<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
COPLEY PHARMACEUTICAL, INC.
(NAME OF SUBJECT COMPANY)
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
TEVA PHARMACEUTICALS USA, INC.
CARIBOU MERGER CORPORATION
(BIDDERS)
------------------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
21745K101
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
WILLIAM FLETCHER
TEVA PHARMACEUTICALS USA, INC.
650 CATHILL ROAD
SELLERSVILLE, PENNSYLVANIA 18960
(215) 256-8400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS
ON BEHALF OF THE BIDDER)
WITH A COPY TO:
PETER H. JAKES, ESQ.
WILLKIE FARR & GALLAGHER
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019-6099
TELEPHONE: (212) 728-8000
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* $222,220,405 AMOUNT OF FILING FEE $44,445
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</TABLE>
* Estimated for purposes of calculating the amount of the filing fee only. The
filing fee calculation assumes the purchase of 20,201,885 shares of common
stock, $0.01 par value per share (the "Shares"), of Copley Pharmaceutical,
Inc. (the "Company") at a price of $11.00 per share in cash, without interest.
The filing fee calculation is based on the 19,343,766 Shares outstanding as of
July 30, 1999, and assumes the issuance prior to the consummation of the Offer
(as defined herein) of 858,089 Shares upon the exercise of outstanding options
and other rights and securities exerciseable into Shares. The amount of the
filing fee calculated in accordance with Regulation 240.0-11 of the Securities
Exchange Act of 1934, as amended, equals 1/50th of one percent of the value of
the transaction.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
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Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable Date Filed: Not applicable
</TABLE>
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<PAGE> 2
14D-1
CUSIP NO. 21745K101
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1 NAMES OF REPORTING PERSONS
Teva Pharmaceutical Industries Limited I.R.S. IDENTIFICATION
NOS. OF ABOVE PERSONS
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) or 2(f) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION Israel
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
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10 TYPE OF REPORTING PERSON CO
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</TABLE>
<PAGE> 3
14D-1
CUSIP NO. 21745K101
<TABLE>
<S> <C> <C>
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1 NAMES OF REPORTING PERSONS
Teva Pharmaceuticals USA, Inc. I.R.S. IDENTIFICATION NOS. OF
ABOVE PERSONS
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) or 2(f) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
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10 TYPE OF REPORTING PERSON CO
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</TABLE>
<PAGE> 4
14D-1
CUSIP NO. 21745K101
<TABLE>
<S> <C> <C>
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1 NAMES OF REPORTING PERSONS
Caribou Merger Corporation I.R.S. IDENTIFICATION NOS. OF
ABOVE PERSONS
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) or 2(f) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
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10 TYPE OF REPORTING PERSON CO
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</TABLE>
<PAGE> 5
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Caribou Merger Corp., a Delaware corporation ("Purchaser"), to
purchase all of the outstanding shares of common stock, par value $.01 per share
(the "Common Stock"), of Copley Pharmaceutical, Inc., a Delaware corporation
(the "Company"), at $11.00 per share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated August 16, 1999 (the "Offer to Purchase"), a copy of which is
attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal, a
copy of which is attached hereto as Exhibit (a)(2) (which, as amended or
supplemented from time to time, together constitute the "Offer"). Purchaser is a
wholly owned subsidiary of Teva Pharmaceuticals USA, Inc., a Delaware
corporation ("Teva USA"), and was formed solely to effect the Offer and the
transactions contemplated thereby. Teva USA is an indirect wholly owned
subsidiary of Teva Pharmaceutical Industries Limited, a corporation organized
under the laws of Israel ("Teva").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Copley Pharmaceutical, Inc., and the
address of its principal executive offices is 25 John Road, Canton,
Massachusetts 02021. The telephone number of the Company at such location is
(781) 621-6111.
(b) The exact title of the class of equity securities being sought in the
Offer is Common Stock, $.01 par value, of the Company. The information set forth
in the "INTRODUCTION" of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in "Section 6 -- Price Range of the Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by Teva, Teva USA, an indirect
wholly owned subsidiary of Teva, and Purchaser, a wholly owned subsidiary of
Teva USA. The information set forth in the "INTRODUCTION" and "Section
9 -- Certain Information Concerning Teva, Teva USA and Purchaser" of the Offer
to Purchase is incorporated herein by reference. The name, business address,
present principal occupation or employment, the material occupations, positions,
offices or employments for the past five years and citizenship of each director
and executive officer of Teva, Teva USA and Purchaser, and the name of any
corporation or other organization in which such occupations, positions, offices
and employments are or were carried on are set forth in Schedule I to the Offer
to Purchase and incorporated herein by reference.
(e)-(f) The information set forth in "Section 9 -- Certain Information
Concerning Teva, Teva USA and Purchaser" of the Offer to Purchase is
incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below, none of
Teva, Teva USA and Purchaser nor, to the best knowledge of Teva, Teva USA and
Purchaser, any of the persons or entities listed in Schedule I to the Offer to
Purchase have entered into any transaction with the Company, or any of the
Company's affiliates which are corporations, since the commencement of the
Company's third full fiscal year preceding the date of this Statement, the
aggregate amount of which was equal to or greater than one percent of the
consolidated revenues of the Company for (i) the fiscal year in which such
transaction occurred or (ii) the portion of the current fiscal year which has
occurred if the transaction occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below, none of
Teva, Teva USA and Purchaser nor, to the best knowledge of Teva, Teva USA and
Purchaser, any of the persons or entities listed in Schedule I to the Offer to
Purchase have entered into any transaction since the commencement of the
Company's third full fiscal year preceding the date of this Statement with the
executive officers, directors or affiliates of the Company which are not
corporations, in which the aggregate amount involved in such
<PAGE> 6
transaction or in a series of similar transactions, including all periodic
installments in the case of any lease or other agreement providing for periodic
payments or installments, exceeded $40,000.
(b) The information set forth in the "INTRODUCTION," "Section 9 -- Certain
Information Concerning Teva, Teva USA and Purchaser," "Section 11 -- Background
of the Offer; Purpose of the Offer and the Merger; The Merger Agreement and
Certain Other Agreements" and "Section 12 -- Plans for the Company; Other
Matters" 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 the "INTRODUCTION" and "Section
10 -- Sources and Amount of Funds" 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 the "INTRODUCTION," "Section
11 -- Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements" and "Section 12 -- Plans for the
Company; Other Matters" of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in the "INTRODUCTION" and "Section
7 -- Effect of the Offer on the Market for the Shares, Nasdaq Listing and
Exchange Act Registration" 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 in the "INTRODUCTION," "Section
9 -- Certain Information Concerning Teva, Teva USA and Purchaser" and "Section
11 -- Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements" 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 in the "INTRODUCTION," "Section 9 -- Certain
Information Concerning Teva, Teva USA and Purchaser," "Section 10 -- Sources and
Amount of Funds," "Section 11 -- Background of the Offer; Purpose of the Offer
and the Merger; The Merger Agreement and Certain Other Agreements," "Section
12 -- Plans for the Company; Other Matters" and "Section 16 -- Fees and
Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Section 16 -- Fees and Expenses" of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in "Section 9 -- Certain Information Concerning
Teva, Teva USA and Purchaser" of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Teva, Teva USA or Purchaser, or to the best knowledge of Teva, Teva USA
and Purchaser, any of the persons or entities listed in Schedule I to the Offer
to Purchase, and the Company or any of its executive officers, directors,
controlling persons or subsidiaries.
<PAGE> 7
(b)-(c) The information set forth in the "INTRODUCTION," "Section
14 -- Certain Conditions to the Offer" and "Section 15 -- Certain Legal Matters
and Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in "Section 7 -- Effect of the Offer on the
Market for the Shares, Nasdaq Listing and Exchange Act Registration; Margin
Regulations" and "Section 15 -- Certain Legal Matters and Regulatory Approvals"
of the Offer to Purchase is incorporated herein by reference.
(e) None.
(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, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
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(a)(1) Offer to Purchase, dated August 16, 1999.
(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) Press Release of Teva dated August 10, 1999.
(a)(8) Summary Advertisement.
(b)(1) Commitment Letter among Bank Leumi USA, Teva and Teva USA,
dated August 13, 1999.
(b)(2) Commitment Letter among Bank Hapoalim B.M., Teva and Teva
USA, dated August 13, 1999.
(c)(1) Agreement and Plan of Merger, dated as of August 9, 1999, by
and among Teva USA, Purchaser and the Company.
(c)(2) Purchase and Sale Agreement, dated as of August 9, 1999, by
and between Hoechst Corporation and the Company.
(c)(3) Stockholder Agreement, dated as of August 9, 1999, by and
among Teva USA, Purchaser and Hoechst Corporation.
(c)(4) Pentoxifylline Agreement Amendment, dated as of August 9,
1999, by and between the Company and Hoechst Marion Roussel,
Inc.
(c)(5) Albuterol Representation Letter, dated as of August 9, 1999,
by and among the Company, Teva USA and Hoechst Corporation.
(c)(6) Confidentiality Agreement, dated March 18, 1999, by and
between Teva USA and the Company.
(c)(7) Guarantee, dated as of August 9, 1999, by Teva in favor of
the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
<PAGE> 8
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
By: /s/ DAN S. SUESSKIND
---------------------------------------
Name: Dan S. Suesskind
Title: Chief Financial Officer
TEVA PHARMACEUTICALS USA, INC.
By: /s/ PETER R. TERRERI
---------------------------------------
Name: Peter R. Terreri
Title: Senior Vice President,
Financing & Manufacturing
CARIBOU MERGER CORPORATION
By: /s/ PETER R. TERRERI
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Name: Peter R. Terreri
Title: Vice President
Dated: August 16, 1999
<PAGE> 9
INDEX TO EXHIBITS
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SEQUENTIAL
EXHIBIT PAGE NO.
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(a)(1) Offer to Purchase, dated August 16, 1999.
(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) Press Release of Teva dated August 10, 1999.
(a)(8) Summary Advertisement.
(b)(1) Commitment Letter among Bank Leumi USA, Teva and Teva USA,
dated August 13, 1999.
(b)(2) Commitment Letter among Bank Hapoalim B.M., Teva and Teva
USA, dated August 13, 1999.
(c)(1) Agreement and Plan of Merger, dated as of August 9, 1999, by
and among Teva USA, Purchaser and the Company.
(c)(2) Purchase and Sale Agreement, dated as of August 9, 1999, by
and between Hoechst Corporation and the Company.
(c)(3) Stockholder Agreement, dated as of August 9, 1999, by and
among Teva USA, Purchaser and Hoechst Corporation.
(c)(4) Pentoxifylline Agreement Amendment, dated as of August 9,
1999, by and between the Company and Hoechst Marion Roussel,
Inc.
(c)(5) Albuterol Representation Letter, dated as of August 9, 1999,
by and among the Company, Teva USA and Hoechst Corporation.
(c)(6) Confidentiality Agreement, dated March 18, 1999, by and
between Teva USA and the Company.
(c)(7) Guarantee, dated as of August 9, 1999, by Teva in favor of
the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COPLEY PHARMACEUTICAL, INC.
AT
$11.00 NET PER SHARE IN CASH
BY
CARIBOU MERGER CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
TEVA PHARMACEUTICALS USA, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON SEPTEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF AUGUST 9, 1999 (THE "MERGER AGREEMENT"), BY AND AMONG TEVA PHARMACEUTICALS
USA, INC., CARIBOU MERGER CORPORATION AND COPLEY PHARMACEUTICAL, INC. (THE
"COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY, INCLUDING THE MEMBERS OF THE
SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS, HAS UNANIMOUSLY APPROVED AND
DECLARED ADVISABLE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND HAS UNANIMOUSLY DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. IN CONNECTION WITH THE
EXECUTION OF THE MERGER AGREEMENT, HOECHST CORPORATION, WHICH BENEFICIALLY OWNS
APPROXIMATELY 51% OF THE OUTSTANDING SHARES, HAS AGREED, AMONG OTHER THINGS, TO
TENDER ITS SHARES PURSUANT TO THE OFFER.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES
OUTSTANDING ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT ON A FULLY-DILUTED BASIS
(EXCLUDING OPTIONS THE EXERCISE PRICE OF WHICH IS EQUAL TO OR GREATER THAN
$11.00 PER SHARE) AND (II) ANY APPLICABLE WAITING PERIODS UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, HAVING EXPIRED
OR BEEN TERMINATED. THE OFFER ALSO IS SUBJECT TO THE OTHER CONDITIONS SET FORTH
IN THIS OFFER TO PURCHASE. SEE SECTION 14.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (i) complete and sign the enclosed
Letter of Transmittal (or a facsimile thereof) in accordance with the
Instructions in the Letter of Transmittal, have such stockholder's signature
thereon guaranteed (if required by Instruction 1 to the Letter of Transmittal),
mail or deliver the Letter of Transmittal (or a facsimile thereof) and any other
required documents to the Depositary (as defined herein) and either deliver the
certificates for such Shares to the Depositary or tender such Shares pursuant to
the procedure for book-entry transfer set forth in Section 3 of this Offer to
Purchase or (ii) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder.
Any stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedures for book-entry transfer on a timely basis, or who cannot deliver
all required documents to the Depositary prior to the expiration of the Offer,
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) at its address and telephone number set forth on the
back cover of this Offer to Purchase. Requests for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other tender offer materials may be directed to the Information Agent or
brokers, dealers, commercial banks or trust companies.
------------------------
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
August 16, 1999
<PAGE> 2
TABLE OF CONTENTS
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INTRODUCTION..................................................... 1
THE TENDER OFFER................................................. 3
1. Terms of the Offer.......................................... 3
2. Acceptance for Payment and Payment for Shares............... 5
3. Procedures for Tendering Shares............................. 6
4. Withdrawal Rights........................................... 8
5. Certain U.S. Federal Income Tax Consequences................ 9
6. Price Range of Shares; Dividends............................ 10
7. Effect of the Offer on the Market for Shares, Nasdaq Listing
and Exchange Act Registration............................... 10
8. Certain Information Concerning the Company.................. 11
9. Certain Information Concerning Teva, Teva USA and
Purchaser................................................... 14
10. Source and Amount of Funds.................................. 17
11. Background of the Offer; Purpose of the Offer and the
Merger; the Merger Agreement and Certain Other Agreements... 17
12. Plans for the Company; Other Matters........................ 32
13. Dividends and Distributions................................. 34
14. Certain Conditions of the Offer............................. 34
15. Certain Legal Matters and Regulatory Approvals.............. 35
16. Fees and Expenses........................................... 37
17. Miscellaneous............................................... 38
</TABLE>
SCHEDULE I -- Information Concerning Directors and Executive Officers of
Purchaser,
Teva USA and Teva.
i
<PAGE> 3
TO THE HOLDERS OF COMMON STOCK OF
COPLEY PHARMACEUTICAL, INC.:
INTRODUCTION
Caribou Merger Corporation, a Delaware corporation ("Purchaser"), hereby
offers to purchase all the outstanding shares of common stock, par value $.01
per share (the "Shares"), of Copley Pharmaceutical, Inc., a Delaware corporation
(the "Company"), at $11.00 per Share, net to the seller in cash without interest
thereon (the "Offer Price"), upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal (which,
as amended or supplemented from time to time, together constitute the "Offer").
Purchaser was formed in connection with the Offer and the transactions
contemplated thereby. Purchaser is a direct wholly owned subsidiary of Teva
Pharmaceuticals USA, Inc., a Delaware corporation ("Teva USA"). Teva USA is an
indirect wholly owned subsidiary of Teva Pharmaceutical Industries Limited, a
corporation organized under the laws of Israel ("Teva"). For information
concerning Teva USA and Teva, see Section 9.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 9, 1999 (the "Merger Agreement"), among Teva USA, Purchaser and the
Company. The Merger Agreement provides, among other things, that as soon as
practicable after the satisfaction or waiver of the conditions to the merger set
forth in the Merger Agreement, on the terms and subject to the conditions of the
Merger Agreement and in accordance with the Delaware General Corporation Law
(the "DGCL"), Purchaser will be merged with and into the Company (the "Merger"),
with the Company continuing as the surviving corporation in the Merger (the
"Surviving Corporation") and as a wholly owned subsidiary of Teva USA. At the
effective time of the Merger (the "Effective Time"), subject to certain
exceptions, each issued and outstanding Share will be converted into the right
to receive the Offer Price or such higher price as may be paid in the Offer (the
"Merger Consideration"), less any required withholding taxes. The obligations of
Teva USA under the Merger Agreement have been guaranteed by Teva. The Merger
Agreement is more fully described in Section 11.
Tendering stockholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase
of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares
through a bank or broker should check with such institution as to whether they
charge any service fees. Purchaser will pay all fees and expenses of Lehman
Brothers Inc. ("Lehman Brothers"), which is acting as dealer manager for the
Offer (in such capacity, the "Dealer Manager"), IBJ Whitehall Bank & Trust
Company, which is acting as the depositary (in such capacity, the "Depositary"),
and MacKenzie Partners, Inc., which is acting as the information agent (in such
capacity, the "Information Agent"), incurred in connection with the Offer and in
accordance with the terms of the agreements entered into between Purchaser and
each such person. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD"), INCLUDING THE
MEMBERS OF THE SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS, HAS UNANIMOUSLY
APPROVED AND DECLARED ADVISABLE THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER AND THE MERGER, HAS
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
CIBC World Markets Corp., the Company's financial advisor ("CIBC"), has
delivered to the Company Board its written opinion, dated August 9, 1999 (the
"Financial Advisor Opinion"), to the effect that, as of such date and based upon
and subject to certain assumptions, matters and limitations stated therein, the
cash consideration to be received by the Company's stockholders (other than
Hoechst Corporation ("HC") and its affiliates) pursuant to the Offer and the
Merger is fair to such stockholders from a financial point of view. A copy of
the Financial Advisor Opinion is attached as an exhibit to the Company's
Solicitation/Recommenda-
<PAGE> 4
tion Statement on Schedule 14D-9 (the "Schedule 14D-9"), which has been filed by
the Company with the Securities and Exchange Commission (the "SEC") in
connection with the Offer and which is being mailed to holders of Shares
herewith. Holders of Shares are urged to, and should, read the Financial Advisor
Opinion carefully and in its entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER
OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A
FULLY-DILUTED BASIS ON THE DATE OF PURCHASE (EXCLUDING OPTIONS THE EXERCISE
PRICE OF WHICH IS EQUAL TO OR GREATER THAN THE OFFER PRICE) (THE "MINIMUM
CONDITION") AND (ii) ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), HAVING EXPIRED
OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH
IN THIS OFFER TO PURCHASE. SEE SECTION 14.
As a condition and inducement to Teva USA and Purchaser entering into the
Merger Agreement, concurrently with the execution of the Merger Agreement, Teva
USA, Purchaser and HC, which beneficially owns approximately 51% of the
outstanding Shares, entered into a Stockholder Agreement (the "Stockholder
Agreement") pursuant to which HC agreed, among other things, to tender its
Shares pursuant to the Offer. See Section 1.
The Merger Agreement provides that promptly upon acceptance for payment of,
and payment by Purchaser for, all Shares tendered and not withdrawn pursuant to
the Offer, Purchaser will be entitled to designate such number of directors on
the Company Board as will give Purchaser representation on the Company Board
equal to that number of directors, rounded up to the next whole number (and in
no event less than a majority of the Company Board), which is the product of (i)
the total number of directors on the Company Board (giving effect to the
directors elected pursuant to this sentence) multiplied by (ii) the percentage
that (a) such number of Shares accepted for payment and paid for by Purchaser or
otherwise owned by Purchaser and its affiliates bears to (b) the number of
Shares outstanding, and the Company shall, at such time, cause Purchaser's
designees to be so elected. The Company has agreed, subject to applicable law,
to take all action requested by Purchaser necessary to effect any such election,
including mailing to its stockholders the information required by Section 14(f)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Rule 14f-1 promulgated thereunder relating to Purchaser's designees to the
Company Board. In connection with the foregoing, the Company has agreed to
promptly, at the option of Purchaser, either increase the size of the Company
Board or obtain the resignation of such number of its current directors as is
necessary to enable Purchaser's designees to be elected to the Company Board as
provided above. Notwithstanding the foregoing, Teva USA and Purchaser have
agreed that, until the Effective Time, the Company Board will have at least two
directors who were directors on the date of the Merger Agreement and who are
otherwise not (A) employees, officers, directors, appointees, nominees or
affiliates of HC or any of its affiliates (other than the Company), Teva USA or
Purchaser or any of their affiliates or (B) employees or officers of the Company
(the "Independent Directors"). Following the election or appointment of
Purchaser's designees to the Company Board as provided above, the vote of the
Independent Directors shall be required to authorize any matter relating to the
Merger Agreement or the Merger, including, without limitation, any termination
or amendment of the Merger Agreement by the Company, any extension of time for
the performance of any obligation of Teva USA or Purchaser under the Merger
Agreement or any waiver of compliance by Teva USA or Purchaser with any
provision of the Merger Agreement for the benefit of the holders of the Shares.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself or itself into such
subsidiary, without any action or vote on the part of the board of directors or
stockholders of such other corporation (a "short-form merger"). If Purchaser
acquires, pursuant to the Offer or otherwise, at least 90% of the outstanding
Shares, Purchaser will be able to adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger, without a vote of the
Company's stockholders. In the event that Purchaser acquires in the aggregate at
least 90% of the outstanding Shares pursuant to the Offer or otherwise, then, at
the election of Purchaser, a short-form merger could be effected without any
further approval of the Company Board or the stockholders of the Company. In the
Merger Agreement, Purchaser
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and the Company have agreed that, notwithstanding that all conditions to the
Offer are satisfied or waived as of the scheduled Expiration Date, Purchaser may
extend the Offer for a period not to exceed ten (10) business days if the Shares
tendered pursuant to the Offer are less than 90% of the outstanding Shares on a
fully-diluted basis. Even if Purchaser does not own 90% of the outstanding
Shares on a fully-diluted basis following consummation of the Offer, Purchaser
could seek to purchase additional shares in the open market or otherwise in
order to reach the 90% threshold and employ a short-form merger. The per share
consideration paid for any Shares so acquired in open market purchases may be
greater or less than the Offer Price. Purchaser presently intends to effect a
short-form merger, if permitted to do so under the DGCL, pursuant to which
Purchaser will be merged with and into the Company. If, however, Purchaser does
not acquire at least 90% of the outstanding Shares pursuant to the Offer or
otherwise, a vote of stockholders will be required to adopt the Merger Agreement
under the DGCL and a significantly longer period of time may be required to
effect the Merger. See Section 1. If the Minimum Condition has been satisfied in
connection with the Offer, however, Purchaser will have sufficient voting power
to adopt the Merger Agreement without the vote in favor of the adoption of the
Merger Agreement by any other stockholder.
According to the Company, as of the close of business on July 30, 1999,
19,343,766 Shares were issued and outstanding. For purposes of the Offer, in
determining the number of Shares outstanding calculated on a "fully diluted
basis," there will be included the number of Shares outstanding, together with
Shares issuable pursuant to employee stock option or similar benefit plans, or
otherwise, with an exercise or purchase price per Share that is less than the
Offer Price. Based upon the foregoing, the Minimum Condition would be satisfied
if at least 10,100,928 Shares were validly tendered in the Offer and not
properly withdrawn. Concurrently with the execution of the Merger Agreement,
Teva USA, Purchaser and HC, which beneficially owns 9,934,100 Shares, entered
into a Stockholder Agreement (the "Stockholder Agreement") pursuant to which HC
agreed, among other things, to tender its Shares pursuant to the Offer. In
addition, certain officers and directors of the Company have indicated their
intent to tender 1,199,957 Shares beneficially owned by such officers and
directors.
As of the date of this Offer to Purchase, neither Teva, Teva USA nor
Purchaser beneficially owns any Shares.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date, and not withdrawn in accordance with
Section 4. The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on September 13, 1999, unless and until Purchaser, in accordance with the
terms of 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.
The Offer is conditioned upon the satisfaction of the Minimum Condition,
the expiration or termination of all waiting periods imposed by the HSR Act, and
the other conditions set forth in Section 14. Subject to the provisions of the
Merger Agreement, including those provisions described in the following two
paragraphs, and the applicable rules and regulations of the SEC, Purchaser
reserves the right to modify the terms of the Offer and, if, by the Expiration
Date, any condition to the Offer is not satisfied, Purchaser may (but is not
obligated to) (i) decline to purchase any of the Shares tendered in the Offer
and terminate the Offer and return all tendered Shares to tendering stockholders
or (ii) waive such unsatisfied condition (other than the Minimum Condition) to
the extent permitted by law and the Merger Agreement and purchase all Shares
validly tendered. The rights reserved by Purchaser in this and the following two
paragraphs are in addition to Purchaser's rights to terminate the Offer as
described in Section 14.
