T.A. Campbell
Chief Executive Office
I accept the above terms on behalf of
F H Faulding & Co Limited
/s/ Dr Edward Tweddell
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Dr Edward Tweddell
Group Managing Director/
Chief Executive Officer
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EXHIBIT C
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AGREEMENT AND PLAN OF RECAPITALIZATION
by and among
FAULDING INC.,
FAULDING HOLDINGS INC.
and
FH FAULDING & CO. LIMITED
dated as of
September 29, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I
THE RECAPITALIZATION
Section 1.1 Certificate of Amendment........................................ 1
Section 1.2 Closing......................................................... 2
Section 1.3 The Amendment................................................... 2
Section 1.4 Payment for Shares.............................................. 3
Section 1.5 Company Stock Options........................................... 4
ARTICLE II
THE CLASS B PREFERRED STOCK
Section 2.1 Certificate of Amendment for Change of Par Value of
Class B Preferred Stock ...................................... 5
Section 2.2 The Conversion ................................................. 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization ................................................... 6
Section 3.2 Capitalization ................................................. 6
Section 3.3 Authorization; Validity of Agreement and Certificate
of Amendment ................................................. 7
Section 3.4 No Violations; Consents and Approvals .......................... 8
Section 3.5 SEC Reports and Financial Statements ........................... 9
Section 3.6 Absence of Certain Changes ..................................... 9
Section 3.7 Proxy Statement; Information in Schedule 13E-3 ................. 10
Section 3.8 Opinion of Financial Advisor ................................... 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND HOLDINGS
Section 4.1 Organization ................................................... 10
Section 4.2 Authorization; Validity of Agreement ........................... 11
Section 4.3 Consents and Approvals; No Violations .......................... 11
Section 4.4 Information in Proxy Statement and Schedule 13E-3 .............. 12
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ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company .............................. 13
Section 5.2 Further Action; Reasonable Efforts ............................. 15
Section 5.3 Consents and Approvals ......................................... 16
Section 5.4 Notification of Certain Matters................................. 17
Section 5.5 Publicity ...................................................... 17
Section 5.6 Meeting of Shareholders of the Company ......................... 17
Section 5.7 Directors' and Officers' Insurance and Indemnification.......... 18
Section 5.8 Brokers or Finders ............................................. 19
Section 5.9 Certificates of Amendment ...................................... 19
Section 5.10 Par Value ...................................................... 19
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the
Recapitalization.............................................. 20
Section 6.2 Conditions to the Obligation of the Company to Effect
the Recapitalization ......................................... 20
Section 6.3 Conditions to Obligations of Parent and Holdings to
Effect the Recapitalization .................................. 21
Section 6.4 Condition to Each Party's Obligation to Effect the
Change in Par Value .......................................... 21
ARTICLE VII
TERMINATION
Section 7.1 Termination .................................................... 23
Section 7.2 Effect of Termination .......................................... 24
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses .............................................. 24
Section 8.2 Amendment; Waiver; Termination ................................. 24
Section 8.3 Nonsurvival of Representations and Warranties .................. 25
Section 8.4 Notices ........................................................ 25
Section 8.5 Interpretation ................................................. 27
Section 8.6 Headings ....................................................... 27
Section 8.7 Counterparts ................................................... 27
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Section 8.8 Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership .......................................... 27
Section 8.9 Severability ................................................... 27
Section 8.10 Governing Law .................................................. 27
Section 8.11 Assignment ..................................................... 27
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TABLE OF DEFINED TERMS
Page
----
affiliates .................................................................. 25
Agreement ................................................................... 1
Amendment ................................................................... 1
Amendments .................................................................. 5
Applicable Amount ........................................................... 4
beneficial ownership ........................................................ 25
Board ....................................................................... 7
Certificate of Amendment .................................................... 1
Certificates ................................................................ 3
Certificates of Amendment ................................................... 5
Class A Preferred Stock ..................................................... 6
Class B Preferred Stock ..................................................... 6
Closing ..................................................................... 2
Closing Date ................................................................ 2
Common Stock ................................................................ 2
Company ..................................................................... 1
Company SEC Documents ....................................................... 9
Conversion .................................................................. 5
DGCL ........................................................................ 1
Dillon Read ................................................................. 19
Effective Time .............................................................. 2
Exchange Act ................................................................ 8
Exchange Agent .............................................................. 3
Fund ........................................................................ 3
GAAP ........................................................................ 9
Governmental Entity ......................................................... 8
Holdings .................................................................... 1
include ..................................................................... 25
Indemnified Parties ......................................................... 18
Laws ........................................................................ 8
made available .............................................................. 25
Material Adverse Effect ..................................................... 6
New Common Shares ........................................................... 2
Oppenheimer ................................................................. 10
Option Holder ............................................................... 4
Par Value Amendment ......................................................... 5
Par Value Certificate of Amendment .......................................... 5
Par Value Effective Time .................................................... 5
Parent ...................................................................... 1
Person ...................................................................... 6
Pre-Amendment Certificate ................................................... 1
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Pre-Par Value Amendment Certificate ......................................... 5
Preferred Stock ............................................................. 2
Preferred Stock ............................................................. 29
Proxy Statement ............................................................. 16
Reverse Stock Split ......................................................... 2
Schedule 13E-3 .............................................................. 10
Securities Act .............................................................. 9
Special Committee ........................................................... 1
Stock Option ................................................................ 4
Subsidiary .................................................................. 6
Transaction Consideration ................................................... 2
Unaffiliated Holders ........................................................ 3
without limitation .......................................................... 25
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AGREEMENT AND PLAN OF RECAPITALIZATION
AGREEMENT AND PLAN OF RECAPITALIZATION, dated as of September 29, 1997
(the "Agreement") by and among Faulding Inc., a Delaware corporation (the
"Company"), FH Faulding & Co. Limited, a corporation organized under the laws
of the State of South Australia, Commonwealth of Australia ("Parent") and
Faulding Holdings Inc., a wholly owned subsidiary of Parent and a Delaware
corporation ("Holdings").
WHEREAS, the Board of Directors of the Company upon the recommendation
of its special committee of independent directors (the "Special Committee"), and
the Boards of Directors of Parent and Holdings have each approved the Amendments
(as defined in Section 2.1) and this Agreement and the transactions contemplated
thereby and hereby in accordance with the terms, and subject to the conditions,
of the Amendments and this Agreement, and deem it advisable and in the best
interests of their respective stockholders to consummate the transactions
contemplated by the Amendments and this Agreement upon the terms and subject to
the conditions set forth therein and herein and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE RECAPITALIZATION
The actions set forth in this Article I, subject to the conditions set
forth in Article VI hereof, shall be taken or caused to be taken by the Company
as provided in this Article I, and such actions shall be referred to collec-
tively as the "Recapitalization."
Section 1.1 Certificate of Amendment for Recapitalization. At the time
of the Closing (as defined in Section 1.2 hereof), the Company shall effect an
amendment to its Certificate of Incorporation (the "Amendment") by filing with
the Secretary of State of the State of Delaware (the "Secretary of State") a
certificate of amendment substantially in the form attached hereto as Exhibit A
(the "Certificate of Amendment"), in accordance with applicable provisions of
the DGCL and the Company's Certificate of Incorporation as
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theretofore amended and in effect at the time immediately prior to such filing
(the "Pre-Amendment Certificate"). The Recapitalization shall become effective
on the date on which, and at the time at which, the Certificate of Amendment has
been duly filed with the Secretary of State or such time as is agreed upon by
the parties and specified in the Certificate of Amendment, and such time is
hereinafter referred to as the "Effective Time".
