<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
CORVITA CORPORATION
(Name of Subject Company)
HPG ACQUISITION CORP.
PFIZER INC.
---------------
(Bidders)
COMMON STOCK, $.001 PAR VALUE
(Title of Class of Securities)
221010 10 1
------------------------
(CUSIP Number)
PAUL S. MILLER, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
PFIZER INC.
235 EAST 42ND STREET
NEW YORK, NEW YORK 10017-5755
(212) 573-2323
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
Copies to:
DENNIS J. BLOCK, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
------------------------
APRIL 17, 1996
(Date of Event which Requires Filing of this Statement)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION VALUATION** FILING FEE
<S> <C>
$86,166,461 $ 17,250
</TABLE>
** Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of 7,106,149 shares of common stock, $.001 par
value (the "Shares"), and a maximum of 1,300,335 Shares issuable upon the
exercise of options and warrants, at a price per Share of $10.25 in cash.
Such number of Shares represents all the Shares outstanding as of April 4,
1996 and assumes the exercise of all existing options and warrants to
acquire Shares from the Company.
/ / Check box if any part of this fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: None Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
Page 1 of __ Pages
(Exhibit Index is located on Page __)
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<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 is filed by HPG Acquisition
Corp. ("Purchaser"), a Florida corporation, and Pfizer Inc. ("Parent"), a
Delaware corporation and the direct owner of all of the outstanding capital
stock of Purchaser, relating to the offer by Purchaser to purchase all
outstanding shares of common stock, $.001 par value (the "Shares"), of Corvita
Corporation (the "Company"), at $10.25 per Share, net to the seller in cash, on
the terms and subject to the conditions set forth in the Offer to Purchase,
dated April 17, 1996 (the "Offer to Purchase"), and in the related Letter of
Transmittal and any amendments or supplements thereto, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively (which collectively
constitute the "Offer").
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D with respect to the acquisition by Parent and Purchaser of
beneficial ownership of the Selling Shareholders' Shares. The item numbers and
responses thereto below are in accordance with the requirements of Schedule
14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Corvita Corporation, a Florida
corporation (the "Company"). The address of the Company's principal executive
offices is 8210 N.W. 27th Street, Miami, Florida 33122.
(b) The information set forth on the cover page and under "Introduction" in
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by Purchaser and Parent. The information set forth
on the cover page, under "Introduction," in Section 9 and in Schedule I of the
Offer to Purchase is incorporated herein by reference.
ITEM 3. PAST CONTRACTS, TRANSACTIONS, OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) The information set forth in Section 11 of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth under "Introduction" and in Sections 9, 11 and
12 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth in Section 12 of the Offer to Purchase is
incorporated herein by reference.
(f)-(g) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) The information set forth under "Introduction" and in Sections 9, 11
and 12 of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth under "Introduction" and in Sections 9, 11, 12 and
13 of the Offer to Purchase is incorporated herein by reference.
Page __ of __ Pages
<PAGE>
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth under "Introduction" and in Section 16 of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS TO CERTAIN BIDDERS
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth under "Introduction" and in Sections 11 and 12
of the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated April 17, 1996
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(a)(7) Form of Summary Advertisement, dated April 17, 1996
(c)(1) Agreement and Plan of Merger, dated as of April 11, 1996, among Parent,
Purchaser, and the Company
(c)(2) Shareholders Agreement, dated as of April 11, 1996, among Parent,
Purchaser, and the Selling Shareholders
(c)(3) Promissory Note, dated April 11, 1996, from the Company to Parent
(c)(4) Letter Agreement, dated April 11, 1996, from Parent to the Company
relating to the loan to the Company
(c)(5) License Agreement, dated April 11, 1996, between Parent and the Company
(c)(6) Joint Press Release, dated April 11, 1996, by Parent and the Company
(c)(7) Confidentiality and Standstill Agreement, dated August 16, 1995, between
Dillon, Read & Co. Inc., on behalf of the Company, and Parent
</TABLE>
Page __ of __ Pages
<PAGE>
<TABLE>
<S> <C>
(d) None
(e) Not applicable
(f) None
</TABLE>
Page __ of __ Pages
<PAGE>
SCHEDULE 14D-1
CUSIP No. 221010 10 1
<TABLE>
<C> <S>
1 NAME OF REPORTING PERSONS
HPG Acquisition Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Applied For
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(E) OR
2(F) / /
N/A
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Florida
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,487,291*
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES / /
N/A
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
21%*
10 TYPE OF REPORTING PERSON
CO
</TABLE>
* On April 11, 1996, Pfizer Inc., a Delaware corporation ("Parent"), and HPG
Acquisition Corp., a Florida corporation and a direct wholly-owned subsidiary
of Parent ("Purchaser"), entered into a Shareholders Agreement (the
"Shareholders Agreement") with certain shareholders of Corvita Corporation
(collectively, the "Selling Shareholders"), pursuant to which the Selling
Shareholders have agreed to validly tender (and not to withdraw) pursuant to
and in accordance with the terms of the Offer all of the Shares owned by them.
The Selling Shareholders own 1,487,291 Shares, representing approximately 21%
of the Company's outstanding common stock (or approximately 18% of the
outstanding Shares on a fully diluted basis). Pursuant to the Shareholders
Agreement, the Selling Shareholders. The Shareholders Agreement is described
more fully in Section 12 of the Offer to Purchase, dated April 17, 1996.
Page __ of __ Pages
<PAGE>
SCHEDULE 14D-1
CUSIP No. 221010 10 1
<TABLE>
<C> <S>
1 NAME OF REPORTING PERSONS
Pfizer Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
13-5315170
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(E) OR
2(F) / /
N/A
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,487,291*
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES / /
N/A
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
21%*
10 TYPE OF REPORTING PERSON
CO
</TABLE>
* The footnote on page 2 is incorporated by reference herein.
Page __ of __ Pages
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: April 17, 1996
PFIZER INC.
By: /s/ Paul S. Miller
Name: Paul S. Miller
Title: Executive Vice President
General Counsel
HPG ACQUISITION CORP.
By: /s/ George A. Stewart_____________
Name: George A. Stewart
Title: President
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------------ ---------
<S> <C> <C>
(a)(1) Offer to Purchase, dated April 17, 1996.........................................................
(a)(2) Letter of Transmittal...........................................................................
(a)(3) Notice of Guaranteed Delivery...................................................................
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees................
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.......................................................................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9...........
(a)(7) Form of Summary Advertisement, dated April 17, 1996.............................................
(c)(1) Agreement and Plan of Merger, dated as of April 11, 1996, among Parent, Purchaser and the
Company........................................................................................
(c)(2) Shareholders Agreement, dated as of April 11, 1996, among Parent, Purchaser and the Selling
Shareholders...................................................................................
(c)(3) Promissory Note, dated April 11, 1996, from the Company to Parent
(c)(4) Letter Agreement, dated April 11, 1996, from Parent to the Company relating to the loan to the
Company
(c)(5) License Agreement, dated April 11, 1996, between Parent and the Company
(c)(6) Joint Press Release, dated April 11, 1996, by Parent and the Company
(c)(7) Confidentiality and Standstill Agreement, dated August 16, 1995, between Dillon, Read & Co.
Inc., on behalf of the Company, and Parent
(d) None............................................................................................
(e) Not Applicable..................................................................................
(f) None............................................................................................
</TABLE>
Page __ of __ Pages
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
INTRODUCTION.................................................................................................... 1
1. Terms of the Offer................................................................................... 2
2. Acceptance for Payment and Payment for Shares........................................................ 4
3. Procedure for Tendering Shares....................................................................... 5
4. Withdrawal Rights.................................................................................... 7
5. Certain Federal Income Tax Consequences of the Offer and the Merger.................................. 9
6. Price Range of the Shares; Dividends on the Shares................................................... 9
7. Effect of the Offer on the Market for the Shares, Stock Quotation and Exchange Act Registration and
Margin Securities................................................................................... 10
8. Certain Information Concerning the Company........................................................... 11
9. Certain Information Concerning Purchaser and Parent.................................................. 13
10. Source and Amount of Funds........................................................................... 14
11. Background of the Offer.............................................................................. 15
12. Purpose of the Offer and the Merger; Plans for the Company; the Merger Agreement; the Shareholders
Agreement........................................................................................... 17
13. Dividends and Distributions.......................................................................... 30
14. Certain Conditions of the Offer...................................................................... 31
15. Certain Legal Matters................................................................................ 33
16. Fees and Expenses.................................................................................... 34
17. Miscellaneous........................................................................................ 34
</TABLE>
i
<PAGE>
To the Holders of Common Stock of
Corvita Corporation:
INTRODUCTION
HPG Acquisition Corp., a Florida corporation ("Purchaser"), hereby offers to
purchase all the outstanding shares of common stock, $.001 par value per share
(the "Shares"), of Corvita Corporation, a Florida corporation (the "Company"),
at a purchase price of $10.25 per Share (such amount, or any greater amount per
share paid pursuant to the Offer (as defined below), being hereinafter referred
to as the "Offer Price"), net to the seller in cash, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer"). Purchaser is a direct
wholly-owned subsidiary of Pfizer Inc., a Delaware corporation ("Parent").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of April 11, 1996 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the commencement
of the Offer by Purchaser and further provides that, after the purchase of
Shares pursuant to the Offer and subject to the satisfaction or waiver of
certain conditions set forth therein, Purchaser will be merged with and into the
Company (the "Merger"), with the Company surviving the Merger as a direct
wholly-owned subsidiary of Parent (the "Surviving Corporation"). In the Merger,
each outstanding Share (excluding Shares owned, directly or indirectly, by the
Company or any subsidiary of the Company or by Parent, Purchaser or any other
subsidiary of Parent and Shares owned by shareholders who shall have properly
exercised their appraisal rights under Florida law) will be converted at the
effective time of the Merger (the "Effective Time") into the right to receive
the Offer Price in cash, without interest (the "Merger Consideration"), less any
required withholding taxes.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS
OF THE COMPANY (THE "SHAREHOLDERS"), HAS APPROVED THE MERGER AGREEMENT, THE
SHAREHOLDERS AGREEMENT (AS DEFINED BELOW), AND THE OFFER AND THE MERGER IN ALL
RESPECTS AND RECOMMENDS THAT THE SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT THERETO.
DILLON, READ & CO., INC., THE COMPANY'S FINANCIAL ADVISOR ("DILLON READ"),
HAS DELIVERED TO THE BOARD ITS WRITTEN OPINION THAT THE OFFER PRICE TO BE
RECEIVED BY THE SHAREHOLDERS PURSUANT TO THE OFFER AND THE MERGER IS FAIR, FROM
A FINANCIAL POINT OF VIEW, TO SUCH SHAREHOLDERS. A COPY OF THE WRITTEN OPINION
OF DILLON READ IS CONTAINED IN THE COMPANY'S SOLICITATION/RECOMMENDATION
STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9") FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") IN CONNECTION WITH THE OFFER, A COPY OF
WHICH IS BEING FURNISHED TO SHAREHOLDERS CONCURRENTLY WITH THIS OFFER TO
PURCHASE.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION 1
HEREOF) THAT NUMBER OF SHARES (THE "MINIMUM NUMBER OF SHARES") REPRESENTING A
MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF
PURCHASE (THE "MINIMUM TENDER CONDITION"). THE OFFER ALSO IS SUBJECT TO CERTAIN
OTHER CONDITIONS. SEE SECTIONS 1 AND 14 HEREOF.
The Company has represented and warranted to Purchaser in the Merger
Agreement that, at the close of business on April 4, 1996, 7,106,149 Shares were
issued and outstanding, 808,636 Shares were reserved for issuance pursuant to
outstanding stock options granted by the Company to key employees and directors
(the "Company Stock Options") and 491,699 Shares were reserved for issuance
pursuant to certain outstanding warrants to purchase Shares issued by the
Company (the "Company Warrants").
As an inducement and a condition to entering into the Merger Agreement,
Parent required certain Shareholders (the "Selling Shareholders"), and the
Selling Shareholders agreed, to enter into a Shareholders Agreement, dated as of
April 11, 1996 (the "Shareholders Agreement"). Pursuant to
1
<PAGE>
the Shareholders Agreement, the Selling Shareholders have agreed to validly
tender (and not to withdraw) pursuant to and in accordance with the terms of the
Offer an aggregate of 1,487,291 Shares, representing approximately 21% of the
outstanding Shares (or approximately 18% of the outstanding Shares calculated on
a fully diluted basis) that are owned by them (the "Option Shares"). The tender
of the Option Shares by the Selling Shareholders will not itself be sufficient
to satisfy the Minimum Tender Condition. See Section 12 hereof.
The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, the approval of the Merger by the
requisite vote or consent of the Shareholders. Under the Florida Business
Corporation Act (the "FBCA"), the Shareholder vote necessary to approve the
Merger will be the affirmative vote of the holders of at least a majority of the
outstanding Shares, including Shares held by Purchaser and its affiliates. If
the Minimum Tender Condition is satisfied and Purchaser purchases at least a
majority of the outstanding Shares on a fully diluted basis in the Offer,
Purchaser will be able to effect the Merger without the affirmative vote of any
other Shareholder. If Purchaser acquires at least 80% of the outstanding Shares
pursuant to the Offer or otherwise, Purchaser will be able to effect the Merger
pursuant to the "short-form" merger provisions of Section 607.1104 of the FBCA,
without prior notice to, or any action by, any other Shareholder. In that event,
Purchaser has agreed to effect the Merger as promptly as practicable following
the purchase of Shares in the Offer. See Section 12 hereof.
The Merger Agreement and the Shareholders Agreement are more fully described
in Section 12 below. Certain federal income tax consequences of the sale of
Shares pursuant to the Offer and the exchange of Shares for the Merger
Consideration pursuant to the Merger are described in Section 5 below.
Tendering Shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer or
Merger. Purchaser will pay all charges and expenses of Lazard Freres & Co. LLC
("Lazard Freres"), as the Dealer Manager (the "Dealer Manager"), The Chase
Manhattan Bank (National Association), as the depositary (the "Depositary"), and
Morrow & Co., Inc., as the information agent (the "Information Agent"), in
connection with the Offer. See Section 16 hereof.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment (and thereby purchase) all Shares
that are validly tendered and not withdrawn in accordance with Section 4 below
prior to the Expiration Date. As used in the Offer, the term "Expiration Date"
means 12:00 midnight, New York City time, on Tuesday, May 14, 1996, unless and
until Purchaser, in accordance with the terms of the Offer and the Merger
Agreement, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" means the latest time and date
at which the Offer, as so extended, expires. As used in this Offer to Purchase,
"business day" has the meaning set forth in Rule 14d-1(c)(6) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
In the event that the Offer is not consummated, Purchaser may seek to
acquire Shares through open market purchases, privately negotiated transactions
or otherwise, upon such terms and conditions and at such prices as it shall
determine, which may be more or less than the Offer Price and could be for cash
or other consideration. See Section 12 hereof.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Tender Condition. The Offer also is subject to certain other conditions
set forth in Section 14 below. Pursuant to the terms of the Merger Agreement,
Purchaser expressly reserves the right (but will not be obligated) to waive any
or all of the conditions of the Offer. Subject to the terms of the Merger
Agreement, if by the Expiration Date any or all of the conditions of the Offer
are not satisfied or waived, but, in the reasonable belief of Parent, may be
satisfied prior to August 9, 1996, Purchaser will extend the Expiration Date for
an additional period or periods until the earlier of (i) the date all such
conditions are met or waived and Purchaser becomes obligated to accept for
payment and pay for shares tendered
2
<PAGE>
pursuant to the Offer or (ii) the date the Merger Agreement is terminated in
accordance with its terms. In addition, Purchaser may, without the consent of
the Company, extend the Offer on one occasion, following the time that all of
the conditions to the Offer have been satisfied as of the scheduled expiration
date for the Offer for a period not to exceed 10 business days, if the number of
Shares tendered, when added to any Shares owned by Parent or Purchaser or any
other wholly-owned subsidiary of Parent, is less than 80% of the Shares
outstanding on the scheduled expiration date of the Offer. Notwithstanding
anything to the contrary contained in the Merger Agreement, Purchaser may
without the consent of the Company, extend the Offer so as to comply with
applicable rules and regulations of the Commission. Any individual extension of
the Offer will be for a period of no more than 10 business days.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right, subject to applicable law, to extend the period of time during which
the Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. There can be
no assurance that Purchaser will exercise any right to extend the Offer.
Purchaser also expressly reserves the right, subject to applicable law
(including applicable rules and regulations of the Commission) and the terms of
the Merger Agreement, at any time or from time to time, to (i) delay acceptance
for payment of, or payment for, any Shares, regardless of whether the Shares
were theretofore accepted for payment, or to terminate the Offer and not accept
for payment or pay for any Shares not theretofore accepted for payment or paid
for, upon the occurrence of any of the conditions specified in Section 14 below
by giving oral or written notice of such delay in payment or termination to the
Depositary, and (ii) waive any conditions or otherwise amend the Offer in any
respect, by giving oral or written notice to the Depositary. Any extension,
delay in payment, termination or amendment will be followed as promptly as
practical by public announcement, the announcement in the case of an extension
to be issued no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date. Without limiting the manner
in which Purchaser may choose to make any public announcement, Purchaser will
have no obligation to publish, advertise or otherwise communicate any such
announcement, other than by issuing a release to the Dow Jones News Service or
as otherwise required by law. The reservation by Purchaser of the right to delay
acceptance for payment of or payment for Shares is subject to the provisions of
Rule 14e-1(c) under the Exchange Act, which requires that Purchaser pay the
consideration offered or return the Shares deposited by or on behalf of
Shareholders promptly after the termination or withdrawal of the Offer.
Pursuant to the Merger Agreement, Purchaser expressly reserves the right to
increase the price per Share payable in the Offer or to make any other changes
in the terms and conditions of the Offer, except without the written consent of
the Company, Purchaser shall not (i) reduce the number of Shares sought to be
purchased pursuant to the Offer, (ii) reduce the price per Share payable in the
Offer, (iii) change the form of consideration to be paid in the Offer, (iv)
impose additional conditions to the Offer or amend any other term of the Offer
in any manner adverse to the holders of Shares or (v) amend or waive
satisfaction of the Minimum Tender Condition. Assuming the prior satisfaction or
waiver of the conditions to the Offer, Purchaser will accept for payment, and
pay for, in accordance with the terms of the Offer, all Shares validly tendered
and not properly withdrawn pursuant to the Offer promptly after the Expiration
Date.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. If Purchaser
decides to increase or, subject to the consent of the Company, to decrease the
consideration in the Offer, to make a change in the percentage of Shares sought
or, subject to the consent of the Company, to change or waive the Minimum Tender
Condition and, if, at the time that notice of any such change or waiver is
3
<PAGE>
first published, sent or given to Shareholders, the Offer is scheduled to expire
at any time earlier than the tenth business day after (and including) the date
of that notice, the Offer will be extended at least until the expiration of that
period of ten business days.
The Company has provided Purchaser with its shareholder list and security
position listings for the purpose of disseminating the Offer to Shareholders.
This Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company' shareholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Merger Agreement and the
Offer (including, if the Offer is extended or amended, the terms and conditions
of any such extension or amendment), Purchaser will accept for payment and will
pay for all Shares that are validly tendered on or prior to the Expiration Date,
and not properly withdrawn in accordance with Section 4 below, promptly after
the Expiration Date. All questions as to the satisfaction of such terms and
conditions will be determined by Purchaser in its sole discretion, which
determination will be final and binding. Subject to the applicable rules of the
Commission, Purchaser expressly reserves the right to delay acceptance for
payment of or payment for Shares in order to comply, in whole or in part, with
any other applicable law or government regulation. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to a
bidder's obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer). See Section 15 below.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing (or a timely Book-Entry Confirmation (as defined in Section 3 below)
with respect to) such Shares, (ii) a Letter of Transmittal (or a manually signed
facsimile), properly completed and duly executed with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below), and (iii) any other documents required by the Letter of
Transmittal. See Section 3 below.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility (as defined in Section 3 below) to, and received by, the
Depositary and forming part of a Book-Entry Confirmation, which states that (i)
such Book-Entry Transfer Facility has received an express acknowledgment from
the participant in such Book-Entry Transfer Facility tendering Shares which are
the subject of such Book-Entry Confirmation, (ii) such participant has received
and agrees to be bound by the terms of the Letter of Transmittal, and (iii)
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares properly tendered to Purchaser and not
withdrawn, if and when Purchaser gives oral or written notice to the Depositary
of Purchaser's acceptance of such Shares. In all cases, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering Shareholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering Shareholders.
If, for any reason, acceptance for payment of any Shares tendered pursuant
to the Offer is delayed, or Purchaser is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to Purchaser's rights
under the Offer (but subject to 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such
Shares may not be withdrawn, except to the extent that the tendering
Shareholders are entitled to exercise, and duly exercise, withdrawal rights as
described in Section 4 below. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE PURCHASE PRICE OF THE SHARES TO BE PAID BY PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
4
<PAGE>
If any tendered Shares are not purchased pursuant to the Offer for any
reason or if certificates are submitted for more Shares than are tendered,
certificates for Shares not purchased or tendered will be returned pursuant to
the instructions of the tendering Shareholder without expense to the tendering
Shareholder (or, in the case of Shares delivered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3 below, the Shares will be credited to an
account maintained at the appropriate Book-Entry Transfer Facility) as promptly
as practicable following the expiration or termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay the increased
consideration for all Shares purchased pursuant to the Offer, whether or not
such Shares were tendered prior to the increase in consideration.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to Parent, or to one or more direct or indirect wholly-owned
subsidiaries of Parent, the right to purchase Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
Shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
VALID TENDERS. For a Shareholder validly to tender pursuant to the Offer,
either (i) a Letter of Transmittal (or a manually signed facsimile), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, must be received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date and either (a) certificates evidencing Shares must be received by the
Depositary at any such address prior to the Expiration Date or (b) the Shares
must be delivered pursuant to the procedures for book-entry transfer set forth
below and a Book-Entry Confirmation must be received by the Depositary prior to
the Expiration Date; or (ii) the tendering Shareholder must comply with the
guaranteed delivery procedures set forth below. No alternative, conditional or
contingent tenders will be accepted.
BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect to
the Shares at The Depository Trust Company, the Midwest Securities Trust Company
and the Philadelphia Depository Trust Company (each, a "Book-Entry Transfer
Facility" and, collectively, the "Book-Entry Transfer Facilities") for purposes
of the Offer within two business days after the date of this Offer to Purchase.
Any financial institution that is a participant in any of the Book-Entry
Transfer Facilities' systems may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer Shares into the Depositary's account at
the Book-Entry Transfer Facility in accordance with that Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or a manually signed
facsimile), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message, and any other required documents, must, in
any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering Shareholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at a Book-Entry Transfer Facility as
described above is referred to as a "Book-Entry Confirmation". DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL
AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
SHAREHOLDER. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section,
5
<PAGE>
includes any participant in any of the Book-Entry Transfer Facilities' systems
whose name appears on a security position listing as the owner of the Shares) of
Shares tendered therewith and such registered holder has not completed either
the box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal; or (ii) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loans associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 1 of the Letter of Transmittal. If the certificates
representing Shares are registered in the name of a person other than the signer
of the Letter of Transmittal or if payment is to be made or certificates for
Shares not tendered or not accepted for payment are to be returned to a person
other than the registered holder of the certificates surrendered, then the
tendered certificates representing Shares must be endorsed or accompanied by
appropriate stock powers, in each case signed exactly as the name or names of
the registered holder or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed as described above and as
provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of
Transmittal.
GUARANTEED DELIVERY. If a Shareholder desires to tender Shares pursuant to
the Offer and such Shareholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such Shareholder's tender, may be
effected if all the following conditions are met:
(i)
such tender is made by or through an Eligible Institution;
(ii)
a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser, is received by the
Depositary (as provided below) prior to the Expiration Date; and
(iii)
the certificates for all tendered Shares in proper form for transfer
(or a Book-Entry Confirmation with respect to all such tendered
Shares) together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile) with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other documents are received by the Depositary within three trading
days after the date of execution of the Notice of Guaranteed Delivery. A
"trading day" is any day on which NASDAQ operated by the National
Association of Securities Dealers, Inc. (the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED, UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE) IS RECEIVED BY THE DEPOSITARY.
Notwithstanding any other provision of this Offer to Purchase, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, a Letter of Transmittal
(or a manually signed facsimile), properly completed and duly executed, with any
required signature guarantees and any other documents required by the Letter of
Transmittal (or in the case of a book-entry transfer, an Agent's Message).
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of Purchaser's counsel,
be unlawful. Purchaser also reserves the absolute right to waive
6
<PAGE>
any defect or irregularity in any tender of any Shares of any particular
Shareholder whether or not similar defects or irregularities are waived in the
case of other Shareholders. Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and its
instructions) will be final and binding on all parties. No tender of Shares will
be deemed to have been validly made, until all defects and irregularities have
been cured or waived. None of Purchaser, Parent, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent backup federal income tax
withholding of 31% of the payments made to Shareholders with respect to the
purchase price of Shares purchased pursuant to the Offer or the Merger, a
Shareholder must provide the Depositary with his or her correct taxpayer
identification number and certify that he or she is not subject to backup
federal income tax withholding by completing the substitute Form W-9 included in
the Letter of Transmittal. See Instruction 10 of the Letter of Transmittal. See
Section 5 below.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering Shareholder's acceptance of the terms and conditions of
the Offer, as well as the tendering Shareholder's representation and warranty to
Purchaser that (i) the Shareholder has a net long position in the Shares being
tendered, within the meaning of Rule 14e-4 under the Exchange Act, and (ii) the
tender of Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a
person, directly or indirectly, to tender Shares for his own account, unless, at
the time of tender, the person so tendering (i) has a net long position equal to
or greater than the amount of (a) Shares tendered or (b) other securities
immediately convertible into or exchangeable or exercisable for Shares tendered
and that person will acquire the Shares for tender by conversion, exchange or
exercise and (ii) will cause Shares to be delivered in accordance with the terms
of the Offer. Rule 14e-4 provides a similar restriction applicable to the tender
or guarantee of a tender on behalf of another person. Purchaser's acceptance for
payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the tendering Shareholder and Purchaser upon the terms and
conditions of the Offer.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal, a tendering
Shareholder irrevocably appoints designees of Purchaser as his attorneys-in-fact
and proxies, with full power of substitution, in the manner set forth in the
Letter of Transmittal, to the full extent of the Shareholder's rights with
respect to Shares tendered by the Shareholder and purchased by Purchaser and
with respect to any and all other Shares or other securities issued or issuable
in respect of those Shares, on or after the date of the Offer. All such powers
of attorney and proxies will be considered coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such purchased Shares for payment. Upon acceptance for
payment, all prior powers of attorney and proxies given by the Shareholder with
respect to the Shares (and any other Shares or other securities so issued in
respect of such purchased Shares) will be revoked, without further action, and
no subsequent powers of attorney and proxies may be given (and, if given, will
not be deemed effective) by the Shareholder. The designees of Purchaser will be
empowered to exercise all voting and other rights of the Shareholder with
respect to such Shares (and any other Shares or securities so issued in respect
of such purchased Shares) as they in their sole discretion may deem proper,
including, without limitation, in respect of any annual or special meeting of
the Shareholders, or any adjournment or postponement of any such meeting, or in
connection with any action by written consent in lieu of any such meeting or
otherwise (including any such meeting or action by written consent to approve
the Merger). Purchaser reserves the absolute right to require that, in order for
Shares to be validly tendered, immediately upon Purchaser's acceptance for
payment of the Shares, Purchaser must be able to exercise full voting and other
rights with respect to the Shares, including voting at any meeting of
Shareholders then scheduled.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by
Purchaser pursuant to the Offer, may also be withdrawn at any time after June
15,
7
<PAGE>
1996. If Purchaser extends the Offer, is delayed in its purchase of or payment
for Shares or is unable to purchase or pay for Shares for any reason then,
without prejudice to the rights of Purchaser, tendered Shares may be retained by
the Depositary on behalf of Purchaser and may not be withdrawn, except to the
extent that tendering Shareholders are entitled to withdrawal rights as set
forth in this Section 4. The reservation by Purchaser of the right to delay the
acceptance or purchase of or payment for Shares is subject to the provisions of
Rule 14e-1(c) under the Exchange Act, which requires Purchaser to pay the
consideration offered or return the Shares deposited by or on behalf of
Shareholders promptly after the termination or withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the persons who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered the Shares.
If certificates evidencing Shares have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such certificates, the
tendering Shareholder must also submit to the Depositary the serial numbers
shown on the particular certificates evidencing the Shares to be withdrawn, and
the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution (except in the case of Shares tendered for the account of an
Eligible Institution). If Shares have been tendered pursuant to the procedure
for book-entry transfer set forth in Section 3 above, the notice of withdrawal
must also specify the name and number of the account at the applicable
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding on all parties. No withdrawal of
Shares will be deemed to have been properly made until all defects and
irregularities have been cured or waived. None of Parent, Purchaser, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failing to give such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 above.
8
<PAGE>
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted into the right to receive the Merger
Consideration in the Merger (including any cash amounts received by dissenting
Shareholders pursuant to the exercise of appraisal rights). This discussion is
based upon the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the applicable Treasury Regulations promulgated and proposed
thereunder, judicial authority and administrative rulings and practice.
Legislative, judicial or administrative changes or interpretations are subject
to change, possibly on a retroactive basis, at any time and therefore could
alter or modify the statements and conclusions set forth below. It is assumed
that the Shares are held as "capital assets" within the meaning of Section 1221
of the Code (I.E., property held for investment). This discussion does not
address all aspects of federal income taxation that may be relevant to a
particular Shareholder in light of such Shareholder's personal investment
circumstances, or those Shareholders subject to special treatment under the
federal income tax laws (for example, life insurance companies, tax-exempt
organizations, foreign corporations and nonresident alien individuals) or to
Shareholders who acquired their Shares through the exercise of employee stock
options or other compensation arrangements. In addition, the discussion does not
address any aspect of foreign, state, local or estate and gift taxation that may
be applicable to a Shareholder.
CONSEQUENCES OF THE OFFER AND THE MERGER TO SHAREHOLDERS. The receipt of
the Offer Price and the Merger Consideration (including any cash amounts
received by dissenting Shareholders pursuant to the exercise of appraisal
rights) will be a taxable transaction for federal income tax purposes (and also
may be a taxable transaction under applicable state, local and other income tax
laws). In general, for federal income tax purposes, a Shareholder will recognize
gain or loss equal to the difference between his or her adjusted tax basis in
the Shares sold pursuant to the Offer or converted to cash in the Merger and the
amount of cash received therefor. Gain or loss must be determined separately for
each block of Shares (I.E., Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer or converted to cash in the Merger. Such
gain or loss will be capital gain or loss and will be long-term gain or loss,
if, on the date of sale (or, if applicable, the date of the Merger), the Shares
were held for more than one year.
BACKUP TAX WITHHOLDING. Under the Code, a Shareholder may be subject, under
certain circumstances, to "backup withholding" at a 31% rate with respect to
payments made in connection with the Offer or the Merger. Backup withholding
generally applies if the Shareholder (i) fails to furnish his or her social
security number or other taxpayer identification number ("TIN"), (ii) furnishes
an incorrect TIN, (iii) fails properly to report interest or dividends or (iv)
under certain circumstances, fails to provide a certified statement, signed
under penalties of perjury, that the TIN provided is his or her correct number
and that he or she is not subject to backup withholding. Backup withholding is
not an additional tax but merely an advance payment, which may be refunded to
the extent it results in an overpayment of tax. Certain persons generally are
exempt from backup withholding, including corporations and financial
institutions. Certain penalties apply for failure to furnish correct information
and for failure to include the reportable payments in income. Each Shareholder
should consult with his or her own tax advisor as to his or her qualifications
for exemption from withholding and the procedure for obtaining such exemption.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OFFER
AND THE MERGER TO THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
According to the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995 (the "Company's 10-K"), the principal trading market for the
Shares is The NASDAQ Small-Cap
9
<PAGE>
Market, where, prior to March 21, 1996, the trading symbol was CVTA. Effective
March 21, 1996, the Company's listing has been made conditional pending
implementation of its plan to satisfy minimum capital and surplus requirements
of NASDAQ. The conditional listing status is indicated by an additional fifth
letter "C" appended to the Company's trading symbol. Accordingly, since March
21, 1996, the trading symbol for the Company's Shares is CVTAC. The following
table sets forth, for each fiscal quarter from October 24, 1994, the date of the
Company's initial public offering, the high and low sale prices per Share
reported on The NASDAQ Small-Cap Market.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1995:
Second Quarter (from October 24, 1994)........................................................... 5 1/4 3 1/4
Third Quarter.................................................................................... 6 3 3/4
Fourth Quarter................................................................................... 5 1/4 3 7/8
1996:
First Quarter.................................................................................... 7 3/4 4 3/4
Second Quarter................................................................................... 10 1/2 6 3/4
Third Quarter.................................................................................... 10 3/4 7 3/4
Fourth Quarter (through April 16)................................................................ 10 1/8 8 3/4
</TABLE>
On April 10, 1996, the last full trading day before the public announcement
by Parent and the Company of the execution of the Merger Agreement and
Purchaser's intention to commence the Offer, the last reported sale price on The
NASDAQ Small-Cap Market was $8 7/8 per Share. On April 16, 1996, the last full
trading day before the commencement of the Offer, the last reported sale price
on The NASDAQ Small-Cap Market was $10 1/16 per Share. SHAREHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
According to published financial sources, the Company has not paid any
dividends on the Shares for the periods presented above.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK QUOTATION AND
EXCHANGE ACT REGISTRATION AND MARGIN SECURITIES
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of Shares, which could adversely affect the liquidity and market value of the
remaining Shares held by Shareholders other than Purchaser. Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for, or
marketability of, the Shares or whether such reduction would cause future market
prices to be greater or less than the Offer Price.
The extent of the public market for the Shares and, according to the
published guidelines of the NASD, the availability of quotations for the Shares
through The NASDAQ Small-Cap Market, after commencement of the Offer, will
depend upon the number of holders of Shares remaining at such time, the interest
in maintaining a market in such Shares on the part of securities firms, the
possible termination of registration of such Shares under the Exchange Act, as
described below, and other factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
the registration of the Shares under the Exchange Act would substantially reduce
the information required to be furnished by the Company to holders of Shares and
to the Commission and would make certain of the provisions of the Exchange Act
no longer applicable to the Company. Such provisions include the short-swing
profit recovery provisions of Section 16(b), the requirement of furnishing a
proxy statement pursuant to Section 14(a) in connection with a shareholder's
meeting and the related requirement of providing an annual report to
shareholders and the requirements of
10
<PAGE>
Rule 13e-3 under the Exchange Act with respect to "going private" transactions.
Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 as promulgated under the Securities Act of 1933,
as amended (the "Securities Act"). If registration of Shares under the Exchange
Act were terminated, Shares would no longer be "margin securities" or eligible
for listing or NASDAQ reporting. Purchaser intends to seek to cause the Company
to terminate registration of the Shares under the Exchange Act as soon after
consummation of the Offer as the requirements for termination of registration of
Shares are met.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares. Depending upon factors similar to those
described above regarding listing and market quotations, the Shares might no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Florida corporation with its principal executive offices
located at 8210 N.W. 27th Street, Miami, Florida 33122. According to the
Company's 10-K, the Company designs, develops, manufactures and markets
artificial arteries, also known as endoluminal grafts (combinations of stents
and grafts) and synthetic vascular grafts, which reline, replace, repair or
bypass occluded, damaged, dilated or severely diseased arteries. Currently, the
Company markets its products primarily in Europe and Latin America. Commercial
sales of the grafts cannot begin in the United States until the U.S. Food and
Drug Administration has granted the Company regulatory approval for such sales.
11
<PAGE>
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries, excerpted from the Company's 10-K
and the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1995. More comprehensive financial information is included in such
reports and other documents filed by the Company with the Commission, and the
following summary is qualified in its entirety by reference to such reports and
other documents and all the financial information (including any related notes)
contained therein. Such reports and other documents are available for inspection
and copies are obtainable in the manner set forth below under "Available
Information".
SELECTED CONSOLIDATED FINANCIAL DATA
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
-------------------------------
1995 1994 1993
SIX MONTHS --------- --------- ---------
ENDED
DECEMBER 31,
1995
------------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................................................... $ 401 $ 1,207 $ 1,034 $ 442
Cost of sales and manufacturing overhead....................... 1,100 2,005 1,680 1,096
Selling, general and administrative expenses................... 1,558 2,399 2,098 1,484
Total operating expenses....................................... 5,712 5,519 5,103 4,487
Interest income (expense), net................................. 49 169 52 130
Total other income (expense)................................... 245 223 (435) 250
Net loss....................................................... (6,166) (6,094) (6,184) (4,891)
Net loss per common share...................................... (0.87) (1.19) -- --
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30,
--------------------
1995 1994
AT DECEMBER --------- ---------
31, 1995
------------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets....................................................... $ 2,572 $ 6,503 $ 2,397
Total assets............................................................... 4,368 8,162 4,149
Total current liabilities.................................................. 3,720 1,456 3,095
Long-term notes payable -- Net of current portion.......................... 834 785 917
Total stockholders' equity (deficit)....................................... (186) 5,921 (18,968)
</TABLE>
- ------------------------
Information relating to the Company's net loss per common share was not
disclosed for the fiscal years ended June 30, 1993 and June 30, 1994.
AVAILABLE INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance with the Exchange Act, the
Company files periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters. The
Company is required to disclose in such proxy statements certain information, as
of particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of those persons in transactions
with the Company. Such reports, proxy statements and other information may be
inspected at the Commission's office at 450 Fifth Street, N.W., Washington, D.C.
20549, and also are available for inspection and copying at the regional offices
of the Commission located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies may be obtained upon payment of the
Commission's prescribed fees by writing to its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material can also be obtained at the
office of The National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006-1506.