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<PAGE> 6
Under the terms of the Merger Agreement, however, unless previously
approved by the Company in writing, Purchaser may not (i) decrease the Offer
Price or change the form of consideration payable in the Offer, (ii) decrease
the number of Shares sought pursuant to the Offer, (iii) change the conditions
to the Offer (other than to increase the Offer Price), (iv) impose additional
material conditions to the Offer, (v) waive satisfaction of the Minimum
Condition, (vi) terminate or withdraw the Offer or extend the Expiration Date
(except as required by law) or (vii) amend any term of the Offer in any manner
adverse to the Company's stockholders. Notwithstanding the foregoing, (x)
Purchaser may in its sole discretion, waive any condition to the Offer (other
than the Minimum Condition), in whole or in part, (y) Purchaser may extend the
Expiration Date in connection with an increase in the consideration to be paid
pursuant to the Offer so as to comply with applicable rules and regulations of
the SEC or (z) if all of the conditions to the Offer set forth in Section 14
hereof are not satisfied on any scheduled Expiration Date, and if all of such
conditions are then still reasonably capable of being satisfied prior to the
Termination Date (as defined below), Purchaser shall extend the Offer from time
to time (each such individual extension not to exceed ten (10) business days
after the previously scheduled Expiration Date) until such conditions are
satisfied or waived, provided that Purchaser shall not be required to extend the
Offer beyond the Termination Date. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering Stockholder to withdraw such stockholder's
Shares. Purchaser shall have no obligation to pay interest on the purchase price
of tendered Shares, whether or not it exercises its rights to extend the Offer.
For purposes of this Offer to Purchase, "Termination Date" shall mean October
31, 1999, provided that if on October 31, 1999 the only condition to the Offer
that has not been satisfied or waived is the condition relating to the
expiration or termination of any applicable waiting periods under the HSR Act,
then "Termination Date" shall mean December 31, 1999.
The Merger Agreement requires Purchaser to accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied on the Expiration Date. However, if
immediately prior to the scheduled Expiration Date, all conditions to the Offer
are satisfied but the number of Shares tendered and not withdrawn pursuant to
the Offer constitutes less than 90% of the Shares outstanding on a fully-diluted
basis, Purchaser may extend the Offer for a period not to exceed ten (10)
business days, notwithstanding that all conditions to the Offer are satisfied as
of such Expiration Date. Any condition satisfied or waived at the commencement
of such final extension period (other than a requirement of law) shall be deemed
satisfied at the end of such extension period. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, 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 in
accordance with Rules 14d-4(c), 14d-6(d) and 14e-l(d) under the Exchange Act.
Without limiting the obligation of Purchaser under such Rules or the manner in
which Purchaser may choose to make any public announcement, Purchaser currently
intends to make announcements by issuing a press release to the Dow Jones News
Service. Under no circumstances will interest be paid on the Offer Price to be
paid by Purchaser for the Shares, regardless of any extension of the Offer or
any delay in making such payment.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to withdrawal
rights as described in Section 4. However, the ability of Purchaser to delay the
payment for Shares which Purchaser has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by, or on behalf of,
holders of securities promptly after the termination or withdrawal of the Offer.
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 the Offer must remain open
following material changes in the terms of the
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<PAGE> 7
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. In a public release, the SEC has stated its view that an
offer must remain open for a minimum period of time following a material change
in the terms of the Offer and that waiver of a material condition, such as the
Minimum Condition, is a material change in the terms of the Offer. The release
states that an offer should remain open for a minimum of five (5) business days
from the date a material change is first published, or sent or given to security
holders and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares being
sought, a minimum of ten (10) business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such increased
consideration will be paid to all holders whose Shares are purchased in the
Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, dealers,
banks and similar persons whose names, or the names of whose nominees, appear on
the stockholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
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 will pay for, as soon as
practicable after the Expiration Date, all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 4.
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, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. 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 stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. 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 for such Shares (or a timely Book
Entry Confirmation (as defined below) with respect thereto), (ii) a Letter of
Transmittal (or facsimile thereof), 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. Accordingly, payment may be made to tendering
stockholders at different times if delivery of the Shares and other required
documents occur at different times. The per share consideration paid to any
holder of Shares pursuant to the Offer will be the highest per share
consideration paid to any other holder of such Shares pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY
PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole or
in part with any applicable law. If Purchaser is delayed in its acceptance for
payment of, or payment for, Shares or is unable to accept for payment or pay for
Shares pursuant to the Offer for any reason, then, without prejudice to
Purchaser's rights under the Offer (including such rights as are set forth in
Sections 1 and 14) (but subject to compliance with Rule 14e-l(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
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 4.
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<PAGE> 8
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person as
the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3, such Shares will be credited to such account
maintained at the Book-Entry Transfer Facility as the tendering stockholder
shall specify in the Letter of Transmittal, as promptly as practicable following
the expiration, termination or withdrawal of the Offer. If no such instructions
are given with respect to Shares delivered by book-entry transfer, any such
Shares not tendered or not purchased will be returned by crediting the account
at the Book-Entry Transfer Facility designated in the Letter of Transmittal as
the account from which such Shares were delivered.
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, 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 stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
VALID TENDER. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as defined below), 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 certificates evidencing tendered Shares must be
received by the Depositary at one of such addresses or such Shares must be
delivered to the Depositary pursuant to the procedures for book-entry transfer
set forth below and a Book-Entry Confirmation must be received by the
Depositary, in each case prior to the Expiration Date, or (ii) the tendering
stockholder must comply with the guaranteed delivery procedures described below.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two (2) business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of Shares
by causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, 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 stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF THE LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A
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BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal if (i) the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the Book-Entry Transfer Facility's 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) 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 Securities
Transfer Agents Medallion Program or a member in good standing of a recognized
Medallion Signature Guarantee Program (each, an "Eligible Institution" and,
collectively, "Eligible Institutions"). In all other cases, all signatures on
Letters of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
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 for such Shares must be endorsed or accompanied by appropriate
stock powers, in either case, signed exactly as the name or names of the
registered holders or owners appear on the certificates, with the signatures on
the certificates or stock powers guaranteed as aforesaid. See Instruction 5 to
the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures 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 stockholder'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 (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three (3) trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the Nasdaq
National Market is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary 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 such Notice of Guaranteed Delivery.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
APPOINTMENT. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder will
irrevocably appoint designees of Purchaser as such stockholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by Purchaser and with respect to any and all non-cash
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect of such Shares on or after August 9, 1999 (collectively,
"Distributions"). All such proxies will be considered coupled with an interest
in the tendered Shares. Such appointment will be effective if, as and when, and
only to the extent that, Purchaser accepts for payment Shares tendered by such
stockholder as provided herein. All such powers of attorney and
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<PAGE> 10
proxies will be irrevocable and will be deemed granted in consideration of the
acceptance for payment by Purchaser of Shares tendered in accordance with the
terms of the Offer. Upon such appointment, all prior powers of attorney, proxies
and consents given by such stockholder with respect to such Shares (and any and
all Distributions) will, without further action, be revoked and no subsequent
powers of attorney, proxies, consents or revocations may be given by such
stockholder (and, if given, will not be deemed effective). The designees of
Purchaser will thereby be empowered to exercise all voting and other rights with
respect to such Shares (and any and all Distributions), including, without
limitation, in respect of any annual or special meeting of the Company's
stockholders (and any adjournment or postponement thereof), actions by written
consent in lieu of any such meeting or otherwise, as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper. Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares (and any and all Distributions), including voting at any
meeting of stockholders.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser, in its sole discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in proper
form or the acceptance for payment of which, or payment for which, may, in the
opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right, in its sole discretion, subject to the provisions of the Merger
Agreement, to waive any defect or irregularity in any tender of Shares of any
particular stockholder, whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed to
have been validly made until all defects or irregularities relating thereto have
been cured or waived. None of Purchaser, 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. Subject to the terms of the Merger Agreement, Purchaser's
interpretation of the terms and conditions of the Offer in this regard
(including the Letter of Transmittal and the instructions thereto) will be final
and binding.
BACKUP WITHHOLDING. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or its assignee (in either
case, the "Payee"), satisfies the conditions described in Instruction 10 of the
Letter of Transmittal or is otherwise exempt, the cash payable as a result of
the Offer may be subject to backup withholding tax at a rate of 31% of the gross
proceeds. To prevent backup withholding, each Payee should complete and sign the
Substitute Form W-9 provided in the Letter of Transmittal. See Instruction 10 to
the Letter of Transmittal.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. 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 October
15, 1999.
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 person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and, unless such Shares
have been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
8
<PAGE> 11
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
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,
which determination will be final and binding. None of Purchaser, the
Depositary, the Dealer Manager, 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 failure to give any such
notification.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of certain U.S. federal income tax
consequences of the Offer and the Merger relevant to a holder of Shares whose
Shares are tendered and accepted for payment pursuant to the Offer or whose
Shares are converted to cash in the Merger (a "Holder"). The discussion is based
on the Internal Revenue Code of 1986, as amended (the "Code"), regulations
issued thereunder, judicial decisions and administrative rulings, all of which
are subject to change, possibly with retroactive effect. The following does not
address the U.S. federal income tax consequences to all categories of Holders
that may be subject to special rules (e.g., Holders who acquired their Shares
pursuant to the exercise of employee stock options or other compensation
arrangements with the Company, Holders who perfect their appraisal rights under
the DGCL, foreign Holders, insurance companies, tax-exempt organizations,
dealers in securities and persons who have acquired the Shares as part of a
straddle, hedge, conversion transaction or other integrated investment), nor
does it address the federal income tax consequences to persons who do not hold
the Shares as "capital assets" within the meaning of Section 1221 of the Code
(generally, property held for investment). The following discussion does not
address all of the U.S. federal income tax considerations that may be applicable
to each particular Holder and does not address any state, local, foreign or
other tax considerations. Accordingly, Holders should consult their own tax
advisors regarding the U.S. federal, state, local and foreign income and other
tax consequences of the Offer and the Merger.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign income and other
tax laws. In general, a Holder who sells Shares pursuant to the Offer or
receives cash in exchange for Shares pursuant to the Merger will recognize gain
or loss for federal income tax purposes equal to the difference, if any, between
the amount of cash received and the Holder's adjusted tax basis in the Shares
sold pursuant to the Offer or surrendered for cash pursuant to the Merger. Gain
or loss will be determined separately for each block of Shares (i.e., Shares
acquired at the same cost in a single transaction) tendered pursuant to the
Offer or surrendered for cash pursuant to the Merger. Such gain or loss will be
long-term capital gain or loss if the Holder has held the Shares for more than
one (1) year at the time of sale pursuant to the Offer or the Merger, as the
case may be. Certain limitations apply to the use of capital losses.
9
<PAGE> 12
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Company's Shares are quoted on the Nasdaq National Market (Symbol:
CPLY). The following table sets forth the high and low sales prices per Share as
reported on the Nasdaq National Market for each of the quarters indicated:
<TABLE>
<CAPTION>
HIGH LOW
------ -----
<S> <C> <C>
Year Ended December 31, 1997:
First Quarter............................................. $ 9.63 $6.50
Second Quarter............................................ $ 8.63 $4.63
Third Quarter............................................. $ 8.13 $5.75
Fourth Quarter............................................ $ 8.88 $5.30
Year Ended December 31, 1998:
First Quarter............................................. $ 8.25 $6.00
Second Quarter............................................ $ 7.00 $5.63
Third Quarter............................................. $11.38 $5.38
Fourth Quarter............................................ $10.50 $6.00
Year Ended December 31, 1999:
First Quarter............................................. $12.00 $7.94
Second Quarter............................................ $10.63 $8.06
Third Quarter (through August 13, 1999)................... $10.88 $8.34
</TABLE>
On August 9, 1999, the last full trading day prior to the public
announcement of the Merger Agreement and Purchaser's intention to commence the
Offer, the closing sale price per Share reported on the Nasdaq National Market
was $8.875. On August 13, 1999, the last full trading day before commencement of
the Offer, the closing sale price per Share reported on the Nasdaq National
Market was $10.875. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION
FOR THE SHARES.
As outlined in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, the Company has never paid cash dividends on its common stock
and the Company disclosed that, because the agreement governing its long-term
indebtedness contains prohibitions on the payment of cash dividends, the Company
has no present intention of paying any cash dividends in the foreseeable future.
Pursuant to the Merger Agreement, the Company has agreed, from the date of
the Merger Agreement until the date of payment for Shares by Purchaser in the
Offer, not to declare, set aside, make or pay any dividend or other distribution
in respect of its capital stock without the prior written consent of Teva USA.
7. EFFECT OF THE OFFER ON THE MARKET FOR SHARES, NASDAQ LISTING AND EXCHANGE ACT
REGISTRATION
MARKET FOR SHARES. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and will reduce
the number of holders of Shares. This could adversely affect the liquidity and
market value of the remaining Shares held by the public. Depending upon the
number of Shares purchased pursuant to the Offer, the Shares may no longer meet
the requirements of the National Association of Securities Dealers (the "NASD")
for continued inclusion in the Nasdaq National Market, which require that
companies with more than $4,000,000 in net tangible assets (such as the Company)
have at least 750,000 publicly held shares held by at least 400 holders of round
lots, with a market value of $5,000,000, and have at least two registered and
active market makers for the Shares. If the Shares are no longer eligible for
inclusion in the Nasdaq National Market, they may nevertheless continue to
included in the Nasdaq SmallCap Market unless, among other things, the number of
holders of Shares were to fall below 300, the number of publicly held shares
were to fall below 500,000 or there were not at least two registered and active
market makers for Shares, in which case the NASD's rules provide that the Shares
would no longer be "qualified" for Nasdaq Stock Market reporting and the Nasdaq
Stock Market would cease to provide any quotations. Shares held directly or
indirectly by directors, officers or beneficial owners of more than 10% of
Shares are not considered as being publicly held for this purpose. The Company
has informed Purchaser that,
10
<PAGE> 13
as of August 9, 1999, there were approximately 208 holders of record and that,
as of close of business on July 30, 1999, 19,343,766 Shares were issued and
outstanding. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NASD for continued
inclusion in the Nasdaq National Market or in any other tier of the Nasdaq Stock
Market and Shares are no longer included in the Nasdaq National Market or in any
other tier of the Nasdaq Stock Market, as the case may be, the market for Shares
could be adversely affected.
In the event that Shares no longer meet the requirements of the NASD for
continued inclusion in any tier of the Nasdaq Stock Market, it is possible that
such Shares would continue to trade on other securities exchanges or in the
over-the-counter market and that price quotations would be reported by such
exchanges or through other sources. However, the extent of the public market for
Shares and the availability of such quotations would depend upon such factors as
the number of stockholders and/or the aggregate market value of Shares remaining
at such time, the interest in maintaining a market in Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below and other factors. 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
Shares.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. The purchase of Shares pursuant to the Offer may result in Shares
becoming eligible for deregistration under the Exchange Act. Registration of
Shares may be terminated upon application of the Company to the SEC if the
Shares are not listed on a national securities exchange and there are fewer than
300 record holders. The 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 the Shares and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
Stockholders' meetings and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to the
Shares. Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of the
securities pursuant to Rule 144 under the Securities Act of 1933.
Teva USA intends to seek to cause the Company to seek termination of the
listing of the Shares on the Nasdaq National Market and of the registration of
the Shares under the Exchange Act as soon as practicable following completion of
the Offer as the requirements for such termination are met. If the Nasdaq
National Market listing and the Exchange Act registration of the Shares are not
terminated prior to the Merger, then the listing of the Shares on the Nasdaq
National Market and the registration of the Shares under the Exchange Act will
be terminated following the consummation of the Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
rules 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 for the purpose of buying,
carrying, or trading in securities ("purpose loans"). Depending upon factors
similar to those described above with respect to listing and market quotations,
it is possible that, following the Offer, 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 purposes of
loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
Unless otherwise specified, the information concerning the Company
contained in this Section 8 and elsewhere in this Offer to Purchase, including
financial information, has been taken or derived from information furnished to
Teva USA and Purchaser by the Company or on file with the SEC and other public
sources, including, among other things, the Company's Annual Report on Form 10-K
for the year ended December 31, 1998 and the Company's Quarterly Reports on Form
10-Q for the six months ended June 30, 1999 and June 30, 1998. Although Teva,
Teva USA and Purchaser do not have any knowledge that would indicate that any
statements contained herein are untrue in any material respect, neither Teva,
Teva USA nor Purchaser assumes any responsibility for the accuracy or
completeness of the information contained herein, or
11
<PAGE> 14
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information but which are
unknown to Teva, Teva USA or Purchaser.
GENERAL. The Company, established in 1972, develops, manufactures, markets
and distributes a broad range of multi-source pharmaceutical products. These
products include prescription and over-the-counter ("OTC") drugs and are
available in a variety of dosage forms consisting of tablets, solutions,
suspensions, syrups, elixirs, jellies, creams, ointments and powders. The
Company's product categories include, among others, preparations for neoplasms,
endocrine system and metabolic diseases, anti-infective agents, central nervous
system and sense organ drugs, respiratory system drugs, cardiovascular system
drugs, vitamins and nutrients and skin preparations. The Company sells its
products to prescription and OTC drug distributors, retail chains, wholesalers,
hospitals, health maintenance organizations, other managed care entities and
government agencies.
The Company is a Delaware corporation with its principal offices located at
25 John Road, Canton, Massachusetts, 02021. The telephone number of the Company
at such offices is (781) 821-6111.
SUMMARY FINANCIAL INFORMATION. Set forth below is a summary of certain
consolidated financial information with respect to the Company taken or derived
from the Company's Annual Report on Form 10-K for the year ended December 31,
1998 and the Company's Quarterly Reports on Form 10-Q for the six months ended
June 30, 1998 and June 30, 1999, each as filed by the Company with the SEC. The
summary information set forth below is qualified in its entirety by reference to
such reports (which may be obtained and inspected as described below) and should
be considered in conjunction with the more comprehensive financial and other
information in such reports and other publicly available reports and documents
filed by the Company with the SEC and other publicly available information. The
consolidated financial information set forth below for the years ended December
31, 1996, 1997 and 1998 is derived from audited consolidated financial
statements. The consolidated financial information set forth below for the six
month periods ended June 30, 1998 and 1999 is unaudited.
COPLEY PHARMACEUTICAL, INC.
SELECTED SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------------- --------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales....................... $123,461 $121,483 $133,497 $ 62,935 $ 50,814
Income (loss) from operations... (16,230) 2,426 10,458 4,178 2,109
Net income (loss)............... (12,673)(a) 564 7,068 3,159 1,499
Fully diluted net income (loss)
per share.................... $ (0.66)(a) $ 0.03 $ 0.37 $ 0.16 $ 0.08
BALANCE SHEET DATA:
Working capital................... $ 48,210 $ 60,144 $ 71,126 $ 62,304 $ 71,239
Total assets.................... 151,727 145,744 155,365 155,473 140,015
Long-term debt.................. 5,100 4,800 4,500 4,800 4,500
Total shareholders' equity...... 100,131 100,881 108,304 104,139 109,907
</TABLE>
- ---------------
(a) Includes $3.5 million ($2.1 million after taxes; $0.11 per share) of
restructuring expenses.
CERTAIN COMPANY PROJECTIONS. In the course of discussions giving rise to
the Merger Agreement (see Section 11), representatives of the Company furnished
Teva USA with certain business and financial information that was not publicly
available, including certain financial projections for fiscal 1999 through 2003
(the "Projections").
12
<PAGE> 15
The Projections were prepared solely for the Company's internal purposes
and were not prepared for publication or with a view to complying with the
published guidelines of the SEC regarding projections or with the American
Institute of Certified Public Accountants Guide for Prospective Financial
Statements, and the Projections are being included in this Offer to Purchase
solely because they were furnished to Teva USA in connection with the
discussions giving rise to the Merger Agreement. The independent accountants of
the Company, PricewaterhouseCoopers LLP, have neither examined nor compiled the
Projections and, accordingly, do not express an opinion or any other form of
assurance with respect thereto. The reports of PricewaterhouseCoopers LLP
included in the Company's Annual Reports on Form 10-K referred to in this Offer
to Purchase relate to the historical financial information of the Company, do
not extend to the Projections and should not be read to do so.
The Projections set forth below reflect numerous assumptions with respect
to the general business and economic conditions and other matters, many of which
are inherently uncertain or beyond the Company's, Teva's, Teva USA's or
Purchaser's control, and do not take into account any changes in the Company's
operations or capital structure which may result from the Offer and the Merger.
It is not possible to predict whether the assumptions made in preparing the
Projections will be valid, and actual results may prove to be materially higher
or lower than those contained in the Projections. The inclusion of the
forward-looking information contained in the Projections should not be regarded
as an indication that the Company, Teva, Teva USA, Purchaser or anyone else who
received this information considered it a reliable prediction of future events,
and this information should not be relied on as such. Neither the Company, Teva,
Teva USA, Purchaser nor any of their respective representatives assumes any
responsibility for the validity, reasonableness, accuracy or completeness of the
Projections, and the Company has made no representation to Teva, Teva USA or
Purchaser regarding the Projections. None of the Company, Teva, Teva USA,
Purchaser or any other party intends publicly to update or otherwise publicly
revise the Projections set forth below even if experience or future changes make
it clear that the Projections will not be realized.
The Projections, in capsulized format, are as follows:
<TABLE>
<CAPTION>
ESTIMATES FOR THE YEARS ENDING DECEMBER 31,
----------------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................. $111,129 $155,438 $175,403 $257,660 $277,307
Net income................................ 5,588 12,860 16,790 48,708 57,316
Net income per share...................... $ 0.29 $ 0.67 $ 0.88 $ 2.55 $ 3.00
</TABLE>
The foregoing Projections do not reflect or give effect to the Offer or the
Merger and transactions related thereto (including the financing for the Offer)
and, accordingly, are not necessarily indicative of the results of operations of
the Company following the Offer or the Merger.
AVAILABLE INFORMATION. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational filing requirements of
the Exchange Act and therefore is obligated to file periodic reports, proxy
statements and other information with the SEC relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning the Company's directors and officers, their remuneration, options
granted to them, the principal holders of the Company's securities and any
material interest of such persons in transactions with the Company is required
to be disclosed in such proxy statements and distributed to the Company's
stockholders and filed with the SEC. Such reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the SEC located in Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and should also be available for inspection and copying
at prescribed rates at the regional offices of the SEC located at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven
World Trade Center, Suite 1300, New York, New York 10048. Such reports, proxy
statements and other information may also be obtained at the Web site that the
SEC maintains at http://www.sec.gov. Copies of this material may also be
obtained by mail, upon payment of the SEC's customary fees, from the SEC's
principal office at 450 Fifth Street, N.W.,
13
<PAGE> 16
Washington, D.C. 20549. In addition, such material should also be available for
inspection at the library of the Nasdaq National Market System, 1735 K Street,
N.W., Washington, D.C. 20006.
9. CERTAIN INFORMATION CONCERNING TEVA, TEVA USA AND PURCHASER.
GENERAL. Purchaser, a Delaware corporation and wholly owned subsidiary of
Teva USA, was organized in connection with the Offer and has not carried on any
activities to date other than those incident to its formation and the
commencement of the Offer. The address and telephone number for Purchaser is the
same as that of Teva USA.
Teva USA is one of the largest generic pharmaceutical companies in the
United States. Teva USA manufactures products in a variety of dosage forms and
markets and sells generic pharmaceuticals throughout the United States. Teva USA
has its principal office at 650 Cathill Road, Sellersville, Pennsylvania 18960.
The telephone number for Teva USA is (215) 256-8400.
Teva USA is wholly owned by Teva Pharma B.V., a corporation organized under
the laws of the Netherlands ("Teva Pharma"), which, in turn, is wholly owned by
Teva Pharmaceutical Industries Limited, a corporation organized under the laws
of the State of Israel. Teva Pharma is a holding company. Its principal office
is located at 3640 AE Mijdrecht, Post Box 206, Holland.
Teva is a fully integrated pharmaceutical company producing drugs in all
major therapeutic categories, with a leading presence in the U.S. generics
market. As the largest pharmaceutical company in Israel, Teva has successfully
utilized its integrated production and research capabilities to establish a
worldwide pharmaceutical business focusing on the growing demand for generic
drugs and the opportunities for proprietary branded products for niche
therapeutic categories. Through its indirect wholly owned subsidiary Teva USA,
Teva is among the leading generic drug companies in the United States. Teva's
operations are conducted directly and through subsidiaries in Israel, Europe,
the United States and several other countries. Its principal office is located
at 5 Basel Street, P.O. Box 3190, Petach Tikva 49131 Israel, telephone number
972-3-9267267. Teva's Ordinary Shares are listed on the Tel Aviv Stock Exchange,
and its ADRs are quoted on the Nasdaq National Market under the symbol "TEVIY."
The name, citizenship, address, principal occupation or employment and
five-year employment history of each of the directors and executive officers of
Teva, Teva USA and Purchaser, as well as certain other information, are set
forth in Schedule I hereto.
Except as set forth below, during the last five years, none of Teva, Teva
USA and Purchaser nor, to the best knowledge of Teva, Teva USA and Purchaser,
any of the persons or entities listed in Schedule I hereto (i) have been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which any such
person 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.
Mr. Eli Hurvitz, President and Chief Executive Officer of Teva and a
director of Teva USA, was sentenced to the payment of a fine of 700,000 NIS
($170,000) and a suspended sentence of 18 months for a period of 3 years for the
same charge following the decision in December 1998 to convict him on charges of
assisting a third party in the avoidance of income taxes. Mr. Eli Hurvitz was
acquitted of all other charges. The Executive Committee of Teva's Board of
Directors convened a meeting following the sentencing of Mr. Hurvitz. The
Executive Committee heard the opinion of Amihud Ben-Porath, who serves as an
outside counsel to the Board, to the effect that the sentence does not
constitute an impediment to Mr. Hurvitz's continuing to serve as Teva's Chief
Executive Officer and Director. The Executive Committee again considered the
best interests of Teva and its shareholders and has decided to reiterate the
Board's request to Mr. Hurvitz to continue in his present office. In addition,
it expressed its full confidence and support in him. During March 1999, Mr.