Section 1.2 Closing. The closing of the Recapitalization (the
"Closing") will take place at 10.00 a.m., New York time, on a date to be
specified by the parties, which shall be no later than the second business day
after satisfaction or waiver of all of the conditions set forth in Article VI
hereof (the "Closing Date"), at the offices of Parker Duryee Rosoff & Haft, 529
Fifth Avenue, New York, New York 10017, unless another date, time or place is
agreed to in writing by the parties hereto.
Section 1.3 The Amendment. The Amendment shall provide for the
amendment of the Pre-Amendment Certificate substantially as provided in Sections
1.3(a) through 1.3(b) below.
(a) Reverse Stock Split. The Amendment shall provide for a reverse
stock split (the "Reverse Stock Split") of the Company's Common Stock, par value
US$0.01 per share (the "Common Stock"), whereby at the Effective Time each
7,924,385 issued shares of Common Stock shall be combined into one validly
issued share of common stock of the Company, the par value per share of which
shall be the quotient obtained by dividing (i) the product of (a) the total
number of shares of Common Stock issued and outstanding immediately prior to
the Effective Time, multiplied by (b) .01, by (ii) the number of shares of new
common stock of the Company to be issued and outstanding immediately following
the Effective Time ("New Common Shares"). The Amendment will prohibit the
issuance of scrip or fractional New Common Shares, but in lieu thereof each
person who would otherwise be entitled to receive a fractional New Common Share
pursuant to the provisions of the Amendment shall be entitled to receive an
amount in cash equal to the product of (x) the number of shares of Common Stock
held by such person immediately prior to the Effective Time, multiplied by (y)
US$13.50 (the "Transaction Consideration").
(b) Reduction of Authorized Capital Stock. The Amendment shall provide
that the total number of shares of all classes of stock which the Company shall
have authority to issue shall be 1,834,190, consisting of 2 New Common Shares
and 1,834,188 shares of preferred stock (the "Preferred Stock"). After the
Effective Time, the New Common Shares and the Preferred
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Stock shall have the same powers, preferences and rights as the Common Stock and
Preferred Stock, respectively, immediately prior to the Effective Time.
Section 1.4 Payment for Shares.
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company to act as agent for the holders of shares of Common Stock not
beneficially owned by Parent or any of its Subsidiaries (the "Unaffiliated
Holders") in connection with the Reverse Stock Split (the "Exchange Agent") to
receive the funds, as needed, to which the Unaffiliated Holders of Common Stock
shall become entitled pursuant to Section 1.3(a). At the Effective Time, Parent
shall deposit or cause to be deposited, in trust with the Exchange Agent, for
the benefit of the Unaffiliated Holders, the funds necessary to make the
payments contemplated by Section 1.3(a) hereof (the "Fund") as and when
certificates which formerly represented shares of Common Stock (the "Certifi-
cates") are surrendered. Such funds shall be invested by the Exchange Agent as
directed by the Company. All interest earned on such funds shall be paid to the
Company. Any amount remaining in the Fund after six months after the Effective
Time may be refunded to the Company at its option; provided, however, that the
Company shall be liable for any cash payments required to be made thereafter
pursuant to Section 1.3(a) hereof, without any interest thereon. Notwithstanding
the foregoing, the Company shall not be liable to any former holder of Common
Stock for any amount paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Any portion of the Fund remaining unclaimed
by holders of Certificates as of a date which is immediately prior to such time
as such portion would otherwise escheat to or become property of any
governmental entity shall, to the extent permitted by applicable law, become the
property of the Company, free and clear of any claims or interest of any Person
(as defined in Section 3.1 hereof) previously entitled thereto.
(b) At the Effective Time, Parent will instruct the Exchange Agent to
promptly mail to each Unaffiliated Holder of record a form letter of transmittal
and instructions for use in effecting the surrender of such Certificate or
Certificates which, as a result of the Amendment, represents only the right to
receive cash as contemplated by Section 1.3(a) hereof. Such letter of trans-
mittal shall specify that delivery shall be effected, and risk of loss and title
to a Certificate shall pass, only upon delivery of a Certificate to the Exchange
Agent and shall be in such form and have such other provisions as the Company
may reasonably specify. Upon surrender to the Exchange Agent of a Certificate,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions set forth therein, the holder of such
Certificate shall be entitled to receive in exchange therefor the Transaction
Consideration,
3
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to be mailed as soon as practicable following the receipt of any such
Certificate and such letter of transmittal, and such Certificate shall forthwith
be cancelled. No interest will be paid or accrue on the cash payable upon the
surrender of a Certificate. If payment is to be made to a person other than the
person in whose name a surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required by
reason of any payment to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Exchange Agent and the Company that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 1.4, each
Certificate held by an Unaffiliated Holder shall be deemed at any time after the
Effective Time to represent only the right to receive the Transaction
Consideration as contem plated by this Section 1.4.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person (as
defined in Section 3.1) claiming such Certificate to be lost, stolen or
destroyed, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Transaction Consideration deliverable in respect
thereof as determined in accordance with Section 1.3(a) hereof, provided that
the Person to whom the Transaction Consideration is paid shall, as a condition
precedent to the payment thereof, give the Company a bond in such sum as it may
direct or otherwise indemnify the Company in a manner satisfactory to it against
any claim that may be made against the Company with respect to the Certificate
claimed to have been lost, stolen or destroyed.
(d) After the Effective Time, the stock transfer books of the Company
relating to the Common Stock shall be closed and there shall be no transfers on
the stock transfer books of the Company of shares of Common Stock which were
outstanding immediately prior to the Effective Time and which, as a result of
the Amendment, have been converted into the right to receive cash as
contemplated by Section 1.3(a) hereof. If, after the Effective Time, a
Certificate is presented to the Company for transfer, it shall be cancelled and
exchanged for the Transaction Consideration as provided herein.
Section 1.5 Company Stock Options. Except as Parent or Holdings and
the holder of any option ("Option Holder") to purchase Common Stock ("Stock
Option") otherwise agree, the Company shall take all actions necessary to
provide that, upon the Effective Time, (i) each outstanding Stock Option,
whether or not then exercisable or vested, shall become fully exercisable and
vested, (ii) each outstanding Stock Option shall be cancelled and
4
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(iii) in consideration of such cancellation the Company shall pay to each Option
Holder an amount in respect thereof equal to the product of (A) the Applicable
Amount, multiplied by (B) the number of shares subject thereto. The term
"Applicable Amount" shall mean the excess, if any, of the Transaction Consid-
eration over the applicable exercise price of each such Stock Option.
ARTICLE II
THE CLASS B PREFERRED STOCK
Section 2.1 Certificate of Amendment for Change of Par Value of Class
B Preferred Stock. Prior to the Closing, the Company shall effect an amendment
to its Certificate of Incorporation (the "Par Value Amendment", and together
with the Amendment, the "Amendments") so as to change the par value of its Class
B Preferred Stock (as defined in Section 3.2) from US$0.01 per share to
US$0.10433 per share, by filing with the Secretary of State a certificate of
amendment substantially in the form attached hereto as Exhibit B (the "Par Value
Certificate of Amendment", and together with the Certificate of Amendment, the
"Certificates of Amendment"), in accordance with applicable provisions of the
DGCL and the Company's Certificate of Incorporation as theretofore amended and
in effect at the time immediately prior to such filing (the "Pre-Par Value
Amendment Certificate"). The Par Value Amendment shall become effective on the
date on which, and the time at which, the Par Value Certificate of Amendment has
been duly filed with the Secretary of State or such time as is agreed upon by
the parties and specified in the Par Value Certificate of Amendment, and such
time is hereinafter referred to as the "Par Value Effective Time"; provided,
however, that the Par Value Certificate of Amendment shall be filed with the
Secretary of State prior to the Certificate of Amendment, and the Par Value
Effective Time shall be prior to the Effective Time.