12
<PAGE>
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained in this Offer to Purchase has been taken from
or based upon publicly available documents on file with the Commission and other
publicly available information. Although Purchaser and Parent do not have any
knowledge that any such information is untrue, neither Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, a Florida corporation, was organized to acquire all the
outstanding Shares pursuant to the Offer and the Merger and has not conducted
any unrelated activities since its organization. All the outstanding capital
stock of Purchaser is owned directly by Parent. The principal executive offices
of Purchaser are located at 235 East 42nd St., New York, New York 10017-5755.
Parent, a Delaware corporation, is an innovative, research-based global
health care company. Parent discovers, develops, manufactures and sells
technology-intensive products in three business segments: Health Care, which
includes a broad range of prescription pharmaceuticals, orthopedic implants,
medical devices and surgical equipment; Animal Health, which includes animal
health products and feed supplements; and Consumer Health Care, which includes a
variety of nonprescription drugs and personal care products. The principal
executive offices of Parent are located at 235 East 42nd St., New York, NY
10017-5755. The shares of Parent are publicly held and listed on the New York
Stock Exchange.
The name, business address, present principal occupation or employment, five
year employment history and citizenship of each director and executive officer
of Purchaser and Parent are set forth in Schedule I.
Set forth below is certain selected consolidated financial data with respect
to Parent and its subsidiaries excerpted from Parent's Annual Report on Form
10-K for the year ended December 31, 1995 as filed by Parent with the
Commission. More comprehensive financial information is included in such report
and other documents filed by the Parent with the Commission. The following
summary is qualified in its entirety by reference to such report and other
documents and all financial information (including any related notes) contained
therein. Such report and other documents are available for inspection and copies
are obtainable in the manner set forth in Section 8 above with respect to
information about the Company in Section 8.
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................................................................ $ 10,021.4 $ 7,977.3 $ 7,161.8
Cost of sales............................................................ 2,164.1 1,722.2 1,559.0
Selling, informational and administrative expenses....................... 3,854.7 3,184.1 3,005.7
Research and development expenses........................................ 1,442.4 1,126.1 961.3
Income from continuing operations before provision for taxes on income
and minority interests.................................................. 2,299.2 1,830.5 835.3
Net income............................................................... 1,572.9 1,298.4 657.5
Net income per common share.............................................. 2.50 2.09 1.03
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Total current assets................................................................. $ 6,152.4 $ 5,788.4
Total assets......................................................................... 12,729.3 11,098.5
Total current liabilities............................................................ 5,187.2 4,825.9
Total liabilities.................................................................... 7,222.7 6,774.6
Total shareholders' equity........................................................... 5,506.6 4,323.9
</TABLE>
Except as described in this Offer to Purchase, (i) none of Parent, Purchaser
or, to the best knowledge of Purchaser and Parent, any of the persons listed in
Schedule I or any associate or majority-owned subsidiary of any such person,
beneficially owns or has a right to acquire any equity security of the Company
and (ii) none of Parent, Purchaser, or, to the best knowledge of Parent and
Purchaser, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days.
Except as described in this Offer to Purchase, (i) none of Parent,
Purchaser, or, to the best knowledge of Parent and Purchaser, any of the persons
listed in Schedule I has any contract, arrangement, understanding or
relationship (whether or not legally enforceable) with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies and (ii) there have been no contacts, negotiations or
transactions between Parent and Purchaser or any of their respective
subsidiaries or, to the best knowledge of Parent and Purchaser or any of the
persons listed in Schedule I, on the one hand, and the Company or any of its
directors, officers or affiliates, on the other hand, that are required to be
disclosed pursuant to the rules and regulations of the Commission.
Except as described in this Offer to Purchase, during the last five years,
none of Purchaser, Parent or, to the best knowledge of Purchaser and Parent, any
of the persons listed in Schedule I (i) has been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) or (ii) was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, Federal or state securities laws or finding any violation of such
laws.
10. SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon any financing arrangements. Purchaser
estimates that the total amount of funds required to consummate the Offer and
the Merger, to pay related fees and
14
<PAGE>
expenses and to pay outstanding indebtedness of the Company which may become due
as a result of the Offer and the Merger is approximately $85 million. Purchaser
expects to obtain these funds in the form of capital contributions and/or loans
from Parent. Parent expects to fund the capital contributions and/or loans
provided to Purchaser from existing available working capital.
11. BACKGROUND OF THE OFFER
Since 1993, Parent and the Company have from time to time engaged in
discussions and have conducted studies together regarding the applicability of
the Company's proprietary biomaterials for use in Parent's medical device
products. In addition, Howmedica, Inc., a wholly-owned subsidiary of Parent, has
from time to time purchased the Company's biomaterials for evaluation.
In early 1993, the Company and Parent engaged in discussions and conducted
feasibility studies regarding the possibile joint development of medical device
products. On June 29, 1993, a representative of Parent raised the possibility of
Parent's acquiring an equity interest in the Company in exchange for rights to
the Company's proprietary technology. Following the June 29, 1993 meeting,
representatives of the Company and Parent further discussed the possibility of
an equity investment in the Company by Parent in several telephone calls. These
discussions were terminated in 1993.
In May of 1995, a representative of Parent contacted a shareholder of the
Company regarding the possible acquisition by Parent of an equity interest in
the Company. Parent's representative was told that the Company was considering a
number of strategic alternatives, including a possible sale of the Company and
that Parent should express its possible interest to Mr. Howard Wachtler, a
director of the Company.
In June of 1995, a representative of Parent and Mr. Wachtler discussed
Parent's possible interest in exploring an acquisition by Parent of the Company.
In mid July of 1995, Parent was contacted by representatives of Dillon Read,
financial advisor to the Company, to further explore a possible acquisition of
the Company. On July 18, 1995, Dillon Read delivered to Parent an information
packet describing the Company.
On August 16, 1995, Parent and the Company entered into a confidentiality
and standstill agreement for the purpose of receiving non-public information
with respect to the Company. Parent subsequently received certain non-public
information concerning the Company and began its due diligence review of the
Company. Subsequent due diligence meetings were held during the Fall of 1995,
including interviews with certain of the Company's technical personnel.
On October 4, 1995, a representative of Dillon Read and a representative of
Parent had a telephone conversation in which the parties explored each others'
positions with respect to a possible price for a transaction.
In mid October of 1995, a representative of Dillon Read indicated to a
representative of Lazard Freres, financial advisor to Parent, that the Company's
Board of Directors would like to receive from Parent for its consideration at a
meeting of the Company's Board of Directors a written expression of interest in
acquiring the Company. Parent subsequently delivered a letter to the Company
indicating that Parent would consider acquiring all of the outstanding common
stock of the Company for approximately $10 per Share provided that the Company
negotiate exclusively with Parent.
On October 17, 1995, a representative of Dillon Read indicated to a
representative of Lazard Freres in a telephone call that the Company's Board of
Directors had determined in their meeting held that day to continue discussions
with Parent but on a non-exclusive basis. The Lazard Freres representative asked
whether there was an acquisition price at which the Company would negotiate
exclusively with Parent. In a subsequent telephone call later that day, a
representative of Dillon Read indicated to the Lazard Freres representative that
the Company would be prepared to negotiate exclusively with Parent if Parent
were prepared to offer $12 per Share.
15
<PAGE>
On October 18, 1995, Parent sent to Dillon Read a non-binding letter
indicating Parent's interest in entering into discussions on a non-exclusive
basis to acquire all of the outstanding common stock of the Company for
approximately $10 per Share, subject to, among other things, approval by
Parent's Board of Directors and negotiation of a mutually satisfactory merger
agreement containing customary conditions.
Parent continued its due diligence review throughout the Fall of 1995. Based
on its due diligence, Parent's representatives indicated to the Company that it
was a condition to Parent's willingness to enter into an agreement to acquire
the Company that a license agreement between the Company and a Japanese licensee
be terminated.
In early December of 1995, Parent's legal counsel furnished the Company's
legal counsel with a draft of each of the merger agreement and the shareholders
agreement.
During December of 1995, representatives of Parent, Lazard Freres, and Weil,
Gotshal & Manges LLP, Parent's legal counsel, met with representatives of the
Company, Dillon Read and Epstein, Becker & Green P.C., the Company's legal
counsel, to negotiate the terms of a definitive merger agreement. Parent
indicated to the Company that it was a condition to Parent's willingness to
enter into an agreement to acquire the Company that the Company enter into
certain license arrangements relating to the Company's patent rights in Belgium,
and the Company acquire all of the shares of its Canadian subsidiary not then
owned by the Company.
In early December of 1995, Mr. Wachtler and a representative of Dillon Read
met with Mr. P. Nigel Gray, President of Parent's Hospital Products Group, and a
representative of Lazard Freres to discuss the status of the negotiations
including the range of prices at which Parent might make an acquisition offer.
During this meeting, the Company's representatives indicated that the Company
was interested in receiving $11 per Share. Parent's representatives indicated
that Parent was considering an offer of approximately $10 per Share but would
consider increasing the aggregate consideration by up to $4 million less the
cost to the Company of satisfying certain conditions to be met prior to
executing a merger agreement.
On January 18, 1996, the Company issued a press release in which it
announced that it was involved in discussions for its acquisition at a price in
the range of approximately $10 per Share.
In late January and February 1996, representatives of Parent and the Company
met to discuss the Company's supply agreements and the possibility of the
Company finding potential third party manufacturers of the Company's
polycarbonate urethane material.
During this same period, Parent's financial advisor continued to hold
discussions with the Company's financial advisor regarding, among other things,
the merger consideration. In a telephone conversation in February 1996, Parent's
and the Company's respective financial advisors discussed the transaction.
Parent's financial advisor indicated that, assuming the parties were able to
resolve open points and the conditions established by Parent were satisfied, and
subject to Parent receiving current information with respect to the Company's
cash balances and payables, Parent would likely consider an offer in the range
of $10.25 to $10.50 per Share.
In March and early April, Parent and the Company continued negotiations
which culminated in the Company and Parent agreeing upon a form of definitive
merger agreement and certain shareholders and Parent agreeing upon a form of
definitive Shareholders Agreement. During this period, the representatives of
the Company and Parent also discussed the Company's need to obtain financing in
order to continue operations in the ordinary course of business.
On March 28, 1996, Parent's Board of Directors approved the Merger Agreement
and the transactions contemplated therein subject to the satisfactory
negotiation of the remaining open points.
16
<PAGE>
On Thursday, April 4, 1996, a representative of Lazard Freres telephoned a
representative of Dillon Read to indicate that Parent was prepared to pay $10.25
per Share. The Merger Agreement was then presented to and approved by the
Company's Board of Directors at a meeting held on Friday, April 5, 1996.
From April 5 through to April 11, representatives of each of the Company and
Parent and their respective legal counsel negotiated the terms of a loan
agreement in an amount of $2,000,000 from Parent to the Company (the "Loan
Agreement"). In connection with the Loan Agreement, the Company and Parent also
negotiated the terms of a non-exclusive license (the "Non-Exclusive License") to
Parent with respect to the Company's proprietary intellectual property.
On the morning of April 11, 1996, the Merger Agreement, the Shareholders
Agreement, the Loan Agreement and the Non-Exclusive License were executed, and
the transaction was publicly announced.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; THE SHAREHOLDERS AGREEMENT
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer and the Merger is to enable Purchaser to acquire,
in one or more transactions, control of the Company and the entire equity
interest in the Company. The Offer is intended to increase the likelihood that
the Merger will be completed promptly. Pursuant to the terms of the Merger
Agreement, if the Offer is successful, each Share not purchased pursuant to the
Offer excluding Shares owned, directly or indirectly, by the Company or any
subsidiary of the Company and Shares owned by shareholders who shall have
properly exercised their appraised rights under Florida law, will be converted
into the right to receive an amount equal to the price per share paid by
Purchaser pursuant to the Offer, less any required withholding of taxes.
PLANS FOR THE COMPANY
Parent intends to utilize the Company's proprietary technology to complement
its development of new stent products. Additionally, Parent intends, from time
to time after completion of the Offer, to evaluate and review the Company's
operations and consider what, if any, changes would be desirable in light of
circumstances that then exist.
Except as noted in this Offer to Purchase, Purchaser and Parent have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation or sale or transfer
of a material amount of assets, involving the Company or any subsidiary or any
other material changes in the Company's capitalization, dividend policy,
corporate structure, business or composition of its management or Board.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, which is incorporated by reference and a copy of which
has been filed with the Commission as an exhibit to the Schedule 14D-1. The
Merger Agreement may be examined, and copies obtained, as set forth in Section 8
above.
THE OFFER. The Merger Agreement provides for the commencement of the Offer.
Purchaser has expressly reserved the right to increase the price per Share
payable in the Offer or to make any other changes in the terms and conditions of
the Offer, except without the prior written consent of the Company, Purchaser
has agreed that it will not (i) reduce the number of Shares sought to be
purchased pursuant to the Offer, (ii) reduce the price per Share payable in the
Offer, (iii) change the form of consideration to be paid in the Offer, (iv)
impose additional conditions to the Offer or amend any other term of the Offer
in any manner adverse to the holders of Shares or (v) amend or waive
satisfaction of the Minimum Tender Condition. Parent and Purchaser have agreed
that Purchaser will not terminate or withdraw the Offer or extend the Expiration
Date unless at the Expiration Date the
17
<PAGE>
conditions to the Offer shall not have been satisfied or earlier waived;
provided that notwithstanding the foregoing, Purchaser may, without the consent
of the Company, extend the Offer on one occasion following the time that all of
the conditions to the Offer have been satisfied as of the scheduled expiration
date for a period not to exceed ten business days, if the number of Shares
tendered, together with any Shares beneficially owned by Parent or Purchaser or
any other wholly-owned subsidiary of Parent, is less than 80% of the Shares
outstanding on the Expiration Date; provided, further, that if Purchaser elects
to extend the Offer as set forth above, the obligation of Purchaser, and of
Parent to cause Purchaser to, accept for payment, purchase and pay for all of
the Shares tendered pursuant to the Offer and not withdrawn will be subject only
to the Minimum Tender Condition and the conditions set forth in Sections 3(A),
3(B) and 3(F) of Annex A to the Merger Agreement.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
purchase pursuant to the Offer by Parent or Purchaser of such number of Shares
which represents a majority of all outstanding Shares on a fully diluted basis,
(i) Parent shall be entitled to designate the number of directors, rounded up to
the next whole number, on the Board that equals the product of (x) the total
number of directors on the Board (giving effect to the election of any
additional directors pursuant to the Merger Agreement) and (y) the percentage
(expressed as a decimal) that the number of Shares beneficially owned by Parent
bears to the total number of Shares outstanding, and (ii) the Company will,
subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, take all action necessary to cause Parent's designees to
be elected or appointed to the Board, including, without limitation, increasing
the number of directors or seeking and accepting resignations of incumbent
directors. Notwithstanding the foregoing, until the Effective Time the Company
will be entitled to retain as members of its Board at least two directors who
are directors of the Company on the date of Merger Agreement, subject to their
availability and willingness to serve. From and after the time, if any, that
Parent's designees constitute a majority of the Board pursuant to the Merger
Agreement (the "Control Date") and prior to the Effective Time, any amendment of
the Merger Agreement, any termination of the Merger Agreement by the Company,
any extension of time for the performance or waiver of the obligations of Parent
or Purchaser, any waiver of any condition to the obligations of the Company or
any of the Company's rights or other action under the Merger Agreement will
require the concurrence of, and shall be effective only if approved by a
majority of the directors of the Company then in office who are not affiliates
of Parent and were not designated by Parent (the "Company Designees"), which
action shall be deemed to constitute the action of the full Board even if such
majority of the Company Designees does not constitute a majority of all
directors then in office; provided that if there shall be no Company Designees,
such actions may be effected by majority vote of the entire Board except that no
such action shall amend the terms of the Merger Agreement in a manner adverse to
the Shareholders of the Company.
CONSIDERATION TO BE PAID IN THE MERGER. The Merger Agreement provides that,
upon the terms and subject to the conditions set forth in the Merger Agreement
and in accordance with the FBCA, Purchaser will be merged with and into the
Company at the Effective Time. At the Effective Time, by virtue of the Merger,
each Share issued and outstanding immediately prior to the Effective Time
(excluding Shares owned, directly or indirectly, by the Company or any of its
subsidiaries or by Parent, Purchaser or any other subsidiary of Parent and
Dissenting Shares (as defined in the Merger Agreement)) will be converted into
the right to receive the Merger Consideration, without interest thereon, upon
surrender of the certificate formerly representing such Share, less any required
withholding of taxes. Each share of common stock, par value $.001 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time will be
converted into one issued and outstanding share of common stock, par value $.001
per share, of the Surviving Corporation (as defined in the Merger Agreement),
which will thereupon become a direct, wholly-owned subsidiary of Parent. Each
Share issued and outstanding immediately prior to the Effective Time that is
owned by (i) the Company's treasury or by any of the Company's direct or
indirect wholly-owned subsidiaries or (ii) Parent, Purchaser or any other direct
or indirect wholly-owned subsidiary of Parent, shall be canceled and retired
without payment of any consideration therefor and shall cease to exist. The
Merger will
18
<PAGE>
become effective upon the filing of the Articles of Merger with the Secretary of
State of the State of Florida or at such time thereafter as is agreed upon by
the parties and specified in the Articles of Merger.
COMPANY STOCK OPTIONS AND WARRANTS. The Merger Agreement provides that,
immediately after the Acceptance Date (as defined in the Merger Agreement), each
holder of a then outstanding option to purchase Shares (collectively, the
"Options") under the Company's 1988 Stock Option Plan, the Company's 1995 Stock
Option Plan and the Company's Non-Employee Director Stock Option Plan
(collectively, the "Stock Option Plans"), whether or not then exercisable or
fully vested, and each holder of the warrants to purchase an aggregate of
491,699 shares issued to certain parties (collectively, the "Warrants"), shall,
in settlement thereof, be entitled to receive for each Share subject to such
Option, or Warrant, an amount (subject to any applicable withholding tax) in
cash equal to the difference between the Offer Price and the per Share exercise
price of such Option, or Warrant, to the extent the Offer Price is greater than
the per Share exercise price of such Option or Warrant (such excess amount with
respect to Options being hereinafter referred to as the "Option Consideration",
and such amount with respect to the Warrants being hereinafter referred to as
the "Warrant Consideration"); provided, however, that with respect to any person
subject to Section 16(a) of the Exchange Act, any such amount shall be paid as
soon as practicable after the first date payment can be made without liability
to such person under Section 16(b) of the Exchange Act. Prior to the Acceptance
Date, the Company will use its reasonable efforts to obtain all necessary
consents or releases from holders of Options under the Stock Option Plans, and
holders of Warrants, and take any such other action as may be reasonably
necessary to give effect to the transactions described above (except for such
action that may require the approval of the Company's shareholders) and to
otherwise cause each Option, and each Warrant, to be surrendered to the Company
and canceled, whether or not any Option Consideration or Warrant Consideration
is payable with respect thereto, at the Acceptance Date. The surrender of an
Option, or Warrant, to the Company shall be deemed a release of any and all
rights the holder had or may have had in such Option, or Warrant, other than the
right to receive the Option Consideration or Warrant Consideration. If
necessary, Parent will cause the Company to be provided with sufficient funds to
make the payments required above.
SHAREHOLDER MEETING. The Merger Agreement provides that the Company will
take all action necessary, in accordance with the FBCA and its Articles of
Incorporation and Bylaws, to convene and hold a special meeting of Shareholders,
if necessary, as promptly as practicable for the purpose of considering and
voting upon the Merger Agreement and the transactions contemplated thereby,
including the Merger. Subject to the fiduciary duties of the Board under
applicable law as advised in writing by outside legal counsel, the Board will
recommend that the holders of the Shares will vote in favor of and approve the
Merger Agreement and the Merger. In connection with such meeting, the Company
will prepare and file with the Commission, and in consultation with Parent and
Purchaser, as soon as practicable after the consummation of the Offer, a
preliminary proxy or information statement (the "Preliminary Proxy Statement"
and together with all amendments and supplements thereto being called the "Proxy
Statement") relating to the Merger in accordance with the Exchange Act and the
rules and regulations under the Exchange Act, with respect to the transactions
contemplated by the Merger Agreement. The Company, Parent and Purchaser will
cooperate with each other in the preparation of the Preliminary Proxy Statement.
The Company will use all reasonable efforts to respond promptly to any comments
made by the Commission with respect to the Preliminary Proxy Statement, and to
cause the Proxy Statement to be mailed to the Company's Shareholders at the
earliest practicable date.
The Merger Agreement provides that if Parent, directly or indirectly through
Purchaser or any other wholly-owned subsidiary, acquires at least 80% of the
outstanding Shares, each of Parent, Purchaser and the Company will take all
necessary appropriate action to cause the Merger to become effective, as soon as
practicable after the consummation of the Offer, without a meeting of the
Shareholders, in accordance with Section 1104 of the FBCA.
19
<PAGE>
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties. These include representations and
warranties by the Company with respect to (i) organization and qualification,
(ii) capitalization, (iii) corporate power and authority, (iv) absence of
certain changes, (v) Commission reports, (vi) governmental authorization, (vii)
non-contravention, (viii) investment banking fees and commissions, (ix) material
contracts, (x) litigation, (xi) benefit plans, (xii) intellectual property,
(xiii) restrictions on operations, (xiv) environmental laws, (xv) compliance
with laws, (xvi) taxes, (xvii) product registration and regulatory compliance,
(xviii) Company action, (xix) labor matters and (xx) the Company's current
inventory.
Parent and Purchaser also have made certain representations and warranties
with respect to (i) organization and qualification, (ii) corporate power and
authority, (iii) governmental authorization and (iv) non-contravention. No
representations or warranties made by the Company, Parent or Purchaser shall
survive beyond the Acceptance Date and no covenants made in the Merger Agreement
will survive beyond the Control Date; provided, however, that the Merger
Agreement does not limit any covenant or agreement of the parties thereto which
by its terms contemplates performance after the Effective Time.
CONDUCT OF BUSINESS PENDING THE MERGER. The Company has agreed that during
the period from the date of the Merger Agreement and continuing until the
Control Date or until the termination of the Merger Agreement (except as
expressly contemplated or permitted by the Merger Agreement, or expressly agreed
to by Parent in writing) the Company will, and will cause each of its
subsidiaries to, conduct its operations according to its ordinary and usual
course of business and consistent with past practice and will use their
commercially reasonable efforts to preserve intact their respective business
organizations, keep available the services of their officers and employees and
maintain satisfactory relationships with licensors, suppliers, distributors,
customers and others having business relationships with them.
The Company has agreed that, during such period, it will, and will cause
each of its subsidiaries to, maintain its books and records in its usual manner
and consistent with past practice and not permit a material change in any of its
financial reporting, tax, or accounting practices or policies or in any
assumption underlying such practices or policies, or in any method of
calculating any bad debt, contingency, or other reserve for financial reporting
purposes or for other accounting purposes, except as may be required by
generally accepted accounting principles.
20
<PAGE>
The Company has further agreed that during each period neither it, nor any
of its subsidiaries, as the case may be, will, without the prior written consent
of Parent, (i) issue, sell, pledge or encumber, or authorize or propose the
issuance, sale, pledge or encumbrance of (A) any shares of capital stock of any
class (including the Shares), or securities convertible into, or exchangeable
for, any such shares, or any rights, warrants or options to acquire any such
shares or other convertible or exchangeable securities, or grant or accelerate
any right to convert or exchange any securities of the Company or any of its
subsidiaries for such shares, other than shares issuable upon exercise of
currently outstanding stock options, stock awards or warrants, or (B) any other
securities in respect of, in lieu of or in substitution for shares of common
stock outstanding on the date of the Merger Agreement (including the Shares);
(ii) redeem, purchase or otherwise acquire, or propose to redeem, purchase or
otherwise acquire, any of its outstanding securities (including the Shares);
(iii) split, combine or reclassify any shares of its capital stock or declare or
pay any dividend or distribution on any shares of capital stock of the Company;
(iv) except as set forth in the Merger Agreement, make any acquisition of a
material amount of assets or securities, any disposition of a material amount of
assets or securities, or enter into or modify any material contract, agreement,
commitment, arrangement, license or right or any release or relinquishment of
any material contract rights, not in the ordinary course of business; (v) pledge
or encumber any material assets of the Company except in the ordinary course of
business
consistent with past practice; (vi) incur any long-term debt for borrowed money
or short-term debt for borrowed money, except for unsecured debt bearing
interest at current market rates incurred in the ordinary course of business
consistent with past practice; (vii) propose or adopt any amendments to the
Articles of Incorporation or Bylaws of the Company or any of its subsidiaries;
(viii) enter into any new employment agreement providing for compensation
(including salary, bonus, benefits and all other forms of compensation, whether
immediately payable or deferred) in excess of $50,000 per year or amend any
existing agreement with any officer, director or employee or grant any increase
in the compensation or benefits to officers, directors, employees and former
employees other than increases in the ordinary course of business and consistent
with past practice or pursuant to the terms of agreements or plans as currently
in effect; (ix) adopt a plan of complete or partial liquidation or resolutions
providing for the complete or partial liquidation or dissolution of the Company
or any of its subsidiaries; (x) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person except wholly-owned subsidiaries of the Company
in the ordinary course of business and consistent with past practices; (xi) make
any loans, advances or capital contributions to, or investments in, any other
person (other than loans or advances to subsidiaries and customary loans or
advances to employees in accordance with past practices); (xii) adopt or amend
(except as may be required by law or required by the Merger Agreement) any
bonus, profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund
or other arrangement for the benefit or welfare of any employee or former
employee; (xiii) take any action other than in the ordinary course of business
and consistent with past practice with respect to the grant of any severance or
termination pay or with respect to any increase of benefits payable under its
severance or termination pay policies in effect on the date hereof; (xiv) make
any tax election or settle or compromise any material Federal, state, local or
foreign income tax liability, except in the ordinary course of business and
consistent with past practice; (xv) execute or enter into with the U.S. Internal
Revenue Service or any other taxing authority (i) any agreement or other
document extending or having the effect of extending the period of assessments
or collection of any Federal, state, local or foreign taxes or (ii) a closing
agreement pursuant to Section 7121 of the Code, or any successor provision
thereof, or any similar agreement, pursuant to any similar provision of state,
local or foreign laws; (xvi) except as specifically disclosed to Parent or as
contemplated by the capital expenditures budget currently in effect, authorize
capital expenditures in excess of $50,000 in the aggregate; or (xvii) authorize
or propose any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing, or take any action which
would make any representation or warranty of the Company in the Merger Agreement
untrue or incorrect.
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The Company has further agreed that during such period, prior to the
Acceptance Date, it will use its reasonable best efforts to obtain written
determinations or permits from the responsible governmental authorities as to
which environmental permits are required for presently unpermitted activities
including, but not limited to, waste water discharges and air emissions at the
Company's facilities in Florida and operations in Brussels, Belgium. Upon the
receipt of a determination that a permit is required, the Company will, as soon
as possible, file applications and support information necessary to obtain such
permits and will use its reasonable best efforts to expedite the issuance of
such permits. With regard to Corvita Europe, a direct wholly-owned subsidiary of
the Company, the Company has agreed to file the application for such permit
prior to the Acceptance Date.
NO SOLICITATION. The Merger Agreement provides that from and after the date
of the Merger Agreement until the earlier of the Control Date or the termination
of the Merger Agreement, the Company will not, and will not permit any of its
subsidiaries, or any of its or their officers, directors, employees,
representatives, agents or affiliates, (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
subsidiaries) to, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action knowingly to facilitate, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its or their officers,
directors or employees or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its subsidiaries to take any such action; PROVIDED, HOWEVER, that
nothing contained in the Merger Agreement shall prohibit the Board of Directors
of the Company from furnishing information to, or entering into, maintaining or
continuing discussions or negotiations with, any person or entity that makes an
unsolicited Acquisition Proposal, if the Board of Directors of the Company,
after consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent legal counsel),
determines in good faith that the failure to take such action could create a
reasonable possibility of a breach by the Board of Directors of the Company of
its fiduciary duties to shareholders under applicable law and, prior to taking
such action, the Company (i) provides reasonable notice to Parent to the effect
that it is taking such action and (ii) receives from such person or entity an
executed confidentiality agreement in reasonably customary form. The Company
will use reasonable efforts to keep Parent informed of the status of any such
Acquisition Proposal. For purposes of the Merger Agreement, "Acquisition
Proposal" means an inquiry, offer or proposal regarding any of the following
(other than the transactions contemplated by the Merger Agreement with Parent or
Purchaser) involving the Company or any of its subsidiaries: (w) any merger,
consolidation, share exchange, recapitalization, business combination or other
similar transaction; (x) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of all or substantially all the assets of the Company and
its subsidiaries, taken as a whole, in a single transaction or series of related
transactions; (y) any tender offer or exchange offer for 20 percent or more of
the outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act in connection therewith; or (z)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
The Company has also agreed that, except as set forth in the Merger
Agreement, the Board of Directors of the Company will not (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Board of the Offer, the Merger
Agreement or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal or (iii) cause the Company to enter into any
agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, in the event that prior to the time of acceptance for payment of
Shares in the Offer the Board determines in good faith, after consultation with
and based upon the advice of independent legal counsel (who may be the Company's
regularly engaged independant legal counsel), that the failure to take such
action could create a reasonable
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possibility of a breach by the Board of Directors of the Company of its
fiduciary duties to the Company's shareholders under applicable law, the Board
may withdraw or modify its approval or recommendation of the Offer, the Merger
Agreement and the Merger, approve or recommend an Acquisition Proposal that is
more favorable to shareholders of the Company than the Offer and Merger (a
"Superior Proposal") or cause the Company to enter into an agreement with
respect to a Superior Proposal. The Company will provide reasonable notice to
Parent or Purchaser to the effect that it is taking such action, in no event
less than three (3) business days.
FEES AND EXPENSES. The Merger Agreement provides that, except as described
below, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated by the Merger Agreement will be paid by the
party incurring the expenses; provided, however, that the costs of printing the
Proxy Statement and in each case all exhibits, amendments and supplements
thereto shall be borne equally by the Company and Parent. The Company has agreed
to pay Purchaser a fee equal to $4,000,000, which fee shall be inclusive of all
Expenses (as defined in the Merger Agreement), upon the termination of the
Merger Agreement or the transactions contemplated by the Merger Agreement for
any of the following reasons: (i) the Company terminates after it has received a
Superior Proposal (as defined in the Merger Agreement), and the Board, after
consultation with and based upon the written advice of outside legal counsel
(who may be the Company's regularly engaged outside legal counsel), determines
in good faith that the failure to accept such Superior Proposal could create a
reasonable possibility of a breach by the Board of its fiduciary duties to
shareholders under applicable law; (ii) Parent terminates because, prior to the
Acceptance Date, the Board shall have (x) withdrawn, modified or amended in any
adverse respect its approval or recommendation of the Merger, the Merger
Agreement or the transactions contemplated thereunder, (y) recommended to its
shareholders an Acquisition Proposal or (z) resolved to do any of the foregoing;
or (iii) Parent terminates prior to the Acceptance Date, if, as a result of an
intentional material breach of the Merger Agreement by the Company following
(but not prior to) the Company's receipt of an Acquisition Proposal by any
person or group other than Parent, (A) the Company shall have failed to comply
in any material respect with any of the material covenants and agreements
contained in the Merger Agreement to be complied with or performed by such party
at or prior to such date of termination, and such failure continues for ten
business days after the actual receipt by such party of a written notice from
the other party setting forth in detail the nature of such failure, or (B) a
material representation or warranty of the other party contained in the Merger
Agreement shall be untrue in any material respect when made on or and as of the
Acceptance Date as if made on the Acceptance Date. Such fee is payable as
promptly as practicable but not later than five business days after the
occurrence giving rise to such payment.
CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the obligation
of each party to effect the Merger is subject to the satisfaction or waiver,
where permissible, prior to the Effective Time, of the following conditions: (i)
Purchaser shall have accepted for payment and paid for Shares pursuant to the
Offer in accordance with the terms thereof; provided, however, that this
condition shall be deemed satisfied with respect to the obligations of Parent
and Purchaser if Purchaser shall have failed to purchase Shares pursuant to the
Offer in violation of the Merger Agreement or the terms of the Offer; (ii)
unless the Merger is consummated pursuant to Section 1104 of the FBCA, the
Merger Agreement and the Merger shall have been approved and adopted by the
affirmative vote of shareholders of the Company by the requisite vote in
accordance with applicable law; and (iii) no statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any Federal or state court or governmental authority
and no other action shall have been taken by any regulatory authority or agency
which is in effect and has the effect of prohibiting the consummation of the
Merger.
TERMINATION. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of the Company, but prior to the Effective Time, in
any one of the following circumstances: (a) by mutual written consent duly
authorized by the Boards of Directors of the Company and the Parent; (b) by
Parent or
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the Company, if, without any material breach by such terminating party of its
obligations under the Merger Agreement, the purchase of Shares pursuant to the
Offer shall not have occurred on or before August 9, 1996; (c) by Parent or the
Company, if the Offer expires or is terminated or withdrawn pursuant to its
terms without any Shares being purchased in accordance with the Merger
Agreement; provided, however, that Parent may not terminate the Merger Agreement
pursuant to the foregoing, if Parent's termination of, or Purchaser's failure to
accept for payment or pay for any Shares tendered pursuant to, the Offer does
not follow the occurrence, or failure to occur, as the case may be, of any
condition set forth in the Merger Agreement or is otherwise in violation of the
terms of the Offer or the Merger Agreement; (d) by Parent or the Company, if any
Federal or state court of competent jurisdiction or other Federal or state
governmental body shall have issued an order, decree or ruling, or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and non-appealable; (e) by the Company, if it shall have received a Superior
Proposal, and the Board, after consultation with and based upon the written
advice of outside legal counsel (who may be the Company's regularly engaged
outside legal counsel), determines in good faith that failure to accept such
Superior Proposal could create a reasonable possibility of a breach by the Board
of its fiduciary duties to shareholders under applicable law; (f) by Parent, but
only prior to the Acceptance Date, if the Board of Directors of the Company
shall have (i) withdrawn, modified or amended in any adverse respect its
approval or recommendation of the Merger Agreement, the Merger or the
transactions contemplated thereby, (ii) recommended to its shareholders an
Acquisition Proposal or (iii) resolved to do any of the foregoing; (g) by Parent
or the Company, but only prior to the Acceptance Date, if (A) the other party
shall have failed to comply in any material respect with any of the material
covenants and agreements contained in the Merger Agreement to be complied with
or performed by such party at or prior to such date of termination, and such
failure continues for ten business days after the actual receipt by such party
of a written notice from the other party setting forth in detail the nature of
such failure, or (B) a material representation or warranty of the other party
contained in the Merger Agreement shall be untrue in any material respect when
made or, on and as of the Acceptance Date, as if made on the Acceptance Date; or
(h) by the Company, if the Offer has not been timely commenced in accordance
with the Merger Agreement.
INDEMNIFICATION. The Merger Agreement provides that until six years from
the Effective Time, the Surviving Corporation will maintain all rights to
indemnification now existing in favor of the directors, officers, employees,
fiduciaries and agents of the Company as provided in the Company's Articles of
Incorporation and Bylaws or otherwise in effect under any agreement or otherwise
on the date of the Merger Agreement and that the Articles of Incorporation and
Bylaws of the Surviving Corporation shall not be amended to reduce or limit the
rights of indemnity afforded to the present and former directors and officers of
the Company, or the ability of the Surviving Corporation to indemnify them, nor
to hinder, delay or make more difficult the exercise of such rights of indemnity
or the ability to indemnify. The Surviving Corporation will at all times
exercise the powers granted to it by its Articles of Incorporation, its Bylaws,
and by applicable law to indemnify and hold harmless to the fullest extent
possible present or former directors, officers, employees, fiduciaries and
agents of the Company against any threatened or actual claim, action, suit,
proceeding or investigation made against them arising from their service in such
capacities (or service in such capacities for another enterprise at the request
of the Company) prior to, and including the Effective Time for at least six
years from the Effective Time. Parent will assume and perform such obligations
under the Merger Agreement; PROVIDED, that any indemnified party makes a good
faith effort (which shall not include any requirement to bring any suit, claim,
action, or other proceeding) to cause the Surviving Corpora-
tion to perform its obligations under the Merger Agreement before requesting
Parent to assume and perform such obligations. Should any threatened or actual
claim, action, suit, proceeding or investigation be made against any present or
former director, officer, employee, fiduciary or agent of the Company, arising
from his or her services as such, within six years from the Effective Time, the
foregoing provisions shall continue in effect until the final disposition of all
such claims. Any indemnified party wishing to claim indemnification under the
Merger Agreement, upon learning of any such action, suit, claim, proceeding or
investigation, must notify Parent and the Surviving Corporation
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within 15 days thereof; PROVIDED, HOWEVER, that any failure so to notify Parent
and the Surviving Corporation of any obligation to indemnify such indemnified
party or of any other obligation imposed by this provision will not affect such
obligations except to the extent Parent and/or the Surviving Corporation is
actually prejudiced thereby. Parent and the Surviving Corporation will be
entitled to assume the defense of any such action, suit, claim, proceeding or
investigation with counsel of its choice, unless there is, under applicable
standards of professional conduct, a conflict of any significant issue between
the positions of Parent and the Surviving Corporation, on the one hand, and the
indemnified parties, on the other, in which event the indemnified parties as a
group may retain one law firm to represent them with respect to such matter.
Neither Parent or the Surviving Corporation, on the one hand, nor the
indemnified parties, on the other hand, may settle any such action, suit, claim,
proceeding or investigation without the prior written consent of the other
party, which consent shall not be unreasonably withheld or delayed.
In addition to the foregoing, Parent has agreed to cause the Surviving
Corporation to honor in accordance with their terms any indemnification
agreements in existence on the date of the Merger Agreement between the Company
and any present or former director, officer, employee, fiduciary or agent of the
Company.