Hurvitz filed an appeal to Israel's Supreme Court. The State of Israel has
appealed the decision to acquit Mr. Eli Hurvitz from the additional charges and
the decision regarding the sentence.
SUMMARY FINANCIAL INFORMATION. Set forth below is a summary of certain
consolidated financial data with respect to Teva taken or derived from Teva's
Annual Report on Form 20-F for the year ended
14
<PAGE> 17
December 31, 1998 (File No. 0-16174) and Teva's Report of Foreign Issuer on Form
6-K for the month of August 1999, each as filed by Teva with the SEC. More
comprehensive financial information is included in such reports (including
management's discussion and analysis of financial condition and results of
operations) and other documents filed by Teva with the SEC, and the following
financial data is qualified in its entirety by reference to such reports and
other documents, including the financial information and related notes contained
therein. Such reports may be examined and copies thereof may be obtained from
the offices of the SEC and the Nasdaq National Market System in the manner set
forth below. The consolidated financial information set forth below for the
years ended December 31, 1996, 1997 and 1998 is derived from audited
consolidated financial statements. The consolidated financial information set
forth below for the six month periods ended June 30, 1998 and 1999 is unaudited.
Teva prepares its consolidated financial statements in accordance with generally
accepted accounting principles in Israel and generally accepted accounting
principles in the United States. As applicable to Teva's financial statements,
such accounting principles are practically identical in all material respects.
Teva believes that any differences are not material to a decision by a
stockholder of the Company whether to sell, transfer or hold any Shares, since
such differences would not affect the ability of Teva, Teva USA and Purchaser to
provide the necessary funds to pay for the Shares to be acquired pursuant to the
Offer and the Merger.
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
------------------------------------ -----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Sales.............................. $ 953,783 $1,116,897 $1,115,928 $ 515,722 $ 581,360
Operating Income................... 109,504* 152,907* 116,541* 49,828* 85,716
Net income (loss).................. 73,422* 101,493* 68,830* 42,184* 59,396
BALANCE SHEET DATA
Working capital.................... $ 204,166 $ 241,185 $ 238,600 $ 244,794 $ 302,474
Total assets....................... 1,241,415 1,188,385 1,435,998 1,284,787 1,436,099
Long-term debt, net of current
maturities...................... 161,100 129,889 201,699 200,332 203,557
Stockholder's equity............... 534,189 611,982 658,806 640,990 696,507
- ---------------
* After deducting the following non-recurring expenditures:
Operating Income................... $ 19,790 $ 21,000 $ 28,530 $ 9,500 --
Net income......................... $ 14,890 $ 21,000 $ 28,511 $ 48 --
</TABLE>
AVAILABLE INFORMATION. Teva is subject to those informational filing
requirements of the Exchange Act that are applicable to foreign private issuers.
Teva is currently exempt from the rules under the Exchange Act prescribing the
furnishing and content of proxy statements, and its officers, directors and
principal shareholders are exempt from the reporting and short-swing profit
recovery provisions contained in Section 16 of such Act. Teva is not required
under the Exchange Act to publish financial statements as frequently or as
promptly as are U.S. companies subject thereto. In accordance with the Exchange
Act, Teva files reports and other information with the SEC. Such reports should
be available for inspection at the public reference facilities of the SEC
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be available for inspection and copying at prescribed rates at the
regional offices of the SEC located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300,
New York, New York 10048. Copies of this material may also be obtained by mail,
upon payment of the SEC's customary fees, from the SEC's principal office at 450
Fifth Street, N.W., Washington, D.C.
15
<PAGE> 18
20549. In addition, such material should also be available for inspection at the
library of the Nasdaq National Market System, 1735 K Street, N.W., Washington,
D.C. 20006.
TRANSACTIONS WITH THE COMPANY AND ITS AFFILIATES.
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between Teva, Teva USA or Purchaser, or, to the
best knowledge of Teva, Teva USA and Purchaser, any of their respective
affiliates or any of the persons listed in Schedule I hereto, on the one hand,
and the Company or its executive officers, directors or affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors, or a sale or other transfer of
a material amount of assets that would require reporting under the rules of the
SEC Except as set forth in this Offer to Purchase, none of Teva, Teva USA or
Purchaser nor, to the best knowledge of Teva, Teva USA and Purchaser, any of
their respective affiliates or any of the persons listed in Schedule I hereto,
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company.
In the first quarter of 1995, Teva and Teva USA entered into a
collaborative arrangement with Marion Merrell Dow Inc. (which subsequent to its
acquisition by Hoechst Aktiengesellschaft ("Hoechst") became known as Hoechst
Marion Rousssel, Inc. ("HMR")), an affiliate of HC, for the distribution and
marketing in North America of Copaxone(R) (Glatiramer Acetate), Teva's product
for the treatment of relapsing remitting multiple sclerosis. Under this
arrangement, the parties formed a jointly owned partnership, Teva Marion
Partners, to be responsible for the marketing and promotion of Copaxone(R) in
North America. Teva manufactures the product in Israel and supplies it to HMR
through Teva USA. HMR purchases Copaxone(R) from Teva USA and sells and
distributes it in the United States and Canada. During the fourth quarter of
1995, Teva entered into another collaborative arrangement with HMR for the
marketing of Copaxone(R) in Europe and other markets. Under the terms of this
arrangement, upon receipt of appropriate regulatory approvals, Copaxone(R) will
be co-promoted in certain European countries, and in others HMR will be the sole
marketer and promoter. Copaxone(R) will be manufactured by Teva in Israel, and
HMR will purchase it from Teva and sell and distribute Copaxone(R) throughout
Europe and in other markets. Under these agreements, Teva is entitled to receive
initial payments of up to $50 million in the aggregate. To date, a total of $35
million has been received and, upon receipt of regulatory approvals for
Copaxone(R) in certain European countries, additional payments of up to $15
million in the aggregate will become due. For the first six months of 1999,
global in-market sales of Copaxone(R) (including in-market sales of Teva and
HMR) totaled approximately $69.7 million.
On November 26, 1996, Teva USA, HMR and the Company entered into three
agreements related to the development of a generic equivalent of mesalamine
asacol. Pursuant to such agreements, Teva USA (i) purchased certain assets of
the Company related to the development of generic mesalamine for a purchase
price of $1 million, payable within 180 days following the first commercial sale
of generic mesalamine, (ii) received a sub-license from the Company of certain
technology related to the development of generic mesalamine in exchange for an
agreement to pay royalties to the licensor based on future net sales of generic
mesalamine and (iii) received $1 million in funding from HMR to continue to
pursue the development of generic mesalamine, such funds to be repaid within 180
days following the first commercial sale of generic mesalamine. Teva USA then
pursued development of a generic equivalent of mesalamine but encountered a
variety of technical difficulties. As a result, during the first six months of
1999, Teva USA decided to discontinue development of this product.
In 1993, Teva USA and the Company, together with certain other entities,
formed a joint venture for the purposes of manufacturing and marketing generic
pharmaceutical products in the New Independent States of the former Soviet
Union. At no time were the activities of such joint venture material to either
Teva USA or the Company. The joint venture was wound down in 1998 and dissolved
in 1999.
BENEFICIAL OWNERSHIP OF THE COMPANY SECURITIES; CONTACTS WITH THE
COMPANY. The wife of Ronald A. Schultz, an executive officer of Teva USA, owns
500 Shares, which Shares were purchased in June 1994 for an average purchase
price of $20.50 per Share. On March 26, 1999, Harold Snyder, a director of Teva
and
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Teva USA, purchased 5,000 Shares in brokered transactions for an average
purchase price of $10.53 per Share. Except as otherwise set forth in this
Section 9, as of the date of this Offer to Purchase, none of Purchaser, Teva USA
or Teva, nor, to the best knowledge of Purchaser, Teva USA and Teva, any of
their respective affiliates or any of the persons listed in Schedule I hereto,
beneficially owns or has a right to acquire directly or indirectly any Shares,
and none of Purchaser, Teva USA or Teva, nor, to the best knowledge of
Purchaser, Teva USA and Teva, any of their respective affiliates or any of the
persons listed in Schedule I hereto, has effected any transactions in Shares
during the past 60 days. Concurrently with the execution of the Merger
Agreement, Teva USA, Purchaser and HC, which beneficially owns approximately 51%
of the outstanding Shares, entered into the Stockholder Agreement pursuant to
which HC agreed, among other things, to tender its Shares pursuant to the Offer.
See Section 11.
10. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by Purchaser to purchase all outstanding
Shares pursuant to the Offer and to pay fees and expenses related to the Offer
and the Merger is estimated to be approximately $220 million. The consummation
of the Offer and the Merger are not subject to any condition that Teva USA or
the Purchaser obtain any requisite financing.
Purchaser plans to obtain all funds needed for the Offer and the Merger
through a capital contribution and/or a loan from Teva USA. Teva and Teva USA
have received a letter from Bank Leumi USA and a letter from Bank Hapoalim B.M.,
each dated August 13, 1999 (the "Commitment Letters"), pursuant to which such
banks have committed to provide Teva USA with term loans in an aggregate amount
of up to $230 million. Each bank has committed to provide up to $115 million of
such financing. Copies of the Commitment Letters are filed as exhibits to the
Tender Offer Statement on Schedule 14D-1 of Teva, Teva USA and Purchaser (the
"Schedule 14D-1"), and the following summary of the Commitment Letters is
qualified in its entirety by reference thereto.
Each Commitment Letter provides that (i) the applicable loan will mature
one year from initial drawing date but not later than December 31, 2000, (ii)
the rate of interest on such loan will be LIBOR plus .25% per annum, (iii) the
proceeds of such loan will be used to provide the cash necessary to fund the
Offer and the Merger and to pay any related expenses, (iv) such loan will be
guaranteed in its entirety by Teva and supported by a negative pledge by Teva on
all of its assets, (v) such loan may be prepaid, in whole or in part, on any
interest payment date on 30 days' prior written notice and (vi) the commitment
is subject to the condition that there shall not have occurred any material
adverse change in the business, assets, liabilities, operations, conditions or
prospects of Teva and its subsidiaries, taken as a whole.
In addition, the commitment of each bank is subject to the negotiation,
execution and delivery of a definitive credit agreement satisfactory to the
parties thereto. Such credit agreements will contain customary covenants, terms,
conditions, indemnities, representations, warranties and events of defaults.
Teva USA anticipates that such borrowings would be repaid with internally
generated funds (including, if the Merger is consummated, those of the Company)
and from other sources which may include the proceeds of future refinancings.
The plan for repayment will be based on Teva's and Teva USA's review from time
to time of the advisability of particular actions, as well as prevailing
interest rates, financial and other economic conditions and such other factors
as Teva or Teva USA may deem appropriate.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS
As used in this Section 11, "Teva" means one or more of Teva, Teva USA or
Caribou Merger Corporation.
In the summer of 1996, members of management of the Company, directors of
the Company and Teva conducted initial conversations regarding a possible
strategic alliance or acquisition of the Company, and on July 12, 1996, a
confidentiality agreement was executed. On October 18, 1996, a representative of
CIBC, the Company's financial advisor, sent Peter R. Terreri, the Chief
Financial Officer of Teva USA, information
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<PAGE> 20
relating to the Company. A meeting between the senior management of the Company
and representatives of Teva and their respective financial advisors was held in
November 1996. Representatives of the parties exchanged information and held a
number of conversations during the following several weeks.
The Company periodically communicated the status of issues to
representatives of Teva. On January 2, 1997, a representative of Lehman
Brothers, Teva's financial advisors, submitted a non-binding proposal on behalf
of Teva to acquire the Company for consideration of $7.50 per Share, which
consideration would be payable in the form of subordinated convertible
debentures of Teva. This indication of interest was subject to the satisfaction
of certain conditions, including the satisfactory completion of legal and
financial due diligence. The Company rejected the terms of such proposal. On
January 29, 1997, a representative of Lehman Brothers submitted a revised
proposal for consideration of $8.00 per Share, payable in subordinated
convertible debentures. Discussions and due diligence continued on a sporadic
basis over the next several months.
On May 6, 1997, a representative of CIBC sent Teva information relating to
the Company and a proposed draft merger agreement in order to solicit a revised
formal proposal to acquire the Company. Teva was requested to comment on certain
specified provisions of the proposed draft merger agreement as part of any
proposal it submitted. On May 15, 1997, a representative of Lehman Brothers
submitted a revised proposal on behalf of Teva to acquire the Company for cash
consideration of $6.00 per Share, subject to the satisfaction of certain
conditions including the satisfactory completion of legal and financial due
diligence. A meeting between the senior management and representatives of the
Company, Teva USA and HMR was held on May 27, 1997 to discuss the proposal and
the status of the Company's business and regulatory issues. Based on the
information disclosed by the Company at such meeting regarding such regulatory
issues, Teva USA determined not to pursue a transaction at such time.
On May 28, 1997, the Company announced that it had entered into a plea
agreement pursuant to which it pled guilty to a criminal charge and agreed to
pay a fine of $10.65 million. The Company also announced that it had agreed to
an independent audit by the FDA of certain of the Company's products.
Informal discussions continued from May 1997 through August 1997, and on
August 26, 1997 members of senior management of Teva and Teva USA and their
representatives met again with senior management of the Company and their
representatives at the Company's offices in Canton, MA. Representatives of the
parties exchanged information and held a number of conversations during the
following several weeks.
In October 1997, a representative of CIBC delivered a letter to Mr. William
A. Fletcher, President and Chief Executive Officer of Teva USA, requesting a
proposal to acquire the Company. The Company furnished representatives of Teva
USA with a draft merger agreement and instructions to mark it up as part of any
proposal it submitted. Representatives of the parties exchanged information and
held a number of conversations over the following two-week period. On November
14, 1997, Mr. Fletcher submitted a proposal on behalf of Teva USA to acquire the
Company for cash consideration of $8.00 per Share. Teva USA indicated its
willingness to structure the transaction as either a one-step merger or a tender
offer. The proposal contained a number of preconditions and set forth a number
of contractual issues that were subject to negotiation.
Following delivery of this proposal through early January 1998, senior
management and representatives of Teva USA and the Company and representatives
of HMR and Hoechst convened numerous times, by telephone and in person, to
exchange information and to progress toward definitive documentation relating to
an acquisition by Teva USA of the Company on the basis of Teva USA's proposal.
By the end of January 1998, Teva USA, the Company, HMR and Hoechst had been
unable to reach agreement on several matters and intensive discussions ceased.
From that time through May 1998, Teva and the Company from time to time
discussed potential alternative forms of transactions.
In a letter addressed to Lehman Brothers dated March 9, 1999, CIBC stated
that HC had indicated an interest in selling its stake in the Company, and that
the Company and HC expected to receive initial indications of interest by March
26, 1999. On March 26, 1999, Lehman Brothers delivered a letter on behalf of
Teva to CIBC, expressing Teva's interest in acquiring 100% of the Company at a
per share price of $13.00 to $15.00.
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<PAGE> 21
On March 18, 1999, Teva USA entered into a second
confidentiality/standstill agreement providing for, among other things, the
receipt and treatment of confidential information regarding the Company.
Representatives of the parties exchanged information and held a number of
conversations during the following two-month period.
On April 30, 1999, a representative of CIBC delivered a letter to Teva USA
and its representatives setting forth the procedure for making final proposals
to acquire the Company. This letter was accompanied by a draft of the Merger
Agreement which contemplated the Offer and Teva USA was instructed to comment on
the Merger Agreement as part of any proposal it submitted. During the following
two-week period, representatives of the Company and Teva USA exchanged
additional information and held a number of conversations on due diligence
matters. On May 17, 1999, a representative of Lehman Brothers submitted a
proposal on behalf of Teva to acquire the Company for cash consideration of
$9.75 per Share subject to the satisfaction of certain conditions, and on May
26, 1999, Teva USA submitted its markup of the Merger Agreement.
On May 28, 1999, representatives of CIBC informed Lehman Brothers that Teva
had not submitted the most favorable proposal and requested that Teva submit a
revised proposal. Teva declined and substantive discussions of any acquisition
of the Company by Teva ceased. On or about July 8, 1999, a representative of
CIBC informed Lehman Brothers that the Company had terminated an exclusivity
agreement with another party and inquired whether Teva wished to reopen
discussions regarding a possible acquisition. Teva, through representatives of
Lehman Brothers indicated on July 9, 1999 an interest in proceeding. On July 9,
1999, legal counsel to the Company provided Teva USA with a revised draft of the
Merger Agreement and invited Teva to comment on it.
On July 15, 1999, a representative of Lehman Brothers submitted a written
proposal on behalf of Teva to acquire the Company for cash consideration of
$11.00 per Share subject to the satisfaction of certain conditions including a
two-week period in which to negotiate exclusively with the Company. The Company
responded that it desired to negotiate with Teva USA only on a non-exclusive
basis and Teva USA agreed. On July 23, 1999, Teva USA provided representatives
of the Company with a markup of the revised draft of the Merger Agreement and a
comprehensive list of Teva USA's conditions to signing the Merger Agreement
including, without limitation, execution of the Stockholder Agreement with the
appropriate parties.
On July 27, 1999, the legal advisors of the Company, Teva USA and HC
negotiated certain provisions of the Merger Agreement in anticipation of a
meeting of the Board of Directors of the Company the following day. On July 28,
1999, CIBC informed Lehman Brothers that the Board of Directors of the Company
had determined to continue discussions with Teva USA on a non-exclusive basis
with the hope of concluding a definitive Merger Agreement expeditiously. During
the following one and one-half weeks, representatives of Teva USA negotiated the
definitive Merger Agreement with the Company, the Stockholder Agreement, the
Albuterol Representation Letter (as defined herein) and the Chia Tai Agreement
(as defined herein) with representatives of HC and the Pentoxifylline Agreement
Amendment (as defined herein) with representatives of the Company and HMR. These
discussions were conducted primarily through telephone conversations. Also,
during this one and one-half-week period, the Company and its representatives
provided Teva USA and its representatives with additional information so that
Teva USA was able to complete its due diligence investigation of the Company.
At a special meeting of the Board of Directors of Purchaser held on August
6, 1999, the Board of Directors of Purchaser unanimously authorized Purchaser to
enter into the transactions contemplated by the draft Merger Agreement and the
then-pending discussions relating thereto.
At a special meeting of the Board of Directors of Teva USA held on August
9, 1999, the Board of Directors of Teva USA unanimously approved the Merger
Agreement, the other agreements to which it is a party and the transactions
contemplated thereby including the Offer.
At a special meeting of the Board of Directors of Teva held on August 9,
1999, the Board of Directors of Teva approved the Merger Agreement, the other
agreements to which Teva USA is a party and the transactions contemplated
thereby including the Offer by a unanimous vote of all directors present.
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<PAGE> 22
At a special meeting of the Board of Directors of the Company held on
August 9, 1999, the Company Board unanimously approved the Merger Agreement, the
other agreements to which the Company is a party and the transactions
contemplated thereby.
Late in the evening on August 9, 1999, Teva USA, the Purchaser and the
Company executed the Merger Agreement, Teva executed a guarantee of all of Teva
USA's obligations under the Merger Agreement, and Teva USA, the Company, HC and
HMR executed each of the other agreements to which they are parties. At
approximately 1:00 a.m., New York City time, on August 10, 1999, Teva USA and
the Company published a joint press release announcing the transaction.
On August 16, 1999, Purchaser commenced the Offer.
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer and the Merger is to acquire control of, and the
entire equity interest in, the Company. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all the
Shares. The Offer is being made pursuant to the Merger Agreement and is intended
to increase the likelihood that the Merger will be effected. The purpose of the
Merger is to acquire all Shares not purchased pursuant to the Offer or
otherwise.
Stockholders who sell their Shares in the Offer will cease to have any
equity interest in the Company and any right to participate in its earnings and
future growth. If the Merger is consummated, non-tendering stockholders will no
longer have an equity interest in the Company and will instead have only the
right to receive cash consideration pursuant to the Merger Agreement or to
exercise statutory appraisal rights under Section 262 of the DGCL. Similarly,
after selling their Shares in the Offer or the subsequent Merger, stockholders
of the Company will not bear the risk of any decrease in the value of the
Company.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement,
which summary qualified in its entirety by reference to the Merger Agreement, a
copy of which has been filed with the SEC as an exhibit to the Schedule 14D-1
and is incorporated herein by reference. The Merger Agreement may be examined
and copies may be obtained at the places and in the manner set forth in Section
9 under the caption "Available Information." Capitalized terms not otherwise
defined in the following description of the Merger Agreement have the respective
meanings ascribed to them in the Merger Agreement.
THE OFFER. The obligation of Purchaser to accept for payment any Shares
tendered will be subject to the satisfaction of the Minimum Condition, the
expiration or termination of all waiting periods imposed by the HSR Act, and the
other conditions set forth in Section 14. Subject to the provisions of the
Merger Agreement, including those provisions described in the following two
paragraphs, and the applicable rules and regulations of the SEC, Purchaser
reserves the right to modify the terms of the Offer and, if, by the Expiration
Date, any condition to the Offer is not satisfied, Purchaser may (but is not
obligated to) (i) decline to purchase any of the Shares tendered in the Offer
and terminate the Offer and return all tendered Shares to tendering stockholders
or (ii) waive such unsatisfied condition (other than the Minimum Condition) to
the extent permitted by law and the Merger Agreement and purchase all Shares
validly tendered. The rights reserved by Purchaser in this paragraph and the
following two paragraphs are in addition to Purchaser's rights to terminate the
Offer as described in Section 14.
Under the terms of the Merger Agreement, however, unless previously
approved by the Company in writing, Purchaser may not (i) decrease the Offer
Price or change the form of consideration payable in the Offer, (ii) decrease
the number of Shares sought pursuant to the Offer, (iii) change the conditions
to the Offer (other than to increase the Offer Price), (iv) impose additional
material conditions to the Offer, (v) waive satisfaction of the Minimum
Condition, (vi) terminate or withdraw the Offer or extend the Expiration Date
(except as required by law) or (vii) amend any term of the Offer in any manner
adverse to the Company's stockholders. Notwithstanding the foregoing, (x)
Purchaser may in its sole discretion, waive any condition to the Offer (other
than the Minimum Condition), in whole or in part, (y) Purchaser may
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<PAGE> 23
extend the Expiration Date in connection with an increase in the consideration
to be paid pursuant to the Offer so as to comply with applicable rules and
regulations of the SEC and (z) if all of the conditions to the Offer set forth
in Section 14 hereof are not satisfied on any scheduled Expiration Date, and if
all of such conditions are then still reasonably capable of being satisfied
prior to the Termination Date, Purchaser shall extend the Offer from time to
time (each such individual extension not to exceed ten (10) business days after
the previously scheduled Expiration Date) until such conditions are satisfied or
waived, provided that Purchaser shall not be required to extend the Offer beyond
the Termination Date. During any such extension, all Shares previously tendered
and not properly withdrawn will remain subject to the Offer, subject to the
right of a tendering Stockholder to withdraw such stockholder's Shares.
Purchaser shall have no obligation to pay interest on the purchase price of
tendered Shares, whether or not it exercises its rights to extend the Offer.
The Merger Agreement requires Purchaser to accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied on the Expiration Date. However, if
immediately prior to the scheduled Expiration Date, all conditions to the Offer
are satisfied but the number of Shares tendered and not withdrawn pursuant to
the Offer constitutes less than 90% of the Shares outstanding on a fully-diluted
basis, Purchaser may extend the Offer for a period not to exceed ten (10)
business days, notwithstanding that all conditions to the Offer are satisfied as
of such Expiration Date. Any condition satisfied or waived at the commencement
of such final extension period (other than a requirement of law) shall be deemed
satisfied at the end of such extension period.
THE MERGER; CONVERSION OF SECURITIES. The Merger Agreement provides that
subject to the terms and conditions set forth in the Merger Agreement and the
applicable provisions of Delaware law, Purchaser will be merged with and into
the Company and the separate existence of Purchaser will cease, and the Company
will be the Surviving Corporation and a wholly owned subsidiary of Teva USA.
Each Share issued and outstanding immediately prior to the Effective Time (other
than Shares held in the treasury of the Company, Shares held by Teva USA,
Purchaser or any other wholly owned subsidiary of Teva USA or the Company, and
Shares with respect to which appraisal rights are properly exercised) will, by
virtue of the Merger and without any action on the part of Purchaser, the
Company, the holders of any Shares or the holders of any capital stock of
Purchaser, be converted into the right to receive the Merger Consideration. Each
Share held in the treasury of the Company and each Share owned by Teva or any
direct or indirect wholly owned subsidiary of Teva USA immediately before the
Effective Time, including Purchaser, shall be cancelled and extinguished and no
payment or other consideration shall be made with respect thereto. The shares of
capital stock of Purchaser outstanding immediately prior to the Merger shall be
converted into validly issued, fully paid and non-assessable shares of the
common stock of the Surviving Corporation, which shares shall constitute all of
the issued and outstanding capital stock of the Surviving Corporation and shall
be owned by Teva USA. The obligations of Teva USA under the Merger Agreement
have been guaranteed by Teva.
The Merger Agreement further provides that, notwithstanding any provision
of the Merger Agreement to the contrary, any Shares issued and outstanding
immediately prior to the Effective Time and held by a stockholder who has
demanded and perfected such stockholder's demand for appraisal of such
stockholder's Shares in accordance with Delaware law (including, but not limited
to Section 262 thereof) and as of the Effective Time has neither effectively
withdrawn nor lost (through failure to perfect or otherwise) such stockholder's
right to such appraisal ("Dissenting Shares") shall not be converted into or
represent the right to receive the Merger Consideration, but the holder thereof
shall be entitled to only such rights as are granted by Delaware law.