Section 2.2 The Conversion. Immediately following the Par Value
Effective Time, but prior to the Effective Time, Holdings shall convert all of
the shares of Class B Preferred Stock that it owns into shares of Common Stock
(the "Conversion") in accordance with the applicable provisions of the Pre-Par
Value Amendment Certificate and the Certificate of Designation, Preferences and
Rights of Class B Preferred Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5
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The Company represents and warrants to Parent and Holdings, as of the
date hereof and as of and at the Closing Date, as follows:
Section 3.1 Organization. Each of the Company and its Subsidiaries
(hereinafter defined) is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware, and has all requisite corporate power
and authority to own, lease, use and operate its properties and to carry on its
business as it is now being conducted. Each of the Company and its Subsidiaries
is qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which it owns real property or in which the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed individually
and in the aggregate would not have or result in a Material Adverse Effect. The
term "Material Adverse Effect" means a material adverse effect on the business,
assets, liabilities, results of operations, financial condition or business
prospects (other than those prospects arising as a result of general economic or
industry conditions) of the Company and its Subsidiaries, taken as a whole. The
term "Subsidiary" means, with respect to any Person, any corporation or other
entity of which 50% or more of the securities or other interests having by their
terms ordinary voting power for the election of directors or others performing
similar functions with respect to such entity is directly owned by such Person
or such Person's Subsidiaries. The term "Person" means any natural person,
firm, individual, partnership, joint venture, business trust, trust,
association, corporation, company, unincorporated entity or Governmental Entity
(as defined in Section 3.4(b)).
Section 3.2 Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (a) 35,000,000 shares of Common Stock,
of which 20,127,188 shares are issued and outstanding and (b) 1,834,188 shares
of Preferred Stock, of which (i) 834,188 shares have been designated as Class A
Preferred Stock, par value US$0.01 per share (the "Class A Preferred Stock"),
none of which are issued and outstanding, and (ii) 150,000 shares have been
designated as Class B Preferred Stock, par value US$0.01 per share (the "Class B
Preferred Stock"), all of which are issued and outstanding. Following the
Conversion but prior to the Effective Time, there shall be 21,692,138 shares of
Common Stock issued and outstanding (subject to increases upon the exercise of
Stock Options) and no shares of Class B Preferred Stock issued and outstanding.
All the outstanding shares of the Company's capital stock are duly authorized,
validly issued, fully paid and nonassessable. There are no existing (i) options,
warrants, calls, preemptive rights, subscriptions or other rights, convertible
securities, agreements or commitments of any character obligating the Company or
any of its Subsidiaries to issue, transfer or sell any shares of capital stock
or other equity interest
6
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in, the Company or any of its Subsidiaries or securities convertible into or ex-
changeable for such shares or equity interests (other than (A) Stock Options to
purchase 875,000 shares of Common Stock (subject to decreases upon the exercise
of any such options), (B) prior to the Conversion, the Class B Preferred Stock,
and (C) the obligation to issue the New Common Shares to Holdings pursuant to
this Agreement), (ii) contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of the
Company or any of its Subsidiaries or (iii) voting trusts or similar agreements
to which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of its Subsidiaries.
Section 3.3 Authorization; Validity of Agreement and Certificate of
Amendment.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and, subject to approval of its stockholders
as contemplated by Section 6.1(b) hereof, to consummate the transactions
contemplated hereby and by the Amendments. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby and by the Amendments have been
duly authorized by the Board of Directors of the Company (the "Board") and,
other than approval and adoption of the Amendments by the holders of the
outstanding shares of Common Stock contemplated by Section 6.1(b) hereof, no
other corporate proceedings on the part of the Company are necessary to
authorize the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and by the Amendments. This Agreement has been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery of this Agreement by Parent and Holdings, is a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforcement may be subject to or limited by (i)
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the effect of general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity). The Certificates of Amendment have been duly and validly
approved, adopted and declared advisable in a resolution of the Board and, when
approved by the holders of Common Stock as contemplated by Section 6.1(b) hereof
and when filed in accordance with Section 103 of the DGCL, shall become
effective in accordance with the DGCL and shall have the effect of amending the
Certificate of Incorporation.
7
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(b) The Board, at a meeting duly called and held and acting on the
unanimous recommendation of the Special Committee, comprised entirely of
non-management, non-affiliated independent directors, has (i) unanimously
determined that each of the Amendments, this Agreement and the Recapital-
ization, including the Reverse Stock Split, are fair to and in the best
interests of the Unaffiliated Holders, and (ii) adopted a resolution setting
forth the terms of the Amendments and approving, adopting and declaring the
advisability of, and recommending the approval by the holders of the Common
Stock of, the Amendments and this Agreement and the transactions contemplated
thereby and hereby, including the Recapitalization, and such resolution is
sufficient to satisfy the provisions of any applicable laws of the State of
Delaware.
Section 3.4 No Violations; Consents and Approvals.
(a) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation by the Company of the transactions
contemplated hereby or by the Amendments will (i) violate any provision of the
certificate of incorporation or by-laws of the Company or its Subsidiaries, (ii)
conflict with, result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or to the
imposition of any lien) under, or result in the acceleration or trigger of any
payment, time of payment, vesting (other than in the case of the employee stock
options as provided in Section 1.5 hereof) or increase in the amount of any
compensation or benefit payable pursuant to, the terms, conditions or provisions
of any note, bond, mortgage, indenture, guarantee or other evidence of
indebtedness, lease, license, contract, agreement, plan or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their assets may be bound or (iii) conflict with or
violate any federal, state, local or foreign order, writ, injunction, judgment,
award, decree, statute, law, rule or regulation (collectively, "Laws")
applicable to the Company, any of its Public Subsidiaries or any of their
properties or assets; except in the case of clauses (ii) or (iii) for such
conflicts, violations, breaches, defaults or liens which individually and in the
aggregate would not have or result in a Material Adverse Effect or materially
impair or delay the consummation of the transactions contemplated hereby or by
the Amendments.
(b) No filing or registration with, declaration or notification to, or
order, authorization, consent or approval of, any federal, state, local or
foreign court, legislative, executive or regulatory authority or agency (a
"Governmental Entity") is required in connection with the execution, delivery
and performance of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby or by the Amendments,
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except (i) applicable requirements under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (ii) the filing of the Certificate of Amendments
with the Secretary of State, and (iii) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings the
failure of which to be obtained or made individually and in the aggregate would
not have or result in a Material Adverse Effect or materially impair or delay
the consummation of the transactions contemplated hereby or by the Amendments.