The parties have agreed that the foregoing provisions of the Merger
Agreement will not require Parent or the Surviving Corporation to maintain
directors' and officers' insurance coverage in favor of the Company's present
and former directors and officers.
AMENDMENT. To the extent permitted by applicable law, the Merger Agreement
may be amended by action taken by or on behalf of the Boards of Directors of
Parent, Purchaser and the Company at any time before or after adoption of the
Merger Agreement by the Shareholders. The Merger Agreement may not be amended
except by an instrument in writing signed on behalf of all of the parties.
TIMING. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Purchaser has agreed to
cause the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
FLORIDA LAW. The Board has approved the Merger Agreement and the
transactions contemplated by it, including the Offer, the Merger and the
Shareholders Agreement, and the entry by Purchaser into the Shareholders
Agreement, for purposes of Sections 607.0901 ("Section 901") and 607.0902
("Section 902") of the FBCA. Accordingly, the restrictions of Section 901 do not
apply to the transactions contemplated by the Offer, the Merger Agreement or the
Shareholders Agreement. Section 901 of the FBCA, in general, prevents an
"interested shareholder" (generally, a shareholder who beneficially owns more
than 10% of a Florida corporation's outstanding voting stock) from engaging in
certain "affiliated transactions" (defined to include mergers and acquisitions)
with such corporation without the approval of the holders of two-thirds of the
corporation's voting shares (excluding all shares owned by the interested
shareholder) unless (i) a majority of the corporation's disinterested directors
approve the affiliated transaction, (ii) the interested shareholder beneficially
owns at least 90% of the corporation's outstanding voting shares, exclusive of
shares acquired directly from the corporation in a transaction not approved by a
majority of the disinterested directors, (iii) the interested shareholder has
been the beneficial owner of at least 80% of the corporation's voting shares for
at least five (5) years preceding the date the transaction is disclosed to the
public or the shareholders, whichever is earlier, or (iv) certain other
statutory conditions have been met. As described above, Section 901 of the FBCA
does not apply to the Offer, the Merger or the Shareholders Agreement. The
foregoing summary of Section 901 does not purport to be complete and is
qualified in its entirety by reference to the provisions of Section 901.
Similarly, Section 902 of the FBCA does not apply to the Offer, the Merger
or the Shareholders Agreement. Section 902 provides, in general, that shares of
an "Issuing Public Corporation" acquired in a "control share acquisition," with
certain exceptions, will have no voting rights unless these rights are granted
by resolution pursuant to a vote of the holders of a majority of the shares of
each class or
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series entitled to vote separately on such a proposal (excluding all interested
shareholders). "Control shares" are shares which, when added to all other shares
which a person owns or has the power to vote, would give that person any of the
following ranges of voting power: (i) one-fifth or more but less than one-third;
(ii) one-third or more but less than a majority; or (iii) more than a majority.
However, shareholder approval is not required where the acquisition of shares is
approved by the Issuing Public Corporation's board of directors. As described
above, Section 902 does not apply to the Offer, the Merger or the Shareholders
Agreement. The foregoing summary of Section 902 does not purport to be complete
and is qualified in its entirety by reference to the provisions of Section 902.
THE SHAREHOLDERS AGREEMENT
As an inducement and a condition to entering into the Merger Agreement,
Parent required that the Selling Shareholders agree, and the Selling
Shareholders agreed, to enter into the Shareholders Agreement.
The following is a summary of the material terms of the Shareholders
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The
Shareholders Agreement may be examined, and copies thereof may be obtained, as
set forth in Section 8 above.
TENDER OF SHARES. Upon the terms and subject to the conditions of the
Shareholders Agreement, each Selling Shareholder has agreed to validly tender
(and not to withdraw) pursuant to and in accordance with the terms of the Offer,
not later than the fifth business day after commencement of the Offer, the
number of Shares set forth opposite such shareholder's name on Schedule I to the
Shareholders Agreement and beneficially owned by him, her or it. Each Selling
Shareholder has acknowledged and agreed that Purchaser's obligation to accept
for payment and pay for Shares in the Offer is subject to the terms and
conditions of the Offer.
VOTING. Each Selling Shareholder has agreed that during the period
commencing on the date of the Shareholders Agreement and continuing until the
first to occur of the Effective Time or termination of the Merger Agreement in
accordance with its terms, at any meeting of the Company's shareholders, however
called, or in connection with any written consent of the Company's shareholders,
such Selling Shareholder will vote (or cause to be voted) the Shares held of
record or beneficially owned by such Selling Shareholder, whether issued,
heretofore owned or hereafter acquired, (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof and each of the other actions contemplated by the Merger
Agreement and the Shareholders Agreement and any actions required in furtherance
thereof; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement or the Shareholders
Agreement (after giving effect to any materiality or similar qualifications
contained therein); and (iii) except as otherwise agreed to in writing in
advance by Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C) (1) any change in a majority of the persons who constitute
the Board of Directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Articles of
Incorporation or By-Laws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action involving the Company
or its subsidiaries which is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by the Shareholders Agreement and the
Merger Agreement. Each Selling Shareholder further agreed not to enter into any
agreement or understanding with any person or entity, the effect of which would
be inconsistent or violative of the provisions and agreements described above.
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ACQUIRED SHARES. Each Selling Shareholder also has agreed that if the
Merger Agreement is terminated by Parent in accordance with any of Section
9.1(f) or 9.1(g) thereof, or by the Company in accordance with Section 9.1(e)
thereof, and, during the period commencing on the date of such termination and
continuing until the first anniversary of the date hereof, the Shares are
disposed, transferred or sold ("Sale") to a Person (other than Parent or
Purchaser) in a transaction in which there is, directly or indirectly, a change
(x) in the ownership of a majority of the Shares or (y) in a majority of the
individuals who constitute the Company's Board of Directors on the date of the
Shareholders Agreement, for a per share amount in excess of the Offer
Consideration, Parent shall be entitled to, and each Shareholder will agree to
pay to Parent, an amount per share in cash equal to 50% of the difference
between the gross proceeds received, or receivable, by such Shareholder in the
sale and the Offer Price. Any such payment due and owing to Parent shall be made
within three (3) days of the Selling Shareholders' receipt thereof. Each Selling
Shareholder has agreed to effect any sale of Shares (other than pursuant to the
Merger Agreement) in an arms' length bona fide transaction to an unaffiliated
person.
REPRESENTATIONS, WARRANTIES, COVENANTS AND OTHER AGREEMENTS. Each Selling
Shareholder has made certain customary representations, warranties and
covenants, including with respect to (i) ownership of the Shares, (ii) the
authority to enter into and perform its obligations under the Shareholders
Agreement, (iii) the absence of required consents or contractual conflicts
relating to the Shareholders Agreement, (iv) the absence of liens and
encumbrances on and in respect of its Shares, (v) no finder's fees, (vi) the
solicitation of Acquisition Proposals, (vii) transfers of Shares, (viii) waiver
of appraisal rights and (ix) further assurances.
TERMINATION. Other than as provided therein, the covenants and agreements
contained in the Shareholders Agreement will terminate upon the earlier of (x)
the Effective Time and (y) the first anniversary of the date of the Shareholders
Agreement; provided however, that the provisions relating to (i) the
solicitation of Acquisition Proposals, (ii) the transfer of Shares and (iii) the
deposit of Shares into a voting trust or entering into a voting agreement, shall
terminate upon any earlier termination of the Merger Agreement.
AGREEMENTS FOR OWNERSHIP OF CORVITA CANADA, INC.
As a condition to entering into the Merger Agreement, the Company entered
into two stock purchase agreements and other related transactions contemplated
by such stock purchase agreements, by which it agreed to purchase, directly and
indirectly, ownership of all of the issued and outstanding common stock of
Corvita Canada, Inc., an Ontario, Canada corporation ("Corvita Canada"), that is
not currently owned by the Company. Currently, the Company owns 115,000 shares
of Corvita Canada common stock, 120,000 shares of Corvita Canada common stock
are owned by Cardiovascular Innovations Canada, Inc. ("CICI"), an Ontario,
Canada corporation, and 3,500 shares of Corvita Canada stock are owned by
Research Visions Canada, Inc., a Canadian corporation ("RVC").
CICI STOCK PURCHASE AGREEMENT. Pursuant to an agreement, dated as of April
11, 1996, among George A. Adams, Ph.D., David C. MacGregor, M.D., Gregory J.
Wilson and Jennie M. Wilson, as trustees for the Gregory Wilson Family Trust,
and Jennie M. Wilson (collectively, the "CICI Sellers") and the Company, the
Company agreed to purchase all of the issued and outstanding common stock of
CICI, for an aggregate purchase price of US$1,943,320. The Company also agreed
to repay to the CICI Sellers the unpaid balance of outstanding shareholder loans
previously made by the CICI Sellers to CICI, together with accrued interest, in
the aggregate amount of CDN$16,320. The Company's purchase of the CICI common
stock is subject to the conditions, among others, that (a) the Company, Parent,
and Purchaser shall have entered into the Merger Agreement and (b) Purchaser
shall have made the Offer and shall have accepted for payment and paid for all
of the Shares validly tendered and not withdrawn pursuant to the Offer.
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RVC STOCK PURCHASE AGREEMENT. Pursuant to an agreement, dated as of April
11, 1996, between RVC and the Company, the Company agreed to purchase 3,500
shares of Corvita Canada common stock owned by RVC for an aggregate purchase
price of US$56,680.
RELATED AGREEMENTS. The other agreements related to the stock purchase
agreements described above are: (a) an escrow agreement whereby the certificates
for shares of CICI common stock will be held in escrow pending completion or
termination of the CICI stock purchase; (b) a trust deposit agreement whereby a
portion of the purchase price for CICI common stock being sold to the Company by
David C. MacGregor, M.D. will be held in trust for the payment of potential
Canadian withholding tax liability with respect to his stock sale (or,
alternatively, for release to Dr. MacGregor upon his provision of an appropriate
certificate issued by the Canadian Minister of National Revenue pursuant to
section 116 of the Income Tax Act of Canada); (c) a letter agreement between
Parent and Dr. MacGregor, whereby Parent has agreed that it will not make or
cause to be made any election under Section 338 of the Code with respect to
Purchaser's acquisition of the stock of the Company pursuant to the terms of the
Merger Agreement, and has further agreed that in the event Parent does make or
cause to be made such a Section 338 election, Parent will indemnify Dr.
MacGregor for U.S. federal income tax liability arising as a result of such
election; (d) a letter agreement between Parent and Corvita Canada whereby
Parent agrees to reimburse Corvita Canada an amount of up to US $250,000 for the
loss of preferential rates for certain refundable research and development tax
credits, in the event that the Merger Agreement is terminated by the Company in
certain specified circumstance and provided that such credits are actually lost
by Corvita Canada as a result of the execution of the CICI Stock Purchase
Agreement and the RVC Stock Purchase Agreement; and (e) a letter agreement
between Corvita Canada and Parent whereby Corvita Canada agrees that from the
date of the letter agreement until the earlier of the completion of the purchase
by the Company of the common stock of CICI or the termination of the Merger
Agreement, Corvita Canada will conduct its operations and maintain its books and
records in its usual manner and consistently with past practice and will refrain
from entering into certain specified transactions and agreements without the
prior written consent of the Parent.
LOAN AGREEMENT AND LICENSE AGREEMENT
Parent and the Company entered into a loan agreement, dated April 11, 1996
(the "Loan Agreement"), whereby Parent agreed to make advances to the Company
from time to time until the earlier to occur of (a) the termination of the
Merger Agreement and (b) August 9, 1996, in an amount not to exceed $2,000,000.
Borrowings under the Loan Agreement are evidenced by a promissory note of the
Company, dated April 11, 1995 (the "Promissory Note"), bearing interest at a
rate of 8.25% per annum, such interest is payable monthly in arrears, and
outstanding principal amounts are due and payable upon demand of Parent at any
time on or after the earlier to occur of (i) August 9, 1996, (ii) the
termination of the Merger Agreement and (iii) the consummation of the Merger.
Pursuant to the Loan Agreement and the Promissory Note, Parent advanced $550,000
to the Company on April 12, 1996, and agreed to will advance up to $150,000
every five business days upon the Company's request, after receiving the
Company's certificate to the effect that (x) the requested amount will be used
to pay certain obligations of the Company that were incurred in the ordinary
course of business and that are set forth in a schedule accompanying the
request, or that are obligations set forth in a schedule to the Loan Agreement,
and (y) that the Company is continuing to operate its business in the ordinary
course consistent with past practice.
In connection with the Loan Agreement and Promissory Note, Parent and the
Company entered into a License Agreement, dated April 11, 1995 (the "License
Agreement"), whereby the Company granted Parent a non-exclusive worldwide
license to make, have made, use, sell and otherwise dispose of a polycarbonate
urethane material that is covered by, whose method of making or use is covered
by, or that is a component of an article of manufacture covered by at least one
claim of certain patents and patent applications owned by the Company, and any
related counterparts, foreign equivalents, divisions and continuations in part.
The License Agreement may be terminated by the Company upon payment in full of
principal and interest payable to Parent under the Loan Agreement and Promissory
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<PAGE>
Note, provided that such payment is made on or before the earlier of (x) August
9, 1996 and (y) forty-five days after the Merger Agreement is terminated in one
of a number of specified circumstances. In certain other circumstances,
including the termination of the Merger Agreement because the Company's Board
withdraws its recommendation of the Merger or the institution of bankruptcy or
insolvency proceedings by the Company or by certain undisclosed creditors of the
Company, the License Agreement may not be terminated even if the Company repays
in full all amounts of principal and interest payable to Parent under the terms
of the Loan Agreement and Promissory Note.
TRANSFERS OF SHARES OF EUROPEAN SUBSIDIARIES
Norman R. Weldon, Ph.D., the Company's President and Chief Executive
Officer, has agreed to transfer to an individual to be designated by the Parent
one share of the capital stock of Corvita Europe, S.A. ("Corvita Europe") now
owned by Dr. Weldon; Herbert Kontges, Ph.D., Managing Director of Corvita
Europe, has agreed to transfer to an individual to be designated by the Parent
one share of the capital stock of Corvita Europe now owned by Dr. Kontges; and
Dr. Weldon has agreed to transfer to an individual designated by the Parent five
shares of the capital stock of Laboratoire Corvita, S.A.R.L. ("Laboratoire
Corvita") now owned by Dr. Weldon. Corvita Europe is a corporation organized
under the laws of Belgium; it has 51,500 shares of issued and outstanding
capital stock, 51,498 of which are owned by the Company. Laboratoire Corvita is
a corporation organized under the laws of France; it has 500 shares of issued
and outstanding capital stock, 495 of which are owned by the Company. The share
transfers by Dr. Weldon and Dr. Kontges will become effective on the Acceptance
Date. Dr. Weldon and Dr. Kontges have delivered stock powers to the Parent for
the purpose of effecting such share transfers in accordance with the foregoing
agreements.
MATERIAL AGREEMENTS
The Company and Corvita Europe have entered into certain agreements with
third parties, which agreements are designated as "Material Agreements" under
the provisions of the Merger Agreement and are required to be in effect to
satisfy the conditions of the Offer. The agreements so designated include: (a) a
License Termination Agreement, dated as of December 1, 1995, between the Company
and Sumitomo Bakelite Co., Ltd., a Japanese corporation ("Sumitomo"),
terminating the License Agreement, dated as of June 19, 1990, between the
Company and Sumitomo; (b) a License Agreement, dated as of January 24, 1996,
among Corvita Europe, Jean Pierre Dereume, M.D., and L'Universite Libre de
Bruxelles; and (c) a Consent to Assignment provided to the Company by Vascor,
Inc., dated April 9, 1996, whereby Vascor, Inc. consents to the assignment to
PTG of certain of the Company's rights and obligations under a License and
Supply Agreement, dated November 30, 1993, between Vascor, Inc. and the Company;
and (e) the CICI and RVC Stock Purchase Agreements.
OTHER MATTERS
VOTE REQUIRED TO APPROVE THE MERGER. The FBCA requires, among other things,
that the adoption of any plan of merger or consolidation must be approved by the
Board and generally by the holders of the Company's outstanding voting
securities. The Board has approved the Offer and the Merger; consequently, the
only additional action by the Company that may be necessary to effect the Merger
is approval of its shareholders if the short-form merger procedure described
below is not available. Under the FBCA and the Company's Articles of
Incorporation, the affirmative vote of holders of a majority of the outstanding
Shares is generally required to approve the Merger. However, Section 607.1104 of
the FBCA provides that, if a parent company owns at least 80% of each class of
stock of a subsidiary, the parent company can effect a "short-form" merger with
that subsidiary without any action by the other shareholders of that subsidiary.
Accordingly, if, as a result of the Offer or otherwise, Purchaser acquires at
least 80% of the Shares, the Purchaser could, and intends to, effect the Merger
without prior notice to, or any action by, any other shareholder of the Company,
except as required under the FBCA. If the Purchaser acquires, through the Offer
or otherwise, voting power with respect to at least a majority of the
outstanding Shares, the Purchaser would have sufficient voting power to effect
the Merger without the vote of any other shareholder of the Company.
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<PAGE>
APPRAISAL RIGHTS. Pursuant to Section 607.1302 of the FBCA, holders of
Shares do not have dissenters' rights as a result of the Offer. If the Merger is
effected with a vote of the Company's shareholders and if on the record date
fixed to determine the shareholders entitled to vote, the Shares are quoted on
NASDAQ or other national securities exchange or are held of record by 2,000 or
more of such shareholders, then holders of the Shares will not have dissenter's
rights under the FBCA. If, however, the Merger is consummated with or without
the vote of the Company's shareholders but the Shares are not so listed or
designated or are not held of record by at least 2,000 shareholders, holders of
Shares will have certain rights pursuant to the provisions of Sections 607.1301,
607.1302, and 607.1320 of the FBCA to dissent and demand determination of and to
receive payment in cash of the fair value of, their Shares. If the statutory
procedures were complied with, such rights could lead to a judicial
determination of the fair value required to be paid in cash to such dissenting
holders for their Shares. Any such judicial determination of the fair value of
the Shares or the market value of the Shares could be more or less than the
Offer Price or the price provided for in the Merger Agreement. Section
607.1301(2) of FBCA defines "fair value" as the value of the shares excluding
any appreciation or depreciation in anticipation of the transaction unless such
exclusion would be inequitable.
If any holder of Shares who asserts dissenters' rights under the FBCA fails
to perfect, or effectively withdraws or loses his dissenters' rights, as
provided in the FBCA, the Shares of such shareholder will be converted into the
right to receive the Merger Consideration provided for in the Merger Agreement
in accordance with the Merger Agreement. A shareholder may withdraw his or her
notice of election to dissent by delivery to Parent of a written withdrawal of
his or her notice of election to dissent and acceptance of the Merger.
FAILURE TO FOLLOW THE STEPS REQUIRED BY THE FBCA FOR PERFECTING DISSENTERS'
RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
GOING PRIVATE TRANSACTIONS. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. Purchaser does not believe that Rule
13e-3 will be applicable to the Merger, unless, among other things, the Merger
is completed more than one year after termination of the Offer. If applicable,
Rule 13e-3 would require, among other things, that certain financial information
regarding the Company and certain information regarding the fairness of the
Merger and the consideration offered to minority Shareholders be filed with the
Commission and disclosed to minority Shareholders prior to consummation of the
Merger.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should (i)
split, combine or otherwise change the Shares or its capitalization, (ii)
acquire currently outstanding Shares or otherwise cause a reduction in the
number of outstanding Shares or (iii) issue or sell additional Shares, shares of
any other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, then, subject to the provisions of Section 14
below, Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company declares or
pays any cash dividend on Shares, makes other distributions on the Shares or
issues with respect to the Shares any additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, conditional or otherwise, to acquire, any
of the foregoing, payable or distributable to Shareholders of record prior to
the transfer of the Shares purchased pursuant to the Offer to Purchaser or its
nominee or transferee on the Company's stock transfer records, then, subject to
Section 14 below, (i) the Offer Price may, in the sole discretion of Purchaser,
be reduced by the amount of any cash dividend or cash distribution and (ii) the
whole of any non-cash dividend, distribution or issuance to be received by the
tendering Shareholders will (a) be received and held by the tendering
Shareholders for the account of Purchaser and will be required to be promptly
remitted and transferred by each tendering Shareholder to the Depositary for the
account of Purchaser,
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<PAGE>
accompanied by appropriate documentation of transfer or (b) at the direction of
Purchaser, be exercised for the benefit of Purchaser, in which case the proceeds
of exercise promptly will be remitted to Purchaser. Pending the remittance and
subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any non-cash dividend, distribution, issuance or proceeds
and may withhold the entire Offer Price or deduct from the Offer Price the
amount or value of the non-cash dividend, distribution, issuance or proceeds, as
determined by Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs and
nothing in this Offer to Purchase shall constitute a waiver by Purchaser or
Parent of any of its rights under the Merger Agreement or a limitation of
remedies available to Purchaser or Parent for any breach of the Merger
Agreement, including termination of the Merger Agreement.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act,
to pay for any Shares tendered, and may postpone the acceptance for payment or,
subject to the restriction referred to above, payment for any Shares tendered,
and, subject to the provisions of the Merger Agreement, may terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for), if,
there have not been validly tendered and not withdrawn prior to the time the
Offer shall otherwise expire a number of Shares that constitutes a majority of
the Shares outstanding on a fully-diluted basis on the date of purchase ("on a
fully-diluted basis" meaning, as of any date, the number of Shares outstanding,
together with Shares the Company is then required to issue pursuant to
obligations outstanding at that date under employee stock option or other
benefit plans or otherwise), any formal investigations relating to the Offer or
the Merger that may have been opened by the Antitrust Division or the Federal
Trade Commission ("FTC") shall not have terminated, or at any time before
acceptance for payment of, of payment for, such Shares, any of the following
events shall occur or be deemed to have occurred:
(A) there shall be pending any suit, action or proceeding by any
governmental entity (1) challenging the acquisition by Parent or
Purchaser of any Shares under the Offer or seeking to restrain or prohibit
the making or consummation of the Offer or Merger, (2) seeking to prohibit
or materially limit the ownership or operation by the Company, Parent or any
of their respective subsidiaries of a material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Parent and
its subsidiaries, taken as a whole, or to compel the Company or Parent to
dispose of or hold separate any material portion of the business or assets
of the Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as a result of the Offer or any of the other
transactions contemplated by the Merger Agreement, (3) seeking to impose
material limitations on the ability of Parent or Purchaser to acquire or
hold, or exercise full rights of ownership of, any Shares accepted for
payment pursuant to the Offer, including, without limitation, the right to
vote such Shares on all matters properly presented to the Shareholders of
the Company, or (4) seeking to prohibit Parent or any of its subsidiaries
from effectively controlling in any material respect any material portion of
the business or operations of the Company and its subsidiaries; or
(B) any governmental entity or federal or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction
or other order that is in effect and that (1) materially restricts, prevents
or prohibits consummation of the Offer, the Merger or any material
transaction contemplated by the Merger Agreement, (2) prohibits or limits
materially the ownership or operation by the Company, Parent or any of their
subsidiaries of all or any material portion of the business or assets of the
Company and its subsidiaries taken as a whole, or compels the Company,
Parent or any of their subsidiaries to dispose of or hold separate all or
any material portion of the business or assets of the Company and its
subsidiaries taken as a whole, (3) imposes material limitations on the
ability
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<PAGE>
of Parent or any of its subsidiaries to exercise effectively full rights of
ownership of any Shares, including, without limitation, the right to vote
any Shares acquired by Purchaser pursuant to the Offer or otherwise on all
matters properly presented to the Company's shareholders, including, without
limitation, the approval and adoption of the Merger Agreement and the
transactions contemplated by the Merger Agreement, or (4) requires
divestitures by Parent, Purchaser or any other affiliate of Parent of any
Shares; provided that Parent shall have used all reasonable efforts to cause
any such decree, judgment, injunction or other order to be vacated or
lifted; or
(C) the representations and warranties of the Company in the Merger
Agreement were untrue or incorrect in any material respect when made
or (except for those that address matters as of a specific date and except
for changes specifically permitted by the Merger Agreement) thereafter
become and remain untrue or incorrect in any material respect; or
(D) the Company shall have breached or failed to comply in any material
respect with any of its obligations under the Merger Agreement and,
with respect to any such breach or failure that can be remedied, the breach
or failure is not remedied within ten (10) business days after Parent has
furnished the Company written notice of such breach or failure; or
(E) the Merger Agreement shall have been terminated in accordance with
its terms; or
(F) the Board of Directors of the Company shall have withdrawn or
materially modified or changed (including by amendment of the
Schedule 14D-9) in a manner adverse to Purchaser its recommendation of the
Offer, the Merger Agreement or the Merger, or the Board of Directors of the
Company shall have approved or recommended an Acquisition Proposal; or
(G) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that any person or "group" (as defined in section
13(d)(3) of the Exchange Act), other than Parent or its affiliates or any
group of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 under the Exchange Act) of more
than 25 percent of the Shares, through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted an option,
right or warrant, conditional or otherwise, to acquire beneficial ownership
of more than 25 percent of the Shares; or
(H) there shall have occurred and continued for at least three business
days (1) any general suspension of, or limitation on prices for,
trading in securities on any national securities exchange or in the
over-the-counter market in the United States, (2) the declaration of any
banking moratorium or any suspension of payments in respect of banks, or any
limitation (whether or not mandatory) by any governmental entity on, or
other event materially adversely affecting, the extension of credit by
lending institutions in the United States or (3) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof,
which, in the judgment of Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent or Purchaser) giving
rise to any such condition, makes it inadvisable to proceed with such acceptance
for payment or payments.
The foregoing conditions are for the sole benefit of Parent, Merger Sub and
their affiliates and may be asserted by either Parent or Purchaser regardless of
the circumstances (including, without limitation, any action or inaction by
Parent, Purchaser or any of their affiliates) giving rise to any such condition
or may be waived by either Parent or Purchaser, in whole or in part, from time
to time in its sole discretion, except as otherwise provided in the Merger
Agreement. The failure by Parent or Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right and may be asserted at any time and from
time to time.
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15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation, neither Purchaser nor Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated in this Offer to Purchase or
of any approval or other action by any governmental authority that would be
required for the acquisition or ownership of Shares by Purchaser as contemplated
in this Offer to Purchase. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under "State Takeover Laws." While,
except as otherwise expressly described in this Section 15, Purchaser does not
presently intend to delay the acceptance for payment of or payment for Shares
tendered pursuant to the Offer pending the outcome of any such matter, there can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions; or that failure to
obtain any such approval or other action might not result in consequences
adverse to the Company's business; or that certain parts of the Company's
business might not have to be disposed of if such approvals were not obtained or
other actions were not taken in order to obtain any such approval or other
action. If certain types of adverse action are taken with respect to the matters
discussed below, Purchaser could decline to accept for payment or pay for any
Shares tendered. See Section 14 above for certain conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in those states.
In EDGAR V. MITE CORP., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS CORP.
V. DYNAMICS CORP. OF AMERICA, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that the laws were applicable
only under certain conditions.
The FBCA contains certain provisions relating to an "affiliated
transaction." Such a transaction includes any merger of a corporation into a
person who is the beneficial owner of more than ten percent (10%) of the
outstanding voting shares of the corporation (an "Interested Shareholder"). The
FBCA requires that, unless certain exceptions are met, the transaction be
approved by the holders of two-thirds of the voting shares other than the shares
owned by the Interested Shareholder and where the transaction is approved by the
holders of two-thirds of the voting shares other than the shares owned by the
Interested Shareholder and where the transaction has been approved by a majority
of the corporation's directors who are not affiliated or associated with the
Interested Shareholder. The Company's Board of Directors, none of whom are
affiliated or associated with the Purchaser or Parent, has approved the Merger
Agreement and the Purchaser's acquisition of Shares pursuant to the Offer.
The FBCA also contains provisions relating to acquisitions of "control
shares," which are defined as shares that entitle a person to exercise more than
specified proportions of the voting power of a corporation. The voting rights of
such shares are limited if they have been obtained in certain types of
acquisition (a "control-share acquisition"). The FBCA expressly excludes an
acquisition of shares of a public corporation where the acquisition has been
approved by the board of directors of such corporation. The Company's Board of
Directors has approved the Merger Agreement and the Purchaser's acquisition of
Shares pursuant to the Offer.
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<PAGE>
Based on information supplied by the Company and the Company's
representations and warranties contained in the Merger Agreement, the Purchaser
does not believe that, other than as set out above, any state takeover statutes
purport to apply to the Offer or the Merger. Neither the Purchaser nor Parent
has currently complied with any state takeover statute or regulation. The
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action takes in connection with the Offer or the Merger
is intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applies to the Offer or the
Merger, the Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to accept for payment as pay for Shares tendered pursuant to the
Offer, or be delayed in consummating the Offer or the Merger. In such case, the
Purchaser may not be obliged to accept payment or pay for any Shares tendered
pursuant to the Offer.
ANTITRUST. The FTC and the Antitrust Division frequently scrutinize the
legality under the antitrust laws of transactions such as Purchaser's proposed
acquisition of the Company. At any time before or after Purchaser's purchase of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by Purchaser or the divestiture of substantial assets of Purchaser or
its subsidiaries, or the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer on antitrust grounds will not
be made or, if such a challenge is made, of the result of that challenge.
16. FEES AND EXPENSES
Lazard Freres is acting as Dealer Manager in connection with the Offer and
has provided certain financial advisory services to Parent in connection with
the proposed acquisition of the Company. In consideration of the foregoing,
Parent has agreed to pay Lazard Freres a fee of $1,000,000.
Purchaser has retained Morrow & Co., Inc. to act as the Information Agent,
and The Chase Manhattan Bank (National Association) to act as the Depositary, in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the federal securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions to
any broker or dealer or other person for soliciting tenders of Shares pursuant
to the Offer. Brokers, dealers, commercial banks and trust companies will be
reimbursed by Purchaser for customary mailing and handling expenses incurred by
them in forwarding the offering materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of the jurisdiction. However, Purchaser may,
in its discretion, take such action as it may deem necessary to make the Offer
in any jurisdiction and extend the Offer to holders of Shares in that
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers that are licensed under the laws of the jurisdiction.
Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule
14d-1 under the Exchange Act containing certain additional information with
respect to the Offer. The Schedule and
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<PAGE>
any amendments to the Schedule, including exhibits, may be examined and copies
may be obtained from the principal office of the Commission in the manner set
forth in Section 8 above (except that they will not be available at the regional
offices of the Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THE OFFER TO PURCHASE OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, THE INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
HPG ACQUISITION CORP.
April 17, 1996
35
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT
A. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Purchaser. Unless
otherwise indicated below, the business address of each such person is 235 East
42nd Street, New York, New York 10017-5755 and each such person is a citizen of
the United States.
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------- -------------------------------------------------------------------------------------
<S> <C>
George A. Stewart* President (January 1996-Present). President of the Medical Devices Division of
Parent's Hospital Products Group (1995-Present); President, Valleylab, Inc.
(1993-1995); President, Schneider Worldwide (1992-1993); President, Shiley Inc.
(1991-1992).
Robert C. Ross Director (January 1996-Present); Treasurer, Vice President and Assistant Secretary
(January 1996-Present). Senior Assistant General Counsel of Parent (1987-Present).
William E. Rhodes, III Director (January 1996-Present); Vice President (January 1996-Present). Director,
Business Development and Technology Assessment of Parent's Hospital Products Group
(1993-Present); President of The William-James Co. Biomedical Consulting Firm
(1983-1993).
Dorothy Bonner Burke Director (January 1996-Present); Secretary and Vice President (January 1996-Present).
Assistant General Counsel of Parent (1990-Present).
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, the business address of each such person is 235 East
42nd Street, New York, New York 10017-5755 and each such person is a citizen of
the United States.
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ---------------------------- ------------------------------------------------------------------------------------
<S> <C>
William C. Steere, Jr. Director (1987-Present); Chairman of the Board (March 1992-Present); Chief Executive
Officer (April 1991-Present); Chair of the Executive Committee. Formerly President
(1991-1992); Senior Vice President (1989-1991); Vice President (1983-1989);
President -- Pharmaceuticals Group (1986-1991). Director of the Federal Reserve Bank
of New York, Mineral Technologies Inc., Pharmaceuticals Research and Manufacturers
of America (PhRMA) and Texaco, Inc. Member of The Business Round Table.
Grace J. Fippinger Director (1976-Present); Member of the Executive Committee; Member of the Corporate
Governance Committee. Vice President, Secretary and Treasurer of NYNEX Corporation,
an exchange telecommunications and exchange access services company (1984-1990).
Director of the Bear Stearns Companies, Inc.
</TABLE>
- ------------------------
* Mr. Stewart is a citizen of Canada.
I-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ---------------------------- ------------------------------------------------------------------------------------
James T. Lynn Director (1979-Present); Member of the Corporate Governance Committee; Chair of that
Committee (1986 through January 1995). Senior Advisor to Lazard Freres & Co. LLC,
Investment Bankers (1992-Present); Chairman and Chief Executive Officer of Aetna
Life and Casualty Company (1984-1992) and Director (1979-1992). Director of TRW Inc.
<S> <C>
Paul A. Marks Director (1978-Present); Chair of the Corporate Governance Committee; member of the
Executive Committee. President and Chief Executive Officer of Memorial
Sloan-Kettering Cancer Center, a private health care institution devoted to cancer
prevention, patient care, research and education (1980-Present). Director of several
Dreyfus Mutual Funds, Life Technologies, Inc. and Tularik Inc.
Edmund T. Pratt, Jr. Director (1969-Present); Member of the Executive Committee; Chairman Emeritus
(1992-Present); Chairman of the Board (1972-1992); Chief Executive Officer
(1972-April 1991). Director of The Chase Manhattan Bank, N.A., The Chase Manhattan
Corporation, General Motors Corporation, International Paper Company, AEA Investors
Inc., Hughes Electronics Corporation and Minerals Technologies, Inc.
Felix G. Rohatyn Director (1971-Present); Member of the Executive Committee; Member of the Audit
Committee. Managing Director of Lazard Freres & Co. LLC, Investment Bankers
(1960-Present); Director of General Instrument Corporation; Former Chairman of the
Municipal Assistance Corporation for the City of New York (1975-1993).
Constance J. Horner Director (1993-Present); Member of the Corporate Governance Committee. Guest Scholar
at The Brookings Institution, an organization devoted to nonpartisan research,
education and publication in economics, government and foreign policy and the social
sciences (1993-Present); Commissioner, U.S. Commission on Civil Rights
(1993-Present); Served at the White House as Assistant to the President and as
Director of Presidential Personnel (August 1991-January 1993); Deputy Secretary,
U.S. Department of Health and Human Services (1989-1991); Director of the U.S.
Office of Personnel Management (1985-1989). Director of Ingersoll-Rand and The
Prudential Insurance Co. of America.
Thomas G. Labrecque Director (1993-Present); Member of the Executive Compensation Committee. President
and Chief Operating Officer and a Director of The Chase Manhattan Corporation, a
bank holding company, and The Chase Manhattan Bank, N.A. (1990-Present); President
of The Chase Manhattan Corporation and The Chase Manhattan Bank, N.A. (1981-1990);
Member of the Business Roundtable, the Council on Foreign Relations, the Council on
Competitiveness and the Trilateral Commission; President of The Bankers Roundtable
and the International Monetary Conference.
Jean-Paul Valles Director (1980-Present). Chairman of Minerals Technologies Inc., a resource and
technology-based company that develops, produces and markets specialty mineral,
mineral-based and synthetic mineral products (1989-Present), and Chief Executive
Officer of Minerals Technologies Inc. (1992-Present). Formerly Vice Chairman of
Parent (March-October 1992); Executive Vice President (1991-1992); Senior Vice
President (1989-1991); Senior Vice President -- Finance (1989-1990); Vice President
-- Finance (1980-1989).
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ---------------------------- ------------------------------------------------------------------------------------
M. Anthony Burns Director (1988-Present); Chair of the Executive Compensation Committee. Chairman of
the Board (1985-Present), Chief Executive Officer (1983-Present), President and
Director (1979-Present) of Ryder System, Inc., a provider of transportation and
logistics services in the Americas and Western Europe. Director of The Chase
Manhattan Bank, N.A., The Chase Manhattan Corporation and J.C. Penney Company Inc.
Member of the Business Roundtable and the Business Roundtable's Policy Committee and
Chairman of its Health, Welfare and Retirement Income Task Force.
<S> <C>
George B. Harvey Director (1994-Present); Member of the Executive Compensation Committee. Chairman,
President, and Chief Executive Officer (1983-Present) and Director (1980-Present) of
Pitney Bowes, a provider of mailing and office systems and management and financial
services. Director of Connecticut Mutual Life Insurance Company, McGraw-Hill, Inc.
and Merrill Lynch & Co., Inc.
Stanley O. Ikenberry Director (1982-Present); Chair of the Audit Committee. President Emeritus and Regent
Professor of the University of Illinois, a comprehensive public research university
with campuses at Urbana-Champaign and Chicago; Formerly President of the University
(1979-July 1995). Director of Harris Bank, Utilicorp United Inc. and the Chairman of
the Board of the Carnegie Foundation for the Advancement of Teaching.
Franklin D. Raines Director of the Company (1993-Present); Member of the Audit Committee. Vice Chairman
of the Federal National Mortgage Association (Fannie Mae), a company that provides a
secondary market for residential mortgages through portfolio purchases, issuance of
mortgage-backed securities and other services (1991-Present); General Partner in
municipal finance at the investment banking firm of Lazard Freres & Co. LLC
(1985-1990). Director of Fannie Mae and The Boeing Company.
Brian W. Barrett* President -- Animal Health Group (April 1996 -- Present); Executive Vice President,
International Pharmaceuticals Group (January 1996-April 1996); Vice President
(1992-Present); President, Northern Asia, Australasia and Canada -- International
Pharmaceuticals Group (1993-1995); President Asia/Canada (1991-1993); President --
Africa/ Middle East (1985-1991).