Notwithstanding the foregoing, if any stockholder who demands appraisal of such
stockholder's Shares under Delaware law shall effectively withdraw or lose such
stockholder's right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever occurs later, such stockholder's Shares
shall automatically be converted into and represent only the right to receive
the Merger Consideration, without interest thereon, upon surrender of the Shares
certificate(s).
Except as otherwise provided below, whether or not the Offer or the Merger
is consummated, all fees, costs and expenses incurred in connection with the
Merger Agreement and the transactions contemplated by the Merger Agreement shall
be paid by the party incurring such fees, costs and expenses.
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DIRECTORS. The Merger Agreement provides that promptly upon acceptance for
payment of, and payment by Purchaser for, all Shares tendered and not withdrawn
pursuant to the Offer the ("Offer Closing Date"), Purchaser will be entitled to
designate such number of directors on the Company Board as will give Purchaser
representation on the Company Board equal to that number of directors, rounded
up to the next whole number (and in no event less than a majority of the Company
Board), which is the product of (i) the total number of directors on the Company
Board (giving effect to the directors elected pursuant to this sentence)
multiplied by (ii) the percentage that (a) such number of Shares accepted for
payment and paid for by Purchaser or otherwise owned by Purchaser and its
affiliates bears to (b) the number of Shares outstanding, and the Company shall,
at such time, cause Purchaser's designees to be so elected.
The Company has agreed, subject to applicable law, to take all action
requested by Purchaser necessary to effect any such election. In connection with
the foregoing, the Company has agreed to promptly, at the option of Purchaser,
either increase the size of the Company Board or obtain the resignation of such
number of its current directors as is necessary to enable Purchaser's designees
to be elected to the Company Board as provided above. In the event that
Purchaser's designees are appointed or elected to the Company Board, until the
Effective Time of the Merger such Company Board shall have at least two
Independent Directors. Following the election or appointment of Purchaser's
designees to the Company Board as provided above, the vote of the Independent
Directors shall be required to authorize any matter relating to the Merger
Agreement or the Merger, including, without limitation, any termination or
amendment of the Merger Agreement by the Company, any extension of time for the
performance of any obligation of Teva USA or Purchaser under the Merger
Agreement or any waiver of compliance by Teva USA or Purchaser with any
provision of the Merger Agreement for the benefit of the holders of the Shares.
TREATMENT OF STOCK OPTION PLANS AND STOCK PURCHASE PLANS. The Merger
Agreement provides that at the Effective Time, each then outstanding option to
purchase Shares under the Company's 1986 Incentive Stock Option Plan, 1990 Stock
Option Plan, Amended and Restated 1992 Stock Plan, 1992 Non-Employee Director
Stock Option Plan and 1995 Non-Employee Director Stock Option Plan
(collectively, the "Company Stock Option Plans," which term expressly does not
include the Company's 1992 Employee Stock Purchase Plan (the "Common Stock
Purchase Plan")), whether or not then exercisable or vested (individually, an
"Option" and collectively, the "Options"), will be canceled, and each holder
thereof will receive at the Effective Time from the Surviving Corporation for
each Share subject to such Option an amount (subject to any applicable
withholding tax) in cash equal to the difference, if any, between the Merger
Consideration and the per share exercise price of such Option to the extent such
difference is a positive number (such amount being hereinafter referred to as
the "Option Consideration"). Upon receipt of the Option Consideration, any and
all rights the holder had or may have had in respect of such Option shall
terminate.
Under the Merger Agreement, effective immediately prior to the Effective
Time, the Company Board shall terminate the Common Stock Purchase Plan. Each
participant in the Common Stock Purchase Plan will receive at the Effective Time
from the Surviving Corporation in lieu of each Share that could have been
purchased under the Common Stock Purchase Plan had the then applicable Payment
Period (as defined in the Common Stock Purchase Plan) ended on such termination
date, an amount (subject to any applicable withholding tax) in cash equal to the
difference between the Merger Consideration and the Option Price (as defined in
the Common Stock Purchase Plan) determined with reference only to the first
business day of the applicable Payment Period to the extent such difference is a
positive number. All funds contributed to the Common Stock Purchase Plan which
have not been used to purchase Shares as of the termination date will be
returned, in cash, without interest, to participants of the Common Stock
Purchase Plan as soon as administratively feasible after such termination date.
STOCKHOLDER MEETING. The Merger Agreement provides that to the extent
required by law, the Company will take all action necessary in accordance with
Delaware law, the Company's certificate of incorporation and its by-laws to
convene a stockholders' meeting as promptly as practicable following the Offer
Closing Date to consider and vote upon the Merger, the Merger Agreement and the
transactions contemplated thereby. The proxy statement used in connection with a
Company Stockholders Meeting, if any is required, shall include the
recommendation of the Company Board to the holders of Shares that they vote in
favor of the adoption of
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the Merger Agreement and the Merger, except to the extent that the Company Board
shall have withdrawn or modified its approval or recommendation of the Merger
Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including
representations by the Company as to various matters, including the absence of
certain changes or events concerning the Company's business, compliance with
law, litigation, regulatory matters, employee benefit plans, labor matters,
intellectual property, environmental matters and taxes.
CONDUCT OF THE BUSINESS OF THE COMPANY. The Company has agreed that during
the period from the date of the Merger Agreement and continuing until the
earlier of the termination of the Merger Agreement or the Offer Closing Date,
the Company will, with certain exceptions, conduct its business and shall cause
the businesses of its subsidiaries to be conducted only in the ordinary course
of business and in a manner consistent with past practice; and the Company will
use reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries, to prevent the loss, cancellation, abandonment, forfeiture or
expiration of any intellectual property rights of the Company and its
subsidiaries, to preserve in full force and effect all material licenses and
approvals held by the Company and its subsidiaries and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. Neither the Company nor any of its subsidiaries will, during
the period from the date of the Merger Agreement and continuing until the
earlier of the termination of the Merger Agreement or the Offer Closing Date,
directly or indirectly do, or propose to do, any of the following, subject to
certain exceptions, without the prior written consent of Teva USA:
(i) amend or otherwise change the Company's or any of its
subsidiaries' certificate of incorporation or by-laws;
(ii) issue or sell, pledge, dispose or encumber, or authorize the
issuance or sale, pledge, disposition or encumbrance of, any shares of
capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest of the Company or any of its
subsidiaries;
(iii) sell, pledge, dispose of or encumber any material assets of the
Company or any of its subsidiaries;
(iv) (A) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent; (B)
split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock; or (C) amend the terms
of, repurchase, redeem or otherwise acquire, or permit any subsidiary to
repurchase, redeem or otherwise acquire, any of its securities or any
securities of its subsidiaries;
(v) (A) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or make any investment therein (other than the acquisition
of equity and debt securities of issuers for investment purposes where such
securities represent less than 5% of the issuer's outstanding voting
securities on an as-converted basis); (B) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee (other
than guarantees of bank debt of the Company's subsidiaries entered into in
the ordinary course of business) or endorse or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans or advances, except in each case in the ordinary course of
business consistent with past practice and except that the Company may
incur short-term indebtedness for borrowed money in an amount not to exceed
in the aggregate $1,000,000 on terms that do not include the payment of any
prepayment penalty or premium and which the Company will repay within five
(5) business days from the proceeds of maturing short-term investments; (C)
enter into any agreement or arrangement that would have qualified
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<PAGE> 26
as a Material Contract if it had been in effect on the date of the Merger
Agreement, or amend or terminate any Material Contract; (D) authorize any
capital expenditures or purchase of fixed assets or bioequivalence studies
other than in the ordinary course of business; or (E) enter into or amend
any contract, agreement, commitment or arrangement to effect any of the
matters prohibited by the Merger Agreement;
(vi) amend or enter into any employment, severance or change of
control agreement; increase the compensation payable or to become payable
to its officers or employees; grant any severance or termination pay to, or
enter into any employment or severance agreement with, any director,
officer or other employee of the Company or any of its subsidiaries; or
establish, adopt, enter into, amend or terminate any Employee Plan except
as may be required by law;
(vii) take any action, other than as required by GAAP or the SEC, to
change accounting policies or procedures;
(viii) make any material tax election inconsistent with past practices
or settle or compromise any material Federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations for any
assessment of any tax;
(ix) waive or release any rights material to the Company and its
subsidiaries or pay, discharge or satisfy any material claims, liabilities
or obligations, other than the payment, discharge or satisfaction (A) in
the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
the Company or incurred in the ordinary course of business and consistent
with past practice or (B) of claims for injury related to use of the
Company's albuterol sulfate solution consistent with past practice; or
(x) take, or agree in writing or otherwise to take, any of the
foregoing actions or any action which would make any of the representations
or warranties of the Company contained in the Merger Agreement untrue or
incorrect in any material respect, prevent the Company from performing in
any material respect or cause the Company not to perform in any material
respect its covenants contained in the Merger Agreement or result in any of
the conditions to the Merger set forth in the Merger Agreement not being
satisfied.
INDEMNIFICATION. The Merger Agreement provides that the Certificate of
Incorporation of the Surviving Corporation shall contain the provisions with
respect to indemnification set forth in the Certificate of Incorporation of the
Company as of the date of the Merger Agreement, which provisions may not be
amended, repealed or otherwise modified for a period of six years after the
Effective Time in any manner that would adversely affect the rights thereunder
existing at the Effective Time of individuals who at the Effective Time were
directors, officers, employees or agents of the Company, unless such
modification is required by law.
The Surviving Corporation and Teva USA have agreed, from and after the
Effective Time, to indemnify, defend and hold harmless each person, to the
fullest extent permitted under applicable law, who is now, or has been at any
time prior to the date of the Merger Agreement or who becomes prior to the
Effective Time, a director, officer, employee, fiduciary or agent of the Company
or any of its subsidiaries against any costs or expenses (including reasonable
attorneys' fees and expenses), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any threatened or
actual claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to (in
whole or in part) any action or omission occurring at or prior to the Effective
Time (including, without limitation, the transactions contemplated by the Merger
Agreement) and to pay expenses in advance of the final disposition of any such
claim, action, suit, proceeding or investigation to the fullest extent permitted
by law.
Teva USA and the Surviving Corporation have also agreed, from and after the
Effective Time, to honor all of the indemnity agreements entered into prior to
the date of the Merger Agreement by the Company with its officers, employees,
directors and consultants, whether or not such persons continue in their
positions with Teva USA or the Surviving Corporation following the Effective
Time.
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<PAGE> 27
The Merger Agreement also provides that, from and after the Effective Time
until at least six years after the Effective Time, Teva USA shall, or shall
cause the Surviving Corporation to, maintain in effect directors' and officers'
liability insurance covering those persons who are currently covered by the
Company's directors' and officers' liability insurance policies of at least the
same coverage and amounts, containing terms that are no less advantageous with
respect to claims arising at or before the Effective Time than the Company's
policies in effect immediately prior to the Effective Time; provided, however,
that neither Teva USA nor the Surviving Corporation will be required to pay an
annual premium in excess of 150% of the last annual premium paid by the Company
for such coverage prior to the date of the Merger Agreement, in which event Teva
USA shall purchase such coverage as is available for such 150% of such annual
premium.
NO SOLICITATION. The Company has agreed in the Merger Agreement that from
the date of the Merger Agreement until the Effective Time or termination of the
Merger Agreement in accordance with its terms, the Company will not nor shall it
permit any of its subsidiaries or any of its or their respective officers,
directors, employees, agents or representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
subsidiaries) (collectively, the "Representatives") to, directly or indirectly:
(i) initiate, solicit or knowingly encourage any inquiries, offers or proposals
that constitute, or could reasonably be expected to lead to, an Acquisition
Proposal, (ii) engage in negotiations or discussions concerning, or provide to
any person or entity any non-public information or data relating to the Company
or any of its subsidiaries for the purposes of making, or take any other action
to facilitate knowingly, the making of any Acquisition Proposal or inquiry that
could reasonably be expected to lead to an Acquisition Proposal (as defined
below), or (iii) agree to, approve or recommend any Acquisition Proposal;
provided, however, that, subject to the Company's compliance with the provisions
of the Merger Agreement, nothing contained in the Merger Agreement will prevent
the Company or the Company Board, prior to the adoption of the Merger Agreement
at the Company Stockholders Meeting, from (A) entering into a definitive
agreement providing for the implementation of a Superior Proposal (as defined
below) if the Company or Company Board is simultaneously terminating the Merger
Agreement in accordance with its terms, (B) providing non-public information or
data to, entering into customary confidentiality agreements with, or entering
into discussions or negotiations with, any person or entity in connection with
an unsolicited bona fide, written Acquisition Proposal to the Company or its
stockholders, if the Company Board, by action of a majority of Independent
Directors determines in good faith after consultation with nationally-recognized
independent financial advisors that such Acquisition Proposal, if accepted,
constitutes, or is reasonably likely to lead to, a Superior Proposal or (C)
taking and disclosing to its stockholders a position with respect to such
Acquisition Proposal contemplated by Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act or making any other public disclosure that, after consultation
with and based on the advice of outside legal counsel, is determined to be
required by applicable law; provided, further, that except as otherwise
permitted by the terms of the Merger Agreement, the Company does not withdraw or
modify its position with respect to the Merger or approve or recommend an
Acquisition Proposal.
The Company has also agreed that it will (i) promptly, and in any event
within 24 hours, notify Teva USA orally and in writing after receipt by the
Company (or its advisors) of any Acquisition Proposal or any inquiries which
could reasonably be expected to lead to an Acquisition Proposal, including the
material terms and conditions thereof and the identity of the person making it,
(ii) (A) promptly, and in any event within 24 hours, notify Teva USA orally and
in writing after receipt of any request for non-public information relating to
it or any of its subsidiaries or for access to its or any of its subsidiaries'
properties, books or records by any person that, to the Company's knowledge, is
considering making, or has made, an Acquisition Proposal and (B) promptly
provide to Teva USA any nonpublic information regarding the Company provided to
any such person which was not previously provided to Teva USA, (iii) receive
from any person identified in clause (ii) an executed confidentiality letter in
reasonably customary form and containing terms that are as stringent in all
material respects as those contained in the confidentiality agreement with Teva
USA prior to delivery of any such non-public information, and (iv) keep Teva USA
advised on a prompt basis of the status of any such Acquisition Proposal,
inquiry or request (including notifying Teva USA within 24 hours of any material
changes to the terms and conditions of any Acquisition Proposal).
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<PAGE> 28
The Company will not withdraw or modify, in any manner adverse to Teva USA,
its approval or recommendation of the Merger Agreement or the Merger and will
not approve or recommend an Acquisition Proposal, except in each case in
connection with a Superior Proposal and then only upon or after the termination
of the Merger Agreement pursuant to its terms.
For purposes of the Merger Agreement, "Acquisition Proposal" will mean any
of the following (other than the transactions between the Company, Teva USA and
Purchaser contemplated by the Merger Agreement and the transactions contemplated
by the Stockholder Agreement and the Registration Rights Agreement) involving
the Company or any of its subsidiaries: (i) a proposal for any transaction
pursuant to which any person or its affiliates (a "Third Party") proposes to
acquire beneficial ownership of at least twenty percent (20%) of the outstanding
equity securities of the Company, whether from the Company or pursuant to a
tender offer, exchange offer, recapitalization, reorganization or otherwise,
(ii) a proposal for any merger, consolidation or other business combination
involving the Company pursuant to which any Third Party proposes to acquire
beneficial ownership of at least twenty percent (20%) of the outstanding equity
securities of the Company or the entity surviving such merger, consolidation or
other business combination, (iii) a proposal for any other transaction or series
of related transactions pursuant to which any Third Party proposes to acquire
control of assets (including for this purpose the outstanding equity securities
of subsidiaries of the Company, and the entity surviving any merger,
consolidation or business combination including any of them) of the Company and
its subsidiaries having a fair market value equal to or greater than twenty
percent (20%) of the fair market value of all of the assets of the Company and
its subsidiaries, taken as a whole, immediately prior to such transaction, or
(iv) 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.
For purposes of the Merger Agreement, "Superior Proposal" means a bona fide
written Acquisition Proposal (i) for which financing, to the extent required, is
committed, (ii) which in the good faith judgment of a majority of the
Independent Directors is reasonably likely to be consummated without undue delay
and (iii) which a majority of the Independent Directors determine in their good
faith judgment (based upon the opinion (written or oral) of
nationally-recognized independent financial advisors that the value of the
consideration provided for in such proposal exceeds the value of the
consideration provided for in the Offer and the Merger) and after taking into
account all legal, financial, regulatory and other material aspects of the
Acquisition Proposal, and the person making the proposal, to be more favorable
to the Company's stockholders than the Merger.
CONDITIONS TO THE MERGER. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions: (i) the approval and adoption of the
Merger Agreement and the Merger by the requisite vote of the stockholders of the
Company if and as required by Delaware law and the Company's certificate of
incorporation and by-laws; (ii) expiration of termination of the waiting period
(and any extension thereof) applicable to the consummation of the Merger under
the HSR Act; (iii) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect; and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal; and (iv) Purchaser
shall have accepted for payment and paid for Shares tendered pursuant to the
Offer, provided that this condition will be deemed satisfied if (i) Purchaser
fails to accept for payment and pay for Shares pursuant to the Offer in
violation of the terms thereof or (ii) Teva USA or any affiliate of Teva USA
acquires any Shares other than pursuant to the Offer, which shares, when added
to the shares acquired by Teva USA pursuant to any stock options and the Offer
would result in Teva USA owning at least a majority of the outstanding Shares on
a fully diluted basis (excluding options the exercise price of which is equal to
or greater than the Offer Price).
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TERMINATION. The Merger Agreement may be terminated and the Offer and
Merger abandoned at any time prior to the Offer Closing Date or the Effective
Time, under the following circumstances, notwithstanding approval thereof by the
stockholders of the Company:
(a) prior to the Effective Time, by mutual written consent of Teva USA
and the Company for any reason, or by mutual action of their respective
boards of directors;
(b) prior to the Effective Time, by Teva USA or the Company if there
shall be any law or regulation making the consummation of the Merger
illegal or if a court of competent jurisdiction or governmental, regulatory
or administrative agency or commission issues a non-appealable final order,
decree or ruling or takes any other action, in each case having the effect
of permanently restraining, enjoining or otherwise prohibiting the Merger;
(c) prior to the Offer Closing Date, by the Company if (i) any of the
representations and warranties of Teva USA or Purchaser set forth in the
Merger Agreement shall fail to be true and correct (in the case of
representations and warranties qualified as to materiality) or true and
correct in all material respects (in the case of other representations and
warranties), in each case as of a given date as though made on and as of
such date (except for representations and warranties made as of a specified
date, which shall fail to be so true and correct as of such date), or (ii)
either Teva USA or Purchaser shall have failed to perform or comply in all
material respects with its obligations, agreements or covenants contained
in the Merger Agreement, which failure, in the case of (i) or (ii), is not
curable or, if curable, is not cured by the earlier of (x) 15 calendar days
after written notice of such failure is given by the Company to Teva USA or
Purchaser and (y) the Termination Date;
(d) prior to the Offer Closing Date, by Teva USA if (i) the
representations and warranties of the Company set forth in the Merger
Agreement (without giving effect to any materiality limitations contained
therein) shall fail to be true and correct on a given date as though made
on and as such date (except for representations and warranties made as of a
specified date, which shall fail to be so true and correct as of such date)
and the failure of such representations and warranties to be so true and
correct in the aggregate has a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole, or (ii) the Company shall have failed to
perform or comply in all material respects with its obligations, agreements
or covenants contained in the Merger Agreement, which failure, in the case
of (i) or (ii), is not curable or, if curable, is not cured by the earlier
of (x) 15 calendar days after written notice of such failure is given by
Purchaser to the Company and (y) the Termination Date;
(e) prior to the Effective Time, by Teva USA or the Company, if, at
the Company Stockholders Meeting (including any adjournment or postponement
thereof), if required, the requisite vote of the stockholders of the
Company is not obtained (provided that in order for Teva USA to terminate
the Merger Agreement pursuant to this provision Teva USA must have voted or
caused to be voted the Shares beneficially owned by it or its affiliates in
favor of the Merger and the Merger Agreement);
(f) prior to the Effective Time, by the Company, if prior to the
adoption of the Merger Agreement at the Company Stockholders Meeting the
Company Board shall have approved, and the Company shall concurrently enter
into, a definitive agreement providing for the implementation of a Superior
Proposal; but only if (i) the Company is not then in breach of the
non-solicitation covenant described in the section above entitled "No
Solicitation," (ii) the Company Board shall have authorized the Company,
subject to complying with the terms of the Merger Agreement, to enter into
a binding written agreement concerning a transaction that constitutes a
Superior Proposal and the Company notifies Teva USA in writing that it
intends to enter into such an agreement, (iii) during the ten (10) business
day period after the Company's notice, (A) the Company offers to negotiate
with, and, if accepted, negotiates in good faith with, Teva USA to attempt
to make such commercially reasonable adjustments in the terms and
conditions of the Merger Agreement as would enable the Company to proceed
with the Merger and (B) the Company Board concludes, after considering the
results of such negotiations and the revised proposals made by Teva USA, if
any, that any Superior Proposal giving rise to the Company's notice
continues to be a Superior Proposal; (iv) such termination is within five
(5) business days following the
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<PAGE> 30
ten (10) business day period referred to above, and (v) no termination
pursuant to this provision shall be effective unless the Company shall
simultaneously make the payment of the termination fee required by the
Merger Agreement;
(g) prior to the Offer Closing Date, by the Company, if Purchaser
fails to commence the Offer within five (5) business days following the
date of the initial public announcement of the Offer;
(h) prior to the Offer Closing Date, by the Company, (x) if the Offer
expires or is withdrawn or terminated without any Shares being purchased
thereunder or (y) if no Shares are purchased thereunder on or prior to the
Termination Date; provided, however, that the Company's right to terminate
the Merger Agreement pursuant to clause (y) of this provision will not be
available to the Company if the Company is in material breach of the Merger
Agreement and such breach has been the proximate cause of the failure of
the Offer to be consummated; or
(i) prior to the Offer Closing Date, by Teva USA, (A) if the Offer is
withdrawn or terminated without any Shares being purchased thereunder,
whether or not the Offer has commenced, or (B) if no Shares have been
purchased thereunder on or prior to the Termination Date, or (C) if the
Stockholder Agreement shall have been terminated by HC in accordance with
its terms; provided, however, that Teva USA's right to terminate the Merger
Agreement pursuant to this provision shall not be available to Teva USA if
Purchaser has withdrawn or terminated the Offer or failed to extend the
Offer in breach of the Merger Agreement or if Teva USA or Purchaser is in
material breach of the Merger Agreement and such breach is the proximate
cause of the failure of the Offer to be consummated.
FEES AND EXPENSES. Except as otherwise provided below, whether or not the
Offer or the Merger is consummated, all fees, costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated by the
Merger Agreement shall be paid by the party incurring such fees, costs and
expenses.
The Merger Agreement provides that, in the event the Company terminates the
Merger Agreement pursuant to clause (c) under the section above entitled
"Termination," Teva USA shall reimburse the Company for its actual, reasonable
and documented out-of-pocket expenses incurred in connection with the Merger
Agreement and the transactions contemplated thereby in an aggregate amount not
to exceed $1,500,000. In the event Teva USA terminates the Merger Agreement
pursuant to clause (d) under the section above entitled "Termination" or the
Company terminates the Merger Agreement pursuant to clause (f) of such section,
the Company shall reimburse Teva USA and Purchaser for its actual, reasonable
and documented out-of-pocket expenses incurred in connection with the Merger
Agreement and the transactions contemplated thereby in an aggregate amount not
to exceed $1,000,000.
The Merger Agreement also provides that, under the following circumstances,
the Company shall pay to Teva USA a fee equal to $10,000,000 (the "Termination
Fee"): (i) the Company terminates the Merger Agreement pursuant to clause (f)
under the section above entitled "Termination"; or (ii) Teva USA terminates the
Merger Agreement pursuant to clause (d) under the section above entitled
"Termination" and on or prior to the 180th day after the date of termination the
Company enters into a definitive agreement providing for a Qualified Acquisition
and on or prior to the first anniversary of the date of termination, such
Qualified Acquisition is consummated.
For purposes of the Merger Agreement, a "Qualified Acquisition" shall mean
an Acquisition Proposal in which the amount to be received with respect to each
Share equals or exceeds the Merger Consideration.
STOCKHOLDER AGREEMENT
The following summary of the material terms of the Stockholder Agreement
does not purport to be complete and is qualified in its entirety by reference to
the copy of the Stockholder Agreement filed as an exhibit to the Schedule 14D-1
and incorporated herein by reference.
In connection with the execution of the Merger Agreement, HC, which
beneficially owns 9,934,100 Shares, or approximately 51% of the issued and
outstanding Shares (the "HC Shares"), entered into the
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Stockholder Agreement with Teva USA. Pursuant to the Stockholder Agreement, HC
has agreed to tender the HC Shares pursuant to the Offer.
AGREEMENT TO TENDER. HC has agreed to validly tender and not to withdraw,
pursuant to the terms of the Offer, not later than the fifth business day after
commencement of the Offer, the HC Shares. For the HC Shares validly tendered in
the Offer and not withdrawn, HC will be entitled to receive an amount per share
equal to the Offer Price.