Section 3.5 SEC Reports and Financial Statements. The Company has
filed with the SEC, all forms and documents required to be filed by it since
June 30, 1994 under the Exchange Act and has heretofore made available to Parent
(i) its Annual Reports on Form 10-K for the years ended June 30, 1995, June 30,
1996 and June 30, 1997, respectively, and (ii) all proxy statements relating to
meetings of stockholders of the Company since January 1, 1994 and (iii) all
other forms, reports and registration statements filed by the Company with the
SEC since January 1, 1994. The documents described in clauses (i)-(iii) above
(whether filed before, on or after the date hereof) are referred to in this
Agreement collectively as the "Company SEC Documents". As of their respective
dates, the Company SEC Documents (a) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and (b) complied in all material
respects with the applicable requirements of the Exchange Act and the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
and the applicable rules and regulations of the SEC thereunder. The consolidated
financial statements included in the Company SEC Documents have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as otherwise disclosed
therein) and present fairly in all material respects the consolidated financial
position and the consolidated results of operations and cash flows of the
Company and its consolidated Subsidiaries as of and at the dates thereof or for
the periods presented therein.
Section 3.6 Absence of Certain Changes. Except as contemplated by
this Agreement or disclosed in the Company SEC Documents, since the fiscal year
ended June 30, 1997, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course and in a manner consistent
with past practices and, since such date, (i) there has not been any material
adverse change in the business, assets, liabilities, results of operations,
financial condition or business prospects (other than those prospects arising as
a result of general economic or industry conditions) of the Company and its
Subsidiaries taken as a whole, and (ii) there has not been any change by the
Company or any of its Subsidiaries in accounting principles or methods.
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Section 3.7 Proxy Statement; Information in Schedule 13E-3.
(a) The Proxy Statement (as defined in Section 5.3(b)) (and any
amendment thereof or supplement thereto), including any information incorpo-
rated therein by reference, at the date mailed to stockholders of the Company
and at the Effective Time, (i) will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading and (ii) will comply as
to form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder; except that no representation is made by the
Company with respect to statements made in the Proxy Statement based on
information supplied by Parent or Holdings relating to Parent or Holdings
specifically for inclusion therein.
(b) The information relating to the Company or the Special Committee,
including its financial and legal advisors, provided by the Company specifically
for use in any Rule 13e-3 Transaction Statement on Schedule 13E-3 to be filed
with the SEC under the Exchange Act in connection with the Recapitalization (the
"Schedule 13E-3") (and any amendment thereto or supplement thereof), including
any information referred to in Section 3.7(a) which is incorporated by reference
therein, at the date filed with the SEC, will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 3.8 Opinion of Financial Advisor. The Special Committee has
received an opinion of Oppenheimer & Co. Inc. ("Oppenheimer") to the effect
that, as of the date hereof, the Transaction Consideration to be received by the
Unaffiliated Holders is fair, from a financial point of view, to such holders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND HOLDINGS
Parent and Holdings jointly and severally represent and warrant to the
Company, as of the date hereof and as of and at the Closing Date, as follows:
Section 4.1 Organization. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of South
10
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Australia, Commonwealth of Australia, and Holdings is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
Section 4.2 Authorization; Validity of Agreement. Each of Parent and
Holdings has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby and by the
Amendments. The execution, delivery and performance by Parent and Holdings of
this Agreement and the consummation by Parent and Holdings of the transactions
contemplated hereby and by the Amendments have been duly authorized by the
respective Boards of Directors of Parent and Holdings and no other corporate
proceedings on the part of Parent or Holdings are necessary to authorize the
execution, delivery and performance of this Agreement by Parent and Holdings
and the consummation by Parent and Holdings of the transactions contemplated
hereby and by the Amendments. This Agreement has been duly executed and
delivered by Parent and Holdings and, assuming due authorization, execution and
delivery of this Agreement by the Company, is a valid and binding obligation of
each of Parent and Holdings, enforceable against each of them in accordance with
its terms, except that such enforcement may be subject to or limited by (i)
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the effect of general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity). As of the date hereof, Holdings is the owner of 14,283,820
shares of Common Stock and 150,000 shares of Class B Preferred Stock, and, other
than as provided for herein, does not own any other interest in any other shares
of the Common Stock or Preferred Stock. Following the Conversion but prior to
the Effective Time, Holdings will be the owner of 15,848,770 shares of Common
Stock and no shares of Class B Preferred Stock.
Section 4.3 Consents and Approvals; No Violations.
(a) Neither the execution, delivery and performance of this Agreement
by Parent and Holdings nor the consummation by Parent and Holdings of the
transactions contemplated hereby or by the Amendments will (i) violate any
provision of the respective certificate of incorporation or by-laws of Parent or
Holdings, (ii) conflict with, result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration or to the
imposition of any lien) under, or result in the acceleration or trigger of any
payment, time of payment, vesting or increase in the amount of any compensation
or benefit payable pursuant to, the terms, conditions or provisions of any
note, bond, mortgage, indenture, guarantee or other evidence of indebtedness,
lease, license, contract, agreement, plan or other instrument or
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obligation to which Parent or Holdings is a party or by which any of them or any
of their assets may be bound, or (iii) conflict with or violate any Laws
applicable to Parent or Holdings or any of their properties or assets; except in
the case of clauses (ii) and (iii) for such conflicts, violations, breaches,
defaults or liens which individually and in the aggregate would not have or
result in a material adverse effect on the financial condition of Parent and
Holdings, taken as a whole, or materially impair or delay the consummation of
the transactions contemplated hereby or by the Amendments.
(b) No filing or registration with, declaration or notification to, or
order, authorization, consent or approval of, any Governmental Entity is re-
quired in connection with the execution, delivery and performance of this
Agreement by Parent or Holdings or the consummation by Parent or Holdings of the
transactions contemplated hereby or by the Amendments, except (i) applicable
requirements under the Exchange Act, (ii) the filing of the Certificates of
Amendment with the Secretary of State and (iii) such other consents, approvals,
orders, authorizations, notifications, registrations, declarations and filings
the failure of which to be obtained or made individually and in the aggregate
would not have a material adverse effect on the financial condition of Parent
and Holdings, taken as a whole, or materially impair or delay the consummation
of the transactions contemplated hereby or by the Amendments.
Section 4.4 Information in Proxy Statement and Schedule 13E-3.
(a) The information relating to Parent and/or Holdings supplied by
Parent or Holdings specifically for inclusion in the Proxy Statement (and any
amendment thereof or supplement thereto), at the date mailed to stockholders of
the Company and at the Effective Time, will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(b) The information relating to Parent and/or Holdings, including its
financial and legal advisors, provided by Parent or Holdings specifically for
inclusion in the Schedule 13E-3 (and any amendment thereto or supplement
thereof), including any information referred to in Section 4.4(a) which is
incorporated by reference therein, at the date filed with the SEC, will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not mis-
leading.