</TABLE>
<TABLE>
<S> <C>
M. Kenneth Bowler Vice President -- Federal Government Relations (1990-Present).
C.L. Clemente Senior Vice President -- Corporate Affairs; Secretary and Corporate
Counsel (1992-Present); Member of the Corporate Management
Committee (1991-Present); Vice President; General Counsel and
Secretary (1986-1992).
Bruce R. Ellig Vice President -- Employee Resources (formerly Vice President --
Personnel Relations) (1985-Present).
Donald F. Farley President of the Consumer Health Care Group (January 1996-Present);
Vice President (1993-Present); President of the Food Science Group
(1992-1995); Executive Vice President - Specialty Chemicals
(1988-1992).
</TABLE>
- ------------------------
* Mr. Barrett is a citizen of Canada.
I-3
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ----------------------- -------------------------------------------------------------------
George A. Forcier Vice President -- Quality Control (1994-Present); Group Director (1991-1994);
Director of the Analytical Research and Development Department (1986-1991).
<S> <C> <C>
P. Nigel Gray* President of the Hospital Products Group (July 1995-Present); Vice President
(1994-Present); Executive Vice President of the Hospital Products Division
(1993-1995); President of the Medical Devices Division (1993-1995); President of
Howmedica International (1992-1993); Senior Vice President and General Manager of
Howmedica International (1987-1992).
Gary N. Jortner Vice President; Group Vice President, Disease Management -- U.S. Pharmaceuticals
Group (1994-Present); Vice President (1992-Present); Vice President and General
Manager, Pfizer Labs Division (1991-1994); Vice President of Operations for Pfizer
Labs (1986-1991).
</TABLE>
<TABLE>
<S> <C>
Karen L. Katen President of the U.S. Pharmaceuticals Group (August 1995-Present);
Vice President (1992-Present); Executive Vice President of the U.S.
Pharmaceuticals Group (1993-1995); Vice President and General
Manager - Roerig Division (1986-1993).
Alan G. Levin Treasurer (January 1995-Present); Senior Director -- Finance, Asia
(1993-1994); Director -- Finance, Asia (1991-1993); Controller of
the Pfizer International Bank in San Juan, Puerto Rico (1988-1991).
Henry A. McKinnell* Executive Vice President (1992-Present); Responsible for U.S.
Pharmaceuticals Group, Consumer Health Care Group, Corporate;
Finance Division and Corporate Strategic Planning and Policy
(1995-Present); Member of the Corporate Management Committee
(1992-Present); President of the Hospital Products Group
(1992-1995); Chief Financial Officer (1990-1995); Vice President -
Finance (1990-1992). Director of Ariall, Inc.
Brower A. Merriam Vice President -- Animal Health Policy (April 1996 to Present);
President of the Animal Health Group (1992-April 1996); Vice
President (1992-Present); Executive Vice President of the Animal
Health Group (1991-1992); Executive Vice President of Pfizer
International (1990-1991).
Victor P. Micati Executive Vice President, International Pharmaceuticals Group
(January 1996-Present); Vice President (1992-Present); President,
Europe (1990-1995).
Paul S. Miller Senior Vice President; General Counsel (1992-Present); Member of
the Corporate Management Committee (1991-Present); Vice President;
General Counsel (1986-1992).
George M. Milne, Jr. President, Central Research (1993-Present); Vice President
(1993-Present); Senior Vice President, Research and Development
(1988-1993).
</TABLE>
- ------------------------
* Mr. Gray is a citizen of the United Kingdom. Mr. McKinnell is a citizen of
Canada.
I-4
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ----------------------- -------------------------------------------------------------------
<S> <C> <C>
Robert Neimeth President, International Pharmaceuticals Group (1992-Present); Responsible for
International Pharmaceutical and Animal Health operations (1992-Present) and
Hospital Products Group (1995-Present); Executive Vice President (1992-Present);
Member of the Corporate Management Committee (1991-Present); Chairman, President and
Chief Executive Officer of Pfizer International (1991-1992); President, Pfizer
International Subsidiaries (1990-1991).
John F. Niblack Executive Vice President -- Research and Development (1993-Present); Member of the
Corporate Management Committee (1993-Present); Vice President (1990-Present);
President Central Research (1990-1993).
William J. Robison Senior Vice President -- Employee Resources (January 1996-Present); President of
Consumer Health Care Group (1992-1995); Vice President (1992-1995); Vice President
and General Manager of Pratt Pharmaceuticals (1990-1992).
Herbert V. Ryan Controller (1993-Present); Assistant Controller, Corporate Accounting (1981-1993).
Craig Saxton Executive Vice President - Central Research (1993-President); Vice President
(1993-President); Senior Vice President, Clinical Research and Development for the
Central Research Division (1988-1993).
David L. Shedlarz Chief Financial Officer (August 1995-Present); Vice President-Finance
(1992-Present); Vice President of Finance for the Pharmaceuticals Group (1989-1992).
Frederick W. Telling Vice President, Corporate Strategic Planning and Policy (1994-Present); Senior Vice
President of Planning and Policy for the U.S. Pharmaceuticals Group (1994); Vice
President of Planning and Policy for the U.S. Pharmaceuticals Group (1987-1994).
</TABLE>
I-5
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each shareholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depository, at one of the addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
THE CHASE MANHATTAN BANK (National Association)
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
Box 3032 c/o Chase Securities (9.00 a.m. - 5:00 p.m.
4 Chase MetroTech Center Processing Corp. New York City Time)
Brooklyn, NY 11245 Ft. Lee Executive Park 1 Chase Manhattan Plaza
1 Executive Drive (6th Floor 1-B
Floor) Nassau and Liberty Streets
Ft. Lee, NJ 07024 New York, NY 10081
By Facsimile Transmission
(201) 592-4372
Information and Confirm
by Telephone
(201) 592-4370
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9061
Brokers and Brokerage firms, please call:
(800) 662-5200
THE DEALER MANAGER FOR THE OFFER IS:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, New York 10020
(Call Collect) 212-632-6717
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
CORVITA CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED APRIL 17, 1996
BY
HPG ACQUISITION CORP.
A DIRECT WHOLLY-OWNED SUBSIDIARY OF
PFIZER INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, MAY 14, 1996, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER:
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
Box 3032 c/o Chase Securities (9:00 a.m.-5:00 p.m.
4 Chase MetroTech Center Processing Corp. New York City Time)
Brooklyn, NY 11245 Fort Lee Executive Park 1 Chase Manhattan Plaza
1 Executive Drive (6th Floor) Floor 1-B
Fort Lee, NJ 07024 Nassau and Liberty Streets
By Facsimile Transmission New York, NY 10081
(201) 592-4372
Information and Confirm
by Telephone
(201) 592-4370
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW
AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Corvita Corporation (the "Shareholders") if certificates
evidencing Shares ("Certificates") are to be forwarded with this Letter of
Transmittal or if delivery of Shares is to be made by book-entry transfer to an
account maintained by The Chase Manhattan Bank (National Association) (the
"Depositary") at The Depository Trust Company ("DTC"), the Midwest Securities
Trust Company ("MSTC") or the Philadelphia Depository Trust Company ("PDTC")
(each a "Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3 of the Offer to Purchase (as defined below).
Shareholders whose Certificates are not immediately available or who cannot
deliver either their Certificates for, or a Book-Entry Confirmation (as defined
in Section 3 of the Offer to Purchase) with respect to, their Shares and all
other required documents to the Depositary prior to the Expiration Date (as
defined in Section 1 of
<PAGE>
the Offer to Purchase) may tender their Shares according to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2 hereof. Delivery of documents to a Book-Entry Transfer Facility
does not constitute delivery to the Depositary.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution: ____________________________________________
Check Box of Book-Entry Transfer Facility:
/ / DTC / / MSTC / / PDTC
Account Number: ___________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s): __________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution Which Guaranteed Delivery: _____________________________
If delivered by book-entry transfer, check box of Applicable Book-Entry
Transfer Facility:
/ / DTC / / MSTC / / PDTC
Account Number: ___________________________________________________________
Transaction Code Number: ___________________________________________________
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
Number of
Name(s) and Address(es) of Registered Holder(s) Share Shares Number of
(Please fill in, if blank, exactly as name(s) Certificates Represented by Shares
appear(s) on the Certificate(s)) Number(s)(1) Certificate(s)(1) Tendered(2)
<S> <C> <C> <C>
Total Shares
(1) Need not be completed by Shareholders delivering Shares by Book-Entry Transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to
the Depositary are being tendered. See Instruction 4.
</TABLE>
<PAGE>
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to HPG Acquisition Corp., a Florida
corporation and a direct wholly-owned subsidiary of Pfizer Inc. ("Purchaser"),
the above-described shares of common stock, $.001 par value (the "Shares"), of
Corvita Corporation, a Florida corporation (the "Company"), for $10.25 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated April 17, 1996 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer"). The undersigned understands
that Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to any newly formed direct or indirect wholly-owned subsidiary
of Purchaser, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer or prejudice the rights of
tendering Shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered with this Letter of Transmittal in accordance with the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms or conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to, or upon the order of,
Purchaser all right, title and interest in and to all of the Shares that are
being tendered hereby and any and all other Shares or other securities issued or
issuable in respect of such Shares on or after April 17, 1996 (a "Distribution")
and irrevocably constitutes and appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares (and
any Distributions), with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (i)
deliver Certificates evidencing such Shares (and any Distributions), or transfer
ownership of such Shares (and all Distributions) on the account books maintained
by a Book-Entry Transfer Facility together, in any such case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
Purchaser, upon receipt by the Depositary as the undersigned's agent, of the
purchase price with respect to such Shares, (ii) present such Shares (and any
Distributions) for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject to
the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to all
Shares tendered hereby and accepted for payment and paid for by Purchaser (and
any Distributions), including without limitation, the right to vote such Shares
(and any Distributions) in such manner as each such attorney and proxy or his
substitute shall, in his sole discretion, deem proper. All such powers of
attorney and proxies, being deemed to be irrevocable, shall be considered
coupled with an interest in the Shares tendered with this Letter of Transmittal.
Such appointment will be effective when, and only to the extent that, Purchaser
accepts such Shares for payment. Upon such acceptance for payment, all prior
powers of attorney and proxies given by the undersigned with respect to such
Shares (and any Distributions) will be revoked, without further action, and no
subsequent powers of attorneys and proxies may be given with respect thereto
(and, if given, will be deemed ineffective). The designees of Purchaser will,
with respect to the Shares (and any Distributions) for which such appointment is
effective, be empowered to exercise all voting and other rights of the
undersigned with respect to such Shares (and any Distributions) as they in their
sole discretion may deem proper. Purchaser reserves the absolute right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the acceptance for payment of such Shares, Purchaser or its designees are
able to exercise full voting rights with respect to such Shares (and any
Distributions), including voting at any meeting of Shareholders then scheduled.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions) and that, when the same are accepted for payment
and paid for by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that the Shares tendered hereby (and any Distributions)
will not be subject to any adverse claim. The undersigned, upon request, will
<PAGE>
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of Shares tendered hereby (and any Distributions). In addition, the
undersigned shall promptly remit and transfer to the Depositary for the account
of Purchaser any and all Distributions issued to the undersigned on or after
April 17, 1996 in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount of value thereof, as
determined by Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
instructions to this Letter of Transmittal will constitute a binding agreement
between the undersigned and Purchaser with respect to such Shares upon the terms
and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Purchaser may not be required to accept for payment any
of the Shares tendered hereby or may accept for payment fewer than all of the
Shares tendered hereby.
Unless otherwise indicated in this Letter of Transmittal under "Special
Payment Instructions," please issue the check for the purchase price and return
any Certificates evidencing Shares not tendered or not accepted for payment in
the name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and return any
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the "Special Payment Instructions" and the "Special Delivery Instructions"
are completed, please issue the check for the purchase price and return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and return such Certificates (and accompanying documents, as appropriate)
to the person(s) so indicated. Unless otherwise indicated in this Letter of
Transmittal under "Special Payment Instructions," in the case of a book-entry
delivery of Shares, please credit the account maintained at the Book-Entry
Facility indicated above with respect to any Shares not accepted for payment.
The undersigned recognizes that Purchaser has no obligation pursuant to the
"Special Payment Instructions" to transfer any Shares from the name of the
registered holder if Purchaser does not accept for payment any of the Shares
tendered hereby.
<PAGE>
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates:
____________________________________________________________________
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
TO BE COMPLETED ONLY IF CERTIFICATES FOR TO BE COMPLETED ONLY IF CERTIFICATES FOR
SHARES NOT TENDERED OR NOT ACCEPTED FOR SHARES NOT TENDERED OR NOT ACCEPTED FOR
PAYMENT AND/OR THE CHECK FOR THE PURCHASE PAYMENT AND THE CHECK FOR THE PURCHASE PRICE
PRICE OF SHARES ACCEPTED FOR PAYMENT ARE TO OF SHARES ACCEPTED FOR PAYMENT ARE TO BE
BE ISSUED IN THE NAME OF SOMEONE OTHER THAN SENT TO SOMEONE OTHER THAN THE UNDERSIGNED
THE UNDERSIGNED, OR IF SHARES DELIVERED BY OR TO THE UNDERSIGNED AT AN ADDRESS OTHER
BOOK-ENTRY TRANSFER THAT ARE NOT ACCEPTED THAN THAT SHOWN ABOVE.
FOR PAYMENT ARE TO BE RETURNED BY CREDIT TO
AN ACCOUNT MAINTAINED AT A BOOK-ENTRY
TRANSFER FACILITY, OTHER THAN TO THE ACCOUNT
INDICATED ABOVE.
Issue Check/Certificate(s) to: Mail Check/Certificate(s) to:
Name: Name:
(Please type or (Please type or Print)
Print) Address:
Address:
(Include Zip Code)
(Include Zip
Code) (Tax Identification or Social Security
No.)
(Tax Identification or Social Security
No.)
(See Substitute Form
W-9)
Credit unpurchased Shares delivered by book-
entry transfer to the Book-Entry Transfer
Facility account set forth below:
/ / DTC / / MSTC / / PDTC
(check one)
(DTC/MSTC/PDTC Acount Number)
</TABLE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, no
signature guarantee is required on this Letter of Transmittal (a) if this Letter
of Transmittal is signed by the registered holder(s) (which term, for the
purposes of this document, includes any participant in any of the Book-Entry
Facilities' systems whose name appears on a security position listing as the
owner of the Shares) of Shares tendered herewith and such registered holder has
not completed either the box entitled "Special Delivery Instructions" of the box
entitled "Special Payment Instructions" on this Letter of Transmittal or (b) if
such Shares are tendered for the account of a financial institution (including
most commercial banks, savings and loan associations and brokerage houses) that
is a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5. If the Certificates are registered in the name
of a person other than the signer of this Letter of Transmittal, or if payment
is to be made or delivered to, or Certificates evidencing unpurchased Shares are
to be issued or returned to, a person other than the registered owner, then the
tendered Certificates must be endorsed or accompanied by duly executed stock
powers, in either case signed exactly as the name or names of the registered
owner or owners appear on the Certificates, with the signatures on the
Certificates or stock powers guaranteed by an Eligible Institution as provided
in this Letter of Transmittal. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by Shareholders if Certificates evidencing Shares are to be forwarded with this
Letter of Transmittal or if delivery of Shares is to be made pursuant to the
procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase. For a Shareholder to validly tender Shares pursuant to the Offer,
either (a) a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile), with any required signature guarantees and any other
required documents, must be received by the Depositary at one of its addresses
set forth in this Letter of Transmittal on or prior to the Expiration Date (as
defined in the Offer to Purchase) and either (i) Certificates for tendered
Shares must be received by the Depositary at one of those addresses on or prior
to the Expiration Date or (ii) Shares must be delivered pursuant to the
procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase and a Book-Entry Confirmation must be received by the Depositary on or
prior to the Expiration Date or (b) the tendering Shareholder must comply with
the guaranteed delivery procedures set forth below and in Section 3 of the Offer
to Purchase.
Shareholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer on or prior to the Expiration
Date may tender their Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) tender
must be made by or through an Eligible Institution, (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by Purchaser, must be received by the Depositary prior to the
Expiration Date, and (iii) Certificates representing all tendered Shares in
proper form for transfer, or a Book-Entry Confirmation with respect to all the
tendered Shares, together with a Letter of Transmittal (or a manually signed
facsimile), properly completed and duly executed, with any required signature
guarantees or an Agent's Message (as defined in Section 2 of the Offer to
Purchase) in connection with a book-entry transfer and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within three NASDAQ Small-Cap Market trading days after the date of such Notice
of Guaranteed Delivery. If Certificates are forwarded separately to the
Depositary, a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile) must accompany each delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
<PAGE>
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering Shareholders, by execution of
this Letter of Transmittal (or a facsimile), waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal
is inadequate, the information required under "Description of Shares Tendered"
should be listed on a separate signed schedule attached to this Letter of
Transmittal.
4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary with this Letter of Transmittal are to
be tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, a new Certificate for the
remainder of the Shares that were evidenced by your old Certificate(s) will be
sent, without expense, to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Payment Instructions" or
the box entitled "Special Delivery Instructions" on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by
Certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all the owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or instruments of transfer
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, that person should so indicate when signing, and proper evidence
satisfactory to Purchaser of that person's authority to so act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on the Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures on
the Certificate(s) or instruments of transfer must be guaranteed by an Eligible
Instruction.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other than the registered holder(s), or if tendered
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder(s) or such person) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter of
Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and Certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and
Certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address
<PAGE>
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. If any tendered Shares are not purchased for any reason and
the Shares are delivered by Book-Entry Transfer Facility, the Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance may be directed to the Information Agent (as defined below) at
its address or telephone number set forth below and requests for additional
copies of the Offer to Purchase, this Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Information Agent or brokers,
dealers, commercial banks and trust companies and such materials will be
furnished at Purchaser's expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by
Purchaser, (subject to certain limitations in the Merger Agreement (as defined
in the Offer to Purchase)), in whole or in part, at any time or from time to
time, in Purchaser's sole discretion.
10. BACKUP WITHHOLDING TAX. Each tendering Shareholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below
and to certify that the Shareholder is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering Shareholder to a penalty and 31% federal income tax backup withholding
on the payment of the purchase price for the Shares. If the tendering
Shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future, the tendering Shareholder should check the
box in Part III of the Substitute Form W-9 and sign and date both the Substitute
Form W-9 and the "Certificate of Awaiting Taxpayer Identification." If the
Shareholder has indicated in the box in Part III that a TIN has been applied for
and the Depositary is not provided with a TIN by the time of payment, the
Depositary will withhold 31% of all payments of the purchase price, if any, made
thereafter pursuant to the Offer until a TIN is provided to the Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost, destroyed or stolen, the Shareholder should promptly
notify the Depositary by checking the box immediately preceeding the special
payment/special delivery instructions and indicating the number of Shares lost.
The Shareholders will then be instructed as to the steps that must be taken in
order to replace the Certificate(s). This Letter of Transmittal and related
documents cannot be processed until the procedures for replacing lost or
destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
(TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY
OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Shareholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
such Shareholder's correct TIN on Substitute Form W-9 below. If such Shareholder
is an individual, the TIN is his social security number. If the tendering
Shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future, the Shareholder should so indicate on the
Substitute Form W-9. See Instruction 10. If the Depositary is not provided with
the correct TIN, the Shareholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to the Shareholder
with respect to Shares purchased pursuant to the Offer may be subject to backup
federal income tax withholding at a 31% rate.
Certain Shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "exempt" across the
face of, and by signing and dating, the Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, that Shareholder must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Forms for such statements can be obtained from the
Depositary. See the enclosed Guidelines for Certificates of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Shareholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Shareholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that the Shareholder is awaiting a TIN) and that (1) the Shareholder
has not been notified by the Internal Revenue Service that he is subject to
backup withholding as a result of failure to report all interest or dividends or
(2) the Internal Revenue Service has notified the Shareholder that he is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
<PAGE>
IMPORTANT
SHAREHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 ON REVERSE
. ,
(Signature(s) of Shareholder(s))
. ,
(Signature(s) of Shareholder(s))
Dated: , 1996
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Certificate or on a security position listing or by person(s) authorized to
become registered holder(s) by Certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers or corporations or others acting in a
fiduciary or representative capacity, please provide the following information.
See Instruction 5.)
Name(s):
(Please type or Print)
Capacity (Full Title):
(See Instruction 5)
Address:
(Include Zip Code)
Daytime Area Code and Telephone Number:
(Home)
(Business)
Taxpayer Identification or Social Security No.:
(See Substitute Form W-9 on Reverse Side)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
(Authorized Signature(s))
(Name)
(Name of Firm)
(Address Including Zip Code)
(Area Code and Telephone Number)
Dated: , 1996
<PAGE>
<TABLE>
<S> <C> <C>
PAYER'S NAME: THE CHASE MANHATTAN BANK (NATIONAL ASSIOCATION)
SUBSTITUTE PART I -- PLEASE PROVIDE YOUR TIN PART III--Social Security Number
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY OR Employee Identification Number
DEPARTMENT OF THE TREASURY BY SIGNING AND DATING BELOW.
INTERNAL REVENUE SERVICE (If awaiting TIN write "Applied for")
PAYER'S REQUEST FOR
TAXPAYER
IDENTIFICATION NUMBER
(TIN)
PART II -- For Payees exempt from backup withholding, see the enclosed
Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 and complete as instructed therein.
Certifications--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a
number to be issued to me); and
(2) I am not subject to backup withholding either because I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or the IRS has notified me that I am no longer subject to backup
withholding.
Certification Instructions--You must cross out item (2) above if you have been notified by the IRS that
you are subject to backup withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you are subject to backup withholding, you
receive another notification from the IRS that you were no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the enclosed guidelines).
SIGNATURE DATE
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN
THE BOX IN PART III OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all payments of the purchase price pursuant to the
Offer made to me thereafter will be withheld until I provide a number.
Signature ______________________________________ Date ______________
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, New York
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms, please call:
(800) 662-5200
THE DEALER MANAGER FOR THE OFFER IS:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, New York 10020
(212) 632-6717
(Call Collect)
April 17, 1996
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
CORVITA CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, MAY 14, 1996, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery or a notice substantially equivalent
hereto must be used to accept the Offer (as defined below) if certificates
representing the common stock, $.001 par value (the "Shares"), of Corvita
Corporation, a Florida corporation, are not immediately available or the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach The Chase Manhattan Bank
(National Association) (the "Depositary") prior to the Expiration Date (as
defined in the Offer to Purchase). This Notice of Guaranteed Delivery may be
delivered by hand or transmitted by facsimile transmission or mail to the
Depositary. See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
Box 3032 c/o Chase Securities (9:00 a.m.-5:00 p.m.
4 Chase MetroTech Center Processing Corp. New York City Time)
Brooklyn, NY 11245 Fort. Lee Executive Park 1 Chase Manhattan Plaza
1 Executive Drive (6th Floor) Floor 1-B
Fort. Lee, NJ 07024 Nassau and Liberty Streets
By Facsimile Transmission New York, NY 10081
(201) 592-4372
Information and Confirm
by Telephone
(201) 592-4370
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to the Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to HPG Acquisition Corp., a Florida
corporation ("Purchaser"), a direct wholly-owned subsidiary of Pfizer Inc., a
Delaware corporation ("Parent"), upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated April 17, 1996 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together constitute
the "Offer"), receipt of each of which is hereby acknowledged, the number of
Shares indicated below pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Name of Record Holder(s):
Certificate Nos. (if available):
Check ONE box if Shares will be tendered by (Please type or Print)
book-entry transfer: Address(es):
/ / The Depository Trust Company
/ / Midwest Securities Trust Company (Zip Code)
/ / Philadelphia Depository Trust Company Area Code and Tel. No.:
Account Number: Signature(s):
Dated: , 1996
</TABLE>
2
<PAGE>
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as such term is defined in Section
3 of the Offer to Purchase), hereby guarantees to deliver to the Depositary the
certificates representing the Shares tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation (as defined in Section 3 of the Offer to
Purchase) with respect to such Shares, in either case together with a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees or an Agent's Message
(as defined in Section 2 in the Offer to Purchase) in connection with a
book-entry transfer, and any other documents required by the Letter of
Transmittal, all within three New York Stock Exchange, Inc. trading days after
the date hereof.
<TABLE>
<S> <C>
Name of Firm:
Address: (Authorized Signature)
Name:
(Zip Code) (Please type or print)
Area Code and Tel. No.: Title:
Date:
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH YOUR
LETTER OF TRANSMITTAL.
3
<PAGE>
LAZARD FRERES & CO. LLC
30 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORVITA CORPORATION
AT
$10.25 NET PER SHARE
BY
HPG ACQUISITION CORP.
A DIRECT WHOLLY-OWNED SUBSIDIARY OF
PFIZER INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, MAY 14, 1996, UNLESS THE OFFER IS EXTENDED.
April 17, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by HPG Acquisition Corp., a Florida corporation and a
direct wholly-owned subsidiary of Pfizer Inc. ("Purchaser"), to act as Dealer
Manager in connection with Purchaser's offer to purchase for cash all of the
outstanding shares of common stock, $.001 par value (the "Shares"), of Corvita
Corporation, a Florida corporation (the "Company"), for $10.25 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated April 17, 1996 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, together with the Offer to Purchase,
constitute the "Offer") enclosed. Please furnish copies of the enclosed
materials to those of your clients for whose accounts you hold Shares in your
name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase dated April 17, 1996.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. A letter to shareholders of the Company from Norman R. Weldon,
Ph.D., President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to shareholders
of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if neither of the two procedures for tendering Shares set forth in
the Offer to Purchase can be completed on a timely basis.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
<PAGE>
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to The Chase Manhattan Bank (National
Association), the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, MAY 14, 1996, UNLESS THE OFFER
IS EXTENDED.
Please note the following:
1. The tender price is $10.25 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not
properly withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase) a majority of the outstanding Shares and certain other conditions.
See the Introduction and Sections 1 and 14 of the Offer to Purchase.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. However, federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is
provided or unless the required tax identification information is provided.
See Instruction 10 of the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, May 14, 1996, unless the Offer is extended.
6. The board of directors of the Company has determined that the Offer
and the Merger (as defined in the Offer to Purchase) are fair to, and in the
best interests of, the shareholders of the Company, has approved the Merger
Agreement (as defined in the Offer to Purchase), the Shareholders Agreement
(as defined in the Offer to Purchase), and the Offer and the Merger in all
respects and recommends that the shareholders of the Company accept the
Offer and tender their Shares pursuant thereto.
7. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation (as defined in Section 3 to the Offer to Purchase)
with respect to) such Shares, (b) the Letter of Transmittal (or a manually
signed facsimile), properly completed and duly executed with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer, and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may
not be made to all tendering shareholders at the same time depending upon
when certificates for Shares or Book-Entry Confirmation with respect to
Shares are actually received by the Depositary.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile) and any
required signature guarantees or other required documents should be sent to the
Depositary and (ii) certificates representing the tendered Shares or a timely
Book-Entry Confirmation (as defined in Section 3 to the Offer to Purchase) with
respect to such Shares should be delivered to the Depositary in accordance with
the instructions set forth in the Letter of Transmittal and the Offer to
Purchase.
2
<PAGE>
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date (as defined in
the Offer to Purchase) a tender may be effected by following the guaranteed
delivery procedures specified in Section 3 of the Offer to Purchase.
Neither Purchaser nor Pfizer Inc. will pay any fees or commissions to any
broker or dealer or other person for soliciting tenders of Shares pursuant to
the Offer (other than the Dealer Manager, Depositary and the Information Agent
as described in the Offer to Purchase). Purchaser will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. Purchaser will pay or
cause to be paid any transfer taxes payable on the transfer of Shares to it,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Lazard Freres & Co. LLC, the Dealer Manager for the Offer, at 30 Rockefeller
Plaza, New York, New York 10020, (212) 632-6717 or Morrow & Co., Inc., the
Information Agent for the Offer, at 909 Third Avenue, New York, New York 10022.
Requests for copies of the enclosed materials may also be directed to the
Dealer Manager or the Information Agent at the above addresses and telephone
numbers.
Very truly yours,
LAZARD FRERES & CO. LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PURCHASER, THE COMPANY, THE DEALER MANAGER, THE
DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF
ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND
THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORVITA CORPORATION
AT
$10.25 NET PER SHARE
BY
HPG ACQUISITION CORP.
A DIRECT WHOLLY-OWNED SUBSIDIARY OF
PFIZER INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, MAY 14, 1996, UNLESS THE OFFER IS EXTENDED.
April 17, 1996
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated April 17,
1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by HPG Acquisition Corp.,
a Florida corporation and a direct wholly-owned subsidiary of Pfizer Inc.
("Purchaser"), to purchase all the outstanding shares of common stock, $.001 par
value (the "Shares"), of Corvita Corporation, a Florida corporation (the
"Company"), at a purchase price of $10.25 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer. Holders of
Shares whose certificates for such Shares are not immediately available or who
cannot deliver their certificates and all other required documents to the
depositary (the "Depositary") or complete the procedures for book-entry transfer
prior to the Expiration Date (as defined in the Offer to Purchase) must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instruction as to whether you wish to have us tender
on your behalf any or all Shares held by us for your account pursuant to the
terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $10.25 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not
properly withdrawn prior to the Expiration Date a majority of the
outstanding Shares and certain other conditions. See the Introduction and
Sections 1 and 14 of the Offer to Purchase.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering shareholders will not be obliged to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. However, federal income tax backup withholding at a
rate of 31% may be required, unless an exemption is provided or unless the
required taxpayer identification information is provided. See Instruction 10
of the Letter of Transmittal.
<PAGE>
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, May 14, 1996, unless the Offer is extended.
6. The board of directors of the Company has determined that the Offer
and the Merger (as defined in the Offer to Purchase) are fair to, and in the
best interests of, the shareholders of the Company, has approved the Merger
Agreement (as defined in the Offer to Purchase), the Shareholders Agreement
(as defined in the Offer to Purchase), and the Offer and the Merger in all
respects and recommends that the shareholders of the Company accept the
Offer and tender their Shares pursuant thereto.
7. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation (as defined in Section 3 to the Offer to Purchase)
with respect to) such Shares, (b) the Letter of Transmittal (or a manually
signed facsimile), properly completed and duly executed with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer, and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may
not be made to all tendering shareholders at the same time depending upon
when certificates for Shares or Book-Entry Confirmation with respect to
Shares are actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified below. An
envelope to return your instructions to us is enclosed. Your instructions should
be forwarded to us in ample time to permit us to submit a tender on your behalf
prior to the expiration of the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser may,
in its discretion, take such action as it may deem necessary to make the Offer
to holders of Shares in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to be
made on behalf of Purchaser by one or more registered brokers or dealers that
are licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORVITA CORPORATION
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase, dated April 17, 1996, and the related Letter of Transmittal (which
together constitute the "Offer") in connection with the offer by HPG Acquisition
Corp., a Florida corporation and a direct wholly-owned subsidiary of Pfizer Inc.
("Purchaser"), to purchase all outstanding shares of common stock, par value
$.001 per share ("Shares"), of Corvita Corporation, a Florida corporation.
This will instruct you to tender to Purchaser the number of Shares indicated
below (or if no number is indicated below, all Shares) which are held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Number of Shares to be Tendered*: ______________________________________________
Date: __________________________________________________________________________
________________________________________________________________________________
SIGN HERE
Signature(s): __________________________________________________________________
(Print Name(s)): _______________________________________________________________
(Print Address(es)): ___________________________________________________________
(Area Code and Telephone Number(s)): ___________________________________________
(Taxpayer Identification or Social Security Number(s)): ________________________
*Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
- ----------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
</TABLE>
- ----------------------------------------------------------
<TABLE>
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under State
law
8. Sole proprietorship account The owner(4)
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
</TABLE>
- ----------------------------------------------------------
<TABLE>
<C> <S> <C>
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a state or local
government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
- ----------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, from your local office of
the Social Security Administration or the Internal Revenue Service and apply for
a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on payments of interest,
dividends and with respect to broker transactions include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a middleman known in the investment community as a nominee
as listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a middleman known in the investment community as a nominee
as listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
Exempt payees described above should file Substitute Form W-9 to avoid possible
erroneous backup withholding.
FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE
PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE
FORM.
Certain payments, other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045 and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest
or other payments to give taxpayer identification numbers to payers who must
report the payments to the IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE, DATED APRIL
17, 1996, AND THE RELATED LETTER OF TRANSMITTAL AND ANY AMENDMENTS OR
SUPPLEMENTS THERETO, AND IS BEING MADE TO ALL HOLDERS OF SHARES. THE OFFER IS
NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF
SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN ANY
JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE OFFER TO
BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON
BEHALF OF HPG ACQUISITION CORP. BY LAZARD FRERES & CO. LLC OR ONE OR MORE
REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORVITA CORPORATION
AT
$10.25 NET PER SHARE
BY
HPG ACQUISITION CORP.
A DIRECT WHOLLY-OWNED SUBSIDIARY
PFIZER INC.
HPG Acquisition Corp., a Florida corporation ("Purchaser") and a direct
wholly-owned subsidiary of Pfizer Inc., a Delaware corporation ("Parent"), is
offering to purchase all outstanding shares of common stock, $.001 par value
(the "Shares"), of Corvita Corporation, a Florida corporation (the
"Company"), at a price of $10.25 per share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated April 17, 1996, and the related Letter of Transmittal (which together
constitutes the "Offer"). Tendering shareholders will not be obligated to
pay brokerage fees or commissions or, except as set forth in Instruction 6 of
the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant
to the Offer. The purpose of the Offer is to acquire for cash as many
outstanding Shares as possible as a first step in acquiring the entire equity
interest in the Company. Following consummation of the Offer, Purchaser
intends to effect the merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, MAY 14, 1996, UNLESS EXTENDED.
THE OFFER IS CONDITION UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER NUMBER OF SHARES
REPRESENTING A MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS.
The Offer is made pursuant to an Agreement and Plan of Merger, dated as of
April 11, 1996 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that after the
purchase of Shares pursuant to the Offer, subject to the satisfaction or waiver
of certain conditions, Purchaser will be merged with and into the Company (the
"Merger"), with the Company surviving the Merger as a direct, wholly-owned
subsidiary of Parent. At the effective time of the Merger, each outstanding
Share (other than Shares owned by the Company or any Subsidiary of the Company
or by Parent, Purchaser or any other subsidiary of Parent, and Shares owned by
shareholders who shall have properly exercised their appraisal rights under
Florida law) will be converted into the right to receive $10.25 in cash or any
greater amount paid pursuant to the Offer without interest.
Concurrently with the execution of the Merger Agreement, Parent and
Purchaser entered into a Shareholders Agreement, dated as of April 11, 1996
(the "Shareholders Agreement"), with certain shareholders of the Company (the
"Selling Shareholders"), pursuant to which such Selling Shareholders have
agreed to validly tender (and not to withdraw) in the Offer approximately 21%
of the Company's outstanding common stock (or approximately 18% of the
outstanding Shares on a fully diluted basis).
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS (a) DETERMINED THAT
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER, ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
SHAREHOLDERS OF THE COMPANY, (b) APPROVED THE MERGER AGREEMENT AND THE
SHAREHOLDERS AGREEMENT, AND THE OFFER AND THE MERGER, IN ALL RESPECTS, AND (c)
RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER
THEIR SHARES THEREUNDER TO PURCHASER PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares as, if and when Purchaser
gives oral or written notice to the Depositary (as defined in the Offer to
Purchase) of its acceptance of such Shares for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, payment for
Shares purchased pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purposes of receiving payments from Purchaser
and transmitting payment to tendering shareholders whose Shares have
theretofore been accepted for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for (or a timely Book-Entry Confirmation (as
defined in Section 3 of the Offer to Purchase) with respect to) such Shares
and (ii) the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed with all required signature guarantees
or an agent's message, and (iii) all other documents required by the Letter
of Transmittal. Under no circumstances will interest by paid on the purchase
price for Shares to be paid by Purchaser, regardless of any delay in making
such payment.
The term "Expiration Date" shall mean 12:00 midnight, New York City
time, on Tuesday, May 14, 1996, unless and until Purchaser, in accordance
with the terms of the Offer and the Merger Agreement, shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by Purchaser, shall expire. Subject to the terms of the Merger
Agreement and applicable law, Purchaser expressly reserves the right, at any
time or from time to time, to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, or payment for,
any Shares by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. Purchaser
shall not have any obligation to pay interest on the purchase price for
tendered Shares whether or not Purchaser exercises its right to extend the
period of time during which the Offer is open. Any such extension will be
followed by a public announcement thereof by no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. During any such extension, all Shares previously tendered
and not withdrawn will remain subject to the Offer, subject to the right of a
tendering shareholder to withdraw such shareholder's Shares. Without limiting
the manner in which Purchaser may choose to make any public announcement,
Purchaser will have no obligation to publish, advertise or otherwise
communicate any such announcement other than by issuing a release to the Dow
Jones News Service or as otherwise may be required by law.