AGREEMENT NOT TO DISPOSE OR ENCUMBER SHARES/HOECHST OFFERING. HC has
agreed that, except pursuant to the Offer, during the term of the Stockholder
Agreement, it will not, without prior written consent of Teva USA and Purchaser,
(i) offer or agree to sell, transfer, tender, assign, pledge, encumber, or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the offer for sale, sale, transfer, tender pledge,
encumbrance, assignment or other disposition of any or all of the HC Shares, or
any interest therein, (ii) grant any proxies or powers of attorney, deposit any
of the HC Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to any of the HC Shares, or (iii) to
take any action that could reasonably be expected to make any representation or
warranty of HC under the Stockholder Agreement incorrect or result in a breach
of the Stockholder Agreement by HC or of the Merger Agreement by the Company.
Additionally, HC has agreed that the HC Shares will bear a legend stating that
they are subject to the restrictions on transfer contained in the Stockholder
Agreement. HC has also agreed to waive any appraisal rights it may have under
the Stockholder and Merger Agreements.
However, in order to assure that HC will have the flexibility to dispose of
at least a portion of the HC Shares in 1999, the Stockholder Agreement provides
that HC will have the right to withdraw and sell up to 4,967,050 of the HC
Shares (the "Offering Shares") to up to ten (10) persons after October 31, 1999
provided that the purchasers of the Offering Shares in turn agree to tender the
Offering Shares into the Offer. To facilitate such a possible sale, HC has been
permitted (i) to take customary actions in preparation for a registered or
unregistered secondary offering of the Offering Shares (a "Hoechst Offering")
(including conducting discussions and negotiations with prospective placement
agents and due diligence activities involving the Company, and drafting any
related registration statement or offering circular); (ii) after September 30,
1999, to file with the Securities and Exchange Commission any registration
statement for a Hoechst Offering, distribute any related prospectus or other
offering circular for a Hoechst Offering and any amendments or supplements
thereto to prospective investors, and commence marketing efforts with respect to
a Hoechst Offering; and (iii) after October 31, 1999, to consummate any Hoechst
Offering with respect to the Offering Shares; provided, that sales of the
Offering Shares shall be made to no more than ten (10) Persons and HC will cause
each Person who or which acquires Offering Shares in any Hoechst Offering to
agree in writing, in form and substance reasonably satisfactory to Teva USA, to
have with respect to such Offering Shares the same rights and obligations under
the Stockholder Agreement as HC (except that no such Person shall have the right
to withdraw the Offering Shares from the Offer or transfer such Shares other
than pursuant to the Offer). Any breach by any such Person of any such
obligations would be deemed a breach of the Stockholder Agreement by HC.
VOTING OF SHARES. In the Stockholder Agreement, HC has agreed that from
the date thereof until the termination of the Stockholder Agreement, at any
meeting of the Company's stockholders (whether annual or special, and whether or
not an adjourned or postponed meeting), however called or in connection with any
written consent of the Company's stockholders, HC will vote the HC Shares (i) in
favor of the approval and adoption of the Merger and each of the other actions
contemplated by the Merger Agreement, (ii) against any action or agreement that
would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement or of HC
under the Stockholder Agreement or that would impede, interfere with, delay,
postpone or adversely affect the Merger or the transactions contemplated thereby
or by the Stockholder Agreement. HC has also agreed to vote against (A) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination, involving the Company or any of its subsidiaries; (B) any
sale, lease or transfer of a material amount of the assets or business of the
Company or its subsidiaries, or any reorganization, restructuring,
recapitalization, special dividend, dissolution, liquidation or winding up of
the Company or its subsidiaries; (C) any change in the present capitalization of
the Company, including any proposal to sell any equity interest in the Company
or
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<PAGE> 32
any of its subsidiaries or any amendment of the certificate of incorporation or
by-laws of the Company; (D) any change in the majority of the Company Board; (E)
any other change in the Company's corporate structure or business; and (F) any
other action which is intended or could reasonably be expected to impede,
interfere with, delay, postpone, discourage or adversely affect the Merger or
the transactions contemplated by the Merger Agreement or the Stockholder
Agreement.
TERMINATION. The Stockholder Agreement shall terminate and be of no
further force and effect automatically and without any required action of the
parties thereto upon the earlier to occur (any such occurrence, a "Termination
Event") of (a) the Effective Time; (b) the termination of the Merger Agreement
by any party thereto in accordance with its terms; (c) Purchaser's failure to
commence the Offer within five (5) business days following the date of the
initial public announcement of the Offer; (d) the termination of the Offer, or
expiration of the Offer without Purchaser's having accepted for payment and paid
for all Shares tendered pursuant thereto, provided that HC's right to terminate
shall not be available to HC if it is then in material breach of the Stockholder
Agreement and such breach is the proximate cause of the Offer having so expired
or having been terminated; (e) any modification of any term or condition of the
Offer which would require the prior written consent of the Company pursuant to
certain provisions of the Merger Agreement in the form executed and delivered as
of the date thereof (whether or not such consent is obtained); and (f) December
31, 1999. HC has also agreed to pay to Teva USA $10,000,000 in cash in same day
funds if the Merger Agreement is terminated in accordance with its terms and the
proximate cause of such termination was HC's breach of any of its
representations or warranties under the Stockholder Agreement or HC's breach or
failure to perform any of its covenants or agreements under the Stockholder
Agreement.
REPRESENTATIONS AND WARRANTIES. The Stockholder Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by HC as to ownership,
organization, power and authority, the absence of any conflicts with charter
documents and contracts or failure to make required filings and consents,
execution, delivery and performance, lack of encumbrances and reliance.
NO SOLICITATION. HC has agreed in the Stockholder Agreement that during
the term of the Stockholder Agreement, except in connection with a Hoechst
Offering it will not, directly or indirectly, through any officer, director,
agent or other representative, solicit, initiate or encourage, or take any other
action designed or reasonably likely to facilitate, any inquiries or the making
of any proposal from any person (other than Teva USA, Purchaser and any of their
Affiliates) relating to (i) any acquisition of all or any of the HC Shares or
(ii) any transaction that constitutes an Acquisition Proposal, or participate in
any negotiations regarding, or furnish to any person any information with
respect to, or otherwise cooperate in any way with, or assist or participate in
or facilitate or encourage, any effort or attempt by any person to do or seek
any of the foregoing. Without the prior written consent of Teva USA, and except
in connection with a Hoechst Offering, HC and its Affiliates shall not, and
shall instruct their respective Representatives not to, issue any press release
or make any public statement or take any action that would otherwise require any
public disclosure concerning the Merger, the Offer or the transactions
contemplated by the Merger Agreement or the Stockholder Agreement; provided,
however, that HC may, without the prior written consent of Teva USA, issue such
press release or make such public statement or take such action as may upon the
advice of counsel be required by law, if it has provided prior notice to Teva
USA and used all reasonable efforts to consult with Teva USA.
CHIA TAI AGREEMENT
Teva USA indicated its unwillingness to enter into the Merger Agreement
unless Teva USA was provided an option to terminate the Company's indirect
interest in the China Joint Venture. Accordingly, the Company and HC have
entered into a Purchase and Sale Agreement, dated as of August 9, 1999 (the
"Chia Tai Agreement"), relating to Wuxi Chia Tai-Copley Pharmaceutical Limited,
a corporation formed under the laws of the Peoples Republic of China (the "China
Joint Venture"). The following summary of the material terms of the Chia Tai
Agreement does not purport to be complete and is qualified in its entirety by
reference to the copy of the Chia Tai Agreement filed as an exhibit to the
Schedule 14D-1 and incorporated herein by reference.
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The Company and Chia Tai Healthcare Group, a Hong Kong corporation, formed
Chia Tai-Copley Pharmaceutical Limited, a corporation formed under the laws of
the British Virgin Islands (the "BVI Joint Venture"). The BVI Joint Venture and
other investors formed the China Joint Venture, and in December 1995 the Company
and HC reached an agreement that HC would purchase (the "Purchase") the
Company's approximate 49% interest in the BVI Joint Venture for $2,107,000 (the
"Purchase Price"). The BVI Joint Venture owns approximately 85% of the China
Joint Venture.
Pursuant to the Chia Tai Agreement, at any time prior to the six month
anniversary of the Offer Closing Date (the "Put Expiration Date"), HC shall,
within ten (10) days of a written request by the Company, purchase all of the
Company's ownership interest in the BVI Joint Venture for the Purchase Price. HC
also agreed to assume any and all liabilities of the Company or Teva USA
existing as of the time of the Purchase and arising out of the BVI Joint Venture
or the China Joint Venture, provided that the Company agreed that until the
earlier of the time of the Purchase and the Put Expiration Date, it would not
incur any liabilities in respect of or arising out the BVI Joint Venture or the
China Joint Venture without the prior consent of HC.
If Purchaser shall not have purchased all Shares tendered pursuant to the
Offer, then the Chia Tai Agreement shall terminate automatically upon the
occurrence of a Termination Event under the Stockholder Agreement.
PENTOXIFYLLINE AGREEMENT AMENDMENT
Since January 1, 1997, the Company has been a party to an agreement
relating to the distribution of Pentoxifylline, a drug manufactured by HMR. Teva
USA, as a condition to entering into the Merger Agreement, required that this
agreement be terminated. Accordingly, on August 9, 1999, the Company and HMR
entered into the Pentoxifylline Agreement Amendment (the "Pentoxifylline
Agreement Amendment") regarding certain changes to the parties' existing
Pentoxifylline Agreement dated as of January 1, 1997 (the "Original
Pentoxifylline Agreement"). The following summary of the material terms of the
Pentoxifylline Agreement Amendment does not purport to be complete and is
qualified in its entirety by reference to the copy of the Pentoxifylline
Agreement Amendment filed as an exhibit to the Schedule 14D-1 and incorporated
herein by reference.
The Pentoxifylline Agreement Amendment provides that after the Offer
Closing Date HMR will continue to receive, with respect to sales by the Company
of Pentoxifylline, 80% of the Copley Net Profit Margin (as defined in the
Pentoxifylline Agreement) if such number is positive, but in no event will HMR
be charged with any losses if such Copley Net Profit Margin is a negative
amount. The determination of Copley Net Profit Margin shall not give effect to
any shelf stock adjustments after the Offer Closing Date.
The Pentoxifylline Agreement Amendment also provides that after the Offer
Closing Date the Company's obligation to purchase and HMR's obligation to supply
Pentoxifylline shall be limited to (i) 100% of the quantity set forth in the
Company's last forecast delivered before the Offer Closing Date for the three
calendar months following the month in which the Offer Closing Date occurs; and
(ii) 50% of the Company's forecast referred to in clause (i) above for the
fourth, fifth and sixth calendar months following the month in which the Offer
Closing Date occurs. HMR may sell Pentoxifylline to other parties on the earlier
of (i) the beginning of the fourth month after the month in which the Offer
Closing Date occurs and (ii) the beginning of the first month in which the
Company's forecast is 50% or less of the forecast for July 1999. The
Pentoxifylline Agreement Amendment provides that the Original Pentoxifylline
Agreement shall terminate at the end of the sixth calendar month following the
month in which the Offer Closing Date Occurs, except for such rights and
obligations relating to Pentoxifylline purchased by the Company prior to such
termination. If Purchaser shall not have purchased all Shares tendered pursuant
to the Offer, then the Pentoxifylline Agreement Amendment shall terminate
automatically upon the occurrence of a Termination Event under the Stockholder
Agreement.
ALBUTEROL REPRESENTATION LETTER
As a condition to its entering into the transaction, Teva USA required HC
to provide it with a letter of assurance regarding the continued availability of
insurance coverage of HC and its affiliates related to the
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albuterol product liability litigation following the consummation of the Merger.
In a letter, dated August 9, 1999 (the "Albuterol Representation Letter"), HC
represented, warranted and confirmed to both the Company and Teva USA that: (a)
product liability claims based on injuries alleged to have been caused by the
Company's Albuterol products are covered, and after the Offer and the Merger
will continue to be covered, under insurance policies of Hoechst and its
affiliated companies, subject to (1) the conditions of such policies; (2) the
existing letter agreements (the "Insurance Agreements") among the Company,
Hoechst and certain of such insurers relating to the Albuterol settlement
agreement; and (3) in the case of the coverage to which the Insurance Agreements
are not applicable, the requirement that such injuries are alleged to have been
caused after November 11, 1993 and prior to the consummation of the Offer; (b)
as to the limits on the Company's co-insurance obligation with respect to
Albuterol product liability claims under the Insurance Agreements; and (c) that
in connection with the Insurance Agreements, neither HC nor the Company has,
except as set forth in the Insurance Agreements, executed any waiver of coverage
under HC's and its affiliated companies' insurance policies relating to injuries
alleged to have been caused by the Company's Albuterol products. The foregoing
summary of the material terms of the Albuterol Representation Letter does not
purport to be complete and is qualified in its entirety by reference to the copy
of the Albuterol Representation Letter filed as an exhibit to the Schedule 14D-1
and incorporated herein by reference.
12. PLANS FOR THE COMPANY; OTHER MATTERS
PLANS FOR THE COMPANY. If Purchaser obtains control of the Company
pursuant to the Offer, Teva USA expects to conduct a detailed review of the
Company and its businesses, assets, corporate structure, capitalization,
operations, properties, policies, management and personnel and to consider what,
if any, changes would be desirable in light of the circumstances that then
exist. Such changes could include changes in the Company's businesses, corporate
structure, certificate of incorporation, by-laws, capitalization, board of
directors, management or dividend policy.
Except as described in this Offer to Purchase, neither Teva USA nor
Purchaser has any present plans or proposals that would relate to or result in
an extraordinary corporate transaction such as a merger, reorganization or
liquidation involving the Company or any of the Company's subsidiaries or a sale
or other transfer of a material amount of assets of the Company or any of the
Company's subsidiaries, any material change in the capitalization or dividend
policy of the Company or any other material change in the Company's corporate
structure or business or the composition of its board of directors or
management.
Subject to the terms and conditions of the Merger Agreement, Teva, Teva USA
or Purchaser or any of their affiliates may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open market
purchases, privately negotiated transactions, a tender offer or exchange offer,
or otherwise, upon such terms and at such prices as it shall determine, which
may be more or less than the price to be paid pursuant to the Offer.
STOCKHOLDER APPROVAL. Under the DGCL, the approval of the Company Board
and the affirmative vote of the holders of a majority of the outstanding Shares
are required to adopt and approve the Merger Agreement and the transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject to the approval of the Merger by the Company's
stockholders in accordance with the DGCL. In addition, the Company has
represented that the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of the holders of any class or series of the
Company's capital stock which is necessary to approve the Merger Agreement and
the transactions contemplated thereby, including the Merger. Therefore, unless
the Merger is consummated pursuant to the short-form merger provisions under the
DGCL described below (in which case no further corporate action by the
stockholders of the Company will be required to complete the Merger), the only
remaining required corporate action of the Company will be the approval of the
Merger Agreement and the transactions contemplated thereby by the affirmative
vote of the holders of a majority of the Shares. The Merger Agreement provides
that Purchaser will vote, or cause to be voted, all of the Shares then owned by
Purchaser or any of its affiliates in favor of the approval of the Merger and
the adoption of the Merger
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Agreement. In the event that Purchaser acquires in the aggregate at least a
majority of the Shares entitled to vote on the approval of the Merger and the
Merger Agreement, it would have the ability to effect the Merger without the
affirmative votes of any other stockholders.
SHORT-FORM MERGER. Section 253 of DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the event
that Purchaser acquires in the aggregate at least 90% of the outstanding Shares,
pursuant to the Offer or otherwise, then, at the election of Purchaser, a short-
form merger could be effected without any approval of the Company Board or the
stockholders of the Company, subject to compliance with the provisions of
Section 253 of DGCL. In the Merger Agreement, Purchaser and the Company have
agreed that, notwithstanding that all conditions to the Offer are satisfied or
waived as of the scheduled Expiration Date, Purchaser may extend the Offer for a
period not to exceed ten (10) business days if the Shares tendered pursuant to
the Offer are less than 90% of the outstanding Shares on a fully-diluted basis.
Even if Purchaser does not own 90% of the outstanding Shares following
consummation of the Offer, Purchaser could seek to purchase additional Shares in
the open market or otherwise in order to reach the 90% threshold and employ a
short-form merger. The per share consideration paid for any Shares so acquired
may be greater or less than that paid in the Offer. Purchaser presently intends
to effect a short-form merger if permitted to do so under the DGCL.
APPRAISAL RIGHTS Stockholders do not have appraisal or dissenters' rights
in connection with the Offer. However, if the Merger is consummated,
stockholders of the Company at the time of the Merger who do not vote in favor
of the Merger and comply with all statutory requirements will have the right
under the DGCL to demand appraisal of, and receive payment in cash of the fair
value of, their Shares outstanding immediately prior to the effective date of
the Merger in accordance with Section 262 of the DGCL.
Under the DGCL, stockholders who properly demand appraisal and otherwise
comply with the applicable statutory procedures will be entitled to receive a
judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of such Shares could be based upon
considerations other than or in addition to the price paid in the Offer and the
Merger and the market value of Shares. In Weinberger v. UOP, Inc., the Delaware
Supreme Court stated, among other things, that "proof of value by any techniques
or methods which are generally considered acceptable in the financial community
and otherwise admissible in court" should be considered in an appraisal
proceeding. Stockholders should recognize that the value so determined could be
equal to or higher or lower than the Offer Price or the Merger Consideration.
In addition, several decisions by Delaware courts have held that in certain
circumstances a controlling stockholder of a corporation involved in a merger
has a fiduciary duty to other stockholders that requires that the merger be fair
to other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of the consideration to be received by the stockholders and whether there
was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief may
be available if a merger is found to be the product of unfairness, including
fraud, misrepresentation or other misconduct.
THE FOREGOING DESCRIPTION OF THE DGCL AND SUMMARY OF THE RIGHTS OF
STOCKHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS.
THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO
THE APPLICABLE PROVISIONS OF THE DGCL.
GOING PRIVATE TRANSACTIONS The SEC has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger. Rule 13e-3
should not be applicable to the Merger if the Merger is consummated within one
year after the expiration or termination of the Offer and the Merger
Consideration is not less than the Offer Price.
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However, in the event that Purchaser is deemed to have acquired control of the
Company pursuant to the Offer and if the Merger is consummated more than one
year after completion of the Offer or an alternative acquisition transaction is
effected whereby stockholders receive consideration less than that paid pursuant
to the Offer, in either case at a time when Shares are still registered under
the Exchange Act, Purchaser may be required to comply with Rule 13e-3 under the
Exchange Act. If applicable, Rule 13e-3 would require, among other things, that
certain financial information concerning the Company and certain information
relating to the fairness of the Merger or such alternative transaction and the
consideration offered to minority stockholders in the Merger or such alternative
transaction, be filed with the SEC and disclosed to stockholders prior to
consummation of the Merger or such alternative transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
The Company has agreed that, from the date of the Merger Agreement until
the date of payment for Shares by Purchaser in the Offer, neither the Company
nor its subsidiaries will (i) declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to the Company, (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) amend the terms of,
repurchase, redeem or otherwise acquire, or permit any subsidiary to repurchase,
redeem or otherwise acquire, any of its securities or any securities of its
subsidiaries.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, but subject in each case
to the terms of the Merger Agreement, Purchaser will 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 (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after expiration or
termination of the Offer), 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 may amend or terminate the Offer (whether or not
any Shares have theretofore been purchased or paid for) if, (i) there have not
been validly tendered and not withdrawn prior to the time the Offer shall
otherwise expire a number of Shares which, together with any Shares now owned by
Purchaser and its affiliates, constitutes at least a majority of the Shares
outstanding on a fully-diluted basis ("on a fully-diluted basis" having the
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 similar benefit plans, or
otherwise, with an exercise or purchase price per Share that is less than the
Offer Price) or (ii) any applicable waiting periods under the HSR Act shall not
have expired or been terminated prior to the expiration of the Offer or (iii) at
any time on or after the date of the Merger Agreement and before acceptance for
payment of such Shares any of the following events shall occur and be
continuing:
(A) any U.S. or foreign governmental entity or foreign, federal, state
or local court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order (other than the application to the
Offer and the Merger of applicable waiting periods under the HSR Act) which
is in effect and which (1) prevents or prohibits consummation of the Offer
or the Merger, (2) prohibits or limits the ownership or operation by the
Company, Teva USA or any of their affiliates or subsidiaries of 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 Teva USA, Purchaser or any other subsidiary of Teva USA to hold
or exercise effectively full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares acquired by Purchaser
pursuant to the Offer or otherwise on all matters properly presented to the
Company's stockholders, including, without limitation, the approval and
adoption of the Merger Agreement and the transactions contemplated thereby,
(4) requires divestiture by Teva USA, Purchaser or any other affiliate of
Teva USA of the Shares, or (5) requires Teva USA, the Company or any of
their respective affiliates to enter into a divestiture, hold-separate,
business limitation or similar agreement or undertaking, except
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in the case of clauses (2), (3), (4) and (5) for any prohibition,
limitation or requirement which would not, individually or in the
aggregate, in the reasonable judgment of the board of directors of Teva
USA, materially and adversely impact the economic or business benefits to
Teva USA and its affiliates of the transactions contemplated by the Merger
Agreement or the ability of Teva USA to conduct its business (including,
without limitation, its product development efforts) substantially in the
manner such business is being conducted as of the date of the Merger
Agreement;
(B) the representations and warranties of the Company contained in the
Merger Agreement (without giving effect to any materiality limitations
contained therein) shall not be true and correct and failure of such
representations and warranties to be so true and correct in the aggregate
has a material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries taken as a whole;
(C) the Company shall not have performed or complied in all material
respects with its obligations under the Merger Agreement to be performed or
complied with by it;
(D) the Merger Agreement shall have been terminated in accordance with
its terms;
(E) there shall have occurred a material adverse change in the
business, financial condition or results of operations of the Company and
its subsidiaries taken as a whole, excluding any change resulting from or
attributable to general economic conditions;
(F) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or the over-the-counter market in the United States for a
continuous period of five (5) days, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) any material limitation by any U.S. or foreign governmental
entity on the extension of credit by banks or other lending institutions in
the United States, (iv) a commencement of a war or armed hostilities or
other national calamity directly involving the United States and Teva USA
shall have determined that there is a reasonably likelihood that such event
would have a material adverse significance to Teva USA, its subsidiaries,
the Company and its subsidiaries, all taken as a whole, or (v) in the case
of any of the foregoing existing at the time of execution of the Merger
Agreement, a material acceleration or worsening thereof; or
(G) the Company Board shall have (i) withdrawn or modified in a manner
adverse to Teva USA its approval or recommendation of the Merger Agreement
or the transactions contemplated thereby, including the Offer, (ii) shall
have recommended an Acquisition Proposal or (iii) shall have adopted any
resolution to effect any of the foregoing;
which, in the judgment of Purchaser in any such case, and regardless of the
circumstances 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 Purchaser and its
affiliates and may be asserted by Purchaser regardless of the circumstances
giving rise to any such condition and may be waived by 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 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.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
GENERAL. Except as set forth below, based upon its examination of publicly
available filings by the Company with the SEC and other publicly available
information concerning the Company, neither Teva USA nor Purchaser is aware of
any licenses or other regulatory permits that appear to be material to the
business of the Company and the Company's subsidiaries, taken as a whole, that
might be adversely affected by Purchaser's acquisition of Shares (and the
indirect acquisition of the stock of the Company's subsidiaries) as contemplated
herein, or of any filings, approvals or other actions by or with any domestic
(federal or state), foreign or supranational governmental authority or
administrative or regulatory agency that would be required
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prior to the acquisition of Shares (or the indirect acquisition of the stock of
the Company's subsidiaries) by Purchaser pursuant to the Offer as contemplated
herein. Should any such approval or other action be required, it is Purchaser's
present intention to seek such approval or action. There can be no assurance
that any such approval or other action, if needed, would be obtained without
substantial conditions, that adverse consequences might not result to the
business of the Company, Teva, Teva USA or Purchaser, that certain parts of the
businesses of the Company, Teva, Teva USA or Purchaser might not have to be
disposed of or held separate or other substantial conditions complied with (i)
in order to obtain such approval or other action or (ii) in the event that such
approval was not obtained or such other action was not taken, any of which could
cause Purchaser to elect (subject to the terms of the Merger Agreement) to
terminate the Offer without the purchase of the Shares thereunder. Purchaser's
obligation under the Offer to accept for payment and pay for Shares is subject
to certain conditions, including conditions relating to the legal matters
discussed in this Section 15. See Section 14.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents
an "interested stockholder" (including a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock) from engaging
in a "business combination" (defined to include mergers and certain other
actions) with a Delaware corporation for a period of three years following the
date such person became an interested stockholder unless, among other things,
the "business combination" is approved by the Board of Directors of such
corporation prior to such date. The Company Board has approved the Offer and the
Merger. Accordingly, Section 203 is inapplicable to the Offer and the Merger.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal executive
offices or principal places of business in such states. In Edgar v. MITE Corp.,
the Supreme Court of the United States (the "Supreme Court") invalidated on
constitutional grounds the Illinois Business Takeover statute, which, as a
matter of state securities law, made certain corporate acquisitions more
difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court held that the State of Indiana may, as a matter of corporate law
and, in particular, with respect to those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of the
remaining stockholders. The state law before the Supreme Court was by its terms
applicable only to corporations that had a substantial number of stockholders in
the state and were incorporated there.