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ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants
and agrees that, between the date of this Agreement and the Effective Time,
except as otherwise expressly contemplated by this Agreement or as agreed to in
writing by Parent, the Company and its Subsidiaries will each conduct its
operations according to its ordinary and usual course of business and consistent
with past practice, and the Company and its Subsidiaries will each use its
reasonable efforts to preserve intact its business organization, to keep
available the services of its officers and employees and to maintain existing
relationships with licensors, licensees, suppliers, contractors, distributors,
customers, lessors and others having business relationships with it. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, neither the Company nor
any of its Subsidiaries will, without the prior written consent of Parent:
(a) amend its Certificate of Incorporation or By-laws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities, except (i) as required by any employee
benefit plan or arrangement as in effect as of the date hereof, (ii) in
connection with the Recapitalization, or (iii) in connection with the
Conversion, or amend any of the terms of any such securities or agreements
outstanding as of the date hereof;
(c) split, combine or reclassify any shares of its capital stock
(except in connection with the Recapitalization and the Par Value Amendment),
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock
(except for its regular quarterly dividend on the Preferred Stock), or redeem or
otherwise acquire any of its securities or any securities of its Subsidiaries;
(d) (i) incur or assume any long-term debt or, except in the ordinary
course of business consistent with past practice under existing lines of credit,
incur or assume any short-term debt (except any trade debt incurred in the
ordinary course of business consistent with past practice); (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except in the
ordinary course of business and except for obligations of wholly owned
Subsidiaries of the Company which, if incurred by the Company, would be
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permitted under clause (i) above; (iii) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned Subsidiaries of the Company);
(e) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance unit, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any director, officer or employee, or (except for normal increases in
the ordinary course of business that are consistent with past practices and
that, in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company) increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights or performance units) or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing;
(f) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or any assets which in the aggregate are material to the
Company and its Subsidiaries taken as a whole or enter into any commitment or
transaction outside the ordinary course of business;
(g) change any of the accounting principles or practices used by it,
except as required by generally accepted accounting principles;
(h) revalue in any material respect 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;
(i) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) enter into any material contract or agreement other than in the
ordinary course of business; (iii) except as previously authorized by the
Company and its Board of Directors, authorize any new capital expenditure or
expenditures; or (iv) enter into or amend any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this Section 5(i);
(j) make any material tax election or settle or compromise any
material income tax liability;
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(k) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in the consolidated financial statements (or the notes thereto)
of the Company and its consolidated Subsidiaries or incurred in the ordinary
course of business and consistent with past practice; or
(l) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1(a) through 5.1(k) or any action which would make any
of the representations or warranties of the Company contained in this Agreement
untrue or incorrect as of the date when made or as of a future date or would
result in any of the conditions set forth in Sections 6.1 or 6.3 not being
satisfied.
Section 5.2 Further Action; Reasonable Efforts.
(a) Upon the terms and subject to the conditions herein provided, and
subject to the fiduciary duties of the Board, each of the parties hereto shall
use its reasonable efforts to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Amendments, including using reasonable
efforts to satisfy the conditions precedent to the obligations of any of the
parties hereto, to obtain all necessary authorizations, consents and approvals,
and to effect all necessary registrations and filings. Each of the parties
hereto shall promptly consult with the other parties with respect to, provide
any necessary information that is not subject to legal privilege with respect
to, and provide the other parties (or their counsel) copies of, all filings made
by such party with any Governmental Entity or any other information supplied by
such party to a Governmental Entity in connection with this Agreement and the
transactions contemplated hereby and by the Amendments. Each of the parties
hereto shall promptly inform the other of any communication from any Govern-
mental Entity regarding any of the transactions contemplated by this Agreement
or by the Amendments. If such party receives a request from any such Govern-
mental Entity with respect to the transactions contemplated by this Agreement or
by the Amendments, then such party will endeavor in good faith to make, or cause
to be made, as soon as reasonably practicable and after consultation with the
other parties, an appropriate response in compliance with such request.
(b) Parent, Holdings and the Company shall use their respective
reasonable efforts to resolve such objections, if any, as may be asserted with
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respect to the transactions contemplated hereby and by the Amendments under the
laws, rules, guidelines or regulations of any Governmental Entity.
Section 5.3 Consents and Approvals; Proxy Statement; Schedule 13E-3.
(a) Parent will (i) vote, or cause to be voted, all of the Shares
owned by it or Holdings in favor of the approval and adoption of the Amendments
and the Recapitalization Agreement and the transactions contemplated thereby and
by this Agreement, including the Recapitalization, and (ii) as promptly as
practicable after the date hereof and upon the request of the Company, provide
the Company with all information concerning Parent or Holdings necessary to be
included in the Proxy Statement.
(b) As promptly as practicable after the date hereof, the Company
shall prepare and file with the SEC, and Parent and Holdings shall cooperate
with the Company in such preparation and filing, a preliminary proxy statement
relating to this Agreement and the Amendments and the transactions contemplated
hereby and thereby, and shall furnish the information required, in the
reasonable judgment of Parent and the Company, to be included in the Proxy
Statement by the Exchange Act and the rules and regulations promulgated
thereunder and, after consultation with Parent, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy statement and
cause a definitive Proxy Statement (the "Proxy Statement") to be mailed to its
stockholders.
(c) The Company, Parent and Holdings shall cooperate with one another
in the preparation and filing of the Schedule 13E-3 and shall use all reasonable
efforts to promptly obtain and furnish the information required, in the
reasonable judgment of Parent and the Company, to be included in the Schedule
13E-3 by the Exchange Act and the rules and regulations promulgated thereunder
and to respond promptly to any comments or requests made by the SEC with respect
to the Schedule 13E-3. Each party hereto shall promptly notify the other parties
of the receipt of comments of, or any requests by, the SEC with respect to the
Schedule 13E-3, and shall promptly supply the other parties with copies of all
correspondence between such party (or its representatives) and the SEC (or its
staff) relating thereto. The Company, Parent and Holdings each shall correct any
information provided by it for use in the Schedule 13E-3 which shall have
become, or is, false or misleading.
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Section 5.4 Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent and Parent shall
give prompt notice to the Company, of (i) the occurrence or nonoccurrence of
any event the occurrence or nonoccurrence of which would cause any
representation or warranty of the Company, or of Parent and Holdings, as the
case may be, contained in this Agreement to be untrue or inaccurate in any
material respect at the Effective Time, and (ii) any material failure of the
Company, or of Parent or Holdings, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder.
(b) If at any time prior to the Effective Time any event or
circumstance relating to the Company or any of its Subsidiaries or affiliates,
or their respective officers or directors, should be discovered by the Company
that is required to be set forth in a supplement to the Proxy Statement, the
Company shall promptly inform Parent and Holdings, and, after consulting with
Parent, so supplement the Proxy Statement (subject to the provisions of Section
5.3(b) hereof) and mail such supplement to its stockholders. If at any time
prior to the Effective Time any event or circumstance relating to Parent or
Holdings or their respective officers or directors, should be discovered by
Parent that is required to be set forth in a supplement to the Proxy Statement,
Parent shall promptly inform the Company; and upon receipt of such information
the Company shall promptly supplement the Proxy Statement and mail such supple-
ment to its stockholders.
Section 5.5 Publicity. Neither the Company, Parent nor any of their
respective affiliates shall issue or cause the publication of any press release
or other announcement with respect to the Recapitalization, this Agreement or
the other transactions contemplated hereby without the prior consultation of the
other party, except as may be required by law or by any listing agreement with a
securities exchange if all reasonable efforts have been made to consult with the
other party.
Section 5.6 Meeting of Shareholders of the Company. The Company shall
as promptly as reasonably practicable take all action necessary in accordance
with Delaware law and its Certification of Incorporation and Bylaws duly to
call, convene and hold a special meeting of the holders of Common Stock for the
purpose of seeking the approval of such holders of the Amendments and the
transactions contemplated thereby and by this Agreement. The Company shall,
subject to the fiduciary obligations of the Company's directors under applicable
law as advised by outside counsel, recommend approval of the Amendments and the
transactions contemplated thereby and by
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this Agreement, including the Recapitalization, use its reasonable efforts to
solicit from holders of the Common Stock proxies in favor of the Amendments and
the transactions contemplated thereby and by this Agreement, and take such other
action as is necessary or advisable to secure the vote of such holders required
by Delaware law and under this Agreement to approve the Amendments and effect
the transactions contemplated thereby and by this Agreement, including the
Recapitalization.