Except as otherwise provided in the Offer to Purchase, tenders of Shares
are irrevocable. Shares tendered pursuant to the Offer may be withdrawn any
time prior to the Expiration Date and, unless theretofore accepted for
payment by Purchaser as provided for in the Offer to Purchase, may also be
withdrawn at any time after Saturday, June 15, 1996. For a withdrawal to be
effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at its address set forth
on the back cover of the Offer to Purchase. Any such notice of withdrawal
must specify the name of the person who tendered the Shares to be withdrawn
the number of Shares to be withdrawn and the name of the registered holder,
if different from that of the person who tendered such Shares. If
certificates evidencing Shares have been delivered or otherwise identified to
the Depositary, then prior to the release of such certificates, the tendering
shareholder must also submit the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn, and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, as
defined in Section 3 of the Offer to Purchase (except in the case of Shares
tendered for the account of an Eligible Institution). If Shares have been
tendered pursuant to the procedure for book-entry transfer set forth in
Section 3 of the Offer to Purchase, the notice of withdrawal must specify the
name and number of the account at the applicable Book-Entry Transfer Facility
(as defined in Section 3 of the Offer to Purchase) to be credited with the
withdrawn Shares. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination shall be final and binding on all
parties. Any Shares properly withdrawn will be deemed not validly tendered
for purposes of the Offer, but may be tendered at any subsequent time prior
to the Expiration Date by following any of the procedures described in
Section 3 of the Offer to Purchase.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and, if
required, any other relevant materials will be mailed to record holders of
Shares and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the name of whose nominees, appear
on the Company's shareholders list or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares by Purchaser.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
<PAGE>
Requests for copies of the Offer to Purchase, the Letter of Transmittal
and other tender offer documents may be directed to the Information Agent as
set forth below, and copies will be furnished promptly at Purchaser's
expense. Questions or requests for assistance may be directed to the
Information Agent or the Dealer Manager. Neither Purchaser nor Parent will
pay any fees or commissions to any broker or dealer or other person (other
than the Dealer Manager, the Depositary and the Information Agent) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms, please call:
(800) 662-5200
THE DEPOSITARY FOR THE OFFER IS:
THE CHASE MANHATTAN BANK, N.A.
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
Box 3032 c/o Chase Securities Processing Corp. (9:00 a.m. - 5:00 p.m.
4 Chase MetroTech Center Ft. Lee Executive Park New York City time)
Brooklyn, NY 11245 1 Executive Drive (6th Floor) 1 Chase Manhattan Plaza, Floor 1-B
Ft. Lee, NJ 07024 Nassau and Liberty Streets
New York, NY 10081
</TABLE>
BY FACSIMILE TRANSMISSION:
(201) 592-4372
CONFIRM BY TELEPHONE:
(201) 592-4370
THE DEALER MANAGER FOR THE OFFICE IS:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, New York 10020
(212) 632-6717
(call collect)
April 17, 1996
<PAGE>
AGREEMENT AND PLAN OF MERGER
AMONG
PFIZER INC.,
HPG ACQUISITION CORP.
AND
CORVITA CORPORATION
Dated as of April 11, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Company Action . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.3 Directors. . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.4 Effects of the Merger. . . . . . . . . . . . . . . . . . 8
SECTION 2.5 Articles of Incorporation and Bylaws . . . . . . . . . . 8
SECTION 2.6 Directors and Officers . . . . . . . . . . . . . . . . . 8
SECTION 2.7 Merger Without Meeting of Shareholders.. . . . . . . . . 8
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS . . . . . . . . . . . . 8
SECTION 3.1 Effect on Capital Stock. . . . . . . . . . . . . . . . . 8
SECTION 3.2 Stock Options; Warrants. . . . . . . . . . . . . . . . . 9
ARTICLE IV PAYMENT OF SHARES . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.1 Payment for Shares . . . . . . . . . . . . . . . . . . . 10
SECTION 4.2 Stock Transfer Books . . . . . . . . . . . . . . . . . . 13
SECTION 4.3 Dissenting Shares. . . . . . . . . . . . . . . . . . . . 13
SECTION 4.4 Right to Merger Consideration. . . . . . . . . . . . . . 13
ARTICLE V REPRESENTATIONS AND WARRANTIES
OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.1 Organization and Qualification . . . . . . . . . . . . . 14
SECTION 5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.3 Corporate Power and Authority. . . . . . . . . . . . . . 15
SECTION 5.4 Absence of Certain Changes . . . . . . . . . . . . . . . 16
SECTION 5.5 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.6 Governmental Authorization . . . . . . . . . . . . . . . 18
SECTION 5.7 Non-Contravention. . . . . . . . . . . . . . . . . . . . 18
SECTION 5.8 Investment Banking Fees and Commissions. . . . . . . . . 19
SECTION 5.9 Material Contracts . . . . . . . . . . . . . . . . . . . 19
SECTION 5.10 Litigation, etc. . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.11 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.12 Intellectual Property. . . . . . . . . . . . . . . . . . 24
SECTION 5.13 Restrictions on Operations . . . . . . . . . . . . . . . 25
SECTION 5.14 Environmental Laws . . . . . . . . . . . . . . . . . . . 25
SECTION 5.15 Compliance with Laws . . . . . . . . . . . . . . . . . . 28
SECTION 5.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 28
i
<PAGE>
SECTION 5.17 Product Registration;
Regulatory Compliance. . . . . . . . . . . . . . . . . . 30
SECTION 5.18 Company Action . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.19 Labor Matters. . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.20 Supply . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB. . . . . . . . . . . . . . . . . . . 33
SECTION 6.1 Organization and Qualification . . . . . . . . . . . . . 33
SECTION 6.2 Corporate Power and Authority. . . . . . . . . . . . . . 33
SECTION 6.3 Governmental Authorization . . . . . . . . . . . . . . . 33
SECTION 6.4 Non-Contravention. . . . . . . . . . . . . . . . . . . . 34
SECTION 6.5 Merger Sub . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.1 Conduct of Business. . . . . . . . . . . . . . . . . . . 35
SECTION 7.2 No Solicitation. . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.3 Access to Information. . . . . . . . . . . . . . . . . . 40
SECTION 7.4 Reasonable Best Efforts. . . . . . . . . . . . . . . . . 40
SECTION 7.5 Indemnification and Insurance. . . . . . . . . . . . . . 41
SECTION 7.6 State Takeover Statutes. . . . . . . . . . . . . . . . . 43
SECTION 7.7 Proxy Statement. . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.8 Company Meeting. . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.9 Support of Merger. . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER. . . . . . . . . . . 44
SECTION 8.1 Conditions to Each Party's
Obligation to Effect the Merger. . . . . . . . . . . . . 44
ARTICLE IX TERMINATION; AMENDMENT; WAIVER. . . . . . . . . . . . . . . . 45
SECTION 9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.2 Effect of Termination. . . . . . . . . . . . . . . . . . 46
SECTION 9.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . 46
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.1 Non-Survival of Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.2 Entire Agreement; Assignment . . . . . . . . . . . . . . 47
SECTION 10.3 Enforcement of the Agreement . . . . . . . . . . . . . . 47
SECTION 10.4 Validity . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.7 Descriptive Headings . . . . . . . . . . . . . . . . . . 49
SECTION 10.8 Parties in Interest. . . . . . . . . . . . . . . . . . . 49
SECTION 10.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.10 Fees and Expenses. . . . . . . . . . . . . . . . . . . . 50
SECTION 10.11 Performance by Merger Sub. . . . . . . . . . . . . . . . 51
SECTION 10.12 Materiality. . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.13 Subsidiaries Defined . . . . . . . . . . . . . . . . . . 51
SECTION 10.14 Publicity. . . . . . . . . . . . . . . . . . . . . . . . 51
ii
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 11, 1996, among Pfizer
Inc., a Delaware corporation ("Parent"), HPG ACQUISITION CORP., a Florida
corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), and CORVITA
CORPORATION, a Florida corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent and Merger Sub
have each determined that it is advisable and in the best interest of Parent and
its stockholders to engage in a transaction whereby Merger Sub will merge with
and into the Company on the terms and subject to the conditions of this
Agreement; and
WHEREAS, the Board of Directors of the Company has determined that it
is advisable and in the best interest of the Company and its shareholders to
engage in a transaction whereby Merger Sub will merge with and into the Company
on the terms and subject to the conditions of this Agreement; and
WHEREAS, in furtherance thereof, it is proposed that Merger Sub shall
make a tender offer (the "Offer") to acquire all of the outstanding shares of
common stock, par value $0.001 per share, of the Company (the "Shares"), at a
price of $10.25 per Share (such amount, or any greater amount per share paid
pursuant to the Offer, being hereinafter referred to as the "Offer
Consideration"), net to the sellers in cash, in accordance with the terms and
subject to the conditions provided for herein; and
WHEREAS, as an inducement and a condition to entering into this
Agreement, Parent required certain shareholders of the Company (the "Selling
Shareholders") to execute and deliver, contemporaneously herewith, an agreement
(the "Shareholders Agreement") providing for certain matters with respect to
their Shares, the tender of their Shares and certain other actions relating to
the Offer, and in order to induce Parent and Merger Sub to enter into this
Agreement, the Company has approved the execution and delivery by Merger Sub and
such shareholders of the Shareholders Agreement; and
<PAGE>
WHEREAS, the Company, Parent and Merger Sub wish to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 THE OFFER. (a) Provided that this Agreement shall not
have been terminated pursuant to Article IX and none of the events or conditions
set forth in Annex A shall have occurred or be existing, Merger Sub shall, and
Parent shall cause Merger Sub to, commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), the
Offer as promptly as practicable (but in no event later than the fifth business
day from and including the date of the initial public announcement of this
Agreement). Subject to the terms and conditions of the Offer, Merger Sub shall,
and Parent shall cause Merger Sub to, accept for payment at the Offer
Consideration (and thereby purchase) and pay for all of the Shares that have
been validly tendered and not withdrawn pursuant to the Offer prior to its
expiration date, as it may be extended in accordance with the terms of the Offer
(the "Acceptance Date"). The obligation of Merger Sub to, and of Parent to
cause Merger Sub to, commence the Offer and accept for payment, purchase and pay
for all of the Shares tendered pursuant to the Offer shall be subject to the
conditions set forth in Annex A hereto, including the condition that a number of
Shares representing a majority of all outstanding Shares on a fully diluted
basis (based on the number of Shares outstanding as of the Acceptance Date)
shall have been validly tendered and not withdrawn prior to the expiration date
of the Offer (the "Minimum Condition"). Merger Sub expressly reserves the right
to increase the price per Share payable in the Offer or to make any other
changes in the terms and conditions of the Offer, except without the written
consent of the Company, Merger Sub shall not (i) reduce the number of Shares
sought to be purchased pursuant to the Offer, (ii) reduce the price per Share
payable in the Offer, (iii) change the form of consideration to be paid in the
Offer, (iv) impose additional conditions to the Offer or amend any other term of
the Offer in any
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manner adverse to the holders of Shares or (v) amend or waive satisfaction of
the Minimum Condition.
(b) On the date of commencement of the Offer, Parent and Merger Sub
shall file with the Securities and Exchange Commission (the "SEC") a Tender
Offer Statement on Schedule 14D-1 with respect to the Offer which will contain
the offer to purchase and form of the related letter of transmittal (such
Schedule 14D-1 and the documents therein pursuant to which the Offer will be
made, together with any supplements or amendments thereto, collectively, the
"Offer Documents"). Parent and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and Parent
agrees to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. Parent and
Merger Sub agree to give the Company and its counsel a reasonable opportunity to
review and comment upon any Offer Document to be filed with the SEC prior to any
such filing and to provide the Company and its counsel in writing with any
comments Parent, Merger Sub or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments.
(c) The Offer shall be made by means of an offer to purchase which
shall provide for an initial expiration date of 20 business days from the date
of commencement. Parent and Merger Sub agree that Merger Sub shall not
terminate or withdraw the Offer or extend the expiration date of the Offer
unless at the expiration date of the Offer the conditions to the Offer shall not
have been satisfied or earlier waived; PROVIDED that notwithstanding the
foregoing, Merger Sub may, without the consent of the Company, extend the Offer
on one occasion following the time that all of the conditions to the Offer have
been satisfied as of the scheduled expiration date of the Offer for a period not
to exceed 10 business days, if the number of Shares tendered, together with any
Shares beneficially owned by Parent or Merger Sub or any other wholly-owned
subsidiary of Parent, is less than 80% of the Shares outstanding on the
scheduled expiration date of the Offer; PROVIDED, FURTHER, that if Merger Sub
elects to extend the Offer as set forth in the immediately preceding proviso,
the obligation of Merger Sub, and of Parent to cause Merger Sub to, accept for
payment, purchase and pay for all of the Shares tendered pursuant to
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the Offer and not withdrawn shall be subject only to the Minimum Condition and
the conditions set forth in Sections 3(A), 3(B) and 3(F) of Annex A. If at the
expiration date of the Offer, any of the conditions to the Offer shall not have
been satisfied or earlier waived but, in the reasonable belief of Parent, may be
satisfied prior to August 9, 1996, Merger Sub shall extend the expiration date
of the Offer an additional period or periods of time until the earlier of (i)
the date all such conditions are met or waived and Merger Sub becomes obligated
to accept for payment and pay for shares tendered pursuant to the Offer or (ii)
this Agreement is terminated in accordance with its terms. Notwithstanding
anything to the contrary contained herein, Merger Sub may without the consent of
the Company, extend the Offer so as to comply with applicable rules and
regulations of the SEC. Any individual extension of the Offer shall be for a
period of no more than 10 business days.
SECTION 1.2 COMPANY ACTION. (a) The Company hereby approves of
and consents to the Offer at the Offer Consideration and represents and warrants
that the Company's Board of Directors, at a meeting duly called and held, has,
subject to the terms and conditions set forth herein, (i) determined that this
Agreement and the transactions contemplated hereby, including the Offer at the
Offer Consideration and the Merger, are fair to, and in the best interests of,
the shareholders of the Company, (ii) approved this Agreement and the
Shareholders Agreement, the Offer at the Offer Consideration and the Merger, in
all respects, including for purposes of Section 1103 of the Florida 1989
Business Corporation Act (the "BCA"), and (iii) resolved to recommend that the
shareholders of the Company accept the Offer, tender their Shares thereunder at
the Offer Consideration to Merger Sub and approve and adopt this Agreement and
the Merger. The Company consents to the inclusion of such recommendation and
approval in the Offer Documents. The Company further represents that Dillon,
Read & Co. Inc., the Company's financial advisor ("Dillon Read"), has delivered
to the Company's Board of Directors the written opinion of Dillon Read that the
Offer Consideration to be received by the shareholders of the Company pursuant
to the Offer and the Merger is fair from a financial point of view to such
shareholders.
(b) The Company hereby agrees, subject to the terms and conditions
set forth herein, to file as promptly as practicable (and after affording Parent
and its counsel a reasonable opportunity to review and comment thereon) with
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the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (such Schedule
14D-9 together with any amendments or supplements thereto, the "Schedule 14D-9")
containing the recommendations described in Section 1.2(a) and to mail the
Schedule 14D-9 to the shareholders of the Company concurrently with the
commencement of the Offer. Each of the Company, Parent and Merger Sub agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that it shall have become false or misleading in any
material respect and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Notwithstanding anything to the
contrary in this Agreement, the recommendations referred to in Section 1.2(a)
and the Schedule 14D-9 may be withdrawn, modified or amended if the Board of
Directors of the Company, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that the failure to take
such action could create a reasonable possibility of a breach by the Board of
Directors of the Company of its fiduciary duties to shareholders under
applicable law.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Merger Sub promptly with mailing labels, securities
position listings and any available listing or computer file containing the
names and addresses of the record holders of the Shares as of a recent date and
shall furnish Merger Sub with such additional information and assistance
(including, without limitation, updated lists of shareholders, mailing labels
and lists of securities positions) as Merger Sub or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Merger Sub shall hold
in confidence the information contained in any of such lists or labels and the
additional information referred to in the preceding sentence, will use the
information contained in any such labels, listings and files only in connection
with the Offer and the Merger and, if this Agreement shall be terminated, will
deliver to the Company all copies of such information then in their possession.
5
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SECTION 1.3 DIRECTORS. (a) Promptly upon the purchase pursuant to
the Offer by Parent or Merger Sub of such number of Shares which represents a
majority of all outstanding Shares on a fully diluted basis, Parent shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Company's Board of Directors that equals the product of (i) the
total number of directors on the Company's Board of Directors (giving effect to
the election of any additional directors pursuant to this Section) and (ii) the
percentage (expressed as a decimal) that the number of Shares beneficially owned
by Parent bears to the total number of Shares outstanding, and the Company
shall, subject to compliance with Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder, take all action necessary to cause Parent's
designees to be elected or appointed to the Company's Board of Directors,
including, without limitation, increasing the number of directors or seeking and
accepting resignations of incumbent directors. Notwithstanding the foregoing,
until the Effective Time (as defined in Section 2.2) the Company shall be
entitled to retain as members of its Board of Directors at least two directors
who are directors of the Company on the date hereof, subject to their
availability and willingness to serve. The date on which Parent's designees
constitute a majority of the Company's board of directors is referred to as the
"Control Date."
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 1.3 and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 1.3. Parent will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors pursuant to this
Section 1.3 and prior to the Effective Time, any amendment of this Agreement,
any termination of this Agreement by the Company, any extension of time for
performance of any of the obligations of Parent or Merger Sub hereunder or any
waiver thereof, any waiver of any condition to the obligations of the Company or
any of the Company's rights hereunder or other action by the Company hereunder
will require the concurrence of, and shall
6
<PAGE>
be effective only if approved by a majority of the directors of the Company then
in office who are not affiliates of Parent and were not designated by Parent
(the "Company Designees"), which action shall be deemed to constitute the action
of the full Board of Directors even if such majority of the Company Designees
does not constitute a majority of all directors then in office; provided, that,
if there shall be no Company Designees, such actions may be effected by majority
vote of the entire Board of Directors except that no such action shall amend the
terms of this Agreement in a manner adverse to the shareholders of the Company.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER. Upon the terms and subject to the
conditions hereof, and pursuant to Section 1103 of the BCA, Merger Sub shall be
merged with and into the Company (the "Merger") at the Effective Time. Following
the Merger, the Company shall continue as the surviving corporation (the
"Surviving Corporation") under the name of "Corvita Corporation," and the
separate corporate existence of Merger Sub shall cease.
SECTION 2.2 EFFECTIVE TIME. On the date of the Closing (as defined
in Section 2.3), the Surviving Corporation will cause articles of merger
substantially in the form of Exhibit A attached hereto (the "Articles of
Merger") to be executed and filed with the Secretary of State of the State of
Florida as provided in Section 1105 of the BCA. The Merger shall become
effective (i) at the time and date which the Articles of Merger are filed with
the Secretary of State of the State of Florida or (ii) such other time as is
agreed upon by the parties and specified in the Articles of Merger (such time as
the Merger becomes effective is hereinafter referred to as the "Effective
Time").
SECTION 2.3 CLOSING. The closing of the Merger (the "Closing")
shall take place (i) at the offices of Weil, Gotshal & Manges LLP, 767 Fifth
Avenue, New York, New York, as promptly as practicable following the date on
which the last of the conditions set forth in Article VIII is satisfied or
waived in accordance with the terms of this Agreement, which date shall in any
event not be later than the third business day following the satisfaction or
waiver of the last of such conditions, or (ii) at such other place
7
<PAGE>
and/or on such other date as Parent and the Company may agree.
SECTION 2.4 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the BCA. As of the Effective Time, Parent shall own all of
the issued and outstanding common stock of the Surviving Corporation.
SECTION 2.5 ARTICLES OF INCORPORATION AND BYLAWS. At the Effective
Time, the Company's Articles of Incorporation and Bylaws shall be the Articles
of Incorporation and Bylaws of the Surviving Corporation.
SECTION 2.6 DIRECTORS AND OFFICERS. The directors of Merger Sub at
the Effective Time shall become the directors of the Surviving Corporation until
their successors are duly elected and qualified. At the Effective Time, the
persons listed on Schedule 2.06 shall become the officers of the Surviving
Corporation until their successors are duly elected and qualified.
SECTION 2.7 MERGER WITHOUT MEETING OF SHAREHOLDERS. Notwithstanding
anything to the contrary contained herein, if Parent, directly or indirectly
through Merger Sub or any other wholly-owned subsidiary, acquires at least 80%
of the outstanding Shares, each of Parent, Merger Sub and the Company shall take
all necessary and appropriate action to cause the Merger to become effective, as
soon as practicable after the consummation of the Offer, without a meeting of
shareholders of the Company, in accordance with Section 1104 of the BCA.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
SECTION 3.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (excluding Shares owned, directly or indirectly, by the Company
or any subsidiary of the Company or by Parent, Merger Sub or any other
subsidiary of Parent and Dissenting Shares (as defined in Section 4.3)) shall be
converted into the right to receive the Offer Consideration (the "Merger
8
<PAGE>
Consideration"), without interest thereon, upon surrender of the certificate
formerly representing such Share, less any required withholding of taxes.
(b) All Shares, when converted as provided in Section 3.1(a), no
longer shall be outstanding and shall automatically be cancelled and retired and
cease to exist, and each holder of a certificate representing any such Shares
shall thereafter cease to have any rights with respect to such Shares, except
the right to receive for each of such Shares, upon the surrender of such
certificate in accordance with Section 4.1, the Merger Consideration specified
in Section 3.1(a) above.
(c) Each Share issued and outstanding immediately prior to the
Effective Time owned by Parent or any direct or indirect wholly-owned subsidiary
of Parent shall cease to be outstanding, be cancelled and retired without
payment of any consideration therefor and cease to exist.
(d) Each Share issued and held immediately prior to the
Effective Time in the Company's treasury or by any of the Company's direct or
indirect wholly-owned subsidiaries shall be cancelled and retired without
payment of any consideration therefor and cease to exist.
(e) Each share of common stock, par value $0.001 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into one issued and outstanding share of common stock, par value
$0.001 per share, of the Surviving Corporation.
SECTION 3.2 STOCK OPTIONS; WARRANTS. Immediately after the
Acceptance Date, each holder of a then outstanding option to purchase Shares
(collectively, the "Options") under the Company's 1988 Stock Option Plan, the
Company's 1995 Stock Option Plan and the Company's Non-Employee Director Stock
Option Plan (collectively, the "Stock Option Plans"), whether or not then
exercisable or fully vested, and each holder of the warrants to purchase an
aggregate of 491,699 Shares issued to certain parties (collectively, the
"Warrants"), shall, in settlement thereof, be entitled to receive from the
Company for each Share subject to such Option, or Warrant, an amount (net of any
applicable withholding tax) in cash equal to the difference between the Offer
Consideration and the per Share exercise
9
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price of such Option, or Warrant, to the extent the Offer Consideration is
greater than the per Share exercise price of such Option or Warrant (such excess
amount with respect to Options being hereinafter referred to as the "Option
Consideration", and such amount with respect to the Warrants being hereinafter
referred to as the "Warrant Consideration"); PROVIDED, HOWEVER, that with
respect to any person subject to Section 16(a) of the Exchange Act, any such
amount shall be paid as soon as practicable after the first date payment can be
made without liability to such person under Section 16(b) of the Exchange Act.
Prior to the Acceptance Date, the Company shall use its reasonable efforts to
obtain all necessary consents or releases from holders of Options under the
Stock Option Plans, and holders of Warrants, and take any such other action as
may be reasonably necessary to give effect to the transactions contemplated by
this Section 3.02 (except for such action that may require the approval of the
Company's shareholders) and to otherwise cause each Option, and each Warrant, to
be surrendered to the Company and cancelled, whether or not any Option
Consideration or Warrant Consideration is payable with respect thereto, at the
Acceptance Date. The surrender of an Option, or Warrant, to the Company shall
be deemed a release of any and all rights the holder had or may have had in such
Option, or Warrant, other than the right to receive the Option Consideration or
Warrant Consideration. If necessary, Parent shall cause the Company to be
provided with sufficient funds to make the payments required by this Section
3.2.
ARTICLE IV
PAYMENT OF SHARES
SECTION 4.1 PAYMENT FOR SHARES. (a) Prior to the commencement of
the Offer, (i) Merger Sub shall appoint a United States bank or trust company
mutually acceptable to the Company and Parent to act as paying agent (the
"Paying Agent") for the payment of the Offer Consideration and the Merger
Consideration, and (ii) Parent shall deposit or shall cause to be deposited with
the Paying Agent in a separate fund established for the benefit of the holders
of Shares, for payment in accordance with this Article IV, through the Paying
Agent (the "Payment Fund"), immediately available funds in amounts necessary to
make the payments pursuant to the Offer, Section 3.1(a) and this Section 4.1 to
holders (other than the Company or any subsidiary of the Company or Parent,
Merger Sub or any other subsidiary of Parent, or holders of Dissenting Shares).
The
10
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Paying Agent shall pay the Offer Consideration and the Merger Consideration out
of the Payment Fund.
From time to time at or after the Effective Time Parent shall take all
lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. Prior to the Effective Time, Parent shall enter
into appropriate commercial arrangements to ensure effectuation of the
immediately preceding sentence. The Paying Agent shall invest portions of the
Payment Fund as Parent directs in obligations of or guaranteed by the United
States of America, in commercial paper obligations receiving the highest
investment grade rating from both Moody's Investors Services, Inc. and Standard
& Poor's Corporation, or in certificates of deposit, bank repurchase agreements
or banker's acceptances of commercial banks with capital exceeding
$1,000,000,000 (collectively, "Permitted Investments"); PROVIDED, HOWEVER, that
the maturities of Permitted Investments shall be such as to permit the Paying
Agent to make prompt payment to former holders of Shares entitled thereto as
contemplated by this Section. Parent shall cause the Payment Fund to be
promptly replenished to the extent of any losses incurred as a result of
Permitted Investments. All earnings on Permitted Investments shall be paid to
Parent. If for any reason (including losses) the Payment Fund is inadequate to
pay the amounts to which holders of Shares shall be entitled under this Section
4.1, Parent shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) As soon as reasonably practicable after the Effective Time,
Parent shall instruct the Paying Agent to mail to each holder of record (other
than the Company or any subsidiary of the Company or Parent, Merger Sub or any
other subsidiary of Parent) of a Certificate or Certificates which, immediately
prior to the Effective Time, evidenced outstanding Shares (the "Certificates"),
(i) a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, and shall be in such
form and have such other provisions as Parent reasonably may specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for payment therefor. Upon surrender of a Certificate for cancellation
to the Paying Agent together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such instructions,
11
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the holder of such Certificate shall be entitled to receive in respect thereof
cash in an amount equal to the product of (x) the number of Shares represented
by such Certificate and (y) the Merger Consideration, and the Certificate so
surrendered shall forthwith be canceled. No interest shall be paid or accrued
on the Merger Consideration payable upon the surrender of any Certificate. If
payment is to be made to a person other than the person in whose name the
surrendered Certificate is registered, it shall be a condition of payment that
the Certificate so surrendered shall be promptly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the surrendered Certificate or established to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
4.1, each Certificate (other than Certificates representing Shares owned by
Parent or any subsidiary of Parent or held in the treasury of the Company) shall
represent for all purposes only the right to receive the Merger Consideration,
subject to Section 4.3.
(c) Any portion of the Payment Fund which remains undistributed to
the holders of Shares for one year after the Effective Time shall be delivered
to Parent, upon demand, and any holders of Shares who have not theretofore
complied with this Article IV and the instructions set forth in the letter of
transmittal mailed to such holder after the Effective Time shall thereafter look
only to Parent for payment of the Merger Consideration to which they are
entitled. All interest accrued in respect of the Payment Fund shall inure to
the benefit of and be paid to Parent.
(d) Neither Parent nor the Surviving Corporation shall be liable to
any holder of Shares for any cash from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(e) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Parent is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which such deduction and
withholding was made by Parent.
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SECTION 4.2 STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of the Company. On
or after the Effective Time, any Certificates presented to the Paying Agent or
Parent for any reason shall be converted into the Merger Consideration.
SECTION 4.3 DISSENTING SHARES. Notwithstanding any other
provisions of this Agreement to the contrary, Shares that are outstanding
immediately prior to the Effective Time and which are held by shareholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares in
accordance with Section 1320 of the BCA (collectively, the "Dissenting Shares")
shall not be converted into or represent the right to receive the Merger
Consideration. Such shareholders instead shall be entitled to receive payment
of the appraised value of such Shares held by them in accordance with the
provisions of such Section 1320, except that all Dissenting Shares held by
shareholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
1320 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender in the manner provided
in Section 4.1, of the Certificate or Certificates that, immediately prior to
the Effective Time, evidenced such Shares.
SECTION 4.4 RIGHT TO MERGER CONSIDERATION. Subject to Section 4.3,
until surrendered and exchanged in accordance with Section 4.1, each Certificate
shall, after the Effective Time, represent solely the right to receive promptly
upon surrender in accordance with the provisions of Section 4.1 the Merger
Consideration and shall have no other rights, including voting rights. Subject
to Section 4.3, from and after the Effective Time, Parent shall be entitled to
treat any Certificates that have not yet been surrendered for exchange as
evidencing only the ownership of the aggregate Merger Consideration into which
the Shares represented by such Certificates shall have been converted
notwithstanding any failure to surrender such Certificates.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Parent and Merger Sub as
follows:
SECTION 5.1 ORGANIZATION AND QUALIFICATION. (a) The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has all requisite corporate power and authority to
carry on its business as it is now being conducted.
(b) The only direct and indirect subsidiaries of the Company are
those named in Schedule 5.01 to the Disclosure Statement relating hereto, which
Disclosure Statement has been delivered to Parent simultaneously herewith (the
"Disclosure Statement"). Each subsidiary of the Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as it is now being conducted. Each of the
Company and its subsidiaries is duly qualified as a foreign corporation and is
in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified would not
in the aggregate have a Material Adverse Effect (as defined below). For
purposes of this Agreement, "Material Adverse Effect" shall mean any adverse
change in or effect on the condition (financial or otherwise), business, assets
or results of operations of the Company and its subsidiaries that is material to
the Company and its subsidiaries taken as a whole.
SECTION 5.2 CAPITALIZATION. (a) The authorized capital stock of
the Company consists of 23,750,000 shares, of which 18,750,000 shares are common
stock, par value of $0.001 per share, and 5,000,000 shares are Series Preferred
Stock, par value of $0.001 per share (the "Company Preferred Stock"). Schedule
5.2 of the Disclosure Statement sets forth a true, correct and complete list of
all outstanding Options (including a list of the persons to whom such Options
have been granted) and Warrants (including a list of the persons and entities to
which such Warrants have been issued). At the close of business on April 4,
1996, 7,106,149 Shares were issued and outstanding,
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no shares of Company Preferred Stock were issued and outstanding, and 808,636
Shares were reserved for issuance pursuant to the Stock Option Plans and 491,699
Shares were reserved for issuance pursuant to the Warrants. Except as set forth
in the preceding sentence and Schedule 5.2 of the Disclosure Statement, there
are not as of the date hereof, and, except as provided in Section 3.2 and
Schedule 5.2 of the Disclosure Statement, at the Effective Time there will not
be, any outstanding or authorized subscriptions, options, warrants, calls,
rights, commitments or any other agreements of any character obligating the
Company to issue any additional Shares or any other shares of capital stock of
the Company or any other securities convertible into, exchangeable, exercisable
or evidencing the right to subscribe for any such shares. All of the
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable and free of preemptive
rights.
(b) The number of outstanding shares of capital stock of each of
the subsidiaries of the Company, owned of record and beneficially by the
Company, is set forth in Schedule 5.01 to the Disclosure Statement. The
Company, or a wholly-owned subsidiary of the Company, is the sole record and
beneficial owner of the issued and outstanding capital stock of each subsidiary
listed in Schedule 5.01 to the Disclosure Statement, except as otherwise set
forth in such Schedule. There are no irrevocable proxies with respect to such
shares, and, except as set forth in Schedule 5.01 to the Disclosure Statement,
no equity securities of any of such subsidiaries are or may become required to
be issued by reason of any options, warrants, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any such subsidiary is bound to issue additional shares of
its capital stock or securities convertible into or exchangeable for such
shares. All of such shares so owned by the Company or a wholly-owned subsidiary
of the Company are validly issued, fully paid and nonassessable and are owned by
it free and clear of all Liens (as defined in Section 5.7).
SECTION 5.3 CORPORATE POWER AND AUTHORITY. The Company has full
corporate power and authority to execute and deliver this Agreement and, subject
to any required approval of the Company's shareholders, to consummate
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the transactions contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by, and the Shareholders Agreement
has been approved by, the Board of Directors of the Company and other than the
approval of this Agreement and the Merger by the holders of a majority of the
outstanding Shares, no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by the Company and, assuming this Agreement constitutes a valid and binding
obligation of each of Parent and Merger Sub, this Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws, now or hereafter in
effect, affecting creditors' rights and remedies and to general principles of
equity.
SECTION 5.4 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
Company's SEC Reports (as defined in Section 5.5) under the Exchange Act, since
December 31, 1995, the Company and its subsidiaries have not suffered
any Material Adverse Effect. Except as disclosed in the Company's SEC Reports
under the Exchange Act or in writing to Parent by the Company prior to execution
of this Agreement, or as otherwise set forth in this Agreement or the Disclosure
Statement, since December 31, 1995, there has not been (a) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
Shares, or any redemption or other acquisition by the Company of any shares of
its capital stock; (b) any increase in the rate or terms of compensation payable
or to become payable by the Company to its directors, officers or key employees,
except increases occurring in the ordinary course of business consistent with
past practices; (c) any increase in the rate or terms of any bonus, insurance,
pension or other employee benefit plan, payment or arrangement made to, for or
with any such directors, officers or employees, except increases occurring in
the ordinary course of business consistent with past practices; (d) any entry
into any agreement, commitment or transaction by the Company which is material
to the Company and its subsidiaries taken as a whole, except for agreements,
commitments or transactions in the ordinary course of business; (e) any
amendment, termination or lapse of a material contract of the Company and its
subsidiaries, taken as a whole; (f) any material labor dispute involving
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the employees of the Company or its subsidiaries; (g) any change by the Company
in accounting methods, principles or practices except as required or permitted
by generally accepted accounting principles; (h) any write-off or write-down of,
or any determination to write-off or write-down, any asset of the Company or any
of its subsidiaries or any portion thereof which write-off, write-down, or
determination exceeds $10,000 individually or $30,000 in the aggregate; (i) any
amendment, termination, waiver, disposal, or lapse of, or other failure to
preserve, any license, permit, or other form of authorization of the Company or
any subsidiary, except for any thereof that would not have a Material Adverse
Effect; or (j) any agreements by the Company to (1) do any of the things
described in the preceding clauses (a) through (i) other than as expressly
contemplated or provided for herein or (2) take, whether in writing or
otherwise, any action which, if taken prior to the date of this Agreement, would
have made any representation or warranty of the Company in this Agreement untrue
or incorrect.
SECTION 5.5 SEC REPORTS. (a) The Company has filed all required
forms, reports and documents with the SEC required to be filed by it pursuant to
the Federal securities laws and the SEC rules and regulations thereunder, all of
which have complied as of their respective filing dates, or, in the case of
registration statements, their respective effective dates, in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, and the rules and
regulations promulgated thereunder. None of such forms, reports or documents,
including, without limitation, any exhibits, financial statements or schedules
included therein, at the time filed, or, in the case of registration statements,
their respective effective dates, contained any untrue statement of a material
fact or omitted 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. All forms, reports and documents
filed by the Company with the SEC are hereinafter collectively referred to as
the "SEC Reports".
(b) The consolidated balance sheets and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows
(including, without limitation, the related notes thereto) of the Company
included in the Company's Annual Report on Form 10-K for the fiscal years ended
June 30, 1994 and 1995 and the
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Company's Quarterly Reports on Form 10-Q for the quarters ended September 30,
1995 and December 31, 1995 complied as to form, at the time filed, in all
material respects with generally accepted accounting principles and the
published rules and regulations of the SEC with respect thereto at the time
filed and present fairly (subject to normal nonrecurring audit adjustments in
the case of unaudited interim financial statements) the consolidated financial
position of the Company as of their respective dates, and the results of
consolidated operations, the stockholders' equity (deficit) and the cash flows
for the periods presented therein, all in conformity with generally accepted
accounting principles applied on a consistent basis, except as otherwise noted
therein.
SECTION 5.6 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby by the Company require no action by the Company
in respect of, or filing with, any governmental body, agency, official or
authority other than (i) the filing with the SEC of such reports and information
as may be required in connection with this Agreement and the transactions
contemplated hereby pursuant to the applicable requirements of the Securities
Act, the Exchange Act and the rules and regulations promulgated thereunder,
(ii) the filing of the Articles of Merger in accordance with the BCA, and, if
necessary, appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (iii) such filings,
authorizations, orders and approvals as may be required under foreign laws and
(iv) compliance with any applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), except for filings and
approvals which are not required prior to the consummation of the Merger or
where the failure of any such action to be taken or filing to be made would not
have or reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby.
SECTION 5.7 NON-CONTRAVENTION. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby by the Company do not and will not
(i) contravene or conflict with the Company's Amended and Restated Articles of
Incorporation (the "Company's Articles of Incorporation") or Bylaws,
(ii) assuming compliance with the matters referred to in Section 5.6, contravene
or conflict with or constitute
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a violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Company or any of its subsidiaries,
(iii) assuming that the Company, Parent and Merger Sub comply in all respects
with the applicable provisions of the Securities Act and the Exchange Act and
the rules and regulations thereunder, in each case, as more fully described in
Section 5.6, except as disclosed in the SEC Reports or in Schedule 5.07 to the
Disclosure Schedule, constitute or result in a default under or give rise to a
right of termination, cancellation or acceleration of any right or obligation,
including without limitation, a repurchase obligation, of the Company or any of
its subsidiaries or to a loss of any benefit to which the Company or any of its
subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its subsidiaries or any license,
franchise, permit or other similar authorization held by the Company or any of
its subsidiaries, or (iv) result in the creation or imposition of any Lien (as
defined below) on any asset of the Company or any of its subsidiaries, other
than, in the case of clauses (ii), (iii) or (iv), any such conflicts,
violations, defaults, losses and Liens that individually or in the aggregate
would not have a Material Adverse Effect. For purposes of this Agreement,
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest, encumbrance, restriction or adverse claim of any kind or
nature in respect of such asset, other than any such mortgage, lien, pledge,
charge, security interest, encumbrance, restriction or adverse claim (i) for
taxes or other governmental charges not yet due and payable, (ii) materialmen's,
mechanic's and similar liens or (iii) reflected on the consolidated balance
sheets of the Company as of September 30, 1995 and December 31, 1995 or (iv) on
any of the Company's properties or assets, or irregularities in title thereto,
that do not materially detract from the value of, or materially impair the use
of, any such property or asset.