Purchaser does not believe that the antitakeover laws and regulations of
any state other than the State of Delaware will by their terms apply to the
Offer, and, except as set forth above with respect to Section 203 of Delaware
Law, Purchaser has not attempted to comply with any state antitakeover statute
or regulation. Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer and nothing in
this Offer to Purchase or any action taken in connection with the Offer is
intended as a waiver of such right. If it is asserted that any state
antitakeover statute is applicable to the Offer and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer or may be
delayed in consummating the Offer. In such case, Purchaser may not be obligated
to accept for payment, or pay for, any Shares tendered pursuant to the Offer.
See Section 14.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares pursuant to the Offer is subject to such
requirements. See Section 2. There may be similar antitrust requirements in
other jurisdictions.
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On August 10, 1999, Teva, Teva USA and Purchaser filed with the FTC and the
Antitrust Division a Premerger Notification and Report Form in connection with
the purchase of Shares pursuant to the Offer. Under the provisions of the HSR
Act applicable to the Offer, the purchase of Shares pursuant to the Offer may
not be consummated until the expiration of a 15-calendar day waiting period
following the filing by Teva, unless both the Antitrust Division and the FTC
terminate the waiting period prior thereto. If, within such 15-calendar day
waiting period, either the Antitrust Division or the FTC requests additional
information or documentary material from Teva, the waiting period would be
extended for an additional ten calendar days following substantial compliance by
Teva with such request. Thereafter, the waiting period could be extended only by
court order or with the consent of Teva. In practice, complying with a request
for additional information or material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while such negotiations continue. Purchaser will not accept for payment Shares
tendered pursuant to the Offer unless and until the waiting period requirements
imposed by the HSR Act with respect to the Offer have been satisfied. See
Section 14.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase by
Purchaser of Shares pursuant to the Offer, either of the FTC or the Antitrust
Division 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 seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Teva, its subsidiaries or
the Company. Private parties and state attorneys general may also bring legal
action under federal or state antitrust laws under certain circumstances.
Based upon an examination of publicly available information, and
information provided to Teva by the Company, relating to the businesses in which
the Company and its subsidiaries are engaged, Purchaser has determined that the
Company and Teva both conduct similar businesses in certain geographic areas.
Although Purchaser believes that the acquisition of Shares pursuant to the Offer
would not violate the antitrust laws, there can be no assurance that a challenge
to the Offer on antitrust grounds will not be made or, if such challenge is
made, what the outcome will be. See Section 14 for certain conditions to the
Offer, including conditions with respect to certain government actions.
MARGIN CREDIT REGULATIONS. Regulations U and X (the "Margin Regulations")
of the Federal Reserve Board restrict the extension or maintenance of credit for
the purpose of buying or carrying margin stock, including the Shares, if the
credit is secured directly or indirectly by margin stock. Such secured credit
may not be extended or maintained in an amount that exceeds the maximum loan
value of all the direct and indirect collateral securing the credit, including
margin stock and other collateral. The Offer will be funded by an unsecured
loan. Accordingly, the Margin Regulations will not apply to the funding of the
Offer.
16. FEES AND EXPENSES.
Purchaser has retained MacKenzie Partners, Inc. to serve as the Information
Agent and IBJ Whitehall Bank & Trust Company to serve as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by personal interview, mail, telephone, telex, telegraph and other methods of
electronic communication and may request brokers, dealers, commercial banks,
trust companies and other nominees to forward the Offer materials to beneficial
holders. The Information Agent and the Depositary will each receive reasonable
and customary compensation for their services, be reimbursed for certain
reasonable out-of-pocket expenses and be indemnified against certain liabilities
in connection with their services, including certain liabilities and expenses
under the federal securities laws.
Lehman Brothers is acting as Dealer Manager for the Offer and as exclusive
financial advisor to Teva USA and Purchaser in connection with the proposed
acquisition of the Company, for which services Lehman Brothers will receive
customary compensation. Lehman Brothers and certain related parties will be
indemnified against certain liabilities, including liabilities under the federal
securities laws, arising out of Lehman
37
<PAGE> 40
Brothers' engagement. In the ordinary course of business, Lehman Brothers and
its affiliates may actively trade or hold the securities of Teva and the Company
for their own account or for the account of customers and, accordingly, may at
any time hold long or short position in such securities.
Except as set forth above, neither Teva, Teva USA nor Purchaser will pay
any fees or commissions to any broker or dealer or other person or entity in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding the Offer
materials to their customers.
17. MISCELLANEOUS.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Shares pursuant thereto, Purchaser
shall make a good faith effort to comply with such statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) holders of Shares in such
state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF TEVA, TEVA USA OR PURCHASER NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Teva, Teva USA and Purchaser have filed with the SEC the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the SEC the Schedule 14D-9 pursuant to Rule
14d-9 under the Exchange Act, setting forth its recommendation with respect to
the Offer and the reasons for its recommendation and furnishing certain
additional related information Such Schedules and any amendments thereto,
including exhibits, should be available for inspection and copies should be
obtainable in the same manner set forth in Sections 8 and 9 of this Offer to
Purchase (except that such material will not be available at the regional
offices of the SEC).
CARIBOU MERGER CORPORATION
August 16, 1999
38
<PAGE> 41
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER, TEVA USA AND TEVA
1. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The name, business
address, present principal occupation or employment and material occupations,
positions, offices or employments during the last five years of each director
and executive officer of Purchaser and certain other information are set forth
below. Unless otherwise indicated, the business address of each such director
and executive officer is c/o Teva Pharmaceuticals USA, Inc. 650 Cathill Road,
Sellersville, Pennsylvania 18960. Unless otherwise indicated, each occupation
set forth opposite an individual's name refers to employment with Purchaser. All
directors and executive officers listed below are citizens of the United States
except Mr. Fletcher who is a citizen of the United Kingdom and Mr. Egosi, who is
also a citizen of Israel.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND BUSINESS ADDRESS POSITIONS, OFFICERS OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ------------------------- --------------------------------------------------------------------
<S> <C>
George Barrett Executive Vice President since formation. President -- U.S.
Pharmaceuticals and Chief Operating Officer of Teva USA since
February 1999. Mr. Barrett served as President and CEO of Diad
Research Inc. from 1997 until 1999, and President of the U.S.
Pharmaceuticals Division of Alpharma Inc. from 1990 until 1997.
Richard S. Egosi, Esq. Secretary since formation. Mr. Egosi also serves as Vice President
and General Counsel of Teva USA since 1999. Mr. Egosi served as
Assistant General Counsel to Teva from May 1995 until March 1999. In
1994, prior to his employment by Teva, Mr. Egosi was an attorney in
private practice.
William A. Fletcher Director and President since formation. Mr. Fletcher also serves as
Director of Teva USA since 1985, President and Chief Executive
Officer of Teva USA since 1983, and as Vice President -- North
American Pharmaceutical Sales of Teva since 1995.
Peter H. Jakes, Esq. Director and Assistant Secretary since formation. Mr. Jakes also
Willkie Farr & Gallagher serves as a Director of Teva USA, a position he has held since 1991,
787 Seventh Avenue and has been a partner at the law firm of Willkie Farr & Gallagher
New York, NY 10019 since 1979.
Peter R. Terreri Vice President and Treasurer since formation. Mr. Terreri serves as
Senior Vice President, Financing & Manufacturing of Teva USA. He
served as a Vice President of Teva USA from 1994 until 1996. Mr.
Terreri also serves as Chief Financial Officer of Teva USA, a
position he has held since 1991.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF TEVA USA. The name, business
address, present principal occupation or employment and material occupations,
positions, offices or employments during the last five years of each director
and executive officer of Teva USA and certain other information are set forth
below. Unless otherwise indicated, the business address of each such director
and executive officer is 650 Cathill Road, Sellersville, Pennsylvania 18960.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to employment with Teva USA. Unless otherwise indicated, all
directors and executive officers listed below are citizens of the United States.
Information for Messrs. Barrett, Egosi, Fletcher, Jakes and Terreri is set forth
above under "Directors and Executive Officers of Purchaser."
I-1
<PAGE> 42
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND BUSINESS ADDRESS POSITIONS, OFFICERS OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ------------------------- --------------------------------------------------------------------
<S> <C>
George Barrett See biographical information of Mr. Barrett set forth in "Directors
and Executive Officers of Purchaser" above.
Carole S. Ben-Maimon Senior Vice President, Research & Development since 1996. Dr. Ben-
Maimon served as Vice President, Medical & Regulatory Affairs from
1993 to 1996 of Lemmon Company (the predecessor of Teva USA), and
Director, Clinical Pharmacology of Wyeth-Ayerst from 1991 to 1993.
Abraham E. Cohen Director since 1996. Mr. Cohen works as an independent consultant.
100 United Nations Plaza He serves as a director of Agouron Pharmaceuticals, Inc., Akzo NV.,
New York, NY 10017 Chugai Pharmaceutical Co. Ltd., Smith Barney (Mutual Funds) and
Pharmaceutical Development, Inc.
Richard S. Egosi, Esq. See biographical information of Mr. Egosi set forth in "Directors
and Executive Officers of Purchaser" above.
William A. Fletcher See biographical information of Mr. Fletcher set forth in "Directors
and Executive Officers of Purchaser" above.
Eli Hurvitz Director since 1985. Director of Teva since 1968. Mr. Hurvitz serves
as President and Chief Executive Officer of Teva, a position he has
held since 1976, and serves as a Director of Vishay Intertechnology
and Koor Industries Ltd. Mr. Hurvitz is a citizen of Israel.
Peter H. Jakes, Esq. See biographical information of Mr. Jakes set forth in "Directors
and Executive Officers of Purchaser" above.
Professor Elon Kohlberg Director of Teva USA since 1991 and Director of Teva since 1987.
Room 235 Professor Kohlberg is a Mathematician and Economist and has been a
Morgan Hall Professor of Business Administration at Harvard University for the
15 Harvard Way past five years. Professor Kohlberg is a citizen of both the United
Harvard Business School States and Israel.
Boston, MA 02163
Charles F. Krippendorf Mr. Krippendorf serves as Vice President of Sales at Gate
Pharmaceuticals, a division of Teva USA since 1996. From 1994 until
1996, Mr. Krippendorf served as Vice President of Sales of Lemmon
Company (the predecessor of Teva USA).
William S. Marth Vice President of Generic Sales & Marketing since 1999. Mr. Marth
served as Director of National Sales and Marketing of Bristol Myers
Squibb from 1998 until 1999, and Product Manager, Multi-Source
Pharmaceuticals for Bristol Myers Squibb from 1997 until 1998.
Director of Pharmacy for Price Chopper Supermarkets Golub
Corporation from 1994 until 1997.
Richard Nase Vice President of Accounting since 1996. Prior to 1996, Mr. Nase
served as Director of Accounting at Lemmon Company (the predecessor
of Teva USA) for over twenty years.
Bob Pearson Mr. Pearson has served as Vice President of Human Resources since
1996. From July 1996 until September 1996, Mr. Pearson was a Vice
President at Webcraft Technologies, and from 1995 until July 1996,
Mr. Pearson served as a Vice President at Philadelphia Gas Works,
Inc.
Ronald A. Schultz Mr. Schultz has served as Vice President of Quality Management of
Teva USA and its predecessor, Lemmon Company since 1992.
Peter R. Terreri See biographical information of Mr. Terreri set forth in "Directors
and Executive Officers of Purchaser" above.
</TABLE>
I-2
<PAGE> 43
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND BUSINESS ADDRESS POSITIONS, OFFICERS OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ------------------------- --------------------------------------------------------------------
<S> <C>
Harold L. Snyder Director since 1996. Mr. Snyder also serves as a Director of Teva
1965 Broadway since 1996. Mr. Snyder served as Senior Vice President, Bulk
New York, N.Y. 10023 Chemicals from May 1996 until May 1999. Mr. Snyder founded Biocraft
Laboratories, Inc. in 1964 and served as its President until its
acquisition by Teva in 1996.
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF TEVA. The name, business address,
present principal occupation or employment and material occupations, positions,
offices or employments during the last five years of each director and executive
officer of Teva and certain other information are set forth below. Unless
otherwise indicated, the business address of each such director and executive
officer is 5 Basel Street, P.O. Box 3190, Petach Tikva 49131 Israel. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Teva. Unless otherwise indicated, all directors and
executive officers listed below are citizens of Israel.
DIRECTORS
<TABLE>
<CAPTION>
NAME ADDRESS PRESENT OCCUPATION MATERIAL OCCUPATION -- LAST FIVE YEARS
- ---- ------- ------------------ --------------------------------------
<S> <C> <C> <C>
Eli Hurvitz 41 Hasaifan St. Ramat Director since 1968. President and CEO of Teva
Hasharon Israel Director of Teva USA since Pharmaceutical Industries Limited
1985. President and CEO. since 1976.
Meir Amit 11 Hibat Zion St. Ramat Director since 1997. Chairman of Spacecom, Director of
Gan Israel Chairman of Spacecom. Lapidot, Israeli Chemicals Ltd., DSI,
Zion Insurance Company, Mobilecom and
Israel Fund PLC.
Haim Bental 1 Danin St. Tel Aviv Director since 1969. Retired Retired Judge.
Israel Judge.
Victor Carter 10375 Wilshire Blvd., Director since 1980. Retired Retired Businessman; Mr. Carter is a
Los Angeles, Ca 90024 Businessman. citizen of the United States.
Ruth Cheshin 15 Caspi St. Jerusalem Director since 1989. Ms. Cheshin serves as President of the
Israel President of the Jerusalem Jerusalem Foundation.
Foundation.
Abraham E. Cohen 100 United Nation Plaza Director since 1992. Retired since January 1992. For 30
New York, NY 10017 Independent consultant. years Mr. Cohen worked at Merck &
Company and was Senior Vice President.
Mr. Cohen is a citizen of the United
States.
Amir Elstein 50 Ha'alon St. Jerusalem Director since 1995. General Various positions at Intel Electronics
Israel Manager Intel Electronics Ltd. Jerusalem and Intel Corp.
Ltd. Jerusalem.
Martin Gerstel 7 Ethiopia St. Jerusalem Director since 1995. CEO & Co-Chairman of Alza Corporation
Israel Independent consultant and from 1987 until 1993. Mr. Gerstel is a
President of Shomar Corp., a citizen of the United States.
private investment company
since 1993.
Dr. Meir Heth 8 Hameshoreret Zelda St. Chairman of the Board since Private economic consultant since 1989
Jerusalem Israel 1994. Director since 1977. and professor at the law school in the
Private economic consultant College of Management since 1993.
and professor at the law
school in the College of
Management.
Gad Horn 16 Shai Agnon St. Director since 1976. Managing Director of Paca Industries
Jerusalem Israel Consultant at Teva. Ltd. from 1991 until 1995.
</TABLE>
I-3
<PAGE> 44
<TABLE>
<CAPTION>
NAME ADDRESS PRESENT OCCUPATION MATERIAL OCCUPATION -- LAST FIVE YEARS
- ---- ------- ------------------ --------------------------------------
<S> <C> <C> <C>
Prof. Elon Room 235 Morgan Hall 15 Director since 1987. Professor of Business Administration
Kohlberg Harvard Way Harvard Director of Teva USA since at Harvard Business School since 1973.
Business School Boston, 1991. Professor of Business Professor Kohlberg is a citizen of
MA 02163 Administration at Harvard both the United States and Israel.
Business School.
Jonathan B. Hasadot 15 Kfar Director since 1990. Vice Vice Chairman and CEO of Koor
Kolber Shmariahu Israel Chairman and CEO of Koor Industries Ltd.; President of Claridge
Industries Ltd. Israel Inc. since 1989. Mr. Kolber is
a citizen of Canada and of Israel.
Dov Lautman 14 Oppenheimer St. Tel Director since 1995. Chairman and formerly CEO of Delta
Aviv Israel Chairman of Delta Galil Galil Industries Ltd. since 1975.
Industries Ltd.
Israel Levin 109 Yeffe Nof St. Haifa Director since 1991. Attorney in private practice since
Israel Attorney in private 1970.
practice.
Prof. Moshe Many 18 Elisha Rodin St. Director since 1987. The former manager of Ramat Marpeh
Givataim Israel President of International Hospital from 1992 until 1995.
School of Management.
Daniel Mirkin 1 King David Blvd. Tel Director since 1989. Senior Senior partner at the law firm of
Aviv Israel partner at the law firm of Daniel Mirkin & Co. since 1980.
Daniel Mirkin & Co.
Avihu Olshanski 3 Bait Zuri Tel Aviv Director since 1997. Venture Chairman of Clal (Israel) and chairman
Israel capitalist and financial or director at several of its
consultant. subsidiaries.
Boaz Paz 19 Herzfeld St. Hod Director since 1994. Co- Co-Managing Director Biometrix Ltd.
Hasharon Israel Managing Director Biometrix since 1992.
Ltd. since 1992.
Yaacov Y. Salomon 2040 Sea and Sun St. Tel Director since 1975. Attorney and Businessman. Mr. Salomon
Aviv Israel Attorney and Businessman. is a citizen of each of Israel, the
United Kingdom and Germany.
Prof. Michael Weizmann Institute of Director since 1987. Professor of Immunology at the
Sela Science Rehovot Israel Professor of Immunology at Weizmann Institute of Science. He has
the Weizmann Institute of been working at the Weizmann Institute
Science. of science since 1950. Deputy chairman
of the Board of Governors -- Weizmann
Institute of Science -- from 1985
until 1994.
Dov Shafir 52 Henrietta Szold St. Director since 1969. Businessman & Chairman of the Teva
Haifa Israel Chairman of the Teva Executive Committee.
Executive Committee.
Sami Shamoon 91 Old Brompton Rd. Director since 1989. Owner Owner and Chairman-Yakhin Hakal Ltd.,
London SW7 3LD, England and Chairman-Yakhin Hakal since 1991; President Buckingham &
Ltd. Lloyds Ltd. since 1980. Mr. Shamoon is
a citizen of Portugal.
Ori Slonim Bet Zifman 8 Raananna Director since 1998. Advocate.
Israel Advocate.
Beryl Snyder 10 W. 66th St., New Director since 1998. V/P and General Counsel of Teva USA
York, NY 10023 Attorney and Businesswoman. from 1996 until 1997. V/P and General
Counsel of Biocraft Laboratories Inc
from 1990 until 1996. Ms. Snyder is a
citizen of the United States.
</TABLE>
I-4
<PAGE> 45
<TABLE>
<CAPTION>
NAME ADDRESS PRESENT OCCUPATION MATERIAL OCCUPATION -- LAST FIVE YEARS
- ---- ------- ------------------ --------------------------------------
<S> <C> <C> <C>
Harold L. Snyder 1965 Broadway Director since 1996. Senior Vice President, Bulk Chemicals
New York, NY 10023 Director of Teva USA since of Teva USA from May 1996 until May
1996. Retired Businessman. 1999. Mr. Snyder founded Biocraft
Laboratories, Inc. in 1964 and served
as its President until its acquisition
by Teva in 1996. Mr. Snyder is a
citizen of the United States.
Dan S. Suesskind 2 Zeruia St. Director since 1981. Chief CFO of Teva Pharmaceutical Industries
Jerusalem Financial Officer. Ltd. since 1977.
Israel
</TABLE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME ADDRESS PRESENT OCCUPATION MATERIAL OCCUPATION -- LAST FIVE YEARS
- ---- ------- ------------------ --------------------------------------
<S> <C> <C> <C>
Eli Hurvitz 41 Hasaifan St. President and CEO. President and CEO of Teva
Ramat Hasharon Pharmaceutical Industries Limited
Israel since 1976.
Aharon Agmon 8 Hadera St. V/P International V/P International Pharmaceutical Sales
Tel Aviv Pharmaceutical Sales. since 1989.
Israel
Haim Benjamini 17 Hazorea St. V/P Human Resources. V/P Human Resources since 1989.
Kfar Shmariahu
Israel
William A. 650 Cathill Rd. President -- Teva USA since President -- Teva USA (formerly Lemmon
Fletcher Sellersville PA 18960 1983; V/P -- North American Company) since 1983. Mr. Fletcher is a
Pharmaceutical Sales since citizen of the United Kingdom.
1995.
Haim Hurvitz 6 Amnon Vetamar St. V/P -- European V/P European Pharmaceutical Sales
Gan Herzelia Pharmaceutical Sales. since 1995. Served as General Manager
Israel of Teva's European office from 1993
until 1994.
Rodney Kasan 11 Hadekel St V/P Generic Product Director of Pharmaceutical Research
Kiryat Ganim Development since 1999. and Development for the Operations
Raananna Division from 1995 until 1999. Head of
Israel Pharmaceutical Research and
Development from 1980 until 1995.
Israel Makov 20 Hanarkis St Executive Vice President V/P -- Business Development from 1995
Karmay Yossef since 1999. until 1999. CEO of Gottex Ltd. from
Israel 1993 until 1995.
Meron Mann 19 Kehilat Vilna V/P -- Chemical Division. V/P -- Chemical Division since 1990.
Ramat Hasharon
Israel
Moshe Manor 21 Hahadas St. V/P -- Teva Israel V/P -- Teva Israel Pharmaceutical
Tel Mond Pharmaceuticals. Sales since 1995. General Manager of
Israel Labeled Products from 1993 until 1995.
David Reisman 14 Dov Hoz At., VP Pharmaceutical Operations Director of Quality Assurance-
Netanya since 1999. Chemical Division from 1996 until
Israel 1999. Employed by Teva since 1980.
</TABLE>
I-5
<PAGE> 46
<TABLE>
<CAPTION>
NAME ADDRESS PRESENT OCCUPATION MATERIAL OCCUPATION -- LAST FIVE YEARS
- ---- ------- ------------------ --------------------------------------
<S> <C> <C> <C>
Eli Shohet 30 Hagana St. V/P Business Development. Director of Business Development for
Kiryat Ono Teva's API division from 1996 until
Israel 1999. President of Plantex USA from
1993 until 1996.
Dr. Aaron 5 Rambam St. V/P Global Product Marketing V/P -- Copaxone(R) Division from 1995
Schwartz Mevaseret Zion since 1999. until 1999. V/P Business
Israel Development/Export Division from 1993
until 1995.
Dan S. Suesskind 2 Zeruia St. Chief Financial Officer. Chief Financial Officer since 1977.
Jerusalem
Israel
Dr. Ben-Zion 113 Hashalom St. V/P -- Innovative Research & V/P -- Research & Development from
Weiner Mevaseret Zion Development. 1989 until 1991.
Israel
Jacob Winter 26 Hachalutz St. V/P -- Global Pharmaceutical V/P -- Manager Pharmaceutical
Jerusalem Manufacturing since 1999. Operations from 1991 until 1998.
Israel
</TABLE>
I-6
<PAGE> 47
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
The Depositary for the Offer is:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Delivery:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Confirm Facsimile by Telephone: New York, NY 10004
New York, NY 10274-0084 Attention: Securities
Attention: Reorganization Dept. (212) 858-2103 Processing Window, SC-1
</TABLE>
Any questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
and addresses listed below. Additional copies of this Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and the other tender
materials may also be obtained from the Information Agent or the Dealer Manager.
You may also contact your broker, dealer, commercial bank or trust company for
assistance concerning the Offer.
The Information Agent for the Offer is:
[Mackenzi logo]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free: (800) 322-2885
------------------------
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
3 World Financial Center
200 Vesey Street
New York, New York 10285
Call collect: (212) 526-2411
or
(212) 526-2843
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
COPLEY PHARMACEUTICAL, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED AUGUST 16, 1999
BY
CARIBOU MERGER CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
TEVA PHARMACEUTICALS USA, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON SEPTEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Delivery:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Confirm Facsimile by Telephone: New York, NY 10004
New York, NY 10274-0084 (212) 858-2103 Attention: Securities Processing
Attention: Reorganization Dept. Window, SC-1
</TABLE>
(For Eligible Institutions Only)
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Copley
Pharmaceutical, Inc. if certificates for Shares (as such term is defined below)
are to be forwarded herewith or, unless an Agent's Message (as defined in
Instruction 2 below) is utilized, if delivery of Shares is to be made by
book-entry transfer to an account maintained by the Depositary at the Book-Entry
Transfer Facility (as defined in and pursuant to the procedures set forth in
Section 3 of the Offer to Purchase). Stockholders who deliver Shares by
book-entry transfer are referred to herein as "Book-Entry Stockholders" and
other stockholders who deliver Shares are referred to herein as "Certificate
Stockholders."
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the 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 documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to
<PAGE> 2
Purchase) must tender their Shares pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
----------------------------------------------
Account Number Transaction Code Number
------- -------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
---------------------------------------------
Window Ticket Number (if any)
---------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
------------------------
Name of Institution that Guaranteed Delivery
------------------------------
If delivered by Book-Entry Transfer, check box: [ ]
Account Number
------------------------------------------------------------
Transaction Code Number
---------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S))
- ------------------------------------------------------------------------
<S> <C>
- ------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Shareholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
represented by Share Certificates delivered to the Depositary are
being tendered hereby. See Instruction 4.
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------ ----------------------------------------------------------
DESCRIPTION OF SHARES TENDERED DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------ ----------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL IN, IF BLANK, AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------ ----------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Total Shares:
- ------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Shareholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
represented by Share Certificates delivered to the Depositary are
being tendered hereby. See Instruction 4.