Section 5.7 Directors' and Officers' Insurance and Indemnification.
(a) Parent and Holdings agree that all rights to indemnification
existing in favor of the present or former directors and officers of the Company
or any of its Subsidiaries (collectively, the "Indemnified Parties") as provided
in the Company's Certificate of Incorporation or By-Laws or pursuant to other
agreements, or certificates of incorporation or by-laws or similar documents of
any of the Company's Subsidiaries, as in effect as of the date hereof with
respect to matters occurring prior to the Effective Time, shall survive the
Recapitalization and shall continue in full force and effect for a period of six
years from and after the Effective Time or longer to the extent required in the
Compensation and Indemnification Agreement dated June 16, 1997 between the
Company and certain directors of the Company.
(b) Parent shall maintain the existing officers' and directors'
liability insurance applicable to the Indemnified Parties for a period of not
less than six years after the Effective Time in relation to actions and
omissions occurring prior to the Effective Time; provided, that the Parent may
substitute therefor policies of substantially similar coverage and amounts
containing terms no less favorable to such former directors or officers;
provided, further, that in no event shall Parent be required to pay annual
premiums for insurance under this Section in excess of 250% of that which the
Company spent on directors' and officers' liability insurance policies during
the fiscal year ended June 30, 1997; and provided further, however, that if the
annual premiums for such insurance coverage exceed said amount, Parent shall be
obligated to obtain a policy with the greatest coverage at a cost which is no
greater than 250% of that which the Company spent on directors' and officers'
liability insurance policies during the fiscal year ended June 30, 1997.
(c) With respect to any actions, suits, proceedings or investigations
relating hereto or to the transactions contemplated hereby that are commenced,
whether before or after the Effective Time, the parties hereto agree to
cooperate and use their reasonable efforts vigorously to defend against and
respond thereto.
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(d) In the event that, following the Recapitalization, the Company 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 all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company shall
assume the obligations set forth in this Section 5.7.
Section 5.8 Brokers or Finders. Each of Parent and the Company
represents, as to itself, its Subsidiaries and its affiliates (other than, in
the case of Parent, the Company and its Subsidiaries, and, in the case of the
Company, Parent or any of its affiliates, other than the Company and its
Subsidiaries), that, with the exception of Dillon, Read & Co., Inc. ("Dillon
Read") (in the case of Parent) and Oppenheimer (in the case of the Company), no
agent, broker, investment banker, financial advisor or other firm or person is
or will be entitled to any brokers' or finders' fee or any other commission or
similar fee in connection with any of the transactions contemplated by the
Amendments and this Agreement, and each of Parent and the Company shall
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other fees, commissions or
expenses asserted by any person, other than by Dillon Read (in the case of
Parent) or by Oppenheimer (in the case of the Company), on the basis of any act
or statement alleged to have been made by such party or its affiliates.
Section 5.9 Certificates of Amendment. As soon as practicable
following the date hereof, the Company will cause to be filed the Certificates
of Amendment pursuant to Section 103 of the DGCL; provided, however, that the
Par Value Certificate of Amendment shall be so filed prior to the Certificate of
Amendment.
Section 5.10 Par Value. The Company will take such actions as
reasonably requested by Parent or Holdings, including making any amendments to
the Proxy Statement, the Schedule 13E-3 or any other document relating to the
transactions contemplated by this Agreement and the Amendments, to ensure that
the aggregate par value of the shares of Common Stock immediately prior to the
Effective Time is equal to the aggregate par value of the shares of New Common
Shares immediately following the Effective Time, so long as such actions would
not adversely affect the rights of the Unaffiliated Holders under this
Agreement.
ARTICLE VI
CONDITIONS
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Section 6.1 Conditions to Each Party's Obligation To Effect the
Recapitalization. The respective obligation of each party to effect the
Recapitalization shall be subject to the satisfaction on or prior to the Closing
Date of each of the following conditions (any or all of which may be waived by
the parties hereto in writing, in whole or in part, to the extent permitted by
applicable law):
(a) No statute, rule, regulation, order, decree or injunction shall
have been enacted, entered, promulgated or enforced by a Governmental Entity and
be in effect which prohibits the consummation of the Recapitalization; provided,
however, that the parties hereto shall use their reasonable efforts to have any
such order, decree or injunction terminated;
(b) The Amendment and the Recapitalization Agreement and the
transactions contemplated thereby and hereby (other than the Par Value Amendment
and the transactions contemplated thereby) shall have been approved and adopted
by the affirmative vote of (i) the holders of a majority of the outstanding
shares of Common Stock and (ii) the holders of a majority of the outstanding
shares of Common Stock entitled to vote thereon, other than shares of Common
Stock held by Parent and its affiliates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act); and
(c) At the time of the mailing of the Proxy Statement, Oppenheimer
shall have reaffirmed in writing the fairness opinion previously prepared and
delivered by it to the Special Committee and shall not have withdrawn such
fairness opinion prior to the Effective Time.
Section 6.2 Conditions to the Obligation of the Company to Effect the
Recapitalization. The obligation of the Company to effect the Recapitalization
is further subject to the satisfaction or waiver at or prior to the Closing Date
of the following conditions:
(a) The representations and warranties of Parent and Holdings
contained in this Agreement shall be true and correct at and as of the date
hereof, and true and correct at and as of the Closing Date as if made at and as
of such time, except where the breach or inaccuracy thereof would not,
individually or in the aggregate, have a Material Adverse Effect at and as of
the Effective Time as if made at and as of such time, except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date;
(b) Each of Parent and Holdings shall have performed in all material
respects its respective obligations under this Agreement required to be
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performed by it at or prior to the Closing Date pursuant to the terms hereof;
and
(c) Other than filing the Certificates of Amendment in accordance
with the DGCL, all authorizations, consents and approvals required to be
obtained prior to consummation of the Recapitalization shall have been ob-
tained, except for such authorizations, consents and approvals the failure of
which to be obtained individually or in the aggregate would not result in the
prohibition of the payment of the Transaction Consideration to the Unaffiliated
Holders.
Section 6.3 Conditions to Obligations of Parent and Holdings to Effect
the Recapitalization. The obligations of Parent and Holdings to effect the
Recapitalization are further subject to the satisfaction or waiver at or prior
to the Closing Date of the following conditions:
(a) The representations and warranties of the Company contained in
this Agreement shall be true and correct at and as of the date hereof, and true
and correct at and as of the Closing Date as if made at and as of such time,
except where the breach or inaccuracy thereof would not, individually or in the
aggregate, have a Material Adverse Effect at and as of the Effective Time as if
made at and as of such time, except that those representations and warranties
which address matters only as of a particular date shall remain true and correct
as of such date;
(b) The Company shall have performed in all material respects each of
its obligations under this Agreement required to be performed by it at or prior
to the Closing Date pursuant to the terms hereof;
(c) The Certificate of Amendment shall have been filed with the
Secretary of State in accordance with Section 103 of the DGCL; and
(d) Other than filing the Certificates of Amendment in accordance
with the DGCL, all authorizations, consents and approvals required to be
obtained by the Company prior to consummation of the Recapitalization shall have
been obtained, except for such authorizations, consents and approvals the
failure of which to be obtained individually and in the aggregate would not have
or result in the prohibition of the filing of the Certificate of Amendment.