SECTION 5.8 INVESTMENT BANKING FEES AND COMMISSIONS. Except for
those fees and expenses payable to Dillon Read with respect to the Company, no
person or entity is entitled to receive from the Company or any of its
subsidiaries any investment banking, brokerage or finder's fee in connection
with this Agreement or the transactions contemplated hereby.
SECTION 5.9 MATERIAL CONTRACTS. (a) Except as disclosed in the
Company's SEC Reports or on Schedule 5.09
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to the Disclosure Statement, neither the Company nor any of its subsidiaries is
a party to any (i) contract or agreement not made in the ordinary course of
business or which is not terminable without penalties of $50,000 or more in the
aggregate or upon notice of thirty (30) days or less; (ii) employment,
consulting, non-competition, severance, golden parachute or indemnification
contract or agreement; (iii) mortgage, pledge, conditional sales contract,
security agreement, loan agreement, credit agreement, promissory note or other
similar contract with respect to any real property of the Company or any of its
subsidiaries; (iv) mortgage pledge, conditional sales contract, security
agreement, factoring agreement, loan agreement, credit agreement, promissory
note or other similar contract with respect to any tangible personal property of
the Company or any of its subsidiaries involving indebtedness for borrowed money
or capital equipment leases, in each case, of more than $50,000; (v) guarantee,
subordination agreement, letter of credit or any other similar type of contract
or agreement involving obligations in excess of $50,000 individually or $50,000
in the aggregate; (vi) contract or agreement with any governmental authority
other than any such contract or agreement which is terminable without penalties
of $50,000 or more in the aggregate or upon notice of 30 days or less, which
involves obligations or indebtedness in excess of $50,000 individually or in the
aggregate, or which requires performance by the Company or any of its
subsidiaries that is not scheduled, and reasonably expected to be completed,
within 30 days from the date hereof; or (vii) commitment or agreement to enter
into any of the foregoing. The Company has delivered or otherwise made
available to Parent true, correct and complete copies of the contracts and
agreements listed on Schedule 5.09 to the Disclosure Statement, together with
all amendments, modifications, supplements or material side letters affecting
the obligations of any party thereunder. Neither the Company nor any of its
subsidiaries is in default under any such contract or agreement nor, to the
Company's knowledge, is any other party thereto in default, which default, in
each case, could reasonably be expected to have a Material Adverse Effect.
(b) (i) The Company and Sumitomo Bakelite Co, Ltd., a Japanese
corporation ("Sumitomo"), have entered into the License Termination Agreement,
dated as of December 21, 1995, terminating the License Agreement, dated as of
June 19, 1990, between the Company and Sumitomo (the "License Termination
Agreement"), (ii) Corvita Europe, S.A., a Belgian corporation and a wholly-owned
subsidiary of the Company ("Corvita Europe"), Jean Pierre Dereume and
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L'Universite Libre Bruxelles have entered into the Patent License Agreement,
dated as of January 24, 1996 (the "Patent License Agreement"), (iii) the Company
has entered into a Stock Purchase Agreement of even date herewith, with the
shareholders of Cardiovascular Innovations Canada, Inc. ("Cardiovascular
Innovations") and with Research Visions Canada, Inc. providing for the purchase
by the Company, directly or indirectly (by purchase of all of the shares of
Cardiovascular Innovations) of all of the shares of Corvita Canada, Inc. that it
does not presently own (the "Stock Purchase Agreements"), (iv) Vascor, Inc.
("Vascor") has executed, as of April 9, 1996, a Consent to Assignment of the
License and Supply Agreement between Vascor and the Company (the "Supply
Agreement") and (v) The Polymer Technology Group and the Company have entered
into a License Agreement, dated April 9, 1996 (the "PTG Agreement" and, together
with the License Termination Agreement, the Patent License Agreement and the
Supply Agreement, the "Material Agreements"), and each such agreement is in full
force and effect and there has been no material breach by the Company or the
other party thereto that has not been cured.
SECTION 5.10 LITIGATION, ETC. As of the date hereof, except as
disclosed in the SEC Reports or in Schedule 5.10 to the Disclosure Statement,
there is no suit, claim, action or proceeding (at law or in equity) pending nor,
to the knowledge of the Company, is any investigation pending or any suit,
claim, action, or proceeding threatened against the Company or any of its
subsidiaries before any court or governmental or regulatory authority or body
seeking money damages in excess of $50,000 or non-monetary relief that, if
granted, could reasonably be expected to have a Material Adverse Effect or
seeking to prevent or challenging the transactions contemplated by this
Agreement. The Company is not subject to any outstanding order, writ,
injunction or decree that would have a Material Adverse Effect.
SECTION 5.11 BENEFIT PLANS. (a) Schedule 5.11 to the Disclosure
Statement contains a true and complete list of each "employee benefit plan" (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), including foreign plans which would be subject to ERISA if
such plans covered U.S. employees, bonus, deferred compensation, incentive
compensation, excess benefit, supplemental retirement, stock purchase, stock
option, severance, life insurance, disability, salary continuation, supplemental
unemployment and other employee benefit plan, program or arrangement whether
written or
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unwritten, qualified or nonqualified, funded or unfunded (i) maintained,
contributed to or required to be contributed to by the Company (the foregoing
being herein called "Benefit Plans"). With respect to each Benefit Plan
maintained or contributed to by the Company or any of its subsidiaries or under
which any of them has any liability or obligation, the Company has made
available to Parent, if applicable, a true and correct copy of (a) the
most recent annual report (Form 5500) filed with the IRS, (b) such Benefit Plan,
(c) each trust agreement and group annuity contract, if any, relating to such
Benefit Plan, and (d) a current IRS determination letter.
(b) With respect to the Benefit Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of the Company, there
exists no condition or set of circumstances in connection with which Parent or
any of its affiliates could be subject to any liability that is reasonably
likely to have a Material Adverse Effect (except liability for benefits claims
and funding obligations payable in the ordinary course) under ERISA, the
Internal Revenue Code of 1986, as amended (the "Code"), or any other applicable
law. To the best of the knowledge of the Company, each Benefit Plan which is
intended to qualify under Section 401(a) of the Code ("Qualified Plans") is and
always has been qualified under such Section and each trust maintained in
connection with such a plan has at all time been exempt from federal income
taxes under Section 501 of the Code. To the best of the knowledge of the
Company, each Qualified Plan is in receipt of a favorable determination letter
issued by the IRS, and each such letter has not been revoked nor, to the
knowledge of the Company, threatened to be revoked. To the best of the
knowledge of the Company, each Benefit Plan has been administered in all
material respects in accordance with its terms and with all applicable laws. No
"prohibited transaction" (within the meaning of Section 406 of ERISA or Section
4975 of the Code) has occurred with respect to any Benefit Plan which would
result directly or indirectly in liability to the Company.
(c) With respect to the Benefit Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
that have not been accounted for by reserves, or otherwise properly footnoted in
accordance with generally accepted accounting principles, on the financial
statements
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of the Company, which obligations are reasonably likely to have a Material
Adverse Effect.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment becoming due, or materially increase the amount of compensation
due, any current or former employee of the Company or any of its subsidiaries
including, without limitation, any severance payment or benefit; (ii) materially
increase any benefits otherwise payable under any Benefit Plan; or (iii) result
in the acceleration of the time of payment or vesting of any such material
benefits, except in each case as contemplated by this Agreement.
(e) The Company and its subsidiaries have complied in all
material respects with the continuation coverage requirements of Section 4980B
of the Code with respect to each group health plan within the meaning of Section
4980B(g)(2) of the Code.
(f) To the best of the knowledge of the Company, each Benefit
Plan which is not subject to regulation under ERISA ("Foreign Plan") has at all
times been maintained, operated and administered in all material respects in
compliance with its terms and all applicable laws. To the best of the knowledge
of the Company, if a Foreign Plan is required under applicable law or by its
terms to be funded in any respect, such Foreign Plan is so funded and, if such
Foreign Plan is not required to be funded, the benefits payable under such
Foreign Plan are adequately reserved for on the Company's, or a subsidiary's,
financial statements included in the Company's SEC Reports (or there is an
adequate combination of reserves and funding) in accordance with U.S. generally
accepted accounting principles. All contributions to and payments from any
Foreign Plan for all periods prior to the date of the balance sheet have been
fully paid or adequately reserved for on the Company's, or a subsidiary's,
financial statements included in the Company's SEC Reports in accordance with
U.S. generally accepted accounting principles. There are no pending or, to the
knowledge of the Company, threatened actions, claims, lawsuits, arbitrations,
audits, investigations or similar proceedings involving any Foreign Plan, or the
assets, sponsor, administrator or fiduciaries of any such Foreign Plans (other
than routine benefit claims in type and amount consistent with past practice)
which would become the
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liability of the Company or Parent on and the after the Closing Date, nor does
the Company have knowledge of facts which could form a reasonable basis for any
such proceedings.
SECTION 5.12 INTELLECTUAL PROPERTY. The Company and its
subsidiaries fully own, or are licensed or otherwise have the right to use, all
patents, patent rights, invention rights, trademark rights, trade names, trade
name rights, service mark rights, copyrights, know-how, trade secrets,
technology and computer programs which are material to the conduct of the
business of the Company and its subsidiaries taken as a whole (the "Intellectual
Property"), including, but not limited to, the patents, patent rights, license
agreements, published foreign patent applications, trademark rights, trade
names, trade name rights and service mark rights set forth in Schedule 5.12 to
the Disclosure Statement. Schedule 5.12 to the Disclosure Statement sets forth
a true, correct and complete list of the Intellectual Property (other than
invention rights, invention disclosures and related agreements and non-published
patent applications). Except as set forth in Schedule 5.12 to the Disclosure
Statement, neither the Company nor any of its subsidiaries has been granted or
has granted any outstanding license (other than "shrink wrap licenses" for any
retail consumer products generally available) or other rights under any
Intellectual Property. The Company and its subsidiaries fully own the data
compiled from all clinical trials and neither the Company nor any of its
subsidiaries is prohibited from (x) using such data in any manner, including for
purposes of gaining regulatory approval for any product of the Company currently
sold or under development or (y) assigning or otherwise transferring ownership
rights in such data to a third party. Except as set forth in Schedule 5.12 to
the Disclosure Statement, (i) to the best of the knowledge of the Company, there
is no violation, breach, misappropriation or infringement by any third party of
any Company Intellectual Property, (ii) there are no pending or, to the best of
the knowledge of the Company, threatened opposition, interference,
reexamination, arbitration, invalidity, declaratory judgment, revocation,
nullity or similar actions in respect of any Company Intellectual Property and
(iii) to the best of the knowledge of the Company, the Company is not infringing
or otherwise adversely affecting the rights of any person with regard to any
patent, license, trademark, trade name, service mark, copyright, know-how, trade
secret or other intellectual property right held by that person nor has it
received notice of any such claim.
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SECTION 5.13 RESTRICTIONS ON OPERATIONS. Except as set forth on
Schedule 5.13 to the Disclosure Statement, the Company and its subsidiaries are
not restricted directly or indirectly by any agreement to which the Company, or
any of its subsidiaries, is bound from carrying on its business anywhere in the
world nor is the Company aware of any other agreement which purports to restrict
the Company or any of its subsidiaries from carrying out its business anywhere
in the world.
SECTION 5.14 ENVIRONMENTAL LAWS. Except as disclosed on Schedule
5.14 to the Disclosure Statement, in the Environmental Reports (as defined in
Section 5.14(d)) or as would not have a Material Adverse Effect:
(a) The Company and its subsidiaries and their respective
operations comply in all material respects with all applicable Environmental
Laws (as defined in Section 5.14(e)).
(b) The Company and its subsidiaries have obtained and maintain
all Environmental Permits (as defined in Section 5.14(e)) necessary for their
operations; there are no legal proceedings pending or, to the knowledge of the
Company, threatened to revoke any such Environmental Permit, the Company and its
subsidiaries are in compliance in all material respects with all such
Environmental Permits; none of the Company or any of its subsidiaries has
received any written notice from any governmental authority to the effect that
there is lacking any Environmental Permit required in connection with the
current use or operation of any of its properties; and the consummation of the
transactions contemplated hereby will not cause the Company to have any of its
rights under such Environmental Permits adversely affected.
(c) To the best of the knowledge of the Company, all real
property owned, operated or leased by the Company and its subsidiaries is free
from contamination by Hazardous Materials (as defined in Section 3.14(e)) at
levels requiring remediation under any Environmental Laws and neither the
Company nor any of its subsidiaries has caused or permitted any Hazardous
Material to remain or be disposed of, either on or under real property legally
or beneficially owned, leased or operated by the Company or any of its
subsidiaries or on any real property not permitted to accept, store or dispose
of such Hazardous Materials other than in compliance with applicable
Environmental Laws.
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(d) The Company and its subsidiaries have provided or made
available to Parent all audits, studies, reports, analyses and results of
investigations, memoranda and correspondence in the Company's possession related
to Environmental Laws or Environmental Claims that have been drafted, created or
performed with respect to currently or previously owned, leased or operated
properties of the operations of the Company and its subsidiaries. The
foregoing, together with the report prepared by ERM Northeast, a member of the
Environmental Resource Management Group, in final form delivered to Parent
regarding the property owned, leased and operated by the Company or any of its
subsidiaries are collectively referred to as the "Environmental Reports".
(e) For purposes of this Agreement:
"ENVIRONMENTAL CLAIM" means any written accusation, allegation, notice
of violation, action, claim, Environmental Lien, demand, abatement or other
order or direction (conditional or otherwise) by any governmental body or any
other person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or restrictions resulting from or based upon (i) the existence,
or the continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases) of, or
exposure to, any Hazardous Material in, into or onto the environment (including,
without limitation, the air, soil, surface water or groundwater) at, in, by,
from or related to any property owned, operated or leased by the Company or its
subsidiaries or any activities or operations thereof; (ii) the generation,
transportation, storage, treatment, handling or disposal of Hazardous Materials
in connection with any property owned, operated or leased by the Company or its
subsidiaries or their operations or facilities; or (iii) the violation, or
alleged violation, of any Environmental Law, order or Environmental Permit of or
from any governmental body relating to environmental matters connected with any
property owned, leased or operated by the Company or its subsidiaries.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule, regulation or other
requirement relating to the environment, natural resources, or public or
employee health and safety and includes, but is not limited to, the
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Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 ET SEQ., the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801 ET seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 ET SEQ., the Clean Water Act, 33 U.S.C. Section 1251 ET SEQ., the
Clean Air Act, 33 U.S.C. Section 2601 ET SEQ., the Toxic Substances Control Act,
15 U.S.C. Section 2601 ET SEQ., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. Section 136 ET SEQ., the Oil Pollution Act of 1990,
33 U.S.C. Section 2701 ET SEQ. and the Occupational Safety and Health Act, 29
U.S.C. Section 651 ET SEQ., (and including, without limitation, European Union
directives and regulations and, with respect to the European operations and
property located within the European Union, prescribed work practices and
technical or other standards issued by competent organizations) as such laws
have been amended or supplemented, and the regulations promulgated pursuant
thereto, and all analogous state or local statutes, including without
limitation, any state environmental property transfer statutes.
"ENVIRONMENTAL PERMIT" means any permit, approval, authorization,
license, variance, registration, or permission required under any applicable
Environmental Law or order.
"HAZARDOUS MATERIALS" means any hazardous substance, material or waste
which is regulated by any local, state, Federal or foreign governmental body
in the jurisdiction in which the Company or any of its subsidiaries conducts
business, including, without limitation, any material or substance which is
defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste" or "restricted hazardous waste," "subject waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law, including, but not limited to, petroleum products, asbestos
and polychlorinated biphenyls.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching, or migration on or into the indoor or outdoor environment or into or
out of any property.
"REMEDIAL ACTION" means all actions, including, without limitation,
any capital expenditures, required or voluntarily undertaken to (i) clean up,
remove, treat, or in any other way address any Hazardous Material or other
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substance; (ii) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; (iii) perform pre-remedial studies and investigations or post-
remedial monitoring and care; or (iv) bring any property owned, operated or
leased by the Company or any of its subsidiaries and the facilities located and
operations conducted thereon into compliance with all Environmental Laws and
Environmental Permits.
SECTION 5.15 COMPLIANCE WITH LAWS. Except as set forth in Schedule
5.15 to the Disclosure Statement or as disclosed in the SEC Reports, neither the
Company nor any of its subsidiaries has violated or failed to comply with any
statute, law, ordinance, regulation, rule or order of any foreign, Federal,
state or local government or any other governmental department or agency, or any
judgment, decree or order of any court, applicable to its business or
operations, except where any such violations or failures to comply would not, in
the aggregate, have a Material Adverse Effect; and the conduct of the business
of the Company and its subsidiaries is in conformity with all Federal, state and
local energy and public utility and all other Federal, state and local
governmental and regulatory requirements applicable to its business or
operations, except where such nonconformities would not, in the aggregate, have
a Material Adverse Effect. The Company and its subsidiaries have all permits,
licenses and franchises from governmental agencies required to conduct their
businesses as now being conducted, except for such permits, licenses and
franchises the absence of which would not, in the aggregate, have a Material
Adverse Effect.
SECTION 5.16 TAXES. Except as set forth in Schedule 5.16 to the
Disclosure Statement:
(a) Each of the Company and its subsidiaries has (i) timely
filed all Federal and all state, local and foreign returns, declarations,
reports, estimates, information returns and statements ("Returns") required to
be filed by or for it on or prior to the date hereof in respect of any Taxes and
such Returns are true, complete and correct in all material respects,
(ii) timely paid all Taxes that are shown as being due on any Returns,
(iii) established reserves that are adequate for the payment of all Taxes not
yet due and payable with respect to the results of operations of the Company and
its subsidiaries through the date hereof, (iv) complied in all material
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respects with all applicable laws, rules and regulations relating to Taxes, and
(v) timely withheld and paid over to the proper governmental authorities all
Taxes and other amounts required to be so withheld and paid over.
(b) (i) Schedule 5.16 to the Disclosure Statement sets forth the
last taxable period (x) through which the Federal Returns of the Company and any
of its subsidiaries have been examined by the Internal Revenue Service ("IRS")
or (y) for which the date for assessment and collection of any deficiency has
expired; (ii) all deficiencies asserted as a result of such examinations have
been paid, fully settled or adequately provided for in the Company's most recent
audited financial statements; (iii) no Federal tax audits or
other administrative proceedings or court proceedings are presently pending with
respect to the Company or any of its subsidiaries with regard to any Federal
Taxes; and (iv) the Company has not received notice that any deficiency for any
such Taxes aggregating in excess of $50,000 has been proposed, asserted or
assessed against the Company or any of its subsidiaries, by any Federal, state,
local or foreign taxing authority or court with respect to any period.
(c) Neither the Company nor any of its subsidiaries has executed
or entered into with the IRS or any other taxing authority (i) any agreement or
other document that continues in force and effect beyond the Effective Time and
that extends or has the effect of extending the period for assessments or
collection of any Federal, state, local or foreign Taxes or (ii) a closing
agreement pursuant to Section 7121 of the Code, or any predecessor provision
thereof, or any similar agreement, pursuant to any similar provision of state,
local or foreign law, that continues in force and effect beyond the Effective
Time.
(d) Neither the Company nor any of its subsidiaries is a party
to an agreement that provides for the payment of any amount that would
constitute a "parachute payment" within the meaning of Section 280G of the Code.
(e) Neither the Company nor any of its subsidiaries has made an
election under Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
subsidiaries.
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(f) Neither the Company nor any of its subsidiaries is a party
to, is bound by or has any obligation under any tax sharing agreement or similar
agreement or arrangement.
(g) All representations made by the Company, any of its
subsidiaries or their respective authorized representatives in connection with
any tax exemption, grant, dispensation or similar allowance under any Federal,
state, local or foreign tax laws are complete, true and accurate in all material
respects and any covenants, promises or undertakings made or to be performed by
the Company or any of its subsidiaries in connection with such tax exemption,
grant, disposition or similar allowance under any such Federal, state, local or
foreign tax laws have been duly discharged or performed in accordance with their
terms.
(h) The Company (i) has not agreed to make, nor is it required
to make any adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise and (ii) has not leased or rented any property
other than on arm's length terms and conditions.
(i) Neither the Company nor any of its subsidiaries is, or has
been, a United States Real Property Holding Corporation within the meaning of
Code Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii).
For purposes of this Agreement, (i) "Taxes" shall mean all Federal,
state, local, foreign and other taxes, charges, fees, levies, imposts, duties,
licenses or other assessments of every kind and description, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority and (ii) "Code" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations thereunder, and any reference to
a specific provision of the Code shall include any predecessor of such Code
provision which was in effect on or after January 1, 1988.
SECTION 5.17 PRODUCT REGISTRATION; REGULATORY COMPLIANCE. (a)
Schedule 5.17 to the Disclosure Statement sets forth, as of the date hereof, a
list of all licenses and approvals granted by or pending with any governmental
authority in any particular country to market any product relating to the
Company's business as conducted on the date hereof (the "Product
Registrations"). Except as set forth in Schedule 5.17 to the Disclosure
Statement, (i) all
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products sold under the Product Registrations are manufactured and marketed in
accordance with the specifications and standards contained in such Product
Registrations, (ii) the Company is the sole and exclusive owner of the Product
Registrations and has not granted any right or reference with respect thereto
and is not prohibited from assigning or otherwise transferring its rights to
such Product Registrations to a third party, (iii) the Product Registrations
granted are in full force and effect with all required annual reports filed and
government maintenance fees and taxes having been paid thereon and no consent of
any governmental authority is required in connection with the transactions
contemplated hereby, (iv) each of the products produced or sold in connection
with the Company's business as conducted on the date hereof (x) is, and at all
times has been, in compliance with all applicable laws, and (y) is, and at all
relevant times has been, fit for the ordinary purposes of which it is intended
to be used and conforms to any promises or affirmations of fact made on the
label for such product or in connection with its sale, or is or has been
provided for use in research, scientific or experimental programs or used for
research, scientific or experimental purposes in accordance with an express
understanding that its fitness and its conformance to performance expectations
are undergoing evaluation, and (v) to the knowledge of the Company, there is no
design or production defect with respect to any of such products and no facts
have come to the Company's attention as a result of the Company's research which
indicates that there are any design defects with respect to any of such
products, and each of such products contains adequate warnings, presented in a
reasonably prominent manner, in accordance with applicable laws and current
industry practice with respect to its packaging, contents and use.
(b) The Company is not aware of any facts: (i) which would furnish a
substantial basis for the recall, withdrawal or suspension by any governmental
authority, or by order of any court, of any product sold by the Company; or
(ii) which would otherwise reasonably be expected to cause the Company to
withdraw, recall or suspend any product from the market, or otherwise take any
other remedial action, or to terminate or suspend the manufacturing or testing
of any product.
(c) Except as set forth in the SEC Reports, Schedule 5.10 or Schedule
5.17, there is no suit, claim, action or proceeding (at law or in equity)
pending nor, to the knowledge of the Company, is any suit, claim, action or
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proceeding threatened against the Company or any of its subsidiaries before any
court or governmental or regulatory authority or body involving any claim that
any product of the Company is defective or otherwise has caused physical harm to
any user.
SECTION 5.18 COMPANY ACTION. The Board of Directors of the Company
(at a meeting duly called and held) has by the requisite vote of all directors
present (a) determined that the Offer and Merger is advisable and in the best
interests of the Company and it shareholders, (b) approved this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, and
(c) directed that this Agreement and the Merger be submitted for consideration
by the Company's shareholders at a duly called meeting (the "Company Meeting")
and has determined to recommend, subject to the Board's ability to withdraw,
modify or change its recommendation regarding this Agreement and the Merger in
accordance with the provisions of Section 7.2, the approval by the Company's
shareholders of these matters. In connection with its consideration of this
Agreement, the Board of Directors of the Company received a written opinion from
Dillon Read that the Offer Consideration to be received by the Company's common
shareholders in the Offer and the Merger is fair, from a financial point of
view, to such shareholders. The affirmative votes of the holders of a majority
of the outstanding Shares entitled to vote thereon are the only votes of the
holders of any class or series of Company capital stock necessary to approve
this Agreement and the transactions contemplated hereby, including the Merger.
SECTION 5.19 LABOR MATTERS. Except as disclosed on Schedule 5.19 of
the Disclosure Statement, neither the Company nor any of its subsidiaries is a
party to or bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization.
SECTION 5.20 SUPPLY. On April 9, 1996, the Company and its
subsidiaries had in finished goods inventory 188 units of endoluminal grafts
manufactured at their facilities in Belgium, which together with ongoing
manufacturing operations in Belgium, is sufficient for continuing to supply at
current levels the reasonably anticipated requirements of all clinical trials
currently in progress and currently scheduled.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
SECTION 6.1 ORGANIZATION AND QUALIFICATION. Each of the Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as it is now
being conducted.
SECTION 6.2 CORPORATE POWER AND AUTHORITY. Each of the Parent and
Merger Sub has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly
authorized by the respective Boards of Directors of Parent and Merger Sub, and
the sole shareholder of Merger Sub, and no other corporate proceedings on the
part of the Parent or Merger Sub are necessary to authorize this Agreement or
to consummate the Merger and the other transactions contemplated by this
Agreement. This Agreement has been duly and validly executed and delivered by
each of Parent and Merger Sub and, assuming this Agreement constitutes a valid
and binding obligation of the Company, this Agreement constitutes the legal,
valid and binding obligation of each of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws, now or hereafter in effect, affecting creditors' rights and
remedies and to general principles of equity.
SECTION 6.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by each of the Parent and Merger Sub of this Agreement and the
consummation of the transactions contemplated hereby by Merger Sub require no
action by or in respect of, or filing with, any governmental body, agency,
official or authority other than (i) the filing with the SEC of such reports and
information as may be required in connection with this Agreement and the
transactions contemplated hereby pursuant to the applicable requirements of the
Securities Act and the Exchange Act and
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the rules and regulations promulgated thereunder, (ii) the filing of the
Articles of Merger in accordance with the BCA, (iii) such filings,
authorizations, orders and approvals as may be required under foreign laws,
(iv) compliance with applicable requirements of the HSR Act, except for filings
and approvals which are not required prior to the consummation of the Merger or
where the failure of any such action to be taken or filing to be made would not
have or reasonably be expected to have, individually or in the aggregate, a
material adverse effect on Parent or prevent consummation of the transactions
contemplated hereby.
SECTION 6.4 NON-CONTRAVENTION. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation of
the transactions contemplated hereby by Parent and Merger Sub do not and will
not (i) contravene or conflict with the Certificate of Incorporation or Bylaws
of the Parent or the Articles of Incorporation or Bylaws of Merger Sub,
(ii) assuming compliance with the matters referred to in Section 6.3, contravene
or conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable to
Parent or Merger Sub, (iii) constitute or result in a default under or give rise
to a right of termination, cancellation or acceleration of any right or
obligation of Parent or Merger Sub or to a loss of any benefit to which Parent
or Merger Sub is entitled under any provision of any agreement or other
instrument binding upon Parent or Merger Sub or any license, franchise, permit
or other similar authorization held by Parent or Merger Sub, or (iv) result in
the creation or imposition of any Lien on any asset of Parent or Merger Sub,
except for any occurrences or results referred to in clauses (ii), (iii), and
(iv) which would not have or reasonably be expected to have, individually or in
the aggregate, a material adverse effect on Parent or prevent consummation of
the transactions contemplated hereby.
SECTION 6.5 MERGER SUB. (a) Parent owns all of the outstanding
stock of Merger Sub; at all times prior to the Merger, no person other than
Parent has owned, or will own, any of the outstanding stock of Merger Sub.
Merger Sub was formed by Parent solely for the purpose of engaging in the
transactions contemplated by this Agreement.
(b) There are not as of the date of this Agreement, and there
will not be at the Effective Time, any outstanding or authorized options,
warrants, calls, rights, commitments or any other agreements of any character
which
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Merger Sub is a party to, or may be bound by, requiring it to issue, transfer,
sell, purchase, redeem or acquire any shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for or acquire, any shares of its capital stock.
(c) As of the date of this Agreement and the Effective Time,
except for obligations incurred in connection with this Agreement, Merger Sub
has not and will not have incurred, directly or indirectly through any other
corporation, any obligations or liabilities of any kind or engaged in any
activities of any type or kind whatsoever or entered into any arrangement or
arrangements with any person or entity.
(d) Parent will make available, and Merger Sub will have, at or
before the Acceptance Date, adequate funds to accept for payment, purchase and
pay for all of the Shares tendered and not withdrawn pursuant to the Offer.
ARTICLE VII
COVENANTS
SECTION 7.1 CONDUCT OF BUSINESS. Except as expressly provided in
this Agreement, or as expressly agreed to in writing by Parent, or as set forth
in Schedule 7.01 to the Disclosure Statement, during the period from the date of
this Agreement and continuing until the Control Date or until the termination of
this Agreement pursuant to Section 9.1 (the "Executory Period"):
(a) The Company will use commercially reasonable efforts, and
will cause each of its subsidiaries to use commercially reasonable efforts, to
conduct its operations according to its ordinary and usual course of business
and consistently with past practice and to preserve intact its respective
business organization, keep available the services of its officers and employees
and maintain satisfactory relationships with licensors, suppliers, distributors,
customers and others having business relationships with it.
(b) The Company will, and will cause each of its subsidiaries
to, maintain its books and records in its usual manner and consistent with past
practice and not permit a material change in any of its financial reporting,
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tax, or accounting practices or policies or in any assumption underlying such
practices or policies, or in any method of calculating any bad debt,
contingency, or other reserve for financial reporting purposes or for other
accounting purposes, except as may be required by generally accepted accounting
principles.
(c) Without limiting the generality of the foregoing, neither
the Company nor any of its subsidiaries, as the case may be, will, without the
prior written consent of Parent, (i) issue, sell, pledge or encumber, or
authorize or propose the issuance, sale, pledge or encumbrance of (A) any shares
of capital stock of any class (including Shares), or securities convertible
into, or exchangeable for, any such shares, or any rights, warrants or options
to acquire any such shares or other convertible or exchangeable securities, or
grant or accelerate any right to convert or exchange any securities of the
Company or any of its subsidiaries for such shares, other than shares issuable
upon exercise of currently outstanding stock options, stock awards or warrants,
or (B) any other securities in respect of, in lieu of or in substitution for
shares of common stock outstanding on the date hereof (including the Shares);
(ii) redeem, purchase or otherwise acquire, or propose to redeem, purchase or
otherwise acquire, any of its outstanding securities (including the Shares);
(iii) split, combine or reclassify any shares of its capital stock or declare or
pay any dividend or distribution on any shares of capital stock of the Company;
(iv) except as set forth in Schedule 7.01 to the Disclosure Statement, make any
acquisition of a material amount of assets or securities, any disposition of a
material amount of assets or securities, or enter into or modify any material
contract, agreement, commitment, arrangement, license or right or any release or
relinquishment of any material contract rights, not in the ordinary course of
business; (v) pledge or encumber any material assets of the Company except in
the ordinary course of business consistent with past practice; (vi) incur any
long-term debt for borrowed money or short-term debt for borrowed money, except
for unsecured debt bearing interest at current market rates incurred in the
ordinary course of business consistent with past practice; (vii) propose or
adopt any amendments to the Articles of Incorporation or Bylaws of the Company
or any of its subsidiaries; (viii) enter into any new employment agreement
providing for compensation (including salary, bonus, benefits and all other
forms of compensation, whether immediately payable or deferred) in excess of
$50,000 per year or amend any existing agreement with any officer,
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director or employee or grant any increase in the compensation or benefits to
officers, directors, employees and former employees other than increases in the
ordinary course of business and consistent with past practice or pursuant to the
terms of agreements or plans as currently in effect; (ix) adopt a plan of
complete or partial liquidation or resolutions providing for the complete or
partial liquidation or dissolution of the Company or any of its subsidiaries;
(x) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person except wholly-owned subsidiaries of the Company in the ordinary course of
business and consistent with past practices; (xi) make any loans, advances or
capital contributions to, or investments in, any other person (other than loans
or advances to subsidiaries and customary loans or advances to employees in
accordance with past practices); (xii) adopt or amend (except as may be required
by law or required by this Agreement) any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or other arrangement for the
benefit or welfare of any employee or former employee; (xiii) take any action
other than in the ordinary course of business and consistent with past practice
with respect to the grant of any severance or termination pay or with respect to
any increase of benefits payable under its severance or termination pay policies
in effect on the date hereof; (xiv) make any tax election or settle or
compromise any material Federal, state, local or foreign income tax liability,
except in the ordinary course of business and consistent with past practice;
(xv) execute or enter into with the IRS or any other taxing authority (x) any
agreement or other document extending or having the effect of extending the
period of assessments or collection of any Federal, state, local or foreign
Taxes or (y) a closing agreement pursuant to Section 7121 of the Code, or any
successor provision thereof, or any similar agreement, pursuant to any similar
provision of state, local or foreign laws; (xvi) except pursuant to agreements
in effect on the date hereof which are disclosed on Schedule 7.01 to the
Disclosure Statement or as contemplated by the capital expenditures budget
currently in effect, authorize capital expenditures in excess of $50,000 in the
aggregate; or (xvii) authorize or propose any of the foregoing, or enter into
any contract, agreement, commitment or arrangement to do any of the foregoing,
or take any action which would make any representation or warranty of the
Company in this Agreement untrue or incorrect.
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(d) The Company will, prior to the Acceptance Date, use its
reasonable best efforts to obtain written determinations or permits from the
responsible governmental authorities as to which environmental permits are
required for presently unpermitted activities including, but not limited to,
waste water discharges and air emissions at the Company's facilities in Florida
and operations in Brussels, Belgium. Upon the receipt of a determination that a
permit is required, the Company shall, as soon as possible, file applications
and support information necessary to obtain such permits and shall use its
reasonable best efforts to expedite the issuance of such permits. With regard
to the Corvita Europe operating permit only, the Company shall file the
application for such permit prior to the Acceptance Date.
(e) Each of the Company and its subsidiaries shall file all
Returns that are due prior to the Closing Date and shall prior to the Closing
Date pay any and all taxes shown as being due on such Returns. The Company
shall provide to Parent at the Closing a copy of such Returns and a copy of the
receipts for any and all Taxes paid with respect to such Returns.
SECTION 7.2 NO SOLICITATION. (a) Until the earlier of the Control
Date or the termination of this Agreement, the Company shall not, and shall not
permit any of its subsidiaries, or any of its or their officers, directors,
employees, representatives, agents or affiliates (including, without limitation,
any investment banker, attorney or accountant retained by the Company or any of
its subsidiaries), to, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action knowingly to facilitate, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its or their officers,
directors or employees or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by
it or any of its subsidiaries to take any such action; PROVIDED, HOWEVER, that
nothing in this Agreement shall prohibit the Board of Directors of the Company
from furnishing information to, or entering into, maintaining or continuing
discussions or negotiations with, any person or
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entity that makes an unsolicited Acquisition Proposal after the date hereof, if
the Board of Directors of the Company, after consultation with and based upon
the advice of independent legal counsel (who may be the Company's regularly
engaged independent legal counsel), determines in good faith that the failure to
take such action could create a reasonable possibility of a breach by the Board
of Directors of the Company of its fiduciary duties to shareholders under
applicable law and, prior to taking such action, the Company (i) provides
reasonable notice to Parent to the effect that it is taking such action and (ii)
receives from such person or entity an executed confidentiality agreement in
reasonably customary form. The Company shall use reasonable efforts to keep
Parent informed of the status of any such Acquisition Proposal. For purposes of
this Agreement, "Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the transactions contemplated by this
Agreement with Parent or Merger Sub) involving the Company or any of its
subsidiaries: (w) any merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction; (x) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of all or
substantially all the assets of the Company and its subsidiaries, taken as a
whole, in a single transaction or series of related transactions; (y) any tender
offer or exchange offer for 20 percent or more of the outstanding shares of
capital stock of the Company or the filing of a registration statement under the
Securities Act in connection therewith; or (z) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(b) Except as set forth in this Section 7.2(b), the Board of
Directors of the Company shall not (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Merger Sub, the approval or
recommendation by the Board of Directors of the Offer, this Agreement or the
Merger, (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal or (iii) cause the Company to enter into any agreement with
respect to any Acquisition Proposal. Notwithstanding the foregoing, in the
event that prior to the time of acceptance for payment of Shares in the Offer
the Board of Directors of the Company determines in good faith, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), that the
failure to take such action could create a reasonable possibility of a breach by
the Board of
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Directors of the Company of its fiduciary duties to the Company's shareholders
under applicable law, the Board of Directors of the Company may withdraw or
modify its approval or recommendation of the Offer, this Agreement and the
Merger, approve or recommend an Acquisition Proposal that is more favorable to
shareholders of the Company than the Offer and Merger (a "Superior Proposal") or
cause the Company to enter into an agreement with respect to a Superior
Proposal. The Company shall provide reasonable notice to Parent or Merger Sub
to the effect that it is taking such action in no event less than 3 business
days.
SECTION 7.3 ACCESS TO INFORMATION. During the Executory Period,
the Company will upon reasonable notice (i) give Parent and its authorized
representatives reasonable access during regular business hours to all of its
subsidiaries, plants, offices, warehouses and other properties and to their
employees, agents, independent accountants and all of their books, records and
contracts, (ii) permit Parent and its authorized representatives to make such
inspections, including, without limitation, environmental assessments or
surveys, during regular business hours as Parent may reasonably require and
(iii) cause its officers and those of its subsidiaries to furnish Parent and its
authorized representatives with such financial and operating data and other
information with respect to the business and properties of the Company and its
subsidiaries as the Parent may from time to time reasonably request, provided
that all requests for such access, inspection, or information and notices
pursuant to this Section 7.3 be made through Norman R. Weldon, Ph.D. or such
other person as he shall designate in notice to Parent in accordance with
Section 10.5 hereof. Notwithstanding anything to the contrary contained herein,
the Company shall deliver to Parent, immediately after the execution of this
Agreement by all of the parties hereto, a schedule which sets forth a true,
correct and complete list of invention rights, invention disclosures and related
agreements and non-published patent applications of the Company and its
subsidiaries not previously disclosed to Parent in Schedule 5.12 to the
Disclosure Statement and shall provide Parent with access to all such documents
and information relating thereto in accordance with this Section 7.3.