- ------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Caribou Merger Corporation, a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Teva Pharmaceuticals
USA, Inc., a Delaware corporation ("Teva USA") and an indirect wholly owned
subsidiary of Teva Pharmaceutical Industries Limited, a corporation organized
under the laws of Israel ("Teva"), the above described shares of common stock,
par value $.01 per share (the "Common Stock" or the "Shares"), of Copley
Pharmaceutical, Inc., a Delaware corporation (the "Company"), pursuant to
Purchaser's offer to purchase all of the outstanding Shares at a price of $11.00
per Share, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in the Offer to
Purchase dated August 16, 1999 and in this Letter of Transmittal (which,
together with any amendments or supplements thereto or hereto, collectively
constitute the "Offer"). The Offer is being made pursuant to an Agreement and
Plan of Merger, dated as of August 9, 1999 (the "Merger Agreement"), by and
among Teva USA, Purchaser and the Company. The obligations of Teva USA under the
Merger Agreement have been guaranteed by Teva. The undersigned understands that
Purchaser reserves the right to transfer or assign, in whole at any time, or in
part from time to time, to one or more of its affiliates, 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 and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer. Receipt of the Offer is hereby acknowledged.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other Shares
or other securities issued or issuable in respect thereof on or after August 9,
1999 (collectively, "Distributions")) 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 all 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 for such Shares (and any
and all Distributions), or transfer ownership of such Shares (and any and all
Distributions) on the account books maintained by the Book-Entry Transfer
Facility, together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of Purchaser, (ii) present such
Shares (and any and all 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 and all Distributions), all in accordance with
the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints William A. Fletcher and George Barrett in their respective capacities
as officers of Purchaser, and any individual who shall thereafter succeed to any
such office of Purchaser, and each of them, the attorneys-in-fact and proxies of
the undersigned, each with full power of substitution, to vote at any annual or
special meeting of the Company's stockholders or any adjournment or postponement
thereof or otherwise in such manner as each such attorney-in-fact and proxy or
his substitute shall in his sole discretion deem proper with respect to, to
execute any written consent concerning any matter as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and otherwise to act as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, all of the
Shares (and any and all Distributions) tendered hereby and accepted for payment
by Purchaser. This appointment will be effective if and when, and only to the
extent that, Purchaser accepts such Shares for payment pursuant to the Offer.
This power of attorney and proxy are irrevocable and are granted in
consideration of the acceptance for payment of such Shares in accordance with
the terms of the Offer. Such acceptance for payment shall, without further
action, revoke any prior powers of attorney and proxies granted by the
undersigned at any time with respect to such Shares (and any and all
Distributions), and no subsequent powers of attorney, proxies, consents or
revocations may be given by the undersigned with respect thereto (and, if given,
will not be deemed effective). Purchaser reserves the right to require that, in
order for Shares or other securities to be deemed validly tendered, immediately
upon Purchaser's acceptance for payment of such Shares, Purchaser must be able
to exercise full voting, consent and other rights with respect to such Shares
(and any and all Distributions), including voting at any meeting of the
Company's stockholders.
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 all Distributions, that the undersigned owns the Shares
tendered
3
<PAGE> 4
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances, and the same will
not be subject to any adverse claims. The undersigned will, upon request,
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 the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the account
of Purchaser all Distributions 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 each such Distribution and may
withhold the entire purchase price of the Shares tendered hereby or deduct from
such purchase price the amount or value of such Distribution as determined by
Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
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 hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer (and if
the Offer is extended or amended, the terms or conditions of any such extension
or amendment). Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the terms of the Merger Agreement, the price
to be paid to the undersigned will be the amended price notwithstanding the fact
that a different price is stated in this Letter of Transmittal. 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.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return any
certificates for Shares not tendered or accepted for payment in the name(s) of
the registered holder(s) appearing above under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price of all Shares purchased and/or
return any certificates for Shares not tendered or not accepted for payment (and
any accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing above under "Description of Shares Tendered." In the event
that the boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase price
of all Shares purchased and/or return any certificates evidencing Shares not
tendered or not accepted for payment (and any accompanying documents, as
appropriate) in the name(s) of, and deliver such check and/or return any such
certificates (and any accompanying documents, as appropriate) to, the person(s)
so indicated. Unless otherwise indicated herein in the box entitled "Special
Payment Instructions," please credit any Shares tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
Purchaser has no obligation, pursuant to the "Special Payment Instructions," to
transfer any Shares from the name of the registered holder thereof if Purchaser
does not accept for payment any of the Shares so tendered.
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
Number of Shares represented by lost, destroyed or stolen certificates:
- ------------------------------
4
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
accepted for payment is to be issued in the name of someone other than the
undersigned, if certificates for Shares not tendered or not accepted for
payment are to be issued in the name of someone other than the undersigned
or if Shares tendered hereby and delivered by book-entry transfer that are
not accepted for payment are to be returned by credit to an account
maintained at a Book-Entry Transfer Facility other than the account
indicated above.
Issue check and/or Share certificate(s) to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
[ ] Credit Shares delivered by book-entry transfer and not purchased to
the Book-Entry Transfer Facility account.
------------------------------------------------------------
(ACCOUNT NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment is to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown under
"Description of Shares Tendered."
Mail check and/or Share certificates to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
------------------------------------------------------------
5
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:
- --------------------------- , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s) ------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
---------------------------------------------------------------------
Capacity (full title)
-----------------------------------------------------------------
(SEE INSTRUCTION 5)
Address-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-----------------------------------------------------
Taxpayer Identification or Social Security Number
-------------------------------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
----------------------------------------------------------------
Name(s) ------------------------------------------------------------------------
(PLEASE PRINT)
Title---------------------------------------------------------------------------
Name of Firm
---------------------------------------------------------------------
Address-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-----------------------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. 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 purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
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
Securities Transfer Agents Medallion Program, or a member in good standing of a
recognized Medallion Signature Guarantee Program (each, an "Eligible
Institution"). In all other cases, all signatures on this Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders of the
Company either if Share certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if delivery of Shares is to be made by book-entry
transfer pursuant to the procedures set forth herein and in Section 3 of the
Offer to Purchase. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees or an
Agent's Message (in connection with book-entry transfer) and any other required
documents, must be received by the Depositary at one of its addresses set forth
herein prior to the Expiration Date and either (i) certificates for tendered
Shares must be received by the Depositary at one of such addresses prior to the
Expiration Date or (ii) Shares must be delivered pursuant to the procedures for
book-entry transfer set forth herein and in Section 3 of the Offer to Purchase
and a Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date or (b) the tendering stockholder must comply with the guaranteed
delivery procedures set forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-entry
transfer procedures on a timely basis may tender their Shares by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth herein and in Section 3 of the Offer to
Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary 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 tendered Shares), together with a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), 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 within three trading days after the date of execution of such
Notice of Guaranteed Delivery. A "trading day" is any day on which the New York
Stock Exchange is open for business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY
7
<PAGE> 8
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares evidenced by any Share
certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares that are to be tendered in the box entitled "Number of
Shares Tendered." In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond 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 held of record by two or more
joint owners, all such 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 Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of the authority of such person so to 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 Share certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or not accepted for payment are to be issued in the name of a person
other than the registered holder(s). Signatures on any such Share certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such other person) payable
on account of the transfer to such other person will be deducted from the
purchase price of such Shares purchased unless evidence satisfactory to
Purchaser 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 Share certificates evidencing the
Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of, and/or
Share certificates for Shares not accepted for payment or not tendered are to be
issued in the name of and/or returned to, a person other than the signer of this
Letter of Transmittal or if a check is to be
8
<PAGE> 9
sent, and/or such certificates are to be returned, to a person other than the
signer of this Letter of Transmittal, or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Any stockholder(s) delivering Shares by book-entry transfer may request that
Shares not purchased be credited to such account maintained at the Book-Entry
Transfer Facility as such stockholder(s) may designate in the box entitled
"Special Payment Instructions." If no such instructions are given, any such
Shares not purchased will be returned by crediting the account at the Book-Entry
Transfer Facility designated above as the account from which such Shares were
delivered.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address and phone number set forth
below, or from brokers, dealers, commercial banks or trust companies.
9. WAIVER OF CONDITIONS. Subject to the Merger Agreement, Purchaser
reserves the absolute right in its sole discretion to waive, at any time or from
time to time, any of the specified conditions of the Offer, in whole or in part,
in the case of any Shares tendered.
10. BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 in this Letter of Transmittal and certify, under penalties
of perjury, that such TIN is correct and that such stockholder is not subject to
backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the Internal Revenue Service. If backup withholding
results in an overpayment of tax, a refund can be obtained by the stockholder
upon filing an income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held 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.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) 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 PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE
9
<PAGE> 10
RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT TO THE
PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION DATE,
OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED
DELIVERY.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct taxpayer identification number on Substitute Form W-9
below. If such stockholder is an individual, the taxpayer identification number
is his social security number. If a tendering stockholder is subject to backup
withholding, such stockholder must cross out item (2) of the Certification box
on the Substitute Form W-9. If the Depositary is not provided with the correct
taxpayer identification number, the stockholder may be subject to a $50 penalty
imposed by the Internal Revenue Service.
Certain stockholders (including, among others, all corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that stockholder must submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt stockholders, other than
foreign individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification 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 stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are 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.
If the tendering stockholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, such stockholder
should write "Applied For" in the space provided for in the TIN in Part 1, and
sign and date the Substitute Form W-9. If "Applied For" is written in Part I and
the Depositary is not provided with a TIN within sixty (60) days, the Depositary
will withhold 31% on all payments of the purchase price until a TIN is provided
to the Depositary.
10
<PAGE> 11
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME:
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Social Security Number
FORM W-9 PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT (If awaiting TIN write "Applied For")
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW -------------------------------
DEPARTMENT OF TREASURY
INTERNAL REVENUE SERVICE
Employer Identification Number
PAYERS REQUEST FOR TAX (If awaiting TIN write "Applied For")
IDENTIFICATION NUMBER (TIN) -------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
PART 2 -- CERTIFICATE -- 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
for me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
- ----------------------------------------------------------------------------------------------------------------------------
PART 3 -- AWAITING TIN [ ]
- ----------------------------------------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are currently
subject to backup withholding because of under-reporting interest or dividends on your tax returns. However, if after
being notified by the IRS that you are subject to backup withholding, you receive another notification from the IRS that
you are no longer subject to backup withholding, do not cross out such item (2). (Also see instructions in the enclosed
Guidelines).
Signature:
---------------------------------- Date:
---------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
- -----------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification
Number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number to the
Depository by the time of payment, 31% of all reportable payments made to me
thereafter will be withheld, but that such amounts will be refunded to me if I
provide a certified Taxpayer Identification Number to the Depository within
(60) days.
Signature: _________________________________________________ Date: _________
- -------------------------------------------------------------------------------
11
<PAGE> 12
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent at its address and telephone number set forth
below:
The Information Agent for the Offer is:
[Mackenzi logo]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free: (800) 322-2885
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
3 World Financial Center
200 Vesey Street
New York, New York 10285
Call collect: (212) 526-2411
or
(212) 526-2843
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
COPLEY PHARMACEUTICAL, INC.
TO
CARIBOU MERGER CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
TEVA PHARMACEUTICALS USA, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON SEPTEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of Common Stock, par value $.01 per share (the "Common
Stock" or "Shares"), of Copley Pharmaceutical, Inc., a Delaware corporation, are
not immediately available, if the procedure for book-entry transfer cannot be
completed prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase), or if time will not permit all required documents to reach the
Depositary prior to the Expiration Date. Such form may be delivered by hand,
transmitted by facsimile transmission or mailed to the Depositary. See Section 3
of the Offer to Purchase.
The Depositary for the Offer is
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<C> <C> <S>
By Mail: By Facsimile: By Hand/Overnight Delivery:
(For Eligible Institutions
P.O. Box 84 Only) One State Street
Bowling Green Station New York, NY 10004
New York, NY 10274-0084 (212) 858-2611 Attention:
Attention: Reorganization Dept. Confirm Facsimile by Telephone: Securities Processing Window,
(212) 858-2103 SC-1
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
THIS FORM 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.
Ladies and Gentlemen:
The undersigned hereby tenders to Caribou Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of Teva Pharmaceuticals USA, Inc., a
Delaware corporation and an indirect wholly owned subsidiary of Teva
Pharmaceutical Industries Limited, a corporation organized under the laws of
Israel, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated August 16, 1999 and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the "Offer"),
receipt of which is hereby acknowledged, the number of shares set forth below of
the common stock, par value $.01 per share (the "Common Stock" or the "Shares"),
of Copley Pharmaceutical, Inc., a Delaware corporation, pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
Number of Shares Tendered:
-----------------------------------------------------
-----------------------------------------------------
Certificate Nos. (if available):
-----------------------------------------------------
Check box if Shares will be tendered by book-entry transfer: [ ]
Account Number:
---------------------------------
Dated:
---------------------------------------, 1999
Name(s) of Record Holder(s):
- -----------------------------------------------------
- -----------------------------------------------------
(Please Print)
Address(es):
- ---------------------------------------
- -----------------------------------------------------
(Zip Code)
Area Code and Tel. No.:
- --------------------------
Signature(s):
- --------------------------------------
- -----------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Securities Transfer Agents
Medallion Program, or a member in good standing of a recognized Medallion
Signature Guarantee Program, guarantees to deliver to the Depositary either
certificates representing the Shares tendered hereby, in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts maintained at one of the Book-Entry Transfer Facilities
(as defined in the Offer to Purchase), in each case with delivery of a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message, and
any other documents required by the Letter of Transmittal, within three (3)
trading days (as defined in the Offer to Purchase) after the date hereof.
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 such Eligible
Institution.
-----------------------------------------------------
Name of Firm
-----------------------------------------------------
Street Address
-----------------------------------------------------
City State Zip Code
Area Code and Tel. No.:
--------------------------
- -----------------------------------------------------
Authorized Signature
Name:
- ---------------------------------------------
Please Print
- -----------------------------------------------------
Title:
Dated:
- ---------------------------------------, 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD
BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COPLEY PHARMACEUTICAL, INC.
AT
$11.00 NET PER SHARE IN CASH
BY
CARIBOU MERGER CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
TEVA PHARMACEUTICALS USA, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON SEPTEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
August 16, 1999
To: Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been appointed by Caribou Merger Corporation ("Purchaser"), a
Delaware corporation and a wholly owned subsidiary of Teva Pharmaceuticals USA,
Inc., a Delaware corporation and an indirect wholly owned subsidiary of Teva
Pharmaceutical Industries Limited, a corporation organized under the laws of
Israel, to act as Dealer Manager in connection with Purchaser's offer to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Common Stock" or the "Shares"), of Copley Pharmaceutical, Inc., a Delaware
corporation (the "Company"), at $11.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated August 16, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed
materials to those of your clients for whose accounts you hold Shares registered
in your name or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE) OF THE OFFER THAT NUMBER OF SHARES WHICH REPRESENTS AT LEAST A
MAJORITY OF THE TOTAL NUMBER OF SHARES OUTSTANDING ON A FULLY DILUTED BASIS
(EXCLUDING OPTIONS THE EXERCISE PRICE OF WHICH IS EQUAL TO OR GREATER THAN
$11.00 PER SHARE) ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT. THE OFFER ALSO IS
SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THE OFFER TO PURCHASE. SEE SECTIONS
14 AND 15 OF THE OFFER TO PURCHASE.
<PAGE> 2
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated August 16, 1999;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients. Facsimile copies
of the Letter of Transmittal may be used to tender Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to the Depositary, or if the procedures for book-entry transfer
cannot be completed on a timely basis, prior to the expiration of the
Offer;
4. A 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;
5. A letter to stockholders of the Company from Daniel L. Korpolinski,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 dated August 16,
1999, which has been filed by the Company with the Securities and Exchange
Commission;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to IBJ Whitehall Bank & Trust Company
(the "Depositary").
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 pay for Shares which are
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by the Depositary of (i) certificates for such
Shares, or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account maintained at one of the Book-Entry Transfer Facilities (as
defined in the Offer to Purchase), pursuant to the procedures described in
Section 3 of the Offer to Purchase, (ii) a properly completed and duly executed
Letter of Transmittal (or a properly completed and manually signed facsimile
thereof) or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry transfer and (iii) all other documents required by
the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Dealer Manager and the Information Agent as
described in the Offer to Purchase) for soliciting tenders of Shares pursuant to
the Offer. Purchaser will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for customary mailing and handling costs
incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
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 SEPTEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the Expiration
2
<PAGE> 3
Date of the Offer, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent or the Dealer Manager, and additional copies of the
enclosed materials may be obtained from the Information Agent at the respective
addresses and telephone numbers set forth on the back cover of the Offer to
Purchase.
Very truly yours,
LEHMAN BROTHERS
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PURCHASER, THE COMPANY, THE INFORMATION AGENT, THE DEPOSITARY, OR
ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION
WITH THE OFFER, OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COPLEY PHARMACEUTICAL, INC.
AT
$11.00 NET PER SHARE IN CASH
BY
CARIBOU MERGER CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
TEVA PHARMACEUTICALS USA, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON SEPTEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.
August 16, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated August 16,
1999 and the related Letter of Transmittal (which, together with any amendments
or supplements thereto, constitute the "Offer") in connection with the offer by
Caribou Merger Corporation ("Purchaser"), a Delaware corporation and a wholly
owned subsidiary of Teva Pharmaceuticals USA, Inc., a Delaware corporation and
an indirect wholly owned subsidiary of Teva Pharmaceutical Industries Limited, a
corporation organized under the laws of Israel, to purchase for cash all
outstanding shares of common stock, par value $.01 per share (the "Common Stock"
or the "Shares"), of Copley Pharmaceutical, Inc., a Delaware corporation (the
"Company"). We are the holder of record of Shares held 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 enclosed 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.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The Offer Price is $11.00 per Share, net to you in cash without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company, including the members of the
Special Committee of Independent Directors, has unanimously approved and
declared advisable the Merger Agreement (as defined in the Offer to
Purchase) and the transactions contemplated thereby, including the Offer
and the Merger (as defined in the Offer to Purchase), and has unanimously
determined that the Offer and the
<PAGE> 2
Merger are fair to, and in the best interests of, the Company's
stockholders and unanimously recommends that the stockholders accept the
Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on September 13, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date (as defined
in the Offer to Purchase) of the Offer that number of Shares which
represents at least a majority of the Shares outstanding on a fully diluted
basis (excluding options the exercise price of which is equal to or greater
than $11.00) on the date Shares are accepted for payment. The Offer is also
subject to the other conditions set forth in the Offer to Purchase. See
Sections 14 and 15 of the Offer to Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Purchaser is not aware of any state in which the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. In any jurisdiction in which 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 licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares will
be tendered unless otherwise specified on the reverse side of this letter. 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.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
COPLEY PHARMACEUTICAL, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated August 16, 1999 and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, constitute the
"Offer") in connection with the offer by Caribou Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of Teva Pharmaceuticals USA, Inc., a
Delaware corporation and an indirect wholly owned subsidiary of Teva
Pharmaceutical Industries Limited, a corporation organized under the laws of
Israel, to purchase all outstanding shares of common stock, par value $.01 per
share (the "Common Stock" or the "Shares"), of Copley Pharmaceutical, Inc., a
Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
<TABLE>
<S> <C>
Number of Shares to be Tendered:
- ------------------- Shares*
Dated: __________, 1999 -----------------------------------------------------
-----------------------------------------------------
SIGNATURE(S)
-----------------------------------------------------
-----------------------------------------------------
PRINT NAME(S)
-----------------------------------------------------
-----------------------------------------------------
ADDRESS(ES)
-----------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
-----------------------------------------------------
TAX ID OR SOCIAL SECURITY NUMBER
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE> 1
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>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate or pension Legal entity (Do
trust not 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, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(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> 2
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 do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the 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 ALL payments 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 nonexempt 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 nominee.
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 of mortgage interest to you.
Exempt payees described above should file 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 back-up
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 IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, 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) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
include any portion of an includable payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 20% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) 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.
(4) 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> 1
Page 1 of 3
TEVA PHARMACEUTICAL INDUSTRIES LTD TO ACQUIRE COPLEY
Pharmaceutical, Inc. -- Strengthens Teva-USA's Leadership in the U.S. Generic
Market
JERUSALEM, Israel & CANTON, Mass.--(BUSINESS WIRE)--Aug. 10, 1999--Teva
Pharmaceutical Industries Ltd, (Nasdaq: TEVIY) and Copley Pharmaceutical, Inc.
(Nasdaq: CPLY) announced today that Copley and Teva Pharmaceuticals USA, Inc.,
Teva's U.S. subsidiary, have executed a definitive merger agreement providing
for the acquisition by Teva-USA of all the outstanding shares of Copley for
$11.00 per share in cash. The transaction is valued at approximately $220
million.
The merger agreement provides for a cash tender offer by Caribou Merger
Corporation, a subsidiary of Teva-USA, for all outstanding Copley shares at
$11.00 per share. The tender offer will be commenced within five business days.
The tender offer will be conditioned upon, among other things, there being
validly tendered and not withdrawn, at least a majority of the outstanding
shares of Copley, and the expiration of appropriate waiting periods under the
Hart-Scott-Rodino Antitrust Act. The offer is not subject to any financing
condition, and the obligations of Teva-USA under the merger agreement have been
guaranteed by Teva Pharmaceutical Industries Limited. Any Copley shares not
purchased pursuant to the tender offer will be acquired in a subsequent merger
at the same $11.00 per share cash price.
In connection with the execution of the merger agreement, Teva-USA has
entered into an agreement with Hoechst Corporation, the holder of approximately
52% of Copley's outstanding shares, under which Hoechst has agreed to tender its
shares in the tender offer.
Mr. Eli Hurvitz, President and Chief Executive Officer of Teva, said,
"The merger will strengthen Teva's position in the U.S. generic drug market and
further enhance the breadth of the generic product line being offered in the
U.S. by Teva. As part of the worldwide Teva group, Copley will bring with it
personnel, facilities, an existing product line and a development pipeline which
will complement our existing operations in the U.S."
Mr. Daniel Korpolinski, Copley's President and Chief Executive Officer,
said, "The acquisition of Copley by Teva is a testament to the many capabilities
that Copley will bring to the Teva Group. We have said that being a first-tier
company is essential to success in our industry, and joining with one of the
world's largest multisource pharmaceutical companies fulfills that objective."
<PAGE> 2
Page 2 of 3
Copley Pharmaceutical, Inc., headquartered in Canton, MA, is a leading
manufacturer and marketer of a broad range of multi-source prescription and
over-the-counter pharmaceuticals. The Company markets its products to
distributors, retail chains, wholesalers, hospitals, government agencies, and
managed health-care entities.
Teva Pharmaceutical Industries Ltd., is Israel's largest pharmaceutical
company, with 80% of its sales outside Israel, mainly in the United States. The
Company develops, manufactures, and markets generic and branded human
pharmaceuticals, active pharmaceutical ingredients, medical disposables and
veterinary products.
Safe Harbor Statement: This release contains forward-looking statements which
express the beliefs and expectations of management. Such statements are based on
current expectations and involve a number of known and unknown risks and
uncertainties that could cause the Company's future results, performance or
achievements to differ significantly from the results, performance or
achievements expressed or implied by such forward-looking statements. Important
factors that could cause or contribute to such differences include the impact of
pharmaceutical industry regulation, the difficulty of predicting FDA and other
regulatory authority approvals, the regulatory environment and changes in the
health policies and structure of various countries, acceptance and demand for
new pharmaceutical products and new therapies, the impact of competitive
products and pricing, the availability and pricing of ingredients used in the
manufacture of pharmaceutical products, uncertainties regarding market
acceptance of innovative products newly launched, currently being sold or in
development, the impact of restructuring of clients, reliance on strategic
alliances, fluctuations in currency, exchange and interest rates, operating
results, the impact of the year 2000 issue and other factors that are discussed
in the Company's Annual Report on Form 20-F and the Company's other filings with
the US Securities and Exchange Commission.
CONTACT: Company Contacts:
Dan Suesskind
Chief Financial Officer
Teva Pharmaceutical Industries, Ltd.
(011) 972-25-892-811
or
Daniel Korpolinski
President and Chief Executive Officer
Copley Pharmaceutical, Inc.
(781) 575-7664
<PAGE> 3
Page 3 of 3
or
Investor Relations Contact:
Donna N. Stein/Cindy Reid/Jill Meleski
Morgen-Walke Associates, Inc.
(212) 850-5600
or
Press Contact:
Gregory Tiberend
Morgen-Walke Associates, Inc.
(212) 850-5600
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase, dated August 16, 1999, and the related Letter of
Transmittal, and is being made to all holders of Shares. The Offer is not being
made to (nor will tenders be accepted from or on behalf of) holders of Shares in
any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Caribou Merger Corporation by Lehman Brothers Inc. or by one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COPLEY PHARMACEUTICAL, INC.
AT
$11.00 NET PER SHARE IN CASH
BY
CARIBOU MERGER CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
TEVA PHARMACEUTICALS USA, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
Caribou Merger Corporation (the "Purchaser"), a Delaware corporation
and a wholly-owned subsidiary of Teva Pharmaceuticals USA, Inc. ("Teva USA"), a
Delaware corporation and an indirect wholly owned subsidiary of Teva
Pharmaceutical Industries Limited ("Teva"), a corporation organized under the
laws of Israel, is offering to purchase all outstanding shares of common stock,
par value $.01 per share (the "Shares"), of Copley Pharmaceutical, Inc., a
Delaware corporation (the "Company"), at a purchase price of $11.00 per share
net to the seller in cash without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
August 16, 1999 (the "Offer to Purchase"),
<PAGE> 2
and in the related Letter of Transmittal (which, together with any amendments
and supplements thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON SEPTEMBER 13, 1999 UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION
DATE").