Section 6.4 Condition to Each Party's Obligation to Effect the Change
in Par Value. The respective obligations of each party to effect the
transactions contemplated by the Par Value Amendment shall be subject to the
satisfaction on or prior to the Closing Date of the condition that the Par Value
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Amendment and the transactions contemplated thereby shall have been approved
and adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock.
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ARTICLE VII
TERMINATION
Section 7.1 Termination. Subject to Section 8.2(c), this Agreement
may be terminated and the Recapitalization may be abandoned at any time prior to
the Effective Time, whether before or after stockholder approval thereof:
(a) By the written mutual consent of Parent, Holdings and the Company.
(b) By either the Company, on the one hand, or Parent and Holdings, on
the other hand, if:
(i) the Recapitalization has not been consummated on or prior to the
date which is 150 days from the date hereof; provided, however, that the
right to terminate this Agreement under this Section 7.1(b)(i) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Recapitalization to occur on or prior to such date;
(ii) the stockholders of the Company required to approve and adopt the
Amendment and the transactions contemplated thereby fail to approve and
adopt the Amendment and the transactions contemplated thereby; provided,
however, that the right to terminate this Agreement under this Section
7.1(b)(ii) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the stockholders of the Company to approve and adopt the
Amendment;
(iii) prior to the consummation of the Recapitalization, any
Governmental Entity shall have issued a statute, order, decree or
regulation or taken any other action, in each case permanently restrain-
ing, enjoining or otherwise prohibiting the Recapitalization and such
statute, order, decree, regulation or other action shall have become final
and non-appealable;
(iv) Oppenheimer shall have withdrawn, modified or amended its
fairness opinion.
(c) By Parent if, prior to the consummation of the Recapitalization,
the Board or the Special Committee shall have withdrawn, or modified or changed
in any manner adverse to Parent or Holdings its approval, adoption or
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declaration of advisability of the Amendment or the transactions contemplated
thereby, including the Recapitalization, or its recommendation that shareholders
of the Company adopt and approve the Amendment and the transactions contemplated
thereby, including the Recapitalization.
Section 7.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given by the terminating party or parties to the other party or
parties specifying the provision hereof pursuant to which such termination is
made, and this Agreement shall forthwith become null and void, and there shall
be no liability on the part of Parent, Holdings or the Company (except as set
forth in this Section 7.2 and Sections 5.5, 5.7(c), 5.8 and 8.1 hereof, each
which shall survive any termination of this Agreement); provided that nothing
herein shall relieve any party from any liability or obligation with respect to
any willful breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. Except as contemplated by this
Agreement, all costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party incurring such expenses.
Section 8.2 Amendment; Waiver; Termination.
(a) Subject to Section 8.2(c), this Agreement may be amended by the
parties hereto at any time before or after approval by the stockholders of the
Company of the Agreement and the transactions contemplated hereby, but after any
such approval no amendment shall be made without the approval of such
stockholders if required by law or if such amendment reduces the Transaction
Consideration or alters or changes any of the other terms or conditions of this
Agreement if such alteration or change would adversely affect the rights of the
Unaffiliated Holders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
(b) Subject to Section 8.2(c), at any time prior to the Effective
Time, the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance with any of the agreements or conditions of the
other parties hereto
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contained herein. Any agreement on the part of any party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. Any such waiver shall constitute a waiver only with
respect to the specific matter described in such writing and shall in no way
impair the rights of the party granting such waiver in any other respect or at
any other time. Neither the waiver by any of the parties hereto of a breach of
or a default under any of the provisions of this Agreement, nor the failure by
any of the parties, on one or more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or privilege hereunder, shall be con-
strued as a waiver of any other breach or default of a similar nature, or as a
waiver of any of such provisions, rights or privileges hereunder. The rights and
remedies herein provided are cumulative and none is exclusive of any other, or
of any rights or remedies that any party may otherwise have at law or in equity.
(c) Notwithstanding any provision of this Agreement to the contrary,
without the approval of the Special Committee, the Company shall not amend,
terminate or waive any right under this Agreement (including any right to
terminate or any actual or potential cause of action).
Section 8.3 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time.
Section 8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery by
a standard overnight carrier or when delivered by hand, (c) the expiration of
ten business days after the day when mailed by certified or registered air mail,
postage prepaid, or (d) delivery in person, addressed at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to the Company, to:
Faulding Inc.
200 Elmora Avenue
Elizabeth, New Jersey 07207
U.S.A.
Telephone: (908) 527-9100
Facsimile: (908) 355-7048
Attention: Richard F. Moldin, President
and Chief Executive Officer and
the Special Committee of the
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Board of Directors
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telephone: (212) 819-8200
Facsimile: (212) 354-8113
Attention: William F. Wynne, Jr., Esq.
(b) if to the Parent or Holdings, to:
F.H. Faulding & Co. Limited
115 Sherriff Street
Underdale, South Australia 5032
Australia
Telephone: (618) 8205-6500
Facsimile: (618) 8234-8230
Attention: Josephine M. Dundon,
Vice President, Corporate Services
with a copy to:
Skadden, Arps, Slate, Meagher & Flom (International)
Level 26, Colonial Centre
52 Martin Place
Sydney, N.S.W. 2000
Australia
Telephone: (612) 9224-6000
Facsimile: (612) 9224-6044
Attention: Ronald C. Barusch, Esq.
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Section 8.5 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The phrase "made available" when used in this Agreement shall mean
that the information referred to has been made available to the party to whom
such information is to be made available. The word "affiliates" when used in
this Agreement shall have the meaning ascribed to it in Rule 12b-2 under the
Exchange Act. The phrase "beneficial ownership" and words of similar import when
used in this Agreement shall have the meaning ascribed to it in Rule 13d-3 under
the Exchange Act.
Section 8.6 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall be considered one and the same agreement.
Section 8.8 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein): (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) except as provided in Section 5.7
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
Section 8.9 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, unenforceable or against its regulatory
policy, 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.
Section 8.10 Governing Law. This Agreement shall be governed,
construed and enforced in accordance with the laws of the State of Delaware
without giving effect to the principles of conflicts of law thereof.
Section 8.11 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties; provided, however, Parent or Holdings
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may assign this Agreement to any Subsidiary of Parent or Holdings. No such
assignment shall relieve either Parent or Holdings of its obligations under this
Agreement. Subject to the first sentence of this Section 8.11, this Agreement
will be binding upon, inure to the benefit of and be enforceable by, the parties
hereto and their respective successors and assigns.
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IN WITNESS WHEREOF, Parent, Holdings and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
FAULDING INC.
By:
------------------------------------
Name:
Title:
FH FAULDING & CO. LIMITED
By:
------------------------------------
Name:
Title:
FAULDING HOLDINGS INC.
By:
------------------------------------
Name:
Title:
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LIST OF EXHIBITS
A. The Certificate of Amendment
B. The Par Value Certificate of Amendment
<PAGE>
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EXHIBIT A
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
FAULDING INC.