SECTION 7.4 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein, and to the fiduciary duties of the Board of Directors of the
Company under applicable laws, each of the parties hereto agrees to (i) make all
required filings under the HSR Act as promptly
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as practicable but in no event later than six business days of the date hereof,
and thereafter promptly make any other required submissions under the HSR Act,
(ii) promptly make their respective filings and thereafter promptly make any
other required submissions under the Securities Act and the Exchange Act with
respect to the Merger and (iii) use its reasonable best efforts to take, or
cause to be taken, all appropriate 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,
including, without limitation, (a) using their respective reasonable best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with the Company and its subsidiaries as are necessary for consummation of the
transactions contemplated by this Agreement and to fulfill the conditions to the
Merger, (b) taking any action reasonably necessary to vigorously defend, lift,
mitigate and rescind the effect of any litigation or administrative proceeding
adversely affecting this Agreement or the transactions contemplated hereby,
including, without limitation, promptly appealing any adverse court or
administrative order or injunction and (c) to fulfill all conditions precedent
applicable to such party pursuant to this Agreement. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use their reasonable best efforts to take all such
necessary action.
SECTION 7.5 INDEMNIFICATION AND INSURANCE. (a) The Surviving
Corporation and Parent agree that until six years from the Effective Time, the
Surviving Corporation will maintain all rights to indemnification now existing
in favor of the directors, officers, employees, fiduciaries and agents of the
Company as provided in the Company's Articles of Incorporation and Bylaws or
otherwise in effect under any agreement or otherwise on the date of this
Agreement and that the Articles of Incorporation and Bylaws of the Surviving
Corporation shall not be amended to reduce or limit the rights of indemnity
afforded to the present and former directors and officers of the Company, or the
ability of the Surviving Corporation to indemnify them, nor to hinder, delay or
make more difficult the exercise of such rights of indemnity or the ability to
indemnify.
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(b) The Surviving Corporation will at all times exercise the
powers granted to it by its Articles of Incorporation, its Bylaws, and by
applicable law to indemnify and hold harmless to the fullest extent possible
present or former directors, officers, employees, fiduciaries and agents of the
Company against any threatened or actual claim, action, suit, proceeding or
investigation made against them arising from their service in such capacities
(or service in such capacities for another enterprise at the request of the
Company) prior to, and including the Effective Time for at least six years from
the Effective Time. Parent shall assume and perform the obligations of the
Surviving Corporation under this Section 7.5; PROVIDED, that, any indemnified
party shall make a good faith effort (which shall not include any requirement to
bring any suit, claim, action, or other proceeding) to cause the Surviving
Corporation to perform its obligations under this Section 7.5 before requesting
Parent to assume and perform such obligations.
(c) Should any threatened or actual claim action, suit,
proceeding or investigation be made against any present or former director,
officer, employee, fiduciary or agent of the Company, arising from his services
as such, within six years from the Effective Time, the provisions of this
Section 7.5 shall continue in effect until the final disposition of all such
claims.
(d) Any indemnified party wishing to claim indemnification under
this Section, upon learning of any such action, suit, claim, proceeding or
investigation, shall notify Parent and the Surviving Corporation within 15 days
thereof; PROVIDED, HOWEVER, that any failure so to notify Parent and the
Surviving Corporation of any obligation to indemnify such indemnified party or
of any other obligation imposed by this Section shall not affect such
obligations except to the extent Parent and/or the Surviving Corporation is
actually prejudiced thereby. Parent and the Surviving Corporation shall be
entitled to assume the defense of any such action, suit, claim, proceeding or
investigation with counsel of its choice, unless there is, under applicable
standards of professional conduct, a conflict of any significant issue between
the positions of Parent and the Surviving Corporation, on the one hand, and the
indemnified parties, on the other, in which event the indemnified parties as a
group may retain one law firm to represent them with respect to such matter.
Neither Parent or the Surviving Corporation, on the one hand, nor the
indemnified parties, on the other hand, may settle any such action,
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suit, claim, proceeding or investigation without the prior written consent of
the other party, which consent shall not be unreasonably withheld or delayed.
(e) In addition to the foregoing, Parent shall cause the
Surviving Corporation to honor in accordance with their terms any
indemnification agreements in existence on the date hereof between the Company
and any present or former director, officer, employee, fiduciary or agent of the
Company.
(f) The parties agree that the provisions of this Section 7.5
will not require Parent or the Surviving Corporation to maintain directors' and
officers' insurance coverage in favor of the Company's present and former
directors and officers.
SECTION 7.6 STATE TAKEOVER STATUTES. The Company shall, upon the
request of Parent, take all reasonable steps to assist in any challenge by
Parent to the validity or applicability to the Offer or the Merger of any state
takeover law.
SECTION 7.7 PROXY STATEMENT. Unless the Merger is consummated in
accordance with Section 1104 of the BCA, the Company shall prepare and file with
the SEC, and in consultation with Parent and Merger Sub, as soon as practicable
after the consummation of the Offer, a preliminary proxy or information
statement (the "Preliminary Proxy Statement") relating to the Merger in
accordance with the Exchange Act and the rules and regulations under the
Exchange Act, with respect to the transactions contemplated by this Agreement.
The Company, Parent and Merger Sub shall cooperate with each other in the
preparation of the Preliminary Proxy Statement. The Company shall use all
reasonable efforts to respond promptly to any comments made by the SEC with
respect to the Preliminary Proxy Statement, and to cause the Proxy Statement to
be mailed to the Company's shareholders at the earliest practicable date.
SECTION 7.8 COMPANY MEETING. The Company shall take all action
necessary, in accordance with BCA and its Articles of Incorporation and Bylaws,
to convene a special meeting of shareholders of the Company (the "Company
Meeting"), if necessary, as promptly as practicable for the purpose of
considering and voting upon this Agreement and the transactions contemplated
hereby, including the Merger. Subject to the fiduciary duties of the Company's
Board of Directors under applicable law as advised in writing by
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outside legal counsel (who may be the Company's regularly engaged independent
legal counsel), the Board of Directors of the Company shall recommend that the
holders of the Shares vote in favor of and approve this Agreement and the Merger
at the Company Meeting.
SECTION 7.9 SUPPORT OF MERGER. Merger Sub shall, and Parent shall
cause Merger Sub to, vote all of the Shares that it acquires in the Offer in
favor of the Merger at any meeting of shareholders of the Company required to be
held to approve the Merger and cause the Company and Merger Sub to execute and
file Articles of Merger with the Secretary of State of the State of Florida.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, prior to the Effective
Time, of the following conditions:
(a) Merger Sub shall have accepted for payment and paid for
Shares pursuant to the Offer in accordance with the terms thereof; PROVIDED,
HOWEVER, that this condition shall be deemed satisfied with respect to the
obligations of Parent and Merger Sub if Merger Sub shall have failed to purchase
Shares pursuant to the Offer in violation of this Agreement or the terms of the
Offer.
(b) Unless the Merger is consummated pursuant to Section 1104 of
the BCA, this Agreement and the Merger shall have been approved and adopted by
the affirmative vote of the shareholders of the Company by the requisite vote in
accordance with applicable law.
(c) No statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
Federal or state court or governmental authority and no other action shall have
been taken by any regulatory authority or agency which is in effect and has the
effect of prohibiting the consummation of the Merger.
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ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
SECTION 9.1 TERMINATION. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of the Company, but prior to the Effective Time, in
any one of the following circumstances:
(a) By mutual written consent duly authorized by the Boards of
Directors of the Company and Parent prior to the Control Date.
(b) By Parent or the Company, if, without any material breach by
such terminating party of its obligations under this Agreement, the purchase of
Shares pursuant to the Offer shall not have occurred on or before August 9,
1996.
(c) By Parent or the Company, if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares being purchased
in accordance with Section 1.1; PROVIDED, HOWEVER, that Parent may not terminate
this Agreement pursuant to this Section 9.1(c), if Parent's termination of, or
Merger Sub's failure to accept for payment or pay for any Shares tendered
pursuant to, the Offer does not follow the occurrence, or failure to occur, as
the case may be, of any condition set forth in Exhibit A or is otherwise in
violation of the terms of the Offer or this Agreement.
(d) By Parent or the Company, if any Federal or state court of
competent jurisdiction or other Federal or state governmental body shall have
issued an order, decree or ruling, or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and non-appealable.
(e) By the Company, if it shall have received a Superior
Proposal, and the Company's Board of Directors, after consultation with and
based upon the written advice of outside legal counsel (who may be the Company's
regularly engaged outside legal counsel), determines in good faith that failure
to accept such Superior Proposal could create a reasonable possibility of a
breach by the Board of Directors of the Company of its fiduciary duties to
shareholders under applicable law.
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(f) By Parent, but only prior to the Acceptance Date, if the
Board of Directors of the Company shall have (i) withdrawn, modified or amended
in any adverse respect its approval or recommendation of this Agreement, the
Merger or the transactions contemplated hereby, (ii) recommended to its
shareholders an Acquisition Proposal or (iii) resolved to do any of the
foregoing.
(g) By Parent or the Company, but only prior to the Acceptance
Date, if (A) the other party shall have failed to comply in any material respect
with any of the material covenants and agreements contained in this Agreement to
be complied with or performed by such party at or prior to such date of
termination, and such failure continues for ten business days after the actual
receipt by such party of a written notice from the other party setting forth in
detail the nature of such failure, or (B) a material representation or warranty
of the other party contained in this Agreement shall be untrue in any material
respect when made or on and as of the Acceptance Date as if made on the
Acceptance Date.
(h) By the Company, if the Offer has not been timely commenced
in accordance with Section 1.1.
SECTION 9.2 EFFECT OF TERMINATION. In the event of the termination
and abandonment of this Agreement pursuant to Section 9.1 hereof, this
Agreement, except for the provisions of this Section 9.2 and Section 10.10
hereof, shall forthwith become void and have no effect, without any liability on
the part of any party or its directors, officers or shareholders; PROVIDED,
HOWEVER, that nothing in this Section 9.2 shall relieve any party to this
Agreement of liability for any willful or intentional breach of this Agreement.
SECTION 9.3 AMENDMENT. To the extent permitted by applicable law,
this Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Merger Sub at any time before or after
adoption of this Agreement by the shareholders of the Company. This Agreement
may not be amended except by an instrument in writing signed on behalf of all
the parties.
SECTION 9.4 EXTENSION; WAIVER. At any time prior to the Control
Date, the parties hereto, by action taken by or on behalf of the respective
Boards of Directors of the Company, Parent or Merger Sub, may (i) extend the
time for the performance of any of the obligations or
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other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein by any other applicable party or
in any document, certificate or writing delivered pursuant hereto by any other
applicable party or (iii) waive compliance with any of the agreements or
conditions 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. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No
representations or warranties shall survive beyond the Acceptance Date and no
covenants made in this Agreement shall survive beyond the Control Date;
PROVIDED, HOWEVER, that this Section 10.1 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time, including, without limitation, the covenants contained
in Sections 7.5 and 10.10.
SECTION 10.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
(a) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise, provided that Parent or Merger Sub may assign any of their
rights and obligations to any wholly-owned, direct subsidiary of Parent but no
such assignment shall relieve Parent or Merger Sub of its obligations hereunder.
SECTION 10.3 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereon in any Federal or
state court located in the State of New York (as to which the parties agree to
submit to jurisdiction for the purpose
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of such action), this being in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 10.4 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect. Each party agrees that, should any court of competent authority hold
any provision of this Agreement to be null, void or unenforceable, or order any
party to take any action inconsistent herewith or not to take any action
required herein, the other party shall not be entitled to specific performance
of such provision or to any other remedy, including, without limitation, money
damages, for breach hereof or of any other provision of this Agreement as a
result of such holding or order.
SECTION 10.5 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by cable, telegram, telecopier, telex
or overnight courier, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
if to Parent or Merger Sub:
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Attention: Paul S. Miller, Esq.
Senior Vice President
and General Counsel
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block, Esq.
if to the Company:
Corvita Corporation
8210 N.W. 27th Street
Miami, Florida
Attention: Norman R. Weldon Ph.D.
President and
Chief Executive Officer
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with a copy to:
Epstein, Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof). All such notices or communications shall be deemed to be
received (a) in the case of personal delivery, cable, telex or telecopy, on the
date of such delivery, (b) in the case of overnight courier, on the next
business day after the date when sent and (c) in the case of registered or
certified mailing, on the third business day following the date on which the
piece of mail containing such communication was posted.
SECTION 10.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto, provided that matters affecting the validity of the
corporate action taken by the Company, Parent or Merger Sub relating to the
Merger shall be governed by the laws of the State of Florida.
SECTION 10.7 DESCRIPTIVE HEADINGS. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 10.8 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Sections 3.1, 3.2 and Article IV and, in respect of the indemnified
parties only, 7.5.
SECTION 10.9 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
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SECTION 10.10 FEES AND EXPENSES. (a) If this Agreement or the
transactions contemplated hereby are terminated for any of the following reasons
(i) such termination occurs pursuant to Section 9.1(e),
(ii) such termination occurs pursuant to Section 9.1(f), or
(iii) such termination occurs pursuant to Section 9.1(g) as a
result of an intentional material breach of this Agreement by the
Company following (but not prior to) the Company's receipt of an
Acquisition Proposal by any person or group other than Parent,
then the Company shall pay Parent a fee equal to $4 million, which fee shall be
inclusive of all Expenses (as defined below).
(b) As used herein, the term "Expenses" shall mean all of
Parent's, Merger Sub's and their affiliates' reasonable out-of-pocket expenses
(including all fees and expenses of counsel, accountants, experts, investment
bankers, financial and other consultants to Parent, Merger Sub and their
affiliates) incurred by them or on their behalf in connection with the
transactions contemplated by this Agreement, including, but not limited to, in
connection with the negotiation, preparation, execution and performance of this
Agreement and the Parent's due diligence investigation of the Company.
(c) Except as provided otherwise in Section 10.10(a) hereof, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses; PROVIDED, HOWEVER, that the costs of printing the Proxy Statement
and in each case all exhibits, amendments or supplements thereto shall be borne
equally by the Company and Parent.
(d) Any payment required to be made pursuant to Section 10.10
shall be made as promptly as practicable but not later than five business days
after the occurrence of the event giving rise to such payment and shall be made
by wire transfer of immediately available funds to an account designated by
Parent, except that any payment to be made pursuant to Section 10.10(a)(i) shall
be made not later
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than the termination of this Agreement by the Company pursuant to Section
9.1(e).
SECTION 10.11 PERFORMANCE BY MERGER SUB. Subject to the terms
hereof, the Parent hereby agrees to cause Merger Sub to comply with its
obligations hereunder and to cause Merger Sub to consummate the Merger as
contemplated herein.
SECTION 10.12 MATERIALITY. The parties hereto agree that,
notwithstanding anything to the contrary contained herein, for purposes of this
Agreement, (a) the representations set forth in Sections 5.9(b)(i), 5.9(b)(ii)
and 5.9(b)(iii) are each, individually and in the aggregate, material
representations and warranties of the Company and (b) the failure of any one or
more of the Material Agreements to be in full force and effect or, if there
shall have been any material breach by the Company or the other party thereto
which has not been cured, such breach, shall be deemed to cause the
representations and warranties in Sections 5.9(b)(i), 5.9(b)(ii) and 5.9(b)(iii)
to be untrue and incorrect in a manner which is reasonably likely to have a
Material Adverse Effect.
SECTION 10.13 SUBSIDIARIES DEFINED. For purposes of this agreement
"Subsidiaries" means with respect to any party, any corporation, partnership,
joint venture or other organization, whether incorporated or unincorporated, of
which (i) such party or any other subsidiary of such party is a general partner;
(ii) voting power to elect a majority of the board of directors or other
performing similar functions with respect to such corporation, partnership,
joint venture or other organization is held by such party or by any one or more
of its subsidiaries, or by such party and any one or more of its subsidiaries;
or (iii) at least 25% of the equity, or other securities or other interests is,
directly or indirectly, owned or controlled by such party or by any one or more
of its subsidiaries, or by such party and any one or more of its subsidiaries.
SECTION 10.14 PUBLICITY. So long as this Agreement is in effect,
each of the Parent and Merger Sub, on the one hand, and the Company, on the
other hand, promptly shall advise, consult and cooperate with the other prior to
issuing, or permitting any of its subsidiaries, directors, officers, employees
or agents to issue, any press release or other statement to the press or any
third party with respect to this Agreement, or the transactions contemplated
hereby.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by an officer thereof thereunto duly authorized, on
the day and year first above written.
PFIZER INC.
By: /S/ PAUL S. MILLER
--------------------------------------
Name: Paul S. Miller
Title: Senior Vice
President and
General Counsel
HPG ACQUISITION CORP.
By: /S/ GEORGE A. STEWART
--------------------------------------
Name: George A. Stewart
Title: President
CORVITA CORPORATION
By: /S/ NORMAN R. WELDON
--------------------------------------
Name: Norman R. Weldon
Title: President and
Chief Executive
Officer
<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Merger Sub shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, to pay
for any Shares tendered, and may postpone the acceptance for payment or, subject
to the restriction referred to above, payment for any Shares tendered, and,
subject to the provisions of the Merger Agreement, may terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for), if, (1)
there have not been validly tendered and not withdrawn prior to the time the
Offer shall otherwise expire a number of Shares that constitutes a majority of
the Shares outstanding on a fully-diluted basis on the date of purchase ("on a
fully-diluted basis" meaning, as of any date, the number of Shares outstanding,
together with Shares the Company is then required to issue pursuant to
obligations outstanding at that date under employee stock option or other
benefit plans or otherwise), (2) any applicable waiting periods under the HSR
Act shall not have expired or been terminated prior to the expiration of the
Offer or any formal investigations relating to the Offer or the Merger that may
have been opened by the Department of Justice or the Federal Trade Commission
(by means of a written request for additional information or otherwise) shall
not have terminated, or (3) at any time before acceptance for payment of, of
payment for, such Shares, any of the following events shall occur or be deemed
to have occurred:
(A) there shall be pending any suit, action or proceeding by any
governmental entity (1) challenging the acquisition by Parent or Merger Sub
of any Shares under the Offer or seeking to restrain or prohibit the making
or consummation of the Offer or Merger, (2) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any
of their respective subsidiaries of a material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Parent and
its subsidiaries, taken as a whole, or to compel the Company or Parent to
dispose of or hold separate any material portion of the business or assets
of the Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as a result of the Offer or any of the
other transactions contemplated by this Agreement,
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(3) seeking to impose material limitations on the ability of Parent or
Merger Sub to acquire or hold, or exercise full rights of ownership of, any
Shares accepted for payment pursuant to the Offer, including, without
limitation, the right to vote such Shares on all matters properly presented
to the shareholders of the Company, or (4) seeking to prohibit Parent or
any of its subsidiaries from effectively controlling in any material
respect any material portion of the business or operations of the Company
and its subsidiaries; or
(B) any governmental entity or federal or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, executive order, decree, injunction or other
order that is in effect and that (1) materially restricts, prevents or
prohibits consummation of the Offer, the Merger or any material transaction
contemplated by the Merger Agreement, (2) prohibits or limits materially
the ownership or operation by the Company, Parent or any of their
subsidiaries of all or any material portion of the business or assets of
the Company and its subsidiaries taken as a whole, or compels the Company,
Parent or any of their subsidiaries to dispose of or hold separate all or
any material portion of the business or assets of the Company and its
subsidiaries taken as a whole, (3) imposes material limitations on the
ability of Parent or any of its subsidiaries to exercise effectively full
rights of ownership of any Shares, including, without limitation, the right
to vote any Shares acquired by Merger Sub pursuant to the Offer or
otherwise on all matters properly presented to the Company's shareholders,
including, without limitation, the approval and adoption of the Merger
Agreement and the transactions contemplated by the Merger Agreement, or (4)
requires divestitures by Parent, Merger Sub or any other affiliate of
Parent of any Shares; provided that Parent shall have used all reasonable
efforts to cause any such decree, judgment, injunction or other order to be
vacated or lifted; or
(C) the representations and warranties of the Company in the Merger
Agreement were untrue or incorrect in a manner which is reasonably likely
to have an adverse change in or effect on the condition (financial or
otherwise), business, assets or results of operations of the Company and
its subsidiaries taken
A-2
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as a whole on the Company ("Material Adverse Effect") when made or (except
for those that address matters as of a specific date and except for changes
specifically permitted by the Merger Agreement) thereafter become and
remain untrue or incorrect in a manner which is reasonably likely to have a
Material Adverse Effect; or
(D) the Company shall have breached or failed to comply in any
material respect with any of its obligations under the Merger Agreement
and, with respect to any such breach or failure that can be remedied, the
breach or failure is not remedied within 10 business days after Parent has
furnished the Company written notice of such breach or failure; or
(E) the Merger Agreement shall have been terminated in accordance
with its terms; or
(F) the board of directors of the Company shall have withdrawn or
materially modified or changed (including by amendment of the Schedule 14D-
9) in a manner adverse to Merger Sub its recommendation of the Offer, the
Merger Agreement or the Merger, or the board of directors of the Company
shall have approved or recommended any Acquisition Proposal; or
(G) it shall have been publicly disclosed or Merger Sub shall have
otherwise learned that any person or "group" (as defined in section
13(d)(3) of the Exchange Act), other than Parent or its affiliates or any
group of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 under the Exchange Act) of
more than 25 percent of the Shares, through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted an option,
right or warrant, conditional or otherwise, to acquire beneficial ownership
of more than 25 percent of the Shares; or
(H) there shall have occurred and continued for at least three
business days (1) any general suspension of, or limitation on prices for,
trading in securities on any national securities exchange or in the over-
the-counter market in the United States, (2) the declaration of any banking
moratorium or any suspension of payments in respect of banks, or any
limitation (whether or not mandatory) by any governmental entity on, or
other event materially adversely affecting, the
A-3
<PAGE>
extension of credit by lending institutions in the United States or (3) in
the case of any of the foregoing existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof;
which, in the judgment of Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent or Merger Sub) giving
rise to any such condition, makes it inadvisable to proceed with such acceptance
for payment or payments.
The foregoing conditions are for the sole benefit of Parent, Merger
Sub and their affiliates and may be asserted by Parent or Merger Sub regardless
of the circumstances (including, without limitation, any action or inaction by
Parent, Merger Sub or any of their affiliates) giving rise to any such condition
or may be waived by Parent or Merger Sub, in whole or in part, from time to time
in its sole discretion, except as otherwise provided in the Merger Agreement.
The failure by Parent or Merger Sub at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right and may be asserted at any time and from time to
time. Unless otherwise defined in this Exhibit A, capitalized terms used in
this Exhibit A have the meanings ascribed to them in the Merger Agreement among
Parent, Merger Sub and the Company to which this Exhibit A is attached (the
"Merger Agreement").
A-4
<PAGE>
SHAREHOLDERS AGREEMENT
AGREEMENT, dated as of April 11, 1996, among Pfizer Inc., a Delaware
corporation ("PARENT"), HPG Acquisition Corp., a Florida corporation and a
direct wholly-owned subsidiary of Parent ("MERGER SUB"), and the other parties
signatory hereto (each a "SHAREHOLDER", and collectively, the "SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Merger Sub and Corvita
Corporation, a Florida corporation (the "COMPANY"), are entering into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "MERGER AGREEMENT"; capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement),
pursuant to which, among other things, Merger Sub will be merged with and into
the Company (the "MERGER");
WHEREAS, in furtherance of the Merger, Parent and the Company have
agreed that as soon as practicable (and not later than five business days) after
the first public announcement of the execution and delivery of the Merger
Agreement, Merger Sub will commence a cash tender offer to purchase all
outstanding shares of Company Common Stock (as defined in Section 1), including
all of the Shares (as defined in Section 2) Beneficially Owned (as defined in
Section 1) by the Shareholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholders agree, and the Shareholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "COMPANY COMMON STOCK" shall mean at any time the common stock,
$.001 par value, of the Company.
<PAGE>
(c) "PERSON" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
2. TENDER OF SHARES.
(a) Each Shareholder hereby agrees to validly tender (and not to
withdraw) pursuant to and in accordance with the terms of the Offer, not later
than the fifth business day after commencement of the Offer pursuant to Section
1.1 of the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of
shares of Company Common Stock set forth opposite such Shareholder's name on
Schedule I hereto (the "EXISTING SHARES" and, together with any shares of
Company Common Stock acquired by such Shareholder after the date hereof and
prior to the termination of this Agreement, whether upon the exercise of
options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of purchase, dividend, distribution or
otherwise, the "SHARES"). Each Shareholder hereby acknowledges and agrees that
Merger Sub's obligation to accept for payment and pay for Shares in the Offer is
subject to the terms and conditions of the Offer.
(b) Each Shareholder hereby agrees to permit Parent and Merger Sub to
publish and disclose in the Offer Documents and, if approval of the Merger by
the Company's shareholders (other than Parent or any of its wholly-owned
subsidiaries) is required under applicable law, in the Proxy Statement
(including all documents and schedules filed with the SEC) his or its identity
and ownership of Company Common Stock and the nature of his or its commitments
under this Agreement.
3. PROVISIONS CONCERNING COMPANY COMMON STOCK. Each Shareholder
hereby agrees that during the period commencing on the date hereof and
continuing until the first to occur of the Effective Time or termination of the
Merger Agreement in accordance with its terms, at any meeting of the holders of
Company Common Stock, however called, or in connection with any written consent
of the holders of Company Common Stock, such Shareholder shall vote (or cause to
be voted) the Shares held of record or Beneficially Owned by such Shareholder,
whether issued, heretofore owned or hereafter acquired, (i) in favor of the
Merger, the execution and delivery by the Company of the Merger Agreement and
the approval of the terms thereof and each of the other actions contemplated by
the Merger Agreement and this Agreement and any actions required in furtherance
thereof and hereof; (ii) against any action or agreement that would result in a
breach in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or this
Agreement (after giving effect to any materiality or similar qualifications
contained therein); and (iii) except as otherwise agreed to in writing in
advance by Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C) (1) any change in a majority of the persons who constitute
the Board of Directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Articles of
Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any
2
<PAGE>
other action involving the Company or its subsidiaries which is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by this
Agreement and the Merger Agreement. Such Shareholder shall not enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions and agreements contained in this
Section 3.
4. ACQUIRED SHARES. In order to induce Parent and Merger Sub to
enter into the Merger Agreement, each of the Shareholders hereby agrees that if
the Merger Agreement is terminated by Parent in accordance with any of Sections
9.1(f) or 9.1(g) thereof, or by the Company in accordance with Section 9.1(e)
thereof, and, during the period commencing on the date of such termination and
continuing until the first anniversary of the date hereof, the Shares are
disposed, transferred or sold ("Sale") to a Person (other than Parent or Merger
Sub) in a transaction in which there is, directly or indirectly, a change (x) in
the ownership of a majority of the Company Common Stock or (y) in a majority of
the individuals who constitute the Company's board of directors on the date
hereof, for a per share amount in excess of the Offer Consideration, Parent
shall be entitled to, and each Shareholder agrees to pay to Parent, an amount
per share in cash equal to 50% of the difference between the gross proceeds
received, or receivable, by such Shareholders in the Sale and the Offer Price.
Any such payment due and owing to Parent shall be made within three (3) days of
the Shareholders' receipt thereof. Each of the Shareholders agrees to effect
any Sale of Shares (other than pursuant to the Merger Agreement) in an arms'
length bona fide transaction to an unaffiliated Person.
5. OTHER COVENANTS, REPRESENTATIONS AND WARRANTIES. Each
Shareholder hereby represents and warrants to Parent as follows:
(a) OWNERSHIP OF SHARES. Such Shareholder is either (i) the record
and Beneficial Owner of, or (ii) the Beneficial Owner but not the record holder
of, the number of Shares set forth opposite such Shareholder's name on Schedule
I hereto. On the date hereof, the Existing Shares set forth opposite such
Shareholder's name on Schedule I hereto constitute all of the shares of
securities issued by the Company owned of record or Beneficially Owned by such
Shareholder. Such Shareholder has sole voting power and sole power to issue
instructions with respect to the matters set forth in Sections 2 and 3 hereof,
sole power of disposition, sole power of conversion, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Existing Shares set forth
opposite such Shareholder's name on Schedule I hereto, with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. Such Shareholder has the legal
capacity, power and authority to enter into and perform all of such
Shareholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Shareholder will not violate any other
agreement to which such Shareholder is a party including, without limitation,
any voting agreement, shareholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Shareholder and
constitutes a valid and binding agreement of such Shareholder, enforceable
against such Shareholder in accordance with its terms. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of which
such
3
<PAGE>
Shareholder is Trustee whose consent is required for the execution and delivery
of this Agreement or the consummation by such shareholder of the transactions
contemplated hereby.
(c) NO CONFLICTS. Except for filings under the HSR Act, if
applicable, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority or any other Person
is necessary for the execution of this Agreement by such Shareholder and the
consummation by such Shareholder of the transactions contemplated hereby and
(B) none of the execution and delivery of this Agreement by such Shareholder,
the consummation by such Shareholder of the transactions contemplated hereby or
compliance by such Shareholder with any of the provisions hereof shall
(1) conflict with or result in any breach of any applicable organizational
documents applicable to such Shareholder, (2) result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a default
(or give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which such Shareholder is a party or by which such Shareholder or any of
such Shareholder's properties or assets may be bound, or (3) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Shareholder or any of such Shareholder's properties or
assets.
(d) NO ENCUMBRANCES. Except as applicable in connection with the
transactions contemplated by Section 2 hereof, such Shareholder's Shares and the
certificates representing such Shares are now, and at all times during the term
hereof will be, held by such Shareholder, or by a nominee or custodian for the
benefit of such Shareholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever, except for any such encumbrances arising
hereunder. The transfer by each Shareholder of his or its Shares to Merger Sub
in the Offer shall pass to and unconditionally vest in Merger Sub good and valid
title to the number of Shares set forth opposite such Shareholder's name on
Schedule I hereto, free and clear of all claims, liens, restrictions, security
interests, pledges, limitations and encumbrances whatsoever.
(e) NO FINDER'S FEES. Other than existing financial advisory and
investment banking arrangements and agreements entered into by the Company no
broker, investment banker, financial adviser or other person is entitled to any
broker's, finder's, financial adviser's or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of such Shareholder.
(f) NO SOLICITATION. No Shareholder shall, in his or its capacity as
such, directly or indirectly, solicit (including by way of furnishing
information) or respond to any inquiries or the making of any proposal by any
person or entity (other than Parent or any affiliate of Parent) with respect to
his or its Shares or with respect to the Company that constitutes an Acquisition
Proposal, except that a Shareholder who is a director of the Company may take
actions in such capacity to the extent permitted by the Merger Agreement. If
any Shareholder receives any such inquiry or proposal, then such Shareholder
shall promptly inform Parent of the existence thereof. Each Shareholder will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
4
<PAGE>
(g) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Except as
applicable in connection with the transactions contemplated by Section 2 hereof,
no Shareholder shall (i) directly or indirectly, offer for sale, sell, transfer,
tender, pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of such Shareholder's Shares or
any interest therein; (ii) except as contemplated by this Agreement, grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares; or (iii) take any action
that would make any representation or warranty of such Shareholder contained
herein untrue or incorrect or have the effect of preventing or disabling such
Shareholder from performing such Shareholder's obligations under this Agreement.
(h) WAIVER OF APPRAISAL RIGHTS. Each Shareholder hereby waives any
rights of appraisal or rights to dissent from the Merger that such Shareholder
may have.
(i) RELIANCE BY PARENT. Such Shareholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter into,
the Merger Agreement in reliance upon such Shareholder's execution and delivery
of this Agreement.
(j) FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
6. STOP TRANSFER; CHANGES IN SHARES. Each Shareholder agrees with,
and covenants to, Parent that such Shareholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Shareholder's Shares, unless
such transfer is made in compliance with this Agreement (including the
provisions of Section 2 hereof). In the event of a stock dividend or
distribution, or any change in the Company Common Share by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "SHARES" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged.
7. TERMINATION. Except as otherwise provided herein, the covenants
and agreements contained herein with respect to the Shares shall terminate upon
the earlier of (x) the Effective Time and (y) the first anniversary of the date
hereof; provided, however, that the provisions of Sections 5(f), 5(g)(i) and
5(g)(ii) shall terminate upon any earlier termination of the Merger Agreement.
8. SHAREHOLDER CAPACITY. No person executing this Agreement who is
or becomes during the term hereof a director of the Company makes any agreement
or understanding herein in his or her capacity as such director.
5
<PAGE>
9. CONFIDENTIALITY. The Shareholders recognize that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, each Shareholder hereby agrees
not to disclose or discuss such matters with anyone not a party to this
Agreement (other than such Shareholder's counsel and advisors, if any) without
the prior written consent of Parent, except for filings required pursuant to the
Exchange Act and the rules and regulations thereunder or disclosures such
Shareholder's counsel advises are necessary in order to fulfill such
Shareholder's obligations imposed by law, in which event such Shareholder shall
give notice of such disclosure to Parent as promptly as practicable.
10. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Each Shareholder agrees that this Agreement and
the obligations hereunder shall attach to such Shareholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Shareholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Parent may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Shareholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; PROVIDED that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any shareholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added shareholder shall be treated as a
"Shareholder" for all purposes of this Agreement.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
6
<PAGE>
If to Shareholders: At the addresses set forth on Schedule I hereto
copy to: Epstein, Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
If to Parent: Pfizer Inc.
235 East 42nd Street
New York, New York 10017-5755
Attention: Paul S. Miller, Esq.
Senior Vice President
and General Counsel
copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000 (telephone)
(212) 310-8007 (telecopier)
Attention: Dennis J. Block, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
7
<PAGE>
(i) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
(l) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(m) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
8
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and each Shareholder have
caused this Agreement to be duly executed as of the day and year first above
written.
PFIZER INC.
By: /s/ Paul S. Miller
----------------------------------
Name: Paul S. Miller
Title: Senior Vice President and
General Counsel
HPG ACQUISITION CORP.
By: /s/ George A. Stewart
----------------------------------
Name: George A. Stewart
Title: President
/s/ Norman R. Weldon
--------------------------------------
Norman R. Weldon, Ph.D.
/s/ David C. MacGregor
--------------------------------------
David C. MacGregor, M.D.
/s/ Leonard Pinchuk
--------------------------------------
Leonard Pinchuk, Ph.D.
WestMed Venture Partners, L.P.
By: /s/ Hal S. Watts
----------------------------------
Name: Hal S. Watts
Title:
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<PAGE>
Trinity Ventures II, L.P.
By: /s/ David Nierenberg
----------------------------------
Name: David Nierenberg
Title: General Partner
/s/ Bruce A. Weber
--------------------------------------
Bruce A. Weber
/s/ Herbert Kontges
--------------------------------------
Herbert Kontges
/s/ John B. Martin
--------------------------------------
John B. Martin
/s/ Karen C. Vinjamuri
--------------------------------------
Karen C. Vinjamuri
AGREED TO AND ACKNOWLEDGED
(with respect to Section 6):
CORVITA CORPORATION
By:/s/ Norman R. Weldon
--------------------------
Name: Norman R. Weldon
Title: President and
Chief Executive Officer
10
<PAGE>
SCHEDULE I TO
SHAREHOLDERS AGREEMENT
Percentage of Out-
Name and Address Number of standing Common Stock
of Shareholder Shares Owned (to nearest hundredth)
- ---------------- ------------ ----------------------
Norman R. Weldon, Ph.D. 489,250 6.88%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100 x801
(F): (305) 599-9301
David C. MacGregor, M.D. 154,539 2.17%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100
(F): (305) 599-9301
Leonard Pinchuk, Ph.D. 50,850 0.72%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100
(F): (305) 599-9301
WestMed Venture Partners, L.P. 410,765 5.78%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100
(F): (305) 599-9301
Trinity Ventures II, L.P. 240,987 3.39%
c/o Trinity Ventures
155 Bovet Road, Suite 660
San Mateo, CA 94402
Attention: David Nierenberg
(W): (415) 358-9700
(F): (415) 358-9785
11
<PAGE>
Percentage of Out-
Name and Address Number of standing Common Stock
of Shareholder Shares Owned (to nearest hundredth)
- ---------------- ------------ ----------------------
Bruce A. Weber 20,000 0.28%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100
(F): (305) 599-9301
Herbert Kontges 45,000 0.63%
c/o Corvita Corporation, S.A.
40 Avenue Joseph Wybran
Erasmus Technology Center
Brussels 1070, Belgium
(W): 011-322-521-6940
(F): 011-322-521-6591
John B. Martin 58,450 0.82%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100
(F): (305) 599-9301
Karen C. Vinjamuri 17,450 0.25%
c/o Corvita Corporation
8210 N.W. 27th Street
Miami, FL 33122
(W): (305) 599-3100 x404
(F): (305) 599-9301
TOTAL: 1,487,291 20.93%
--------- -----
--------- -----
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<PAGE>
THE PROMISSORY NOTE REPRESENTED HEREBY WAS ORIGINALLY ISSUED ON APRIL 11, 1996,
AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE THEREWITH OR
PURSUANT TO AN EXEMPTION THEREFROM.
PROMISSORY NOTE
$2,000,000 New York, New York
April 11, 1996
FOR VALUE RECEIVED, the undersigned Corvita Corporation, a Florida
corporation whose principal office is located at 8210 N.W. 27th Street, Miami,
Florida ("Payor"), does hereby promise to pay to Pfizer Inc., a Delaware
corporation whose principal office is located at 235 East 42nd Street, New York,
New York 10017 ("Payee"), in lawful money of the United States, in immediately
available funds, the principal amount of TWO MILLION DOLLARS ($2,000,000),
together with interest thereon at a rate per annum equal to 8.25%, calculated on
the basis of a 360-day year for actual days elapsed. Payment of the principal
amount of this Note shall be made upon demand of Payee at any time on or after
the earlier of (i) August 9, 1996, (ii) the termination of the Merger Agreement
(as hereinafter defined), or (iii) the consummation of the Merger contemplated
by and as defined in the Merger Agreement. Interest shall be payable monthly in
arrears on the last day of each month.
All loans made by the Payee to the Payor, and all payments made on
account of the principal thereof, shall be recorded by the Payee and, prior to
any transfer hereof, endorsed on this Note.
The Payor agrees that so long as any amounts remain outstanding under
this Note, it will continue to operate its business in the ordinary course
consistent with past practice, including continuing to conduct clinical studies
and to perform Food and Drug Administration regulatory activities.
Upon the occurrence of any of the following events:
(i) the failure by the Payor to comply with the covenant contained
in the preceding paragraph; or
(ii) the institution by or against the Payor of any proceeding
seeking to adjudicate the Payor a bankrupt or
<PAGE>
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for the Payor or for any substantial party of its property;
then this Note shall become immediately due and payable, without presentment,
notice, demand or protest, all of which are waived by the Payor.
This Note shall be binding upon and inure to the benefit of Payee and
Payor and their respective transferees, successors and assigns; PROVIDED,
HOWEVER, that Payor may not transfer or assign any of its rights or obligations
hereunder without the prior written consent of Payee.
This Note may not be changed orally, but only by an agreement in
writing and signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York.
IN WITNESS WHEREOF, the Payor has caused this Note to be executed and
delivered by its duly authorized officer on the date first written above.
CORVITA CORPORATION
By: /s/ Norman R. Weldon
-----------------------------------
Name: Norman R. Weldon
Title: President and
Chief Executive
Officer
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PFIZER, INC.
235 EAST 42ND STREET
NEW YORK, NEW YORK 10017
April 11, 1996
Corvita Corporation
8210 N.W. 27th Street
Miami, Florida
Gentlemen:
We hereby agree to make advances to Corvita Corporation (the "Company"
or "you") from time to time until the earlier to occur of (x) the termination of
the Agreement and Plan of Merger, dated as of April 11, 1996, among Pfizer Inc.,
HPG Acquisition Corp. and the Company (the "Merger Agreement") and (y) August 9,
1996, in an amount not to exceed $2,000,000.
Subject to the terms set forth herein, funds shall be made available
to you on the business day subsequent to the business day on which we receive a
certificate, signed by the chief financial officer of the Company, requesting a
specified sum and certifying that (i) such amount will be used to pay (A)
obligations of the Company incurred in the ordinary course of business,
including payroll (but not bonuses), and other general and administrative
expenses (but not including fees payable to the Company's legal and financial
advisors), which obligations (including the name of each payee and the amounts
owed to each such payee) shall be set forth in a schedule attached to such
officer's certificate or (B) claims of the Company's creditors set forth on
Exhibit A hereto, and (ii) that the Company is in compliance with the covenant
contained in the Promissory Note referred to below. Funds shall be advanced in
amounts not to exceed $150,000 once every five business days; PROVIDED, HOWEVER,
that an initial funding in an amount not to exceed $550,000 shall be advanced to
the Company upon its compliance with the terms hereof.
Borrowings under this letter will be evidenced by your Promissory Note
to our order in the form attached hereto as Exhibit A. All outstanding amounts
evidenced by the Note will bear interest at a rate per annum equal to 8.25%.
Interest shall be paid monthly in arrears on the last day of each month.
<PAGE>
Please evidence your agreement by signing a counterpart of this
letter.
Very truly yours,
PFIZER INC.
By: /s/ Paul S. Miller
-----------------------------------------
Title: Senior Vice
President and
General Counsel
Accepted and Agreed:
CORVITA CORPORATION
By: /s/ Norman R. Weldon
-------------------------
Title: President and
Chief Executive
Officer
2
<PAGE>
LICENSE AGREEMENT
This Agreement, dated April 11, 1996 (this "Agreement"), is entered
into by and between Corvita Corporation, a corporation organized under the laws
of Florida and having its principal place of business at 8210 N.W. 27th Street,
Miami, Florida 33122 (the "Licensor") and Pfizer Inc., a corporation organized
under the laws of Delaware and having its principal place of business at 235
East 42nd Street, New York, New York 10017-5755 ("the Licensee").
WHEREAS:
The Licensor is the owner of certain United States patents, and
foreign counterparts and applications for foreign counterparts of such patents,
covering a certain polycarbonate urethane material manufactured and sold by the
Licensor under the registered trademark "Corethane";
The Licensee manufactures and sells urethane materials and therefore
desires a license under the Licensed Patents, subject to the terms and
conditions set forth in this Agreement, to manufacture and sell the Licensor's
polycarbonate urethane material;
The Licensor, the Licensee and HPG Acquisition Corp., a corporation
organized under the laws of Florida and a direct wholly-owned subsidiary of the
Licensee, have entered into an Agreement and Plan of Merger dated April 11, 1996
(as such agreement may hereafter be amended from time to time, the "Merger
Agreement"; capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement), pursuant to which, among
other things, HPG will be merged with and into the Licensor;
Simultaneously herewith, the Licensor and the Licensee are entering
into a Loan Agreement (the "Loan Agreement") relating to the Licensee's
agreement, subject to certain conditions specified therein, to advance to the
Licensor not more than $2,000,000, and the Licensor has executed a Promissory
Note, of even date herewith (the "Promissory Note") in favor of the Licensee in
connection therewith;
NOW THEREFORE, in consideration of the mutual representation,
warranties, covenants and agreements, including, but not limited to, the Loan
Agreement, and upon the terms and subject to the conditions hereinafter set
forth, the parties hereto do hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 AFFILIATE. The term "Affiliate" shall mean, with respect to any
person or entity, any other person or entity that directly or indirectly
controls, is under common control with or is controlled by that person or
entity. For purposes of this definition, "control" (including, with correlative
meaning, the terms "controlled by" and "under common control with"), as used
with respect to any person or entity, shall mean the possession, direct or
indirectly, of the power to direct or to cause the direction of the management
and policies of such person or entity, whether through the ownership of voting
securities, by contract or otherwise.
1.2 CLAIM. The term "Claim" shall mean a patent claim which has not
expired and which has not been disclaimed, canceled or finally held invalid or
unenforceable by a court or administrative body of competent jurisdiction from
which no further appeal is possible or has been taken within the time period
provided under applicable law for such appeal.
1.3 EFFECTIVE DATE. The "Effective Date" of this Agreement shall be
the date hereof.
1.4 LICENSED DEVICE. The term "Licensed Device" shall mean a device
containing one or more parts composed of, in whole or in part, a Licensed
Material.
1.5 LICENSED KNOW-HOW. The term "Licensed Know-How" shall mean
manufacturing know-how related to the manufacture of any Licensed Material,
which manufacturing know-how is known to Licensor on or around the Effective
Date of this Agreement.
1.6 LICENSED MATERIAL. The term "Licensed Material" shall mean a
polycarbonate urethane material that is covered by, whose method of making or
use is covered by, or that is a component of an article of manufacture covered
by at least one claim of a Licensed Patent and that is manufactured, used or
sold for any end-use.
2
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1.7 LICENSED PATENT. The term "Licensed Patent" shall mean and
include any of the patents and patent applications listed on Exhibit A attached
hereto, and any counterparts, foreign equivalents, divisions and continuations-
in-part relating thereto, as licensed hereunder for any end-use; PROVIDED,
HOWEVER, that the term shall not include any improvements to any Licensed Patent
or to any Licensed Material invented by the Licensor or by any of its Affiliates
after the Effective Date.
1.8 LICENSED USE. The term "Licensed Use" shall mean any use by a
User of a Licensed Material for the development, improvement, manufacture, sale,
or use of Licensed Devices.
1.9 TERRITORY. The term "Territory" shall mean a territory
consisting of all of the countries of the world.
1.10 USER. The term "User" shall mean any person or entity that uses
Licensed Material in the manufacture, sale and use of Licensed Devices.
ARTICLE II
GRANT
2.1 WORLDWIDE LICENSE.
(a) LICENSED MATERIAL. The Licensor hereby grants to the
Licensee the non-exclusive right and license under the Licensed Patents and the
Licensed Know-How to make, have made, use, sell and otherwise dispose of
Licensed Material during the term hereof throughout the Territory, subject to
all of the terms and conditions of this Agreement. The foregoing grant excludes
the right to sublicense, with the following exceptions:
(i) The Licensee shall have the right to sublicense any of
its rights under the foregoing grant to any one or more of its Affiliates, on
such terms and conditions as the Licensee in its sole discretion deems
appropriate, to the full extent, and subject to all of the limitations and
conditions of the grant to the Licensee hereunder.
(ii) In the event that the Licensor grants to any third
party, other than an Affiliate of the Licensor, a successor to any substantial
part of the business of the Licensor, or a successor to any substantial part of
the business of such an Affiliate, a license under the Licensed Patents and the
Licensed Know-How to make and sell (or to make, use, and sell) the Licensed
Material on terms and
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<PAGE>
conditions that include rights to sublicense that are greater, broader, or in
addition to the sublicense rights granted in paragraphs 2.1(a)(i) and 2.1(a)(ii)
hereof, the Licensor will grant to the Licensee sublicense rights that are at
least as extensive as those granted to such third party.
2.2 IMPROVEMENTS.
(a) LICENSOR'S IMPROVEMENTS. All right, title and interest in
and to any improvements of the Licensed Patents or of the Licensed Material
invented by the Licensor or by any of its Affiliates after the Effective Date
shall remain the exclusive property of the Licensor and the Licensee shall not
be entitled to receive any license or other interest in such improvements.
(b) LICENSEE'S IMPROVEMENTS. All right, title and interest in
and to any improvements of the Licensed Material invented by the Licensee or by
any of its Affiliates after the Effective Date shall remain the exclusive
property of the Licensee and the Licensor shall not be entitled to receive any
license or other interest in such improvements.
2.3 EFFORTS. The Licensee's only obligation under this Agreement
with respect to the promotion and marketing of Licensed Material is to use such
reasonable efforts as Licensee in the exercise of its sole discretion deems
appropriate.
2.4 BANKRUPTCY. The Licensor acknowledges that this Agreement
constitutes a license for "intellectual property" as that term is defined in
Section 365(n) of the U.S. Bankruptcy Code and all provisions of that Section
shall apply in the event of the Licensor's bankruptcy.
ARTICLE III
PAYMENT
3.1 INITIAL PAYMENT. No initial or other payment shall be payable by
the Licensee for the licenses granted hereunder, it being acknowledged that the
forgiveness of the principal and interest under the Promissory Note is full and
sufficient consideration for the licenses granted herein.
4
<PAGE>
3.2 ROYALTY. No royalty shall be payable by the Licensee with
respect to Licensed Material made, sold or otherwise disposed of after the
Effective Date of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 LICENSOR'S REPRESENTATIONS. The Licensor represents and warrants
to the Licensee as of the Effective Date that (a) the Licensor is the sole owner
of the Licensed Patents, (b) the Licensor has the right to grant to the Licensee
the rights and licenses granted hereunder, (c) no approvals or consents of any
governmental entity are necessary with respect to the execution and performance
by the Licensor of this Agreement and, (d) the Licensed Patents and the Licensed
Know-How are valid, sustaining, enforceable and do not infringe the rights of
any third party, and (e) to the best of the Licensor's knowledge, the
manufacture, use and sale of the Licensed Material as practiced commercially by
the Licensor on or around the Effective Date of this Agreement and its use in
the manufacture of Licensed Devices will not infringe the patents or other
intellectual property rights of third parties and no claim of any such
infringement or misappropriation has been made by any third party.
4.2 MUTUAL REPRESENTATIONS. The Licensor and the Licensee each
represent and warrant to the other as of the Effective Date that it has the full
power and authority to enter into this Agreement and carry out the transactions
and activities contemplated hereby.
4.3 LICENSEE'S REPRESENTATIONS. The Licensee represents and warrants
that (a) the Licensee has full power and authority to enter into and perform its
obligations under this Agreement, and (b) no approvals or consents of any
person, firm or governmental entity are necessary with respect to the execution
and performance by the Licensee of this Agreement.
ARTICLE V
CONFIDENTIAL INFORMATION
5.1 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Neither the Licensor
nor the Licensee shall disclose to any third party or use except in furtherance
of this Agreement any confidential information disclosed by the other
5
<PAGE>
party or its Affiliates in connection with the Agreement, except that either
party may disclose such confidential information to the extent necessary to
comply with an order of a court or a government agency PROVIDED THAT the
disclosing party shall use its reasonable best efforts to notify the other party
of the disclosing party's intention to make the disclosure, and shall provide
the other party with a copy of the court or government agency's order, identify
precisely the confidential information the disclosing party intends to disclose,
and cooperate with the other party in devising reasonable measures to protect
the confidentiality of such information including, but not limited to, obtaining
a protective order from the court or government agency that issued the order to
disclose. For purposes of this Agreement, confidential information shall
include at least any customer list, and any non-patented technology, data, know-
how or technical information provided to the Licensee by the Licensor in
connection with this Agreement and performance of the transactions and
activities contemplated hereby.
5.2 RETURN OF CONFIDENTIAL INFORMATION. Upon the termination of this
Agreement for any reason prior to the expiration of its term, the Licensee shall
return to the Licensor all confidential information including, without
limitation, any customer list, and any non-patented technology, data, know-how
or technical information provided to the Licensee by the Licensor.
5.3 NON-CONFIDENTIAL INFORMATION. Neither any party nor the
inspector shall be under any obligation with respect to information of the other
party or, in the case of the inspector, information of the Licensee, which the
party receiving the information or the inspector can demonstrate, preferably by
reference to documents:
(a) through no act or failure on the part of the party receiving
the information or the inspector, becomes known or available to the public;
(b) is known by the party receiving the information or by the
inspector prior to its receiving such information from the other party; or
(c) is furnished to the party receiving the information or to
the inspector by any person not legally precluded from making disclosure of the
information without restriction.
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<PAGE>
ARTICLE VI
COVENANTS
6.1 NO SUBLICENSES. Except as set forth in paragraphs 2.1(a)(i) and
(ii) of this Agreement, or as permitted pursuant to the provisions of paragraph
2.1(a)(iii), the Licensee will not sublicense any of its rights hereunder to any
person or entity.
6.2 REGULATORY SUBMISSIONS.
(a) LICENSOR DATA. The Licensor's Device Master File shall
remain the property of the Licensor and shall remain confidential, proprietary
information of the Licensor. The Licensee shall be allowed access to data
contained or referenced in the Licensor's Device Master File as of the Effective
Date for the purpose of establishing the Licensee's FDA Master File.
(b) LICENSEE DATA. The Licensee's FDA Master File shall remain
the property of the Licensee and shall remain confidential, proprietary
information of the Licensee. However, upon the request of any User or of the
Licensor, the Licensee will permit User or the Licensor to reference all data
that may be generated by or for the Licensee and contained in the Licensee's FDA
Master File demonstrating the safety of the Licensed Material.
(c) INVESTIGATIONAL DEVICE EXEMPTION. The Licensor hereby
grants to the Licensee a right of reference to Investigational Device Exemption
#G950009 ("IDE"), and to all information contained in any application for such
IDE, and to any application or file to which such IDE refers. The Licensor
hereby represents and warrants that it has full and complete authority to grant
this right of reference. The Licensor further agrees to cooperate with the
Licensee in effectuating the provisions of this paragraph, including but not
limited to providing written documentation to be submitted to FDA confirming
this right of reference.
ARTICLE VII
PATENT INFRINGEMENT
7.1 PATENT ENFORCEMENT. The Licensor shall have the first right to
institute patent infringement actions against third parties manufacturing or
marketing products, devices or instruments competitive with the Licensed Devices
based on any
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<PAGE>
patents covering the Licensed Materials. If the Licensor does not institute an
infringement proceeding against an offending third party within 30 days, the
Licensee shall have the right, but not the obligation, to institute such an
action. Any award paid by third parties as a result of such an infringement
action (whether by way of settlement or otherwise), shall be paid to the party
who instituted and maintained such action.
7.2 INDEMNITY FOR CLAIMS OF INFRINGEMENT. The Licensor shall
indemnify, defend and hold harmless the Licensee, its Affiliates, its successors
and assigns, and their directors, officers, employees, agents and
representatives from and against any loss, damage, cost or expense of any kind
or nature (including reasonable attorneys' and other professionals' fees and
expenses) incurred as a result of or in responding to any demand, claim, action,
proceeding or suit that is brought or threatened to be brought against any of
them by any third party and that asserts a claim of patent infringement arising
from such third party's assertion of the ownership or co-ownership of rights in
or to or related to the Licensed Material; PROVIDED, HOWEVER, that the Licensor
shall have no obligation to indemnify any person or entity with respect to any
demand, claim, action, proceeding or suit that is brought or threatened to be
brought by any third party and that asserts a claim of patent infringement to
the extent the claim results from any modification of the Licensed Material from
the commercial practice of the Licensor on or around the Effective Date of this
Agreement.
ARTICLE VIII
ASSIGNMENTS AND TRANSFERS
8.1 TRANSFERS GENERALLY. The Licensee shall not be permitted to
assign or transfer any of its rights, obligations or duties under this Agreement
without the express written consent of the Licensor. The Licensor shall not be
permitted to assign or transfer any or all of its rights, obligations or duties
under this Agreement without the express written consent of the Licensee.
ARTICLE IX
TERM AND TERMINATION
9.1 TERM. The term of this Agreement shall commence on the
Effective Date, and unless sooner terminated as herein provided, shall end on
the date
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on which the last to expire of the Licensed Patents covering the Licensed
Material expires.
9.2 TERMINATION. This Agreement may be terminated prior to the
expiration of its term (a) if mutually agreed by the parties in writing, (b) in
the event of the breach of this Agreement by either party, at the option of the
non-breaching party; PROVIDED that the non-breaching party has provided written
notice to the breaching party of the breach and the non-breaching party's
intention to terminate the Agreement, and the breaching party has failed to cure
its breach within ninety days following the date such notice was sent to the
breaching party, or (c) by the Licensor upon payment in full of the principal
amount outstanding under the Loan Agreement together with all interest thereon;
PROVIDED, HOWEVER, with respect to clause (c), that the Licensor makes such
payment to the Licensee in immediately available funds on or prior to the
earlier of (i) August 9, 1996 and (ii) forty-five calendar days after the Merger
Agreement is terminated in accordance with Section 9.1(a), 9.1(b), 9.1(c),
9.1(d), 9.1(g) or 9.1(h) thereof. Notwithstanding anything to the contrary
contained in section 9.2(c) hereof, the Licensor shall not be entitled to
terminate this Agreement (x) if the Merger Agreement is terminated in accordance
with Section 9.1(e) or 9.1(f) thereof, or (y) upon the institution by or against
the Licensee of any proceeding seeking to adjudicate the Licensor a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for the Licensor or for any substantial part of its property.
9.3 DISPOSITION OF LICENSED PATENTS. In the event that this
Agreement is terminated prior to the expiration of its term pursuant to the
provisions of Section 9.2, all rights in and to the license granted hereunder
shall immediately revert to and become the property of the Licensor in
accordance with Section 9.2 hereofX, and the Licensee shall be obligated to
return all confidential information of the Licensor as provided in Section 5.2
hereof.
9.4 SURVIVAL. Any provision of this Agreement with respect to the
subject matter described in this Article IX shall continue in effect after the
expiration of the term of, or termination of, this Agreement to the extent
necessary to permit the complete fulfillment or discharge of any obligation that
so continues:
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(a) Any agreement, including the provisions of Article V of this
Agreement, in effect at the time of such expiration or termination with respect
to confidential information of any party to this Agreement; and
(b) The indemnity for claims of infringement contained in
Article VII of this Agreement.
9.5 SALES AFTER TERMINATION. Upon termination or expiration of this
Agreement for any reason, the Licensee shall have the right to sell or otherwise
dispose of any stock of Licensed Material which it or any of its Affiliates has
in its possession or for which it has acquired constituent materials.
ARTICLE X
MISCELLANEOUS
10.1 NOTICE. Any notice given pursuant to this Agreement shall be
in writing and, except as otherwise expressly provided herein, shall be deemed
to have been duly delivered when it actually is delivered in person or by
facsimile transmission; seven days after it is mailed by certified or registered
mail, postage and mailing expense prepaid; and one day after it is sent by
overnight express mail or by overnight courier service (such as FedEx or DHL),
postage or shipping expense prepaid and designated for next-day delivery; and,
if given or rendered to
the Licensee, addressed to:
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Attention: Paul S. Miller, Esq.
Senior Vice President
and General Counsel
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block, Esq.
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or if given or rendered to the Licensor, addressed to:
Corvita Corporation
8210 N.W. 27th Street
Miami, Florida
Attention: Norman R. Weldon, Ph.D.
President and
Chief Executive Officer
with a copy to:
Epstein, Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
Either party may specify a different address by notice in writing in accordance
with this Section 10.1.
10.2 ENTIRE AGREEMENT; AMENDMENT. This agreement sets forth the
entire agreement and understanding between the parties as to the subject matter
hereof and has priority over any and all agreements, documents, verbal consents
or understandings previously made between the parties with respect to the
subject matter hereof. None of the terms of this Agreement shall be amended or
modified except as set forth in a writing signed by both the Licensor and the
Licensee.
10.3 WAIVER. A waiver by any party of any term or condition of this
Agreement in any one instance shall not be deemed or construed to be a waiver of
such term or condition for any similar instance in the future or of any
subsequent breach thereof. No failure by a party to take action against default
or breach of this Agreement shall constitute a waiver of such party's right to
enforce any provision of this Agreement or to take action against such default
or breach or against any subsequent default or breach. All rights, remedies,
undertaking, obligations, and agreements contained in this Agreement shall be
cumulative and none of them shall be a limitation of any other remedy, right,
undertaking, obligation or agreement of any party.
10.4 SEVERABILITY. If, and solely to the extent that, any provision
of this Agreement shall be invalid or unenforceable, or shall render this entire
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Agreement invalid or unenforceable, such offending provision shall be of no
effect and shall not affect the validity of the remainder of this Agreement or
of any of its other provisions.
10.5 NO AGENCY. Nothing in this Agreement shall be deemed to
appoint or authorize the Licensee to act as an agent of the Licensor or to
assume or incur any liability or obligation in the name of or on behalf of the
Licensor.
10.6 DISCLAIMER. LICENSOR HEREBY DISCLAIMS ALL WARRANTIES, WHETHER
EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE LICENSED MATERIAL,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
INCLUDING, BUT NOT LIMITED TO, THE USE OF THE LICENSED MATERIAL IN IMPLANTABLE
DEVICES OR IN ANY OTHER MEDICAL APPLICATIONS. IN NO EVENT SHALL LICENSOR BE
LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES,
INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS.
10.7 HEADINGS. Headings in this Agreement are included for ease of
reference only and shall have no effect on the meaning or interpretation of this
Agreement.
10.8 SINGULAR/PLURAL. Whenever in the context it appears
appropriate, each term stated either in the singular or the plural shall include
both the singular and the plural.
10.9 APPLICABLE LAW/JURISDICTION. All disputes arising out of the
validity, interpretation or application of this Agreement shall be submitted to
the courts of competent jurisdiction sitting in the County and State of New
York. This Agreement shall be interpreted and construed in accordance with the
law of New York, without reference to its conflicts of laws provisions.
10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.11 NO THIRD-PARTY BENEFICIARIES. The provisions of this
Agreement are for the exclusive benefit of the parties hereto, and no other
person,
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firm, institution or other entity shall have any right or claim against any
party to this Agreement by reason of such provisions or shall be entitled to
enforce any such provision against any party.
13
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LICENSOR
Corvita Corporation
By: /S/ NORMAN R. WELDON
-------------------------------
Title: President and
Chief Executive Officer
LICENSEE
Pfizer Inc.
By: /S/ PAUL S. MILLER
-------------------------------
Title: Senior Vice President
and General Counsel
14
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EXHIBIT A
LICENSED PATENTS
U.S. Patent No. 5,133,742, L. Pinchuk, "Crack-Resistant Polycarbonate Urethane
Polymer Prostheses and the Like," July 28, 1992
U.S. Patent No. 5,229,431, L. Pinchuk, "Crack-Resistant Polycarbonate Urethane
Polymer Prostheses and the Like," July 28, 1993
U.S. Patent No. 4,810,749, L. Pinchuk, "Polyurethanes," March 7, 1989
All pending and issued reissues, re-examinations, divisions, continuations,
continuations-in-part, renewals, extensions and additions thereto, and all
foreign counterparts and applications for foreign counterparts of the foregoing.
15
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Pfizer Inc
235 East 42nd Street
New York, NY 10017
----------------------------------------
[Logo] NEWS
For immediate release Contact:
April 11, 1996 Bob Fauteux (Pfizer, New York) 212-573-3079
Andrew Heath (Pfizer, Brussels) 32-2-722-0853
Karen Vinjamuri (Corvita, Miami) 305-599-3100
PFIZER AGREES TO ACQUIRE CORVITA CORPORATION,
INNOVATOR IN TECHNOLOGIES FOR VASCULAR DISEASE
New York, April 11 -- Pfizer Inc (NYSE: PFE) and Corvita Corporation (Nasdaq:
CVTA) jointly announced today that they have signed a definitive merger
agreement pursuant to which Pfizer will acquire all of the outstanding stock of
Corvita at $10.25 per share, or approximately $85 million. To implement this
agreement Pfizer will commence a cash tender offer within five business days.
The completion of the tender offer is subject to a number of customary
conditions.
Based in Miami, Florida, Corvita develops, manufactures and markets synthetic
vascular grafts. These grafts are used in the treatment of severely diseased
arteries and are produced at Corvita's facilities in Miami and Brussels,
Belgium. Corvita is also developing combination stent/graft devices, which are
in clinical trails both in the U.S. and Europe.
Consummation of the merger is conditioned on, among other things, the tender of
at least a majority of the outstanding shares of Corvita, on a fully diluted
basis, in the tender offer. Shareholders owning approximately 20% of the
outstanding shares of Corvita have entered into binding agreements to tender
their shares.
Corvita will operate as a business of the Pfizer Hospital Products Group (HPG).
(more)
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-2-
"The acquisition of Corvita brings new products and biomaterials technologies
highly complementary to one of HPG's strategic emphases, interventional
cardiology and radiology," said P. Nigel Gray, vice president of Pfizer Inc and
president of the Pfizer Hospital Products Group. "In these rapidly growing
clinical specialties, Corvita's expertise in developing advanced stent/graft
devices adds significantly to the existing global strengths of our Schneider and
NAMIC businesses."
Corvita stent/graft devices may be implanted in diseased or damaged arteries,
for example, using minimally invasive techniques. Once in place, these devices
allow the unimpeded flow of blood.
"Corvita's technologies focus on the critical medical needs of thousands of
patients suffering from life-threatening vascular disease, including abdominal
aortic aneurysms, and trauma," said Robert Neimeth, executive vice president of
Pfizer Inc responsible for the Hospital Products and Animal Health Groups, and
president of the Pfizer International Pharmaceuticals Group. In the United
States each year, abdominal aortic aneurysm -- a weakening of the walls of one
of the body's main arteries, sometimes to the point of rupture -- afflicts an
estimated 190,000 people, often resulting in death.
Pfizer Inc is a research-based, diversified health-care company with global
operations. In 1995, the Company reported sales of over $10 billion and invested
more than $1.4 billion in research and development.
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[Letterhead - Dillon, Read & Co. Inc.]
CONFIDENTIALITY AND STANDSTILL AGREEMENT
August 16, 1995
Pfizer Inc.
235 East 42nd Street
New York, NY 10017
Attention: P. Nigel Gray
President, Hospital Products Group
Ladies and Gentlemen:
We have advised you that Dillon, Read & Co. Inc. ("Dillon Read") is acting on
behalf of Corvita Corporation ("Corvita" or the "Company") with respect to your
discussions with the Company. In connection with your analysis of a possible
acquisition transaction with the Company, you have requested certain oral and
written information concerning the Company from officers, directors, employees
and/or agents of the Company, including Dillon Read, to be disclosed pursuant to
this Agreement (collectively, the "Information"). As a condition to being
furnished with the information, you agree (and agree to cause your affiliates)
to treat the Information in accordance with the following:
1. The Information disclosed pursuant to this Agreement will be used
solely for the purpose of evaluating a possible acquisition
transaction between the Company and you and will not be used for any
other purpose or in any way directly or indirectly in competition with
or detrimental to the Company, and said Information will be kept
confidential by you and your advisors and not be disclosed to any
third party provided, however, that you may disclose the said
Information or portions thereof to those of your directors, officers,
employees and representatives (the persons to whom such disclosure is
permissible being collectively called "Representatives") who need to
know such Information for the sole purpose of evaluating your possible
acquisition transaction with the Company (it being understood that
those Representatives will be informed by you of the confidential
nature of the Information and will agree to be bound by this agreement
and shall be directed by you not to disclose the said Information to
any other person). You agree to be responsible for any breach of this
agreement by your Representatives.
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Pfizer Inc.
August 16, 1995
Page 2
In the event that you are requested or required (by oral questions,
interrogatories, requests for information or documents, subpoenas, civil
investigative demands or similar processes) to disclose any Information
supplied to you pursuant to this Agreement it is agreed that you will (i)
provide the Company with prompt notice of such request(s) and the documents
requested so that the Company may seek an appropriate protective order
and/or waive your compliance with the provisions of this agreement, and
(ii) take such legally available steps, as the Company may reasonably
request, to resist or narrow such request provided that any expenses
(including legal fees and expenses) incurred by you in carrying out the
Company's request will be reimbursed by the Company. It is further
agreed that if in the absence of a protective order or the receipt of a
waiver hereunder you are nonetheless, in the reasonable written opinion of
your legal counsel, compelled to disclose Information concerning the
Company to any tribunal or else stand liable for contempt or suffer other
censure or penalty, you may disclose such Information to such tribunal
without liability hereunder; provided, however, that you shall give the
Company written notice of the Information to be so disclosed as far in
advance of its disclosure as is practicable, shall furnish only that
portion of the Information which is legally required, and shall take such
steps as reasonably requested by the Company provided that any expenses
incurred by you in carrying out the Company's request shall be reimbursed
by the Company.
2. The term "Information" does not include any information which (i) is
already in your possession on the date hereof, (ii) is or becomes generally
available to and known by the public (other than as a result of a wrongful
disclosure directly or indirectly by you or your Representatives), (iii)
becomes available to you on a nonconfidential basis from a source other
than the Company or its advisors, provided that such source is not and was
not bound to your knowledge (after reasonable inquiry) by a confidentiality
agreement with or other obligation of secrecy to the Company with respect
thereto or (iv) is independently acquired or developed by you (which you
can show through written documentation) without violating any
confidentiality agreement with or other obligation of secrecy to the
Company.
3. When the Company so requests, you will return promptly to Dillon Read or
the Company all copies, extracts or other reproductions in whole or in part
of the Information in your possession or in the possession of your
Representatives which was disclosed only pursuant to this Agreement, and
you will destroy all copies of any memoranda, notes, analyses,
compilations, studies or other documents prepared by you or for your use
based on, containing or reflecting any Information which was disclosed only
pursuant to this Agreement. Such destruction shall, if requested, be
certified in writing to Dillon Read or the Company by an authorized officer
supervising such destruction.
4. Without the prior written consent of the Company, you will not, and will
direct your Representatives not to, disclose to any person either the fact
that any investigation, discussions or negotiations are taking place
concerning a possible acquisition transaction between the Company and you,
or that you have requested or received Information from the Company or
Dillon Read pursuant to this Agreement, or any of the terms, conditions or
other facts with respect to any such possible acquisition transaction,
including the status thereof. The term "person" as used throughout this
agreement will be interpreted broadly to
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Pfizer Inc.
August 16, 1995
Page 3
include, without limitation, any corporation, company, partnership or
individual, or any governmental instrumentality or any official or employee
thereof.
In addition, without the prior written consent of the Company, you will
not, and will direct your Representatives not to, hold any discussion
whatsoever with suppliers, customers and/or any other person with whom the
Company has a relationship regarding any potential acquisition transaction
involving the Company, the possible terms of any such acquisition
transaction or the fact that any investigation, discussions or negotiations
are taking place concerning a possible acquisition transaction between you
and the Company.
5. You understand and acknowledge that neither the Company nor Dillon Read is
making any representation or warranty, express or implied, as to the
accuracy or completeness of the Information, and none of the Company,
Dillon Read, or any of their respective directors, officers, employees,
stockholders, owners, affiliates or agents will have any liability to you
or any other person resulting from your use of the Information. Only
those representations or warranties that are made to you in a definitive
transaction agreement when, as, and if it is executed, and subject to such
limitations and restrictions as may be specified in such definitive
transaction agreement, will have any legal effect.
6. You also understand and agree that unless and until a definitive
transaction agreement has been executed and delivered, no contract or
agreement providing for a transaction with the Company shall be deemed to
exist between you and the Company, and neither the Company nor you will be
under any legal obligation of any kind whatsoever with respect to such
transaction by virtue of this or any written or oral expression thereof,
except, in the case of this agreement, for the matters specifically agreed
to herein. For purposes of this paragraph, the term "definitive
transaction agreement" does out include an executed letter of intent or any
other preliminary written agreement, nor does it include any written or
oral acceptance of an offer, bid proposal or expression of interest on your
part.
7. You agree that the Company shall be entitled to equitable relief, including
injunction and specific performance, in the event of any breach of the
provisions of this agreement, in addition to all other remedies available
to the Company at law or in equity including, but not limited to,
reasonable attorney's fees. You also hereby irrevocably and
unconditionally consent to submit to the jurisdiction of the courts of the
State of Florida and Courts of the United States of America located in
State of Florida for any actions, suits or proceedings arising out of or
relating to this agreement (and you agree not to commence any action, suit
or proceeding relating thereto except in such courts), and further agree
that service of any process, summons, notice or document by U.S. registered
mail to your address set forth above shall be effective service of process
for any action, suit or proceeding brought against you in any such court.
You hereby irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of this
agreement, in the courts of the State of Florida or of the United States of
America located in the State of Florida, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in inconvenient forum.
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Pfizer Inc.
August 16, 1995
Page 4
B. You hereby acknowledge that you are aware that the securities laws of the
United States prohibit any person who has material, non-public information
concerning the Company or a possible transaction involving the Company from
purchasing or selling securities of the Company in reliance upon such
information or from communicating such information to any other person or
entity under circumstances in which it is reasonably foreseeable that such
person or entity is likely to purchase or sell such securities in reliance
upon such information.
You agree that, for a period of two years from the date of this agreement,
unless such action shall have been specifically approved in writing by the
Board of Directors of the Company, none of you, any of your affiliates or
any Representatives will in any manner, directly or indirectly, (a) effect
or seek, offer or propose (whether publicly or otherwise) to effect,
participate in or cause or in any way assist any other person to effect or
seek, offer or propose (whether publicly or otherwise) to effect or
participate in, (i) any acquisition of any securities (or beneficial
ownership thereof) or assets of the Company or any of its subsidiaries,
(ii) any tender or exchange offer or merger or other business combination
involving the Company or any of its subsidiaries, (iii) any
recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction with respect to the Company or any of its
subsidiaries or (iv) any "solicitation" of "proxies" (as such terms are
used in proxy rules of the Securities and Exchange Commission) or consents
to vote any voting securities of the Company, (b) form, join or in any way
participate in a "group" (as such term is used in regulations under the
Exchange Act) for the propose of acquiring, holding, voting or disposing of
equity securities of the Company, (c) otherwise act, alone or in concert
with others, to seek to control or influence the management, the Board of
Directors or policies of the Company, (d) take any action which might force
the Company to make a public announcement regarding any of the types of
matters set forth in (a) above, or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing,
except that you shall be free of any restriction or obligation imposed by
this Paragraph 8 if one or more third parties has taken any one or more of
the actions set forth above or has announced its intention to do so.
9. You agree that the Company reserves the right, in its sole and absolute
discretion, to reject any or all proposals, to decline to furnish further
Information and to terminate discussions and negotiations with you at any
time. The exercise by the Company of these rights shall not affect the
enforceability of any provision of this agreement.
10. Without the prior written consent of the Company you agree not to directly
or indirectly solicit for employment any of the current employees of the
Company so long as they are employed by the Company during the period in
which there are discussions or negotiations conducted pursuant to this
agreement and for a period of one year after abandonment or termination of
such discussions or negotiations. For the purposes of this paragraph, a
solicitation will not include general employment solicitations, including
newspaper advertisements and industry publications, or employees of the
Company who approach you.
11. This agreement will be governed and construed in accordance with the laws
of the State of Florida as applied to agreements to be performed entirely
within the State of Florida. No amendment, modification or discharge of
this agreement, and no waiver hereunder, shall be valid or binding unless
set forth in writing and duly executed by the party against whom
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Pfizer Inc.
August 16, 1995
Page 5
enforcement of the amendment, modification, discharge or waiver is sought.
No delay or failure at any time on the part of any party in exercising any
right, power or privilege under this agreement, or in enforcing any
provision of this agreement, shall impair any such right, power or
privilege, or be construed as a waiver of such provision, or be construed
as a waiver of any default or any acquiescence therein, or shall effect the
right of any party thereafter to enforce each and every provision of this
agreement in accordance with its terms. This agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
12. All obligations of the Parties under this Agreement (other than obligations
arising from breaches of this Agreement occurring prior to the end of such
three year period) shall terminate three years from the date of this
Agreement.
If you agree with the foregoing, please so indicate by signing and returning
one executed copy of this letter, which will constitute our agreement with
respect to the subject matter of this letter.
Very truly yours,
DILLON, READ & CO. INC. on behalf of
CORVITA CORPORATION
BY: /s/ Tamara A. Baum
-------------------
Tamara A. Baum
Managing Director
Confirmed and Agreed as of
the day written above:
PFIZER INC.
By: /s/ P. Nigel Gray
-------------------
P. Nigel Gray
President, Hospital Products Group