-----------------------------------
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
-----------------------------------
FAULDING, INC., a Delaware corporation (the "Corporation"), does
hereby certify as follows:
FIRST: that this Amendment shall provide for a reverse stock split
(the "Reverse Stock Split") of the Corporation's common stock, par value $0.01
per share (the "Old Common Stock"), whereby each 7,924,385 issued shares of Old
Common Stock shall be combined into one validly issued share of new common
stock, the par value per share of which shall be the quotient obtained by
dividing (i) the product of (a) the total number of shares of Old Common Stock
issued and outstanding immediately prior to the Effective Time, multiplied by
(b) .01, by (ii) the number of shares of new common stock to be issued and
outstanding immediately following the Reverse Stock Split (the "Common Stock").
No scrip or fractional shares of the Common Stock will be issued, but in lieu
thereof each person who would otherwise be entitled to receive a fractional
share of Common Stock shall be entitled to receive an amount in cash equal to
the product of (x) the number of shares of Old Common Stock held by such person
immediately prior to the time this Amendment becomes effective (the "Effective
Time"), multiplied by (y) $13.50.
SECOND: that this Amendment shall further provide that the total
number of shares of all classes of stock which the Company shall have authority
to issue shall be 1,834,190, consisting of (i) 2 shares of Common Stock and (ii)
1,834,188 shares of preferred stock (the "Preferred Stock), which shall be com-
prised of (a) 834,188 shares of Class A Preferred Stock, par value $0.01 per
share (the "Class A Preferred Stock"), and (b) 1,000,000 shares of additional
Preferred Stock (the "Additional Preferred Stock"), of which 150,000 shares
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shall be designated as Class B Preferred Stock, par value $0.10433 per share
(the "Class B Preferred Stock"). After the Effective Time, the Common Stock and
the Preferred Stock shall have the same powers, preferences and rights as the
Common Stock and Preferred Stock, respectively, immediately prior to the
Effective Time.
THIRD: that the first paragraph of Article FOURTH of the Corporation's
Certificate of Incorporation, as amended, is hereby amended so that it shall
read as follows:
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1,834,190, which shall consist of (i)
2 shares, par value $____ per share,* designated as Common Stock (the
"Common Stock"), and (ii) 1,834,188 shares designated as Preferred
Stock (the "Preferred Stock"), which shall be comprised of (a) 834,188
shares of Class A Preferred Stock, par value $0.01 per share (the
"Class A Preferred Stock"), and (b) 1,000,000 shares of additional
Preferred Stock (the "Additional Preferred Stock"), of which 150,000
shares shall be designated as Class B Preferred Stock, par value
$0.10433 per share (the "Class B Preferred Stock"). All
cross-references in each Part of this Article FOURTH refer to other
Sections in such Article unless otherwise indicated.
THIRD: that this Amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
- ---------------
* The par value of each such share shall be the quotient obtained by dividing
(i) the product of (a) the total number of shares of Old Common Stock
issued and outstanding immediately prior to the Effective Time, multiplied
by (b) .01, by (ii) the number of shares of Common Stock to be issued and
outstanding as a result of the Reverse Stock Split
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IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment of Certificate of Incorporation on the __ day of September, 1997, and
affirms that the statements contained herein are true under the penalty of
perjury.
FAULDING INC.
By:
----------------------------------
Richard F. Moldin, President
and Chief Executive Officer
ATTEST
By:
---------------------------------
Andrew M. Berdon, Secretary
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EXHIBIT B
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
FAULDING INC.
-----------------------------------
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
-----------------------------------
FAULDING, INC., a Delaware corporation (the "Corporation"), does
hereby certify as follows:
FIRST: that this Amendment shall provide for a change of the par value
of the Corporation's Class B Preferred Stock, par value $0.01 per share, from
$0.01 per share to $0.10433 per share.
SECOND: that the first paragraph of Article FOURTH of the
Corporation's Certificate of Incorporation, as amended, is hereby amended so
that it shall read as follows:
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 36,834,188, which shall consist of
(i) 35,000,000 shares, par value $0.01 per share, designated as Common
Stock (the "Common Stock"), and (ii) 1,834,188 shares designated as
Preferred Stock (the "Preferred Stock"), which shall be comprised of
(a) 834,188 shares of Class A Preferred Stock, par value $0.01 per
share (the "Class A Preferred Stock"), and (b) 1,000,000 shares of
Additional Preferred Stock (the "Additional Preferred Stock"), of
which 150,000 shares shall be designated as Class B Preferred Stock,
par value $0.10433 per share (the "Class B Preferred Stock"). All
cross-references in each Part of this Article FOURTH refer to other
Sections in such Article unless otherwise indicated.
THIRD: that this Amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment of Certificate of Incorporation on the __ day of September, 1997, and
affirms that the statements contained herein are true under the penalty of
perjury.
FAULDING INC.
By:
--------------------------------
Richard F. Moldin, President
and Chief Executive Officer
ATTEST
By:
-----------------------------------
Andrew M. Berdon, Secretary
<PAGE>
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EXHIBIT D
29 September 1997
AGREEMENT REACHED FOR F H FAULDING & CO LIMITED TO
ACQUIRE MINORITY INTERESTS IN FAULDING INC
Adelaide, South Australia and Elizabeth, New Jersey -- 29 September 1997 -
Faulding Inc (NASDAQ:FAUL) and F H Faulding & Co Limited (ASX:FHF) announced
today an agreement pursuant to which F H Faulding will acquire all of the
outstanding shares of Faulding Inc's common stock that it does not already own
for a cash price of US$13.50 per share.
F H Faulding currently owns approximately 71% of the outstanding common stock of
Faulding Inc. The purchase of the remaining 29% will cost approximately US$79
million. The company will also incur transaction costs and all outstanding
options held by Faulding Inc employees will be paid out at an after tax cost of
approximately US$3.5m.
The transaction will be structured as a reverse stock split which will result in
Faulding Inc's stockholders (other than F H Faulding) receiving cash for all of
their shares.
In approving the agreement, the Board of Directors of Faulding Inc acted upon
the unanimous recommendation of a Special Committee of its independent directors
that the transaction at US$13.50 per share, is fair to and in the best interests
of the minority stockholders of Faulding Inc. Oppenheimer & Co., Inc. has
rendered an opinion to the Special Committee and the Board that the
consideration to be received by the stockholders of Faulding Inc. (other than F
H Faulding) is fair from a financial point of view.
On 3 June 1997, F H Faulding made a proposal to Faulding Inc to acquire all of
the shares of Faulding Inc's common stock that it did not already own at a price
of US$12 per share. Faulding Inc thereafter established the Special Committee to
consider the proposal. The Special Committee was assisted in its evaluation of
the proposal and its negotiations with F H Faulding by independent financial and
legal advisers.
The transaction is subject to the approval of Faulding Inc's minority
stockholders. A special meeting of stockholders is expected to be scheduled for
15 December 1997 to consider and vote upon the transaction.
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Faulding Inc and F H Faulding also announced an agreement in principle to settle
four purported class actions which had been commenced in the Delaware Chancery
Court challenging the transaction. The actions were all filed in June and named
Faulding Inc, its directors and F H Faulding as defendants. In accordance with
the terms of the settlement, it has been agreed that all of the claims will be
dismissed. The settlement is subject to confirmation by the Chancery Court.
Details of the equity issue to partially fund the acquisition will be announced
separately.
For further information please contact:
Dr Ed Tweddell
Group Managing Director/Chief Executive Officer
F H Faulding & Co Limited
Telephone: +61 8 8205 6500
Mr Peter Maloney
Chief Financial Officer
F H Faulding & Co Limited
Telephone: +61 8 8205 6500
2