The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer, a
number of Shares which represents at least a majority of the Shares outstanding
on a fully diluted basis (excluding options the exercise price of which is equal
to or greater than the Offer Price) and (ii) any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having
expired or been terminated. The Offer is also subject to other terms and
conditions.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of August 9, 1999, by and among Teva USA, Purchaser, and the Company
(the "Merger Agreement"). The Merger Agreement provides that, among other
things, after the purchase of Shares pursuant to the Offer and the satisfaction
or waiver of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware (the "Delaware Code"), Purchaser will be merged with and into
the Company (the "Merger"). Following consummation of the Merger, the Company
will continue as the surviving corporation and will be a wholly owned subsidiary
of Parent. At the effective time of the Merger, each issued and outstanding
Share (subject to certain exceptions, including for Shares as to which
dissenters' rights are perfected and exercised under the Delaware Code) will be
converted into the right to receive $11.00 in cash, without interest thereon.
The obligations of Teva USA under the Merger Agreement have been guaranteed by
Teva.
In connection with the Merger Agreement, Teva USA and Purchaser have
entered into an agreement dated as of August 9, 1999 with Hoechst Corporation
(the "Selling Stockholder") which beneficially owns an aggregate of 9,934,100
Shares, or approximately 51% of the issued and outstanding Shares, pursuant to
which, among other things, the Selling Stockholder has agreed to tender its
Shares in the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY, INCLUDING THE MEMBERS OF THE
SPECIAL COMMITTEE OF THE INDEPENDENT DIRECTORS, HAS UNANIMOUSLY APPROVED AND
DECLARED ADVISABLE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND HAS DETERMINED THAT THE OFFER
AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, HOLDERS OF SHARES
("STOCKHOLDERS"), AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when Purchaser gives oral or written notice to IBJ Whitehall Bank &
Trust Company, as depositary (the "Depositary"), of Purchaser's acceptance of
such Shares for payment pursuant to the Offer. In
-2-
<PAGE> 3
all cases, upon the terms and subject to the conditions of the Offer, payment
for Shares purchased pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to validly tendering stockholders. 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 such Shares (or a timely Book
Entry Confirmation (as defined in the Offer to Purchase) with respect thereto),
(ii) the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer and
(iii) any other documents required by the Letter of Transmittal. The per share
consideration paid to any holder of Shares pursuant to the Offer will be the
highest per share consideration paid to any other holder of such Shares pursuant
to the Offer. Under no circumstances will interest on the purchase price for
shares be paid by Purchaser, regardless of any extension of the offer or any
delay in making such payment.
Subject to the terms and conditions of the Merger Agreement, Purchaser
expressly reserves the right, in its sole discretion, at any time and from time
to time, to extend the period during which the Offer is open for any reason, by
giving oral or written notice of such extension to the Depositary. Any such
extension will be followed as promptly as practicable by public announcement
thereof, and such announcement will be made no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.
Tenders of Shares made pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date and, unless theretofore accepted for payment as
provided in the Offer to Purchase, may also be withdrawn at any time after
October 15, 1999. In order 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 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 of the Shares to be withdrawn,
if different from the name of the person who tendered the Shares. If
certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and the signature on the notice of withdrawal must be guaranteed
by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program or is a member in good standing of a
recognized Medallion Signature Guarantee Program, (an "Eligible Institution"),
except in the case of Shares tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry transfer set forth in the Offer to Purchase, any notice of withdrawal
must specify the name and number of the account at the appropriate Book-Entry
Transfer Facility (as defined in the Offer to Purchase) to be credited with the
withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's
-3-
<PAGE> 4
procedures, in which case a notice of withdrawal will be effective if delivered
to the Depositary by any method of delivery described in this paragraph. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by Purchaser, in its sole discretion, whose
determination shall be final and binding. Any Shares properly withdrawn will be
deemed not validly tendered for purposes of the Offer, but may be tendered at
any subsequent time prior to the Expiration Date by following any of the
procedures described in Section 3 of the Offer to Purchase.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase, and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
and, if required, other relevant materials will be mailed to record holders of
Shares and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
listed below. Requests for copies of the Offer to Purchase, the related Letter
of Transmittal and all other tender offer materials may be directed to the
Information Agent or brokers, dealers, commercial banks and trust companies, and
copies will be furnished promptly at Purchaser's expense. None of Teva, Teva USA
or Purchaser will pay any fees or commissions (other than to the Information
Agent and the Dealer Manager) for soliciting tenders of Shares pursuant to the
Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free: (800) 322-2885
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
Three World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-2411 or
(212) 526-2843
August 16, 1999
-4-
<PAGE> 1
August 13, 1999
Teva Pharmaceuticals USA, Inc.
650 Cathill Road
Sellersville, Pennsylvania 18960
Teva Pharmaceutical Industries Ltd.
5 Basel Street
Petach Tikva, Israel
Ladies and Gentlemen:
On behalf of Bank Leumi USA (the "Bank"), we are pleased to advise you
that the Bank is prepared to make available to Teva Pharmaceuticals USA, Inc.
("Teva-USA") for use by its wholly-owned subsidiary Caribou Merger Corporation
("MergerSub") a credit facility in an aggregate principal amount of up to
$115,000,000 to be used by MergerSub to fund the acquisition of all of the
outstanding Common Stock of Copley Pharmaceutical, Inc. ("Copley") for a
purchase price of $11.00 per share in cash. Such acquisition will be made
pursuant to an Agreement and Plan of Merger among Teva-USA, Merger Sub and
Copley, dated August 9, 1999, a copy of which has previously been furnished to
us (the "Merger Agreement"). The Merger Agreement contemplates a first step
tender offer (the "Offer"). Any Copley shares not purchased pursuant to the
tender offer will be acquired in a subsequent merger at the same $11.00 per
share cash price. You have advised us the Hoechst Corporation, the holder of 52%
of the outstanding Common Stock of Copley has agreed to tender its shares into
the Offer pursuant to a Stockholder Agreement, dated August 9, 1999, a copy of
which has also been furnished to us.
Our final commitment will be made available only pursuant to, and is
subject to the negotiation, execution and delivery of, a definitive credit
agreement and to the execution and delivery of other related documents in each
case satisfactory to us and you. Such documents shall reflect the terms set
forth herein and shall also contain such other covenants, terms, conditions,
indemnities, representations and warranties and events of default as shall be
customary and appropriate to transactions of this size and nature.
The commitment contained in this letter shall expire on August 31,
1999, unless sooner accepted in writing by you. The facilities described herein,
assuming acceptance by you, shall be available to you for drawing until December
31, 1999.
<PAGE> 2
Teva Pharmaceuticals USA, Inc.
Teva Pharmaceutical Industries Ltd.
August 13, 1999
Page 2
The terms upon which the credit facility are to be made available are
as follows:
I. Structure
Borrower Teva Pharmaceuticals USA, Inc.
Guarantor Teva Pharmaceutical Industries Ltd.
II. Type of Facility
Term Loan, to be extended to Borrower, due one year from the
initial drawing date but not later than December 31, 2000. No
drawings to be permitted after December 31, 1999.
III. Prepayment
Only upon 30 days prior written notice to the Bank, the Loan
may be pre-paid, in whole or in part, on any interest payment
date. No redrawings of any repaid principal part of the Loan
is permitted.
IV. Use of Proceeds
Borrower will utilize the proceeds to capitalize MergerSub to
provide the cash necessary to fund the Offer and the
subsequent cash merger, together with expenses incidental to
the transaction.
V. Co-Lender
Funding of this facility is subject to concurrent facility of
$115,000,000 being available from Bank Hapoalim B.M. to
Borrower upon the same Structure as set forth herein.
VI. Pricing and Tenor
LIBOR plus .25% per annum (length of interest periods to be
determined by the Bank as agreed by the Bank and the
Borrower).
VII. Guarantee
The facility will be guaranteed in its entirety by the
Guarantor and supported by Guarantor's negative pledge on all
of its assets.
<PAGE> 3
Teva Pharmaceuticals USA, Inc.
Teva Pharmaceutical Industries Ltd.
August 13, 1999
Page 3
VIII. Events of Default, Representations and Warranties, Conditions
Precedent and Covenants
Standard terms and provisions acceptable to the Bank.
IX. Governing Law
New York State law will be governing law.
The Bank reserves the right to invite other lenders to participate in
the facilities described herein and to act as agent for such lenders.
Accordingly, the documentation will allow for co-lending, assignment and
participation provisions as appropriate.
The commitment of the Bank hereunder is based upon the financial and
other information regarding the Borrower and the Guarantor and its subsidiaries
previously provided to the Bank and is subject to the condition, among others,
that there shall not have occurred after the date of such information, in the
opinion of the Bank, any material adverse change in the business, assets,
liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of the Guarantor and its subsidiaries taken as a whole.
If the continuing review by the Bank of the Guarantor and its subsidiaries
discloses information relating to conditions or events not previously disclosed
to the Bank or relating to new information or additional developments concerning
conditions or events previously disclosed to the Bank which the Bank in its sole
discretion believes may have a material adverse effects on the condition
(financial or otherwise), assets, properties, business, operations or prospects
of the Guarantor or the Borrower, the Bank may, in its sole discretion, suggest
alternative financing amounts or structures that ensure adequate protection for
the Bank or decline to participate in the proposed financing. The Bank shall be
provided with the opportunity to review any reference to the Bank, in connection
with any regulatory or other filing prior to the filing thereof.
The Borrower shall reimburse the Bank on demand for any and all costs
and expenses incurred by the Bank in connection with the proposed transactions
referred to above (whether incurred before or after the date hereof) including,
without limitation, fees and out-of-pocket expenses of counsel regardless of
whether the loan is finalized and signed or any loan is made thereunder.
However, the Borrower shall not be obligated to reimburse Lender for expenses if
the Bank elects not to complete the transaction described herein for any reason
except the disclosure of materially adverse information about the Borrower, or
the failure by another party to comply with
<PAGE> 4
Teva Pharmaceuticals USA, Inc.
Teva Pharmaceutical Industries Ltd.
August 13, 1999
Page 4
any condition or requirement reasonably imposed by the Bank.
In the event that the Bank becomes involved in any capacity in any
action, proceeding or investigation in connection with any matter contemplated
by this letter, the Borrower and the Guarantor will reimburse the Bank for its
legal and other expenses (including the cost of any investigation and
preparation) as they are incurred by the Bank. The Borrower and the Guarantor
also agree to indemnify and hold harmless the Bank and its affiliates and their
respective directors, officers, employees and agents (the "Indemnified Parties")
from and against any and all losses, claims, damages and liabilities, joint or
several, related to or arising out of any matters contemplated by this letter
unless and only to the extent that it shall be finally judicially determined
that such losses, claims, damages or liabilities resulted primarily from the
gross negligence or willful misconduct of the Bank.
If you are in agreement with the foregoing, please execute and return
the enclosed copy of this letter agreement no later than the close of business
on August 31, 1999. This letter agreement will become effective upon your
delivery to us of executed counterparts of this letter agreement. This letter
agreement is not assignable.
You shall have the right to disclose this Commitment Letter in
connection with filings made by you with the United States Securities & Exchange
Commission in connection with the transactions contemplated by the Merger
Agreement.
This letter may be executed in counterparts which, taken together,
shall constitute an original. This letter embodies the entire agreement and
understanding among the Bank, the Borrower and the Guarantor with respect to the
specific matters set forth herein and supersedes all prior agreements and
understandings relating to the subject matter hereof. THIS LETTER SHALL BE
<PAGE> 5
Teva Pharmaceuticals USA, Inc.
Teva Pharmaceutical Industries Ltd.
August 13, 1999
Page 5
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
Very truly yours,
Bank Leumi USA
By /s/ S. Brosh & /s/ E. Moverman
ACCEPTED AND AGREED TO: ------------------------------
Teva Pharmaceuticals USA, Inc. Teva Pharmaceutical Industries Ltd.
By /s/ Peter Terreri By /s/ Dan S. Suesskind
------------------------------ ------------------------------
Chief Financial Officer Chief Financial Officer
<PAGE> 1
August 13, 1999
Teva Pharmaceuticals USA, Inc.
650 Cathill Road
Sellersville, Pennsylvania 18960
Teva Pharmaceutical Industries Ltd.
5 Basel Street
Petach Tikva, Israel
Ladies and Gentlemen:
On behalf of Bank Hapoalim B.M. (the "Bank"), we are pleased to advise you that
the Bank is prepared to make available to Teva Pharmaceuticals USA, Inc.
("Teva-USA") for use by its wholly-owned subsidiary Caribou Merger Corporation
("MergerSub") a credit facility in an aggregate principal amount of up to
$115,000,000 to be used by MergerSub to fund the acquisition of all of the
outstanding Common Stock of Copley Pharmaceutical, Inc. ("Copley") for a
purchase price of $11.00 per share in cash. Such acquisition will be made
pursuant to an Agreement and Plan of Merger among Teva-USA, MergerSub and
Copley, dated August 9, 1999, a copy of which has previously been furnished to
us (the "Merger Agreement"). The Merger Agreement contemplates a first step
tender offer (the "Offer"). Any Copley shares not purchased pursuant to the
tender offer will be acquired in a subsequent merger at the same $11.00 per
share cash price. You have advised us that Hoechst Corporation, the holder of
52% of the outstanding Common Stock of Copley has agreed to tender its shares
into the Offer pursuant to a Stockholder Agreement, dated August 9, 1999, a copy
of which has also been furnished to us.
Our final commitment will be made available only pursuant to, and is subject to
the negotiation, execution and delivery of, a definitive credit agreement and to
the execution and delivery of other related documents in each case satisfactory
to us and you. Such documents shall reflect the terms set forth herein and shall
also contain such other covenants, terms, conditions, indemnities,
representations and warranties and events of default as shall be customary and
appropriate to transactions of this size and nature.
The commitment contained in this letter shall expire on August 31, 1999 unless
sooner accepted by you. The facilities described herein, assuming acceptance by
you, shall be available to you for drawing until December 31, 1999.
The terms upon which the credit facility is to be made available are as follows:
<PAGE> 2
I. Structure
Borrower: Teva Pharmaceuticals USA, Inc.
Guarantor: Teva Pharmaceutical Industries Ltd.
II. Type of Facility
Term Loan to be extended to Borrower, due one year from the initial drawing but
not later than December 31, 2000. No drawings to be permitted after December 31,
1999.
III. Prepayment
Only upon 30 days' prior written notice to the Bank, the Loan may be pre-paid,
in whole or in part, only on an interest payment date. No redrawings of any
repaid principal part of the Loan is permitted.
IV. Use of Proceeds
Borrower will utilize the proceeds to capitalize MergerSub to provide the cash
necessary to fund the Offer and the subsequent cash merger, together with
expenses incidental to the transaction.
V. Pricing and Tenor
Libor plus .25% per annum (length of interest periods to be determined by the
Bank as agreed by the Bank and the Borrower).
VI. Guarantee
The facility will be guaranteed in its entirety by the Guarantor.
VII. Representations, Warranties, Covenants, Condition Precedent and Events of
Default
Standard terms and provisions acceptable to the Bank.
VIII. Governing Law
New York State law will be the governing law.
While the Bank expects to provide the entire facilities described below, they
reserve the right to invite other lenders to participate in the facilities
described herein and to act as agent for such lenders. Accordingly, the
documentation will allow for co-lending, assignment and participation provisions
as appropriate.
The commitment of the Bank hereunder is based upon the financial and other
information regarding the Borrower and the Guarantor
2
<PAGE> 3
and its subsidiaries previously provided to the Bank and is subject to the
condition, among others, that there shall not have occurred after the date of
such information, in the opinion of the Bank, any material adverse change in the
business, assets, liabilities (actual or contingent), operations, condition
(financial or otherwise) or prospects of the Guarantor and its subsidiaries
taken as a whole. If the continuing review by the Bank of the Guarantor and its
subsidiaries discloses information relating to conditions or events not
previously disclosed to the Bank or relating to new information or additional
developments concerning conditions or events previously disclosed to the Bank
which the Bank in its sole discretion believes may have a material adverse
effect on the condition (financial or otherwise), assets, properties, business,
operations or prospect of the Guarantor or the Borrower, the Bank may, in its
sole discretion, suggest alternative financing amounts or structures that ensure
adequate protection for the Bank or decline to participate in the proposed
financing. The Bank shall be provided with the opportunity to review any
reference to the Bank, in connection with any regulatory or other filing prior
to the filing thereof.
The Borrower shall reimburse the Bank on demand for any and all costs and
expenses incurred by the Bank in connection with the proposed transactions
referred to above (whether incurred before or after the date hereof) including,
without limitation, fees and out-of-pocket expenses of counsel regardless of
whether the loan is finalized and signed or any loan is made thereunder.
However, the Borrower shall not be obligated to reimburse the Bank for expenses
if the Bank elects not to complete the transaction described herein for any
reason except the disclosure of materially adverse information about the
Borrower, or the failure by another party to comply with any condition or
requirement reasonably imposed by the Bank.
In the event that the Bank becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter contemplated by this
letter, the Borrower and the Guarantor will reimburse the Bank for its legal and
other expenses (including the cost of any investigation and preparation) as they
are incurred by the Bank.
The Borrower and the Guarantor also agree to indemnify and hold harmless the
Bank and its affiliates and its respective directors, officers, employees and
agents (the "Indemnified Parties") from and against any and all losses, claims,
damages and liabilities, joint or several, related to or arising out of any
matters contemplated by this letter unless and only to the extent that it shall
be finally judicially determined that such losses, claims, damages or
liabilities resulted primarily from the gross negligence or willful misconduct
of the Bank.
If you are in agreement with the foregoing, please execute and return the
enclosed copy of this letter agreement no later than
3
<PAGE> 4
the close of business on August 31, 1999. This letter agreement will become
effective upon your delivery to us of executed counterparts of this letter
agreement. This letter agreement is not assignable.
You shall have the right to disclose this Commitment Letter in connection with
filings made by you with the United States Securities & Exchange Commission in
connection with the transactions contemplated by the Merger Agreement.
This letter may be executed in counterparts which, taken together, shall
constitute an original. This letter embodies the entire agreement and
understanding among the Bank, the Borrower and the Guarantor with respect to the
specific matters set forth herein and supersedes all prior agreements and
understandings relating to the subject matter hereof. THIS LETTER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
Very truly yours,
Bank Hapoalim B.M.
By: /s/ Shlomo Braun
-------------------------------
Senior Vice President & Manager
of New York Branches
By: /s/ Eli Eisdorfer
-------------------------------
First Vice President
ACCEPTED AND AGREED TO
Teva Pharmaceuticals Teva Pharmaceutical
USA, Inc. Industries Ltd.
By: /s/ Peter Terreri By: /s/ Dan S. Suesskind
------------------------------- -------------------------------
Chief Financial Officer Chief Financial Officer
4
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TEVA PHARMACEUTICALS USA, INC.,
CARIBOU MERGER CORPORATION
AND
COPLEY PHARMACEUTICAL, INC.
DATED AS OF AUGUST 9, 1999
<PAGE> 2
-i-
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I THE OFFER........................................................ 1
SECTION 1.01. The Offer.................................................. 1
SECTION 1.02. Offer Documents............................................ 3
SECTION 1.03. Company Actions............................................ 3
ARTICLE II THE MERGER...................................................... 4
SECTION 2.01. The Merger................................................. 4
SECTION 2.02. Closing.................................................... 5
SECTION 2.03. Effective Time............................................. 5
SECTION 2.04. Effect of the Merger....................................... 5
SECTION 2.05. Certificate of Incorporation; By-Laws...................... 5
SECTION 2.06. Directors and Officers..................................... 5
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES............. 6
SECTION 3.01. Effect on Capital Stock.................................... 6
SECTION 3.02. Conversion of Securities................................... 6
SECTION 3.03. Payment for Shares......................................... 7
SECTION 3.04. Treatment of Options....................................... 9
SECTION 3.05. Company Employee Stock Purchase Plan....................... 9
SECTION 3.06. Dissenting Shares.......................................... 10
SECTION 3.07. Lost, Stolen or Destroyed Certificates..................... 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 11
SECTION 4.01. Organization and Qualification; Subsidiaries............... 11
SECTION 4.02. Certificate of Incorporation and By-Laws................... 12
SECTION 4.03. Capitalization............................................. 12
SECTION 4.04. Authority Relative to This Agreement....................... 12
SECTION 4.05. No Conflict; Required Filings and Consents................. 13
SECTION 4.06. Material Contracts; Permits................................ 14
SECTION 4.07. SEC Filings; Financial Statements.......................... 15
SECTION 4.08. Absence of Certain Changes or Events....................... 16
SECTION 4.09. No Undisclosed Material Liabilities........................ 17
SECTION 4.10. Absence of Litigation...................................... 17
SECTION 4.11. Employee Benefit Plans; Employment Agreements.............. 17
SECTION 4.12. Labor Matters.............................................. 19
SECTION 4.13. Intellectual Property...................................... 19
SECTION 4.14. Taxes...................................................... 21
SECTION 4.15. Compliance with Laws....................................... 22
</TABLE>
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SECTION 4.16. Brokers.................................................... 23
SECTION 4.17. Vote Required.............................................. 23
SECTION 4.18. Interested Party Transactions.............................. 23
SECTION 4.19. Insurance.................................................. 23
SECTION 4.20. Real Estate................................................ 24
SECTION 4.21. Personal Property.......................................... 24
SECTION 4.22. Liens and Encumbrances..................................... 25
SECTION 4.23. Environmental Matters...................................... 25
SECTION 4.24. Regulatory Compliance...................................... 26
SECTION 4.25. Suppliers and Customers.................................... 29
SECTION 4.26. Information Supplied....................................... 29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB...................................................... 30
SECTION 5.01. Organization and Qualification............................. 30
SECTION 5.02. Authority Relative to this Agreement....................... 30
SECTION 5.03. No Conflict; Required Filings and Consents................. 30
SECTION 5.04. Information Supplied....................................... 31
SECTION 5.05. Absence of Litigation...................................... 32
SECTION 5.06. Financing.................................................. 32
SECTION 5.07. Ownership of Company Common Stock.......................... 32
ARTICLE VI CONDUCT OF BUSINESS OF THE COMPANY.............................. 32
SECTION 6.01. Conduct of Business of the Company......................... 32
ARTICLE VII ADDITIONAL AGREEMENTS.......................................... 35
SECTION 7.01. Stockholder Approval....................................... 35
SECTION 7.02. Access to Information; Confidentiality..................... 36
SECTION 7.03. Consents; Approvals........................................ 37
SECTION 7.04. Indemnification and Insurance.............................. 38
SECTION 7.05. Employee Benefit Plans..................................... 39
SECTION 7.06. Notification of Certain Matters............................ 40
SECTION 7.07. Further Action............................................. 40
SECTION 7.08. Public Announcements....................................... 40
SECTION 7.09. Conveyance Taxes........................................... 41
SECTION 7.10. Conduct of Business of Merger Sub.......................... 41
SECTION 7.11. No Solicitation............................................ 41
SECTION 7.12. Directors.................................................. 43
ARTICLE VIII CONDITIONS TO THE MERGER...................................... 44
SECTION 8.01. Conditions of all Parties to the Merger.................... 44
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ARTICLE IX TERMINATION..................................................... 45
SECTION 9.01. Termination............................................... 45
SECTION 9.02. Effect of Termination..................................... 47
SECTION 9.03. Fees and Expenses Payable by the Company.................. 47
SECTION 9.04. Fees and Expenses Payable by Parent....................... 47
SECTION 9.05 Termination Fee........................................... 48
ARTICLE X GENERAL PROVISIONS............................................... 48
SECTION 10.01. Effectiveness of Representations, Warranties and Agreements 48
SECTION 10.02. Notices................................................... 48
SECTION 10.03. Certain Definitions....................................... 49
SECTION 10.04. Amendment................................................. 50
SECTION 10.05. Waiver.................................................... 50
SECTION 10.06. Headings.................................................. 50
SECTION 10.07. Severability.............................................. 50
SECTION 10.08. Entire Agreement.......................................... 51
SECTION 10.09. Assignment................................................ 51
SECTION 10.10. Parties in Interest....................................... 51
SECTION 10.11. Failure or Indulgence Not Waiver; Remedies Cumulative..... 51
SECTION 10.12. Governing Law............................................. 51
SECTION 10.13. Counterparts.............................................. 51
</TABLE>
SIGNATURES
ANNEX A Conditions of the Offer
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 9, 1999 (this
"Agreement"), among Teva Pharmaceuticals USA, Inc., a Delaware corporation
("Parent"), Caribou Merger Corporation, a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and Copley Pharmaceutical, Inc., a
Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each determined that it is advisable and in the best interests of their
respective stockholders for Parent and Merger Sub to enter into a business
combination with the Company, by means of the merger (the "Merger") of Merger
Sub with and into the Company, upon the terms and subject to the conditions set
forth herein;
WHEREAS, Hoechst Corporation, a Delaware corporation ("HC"), is the
beneficial owner of a majority of the issued and outstanding shares of Company
Common Stock and simultaneously with the execution and delivery of this
Agreement, and as a condition and inducement to Parent's willingness to enter
into this Agreement, has entered into a Stockholder Agreement (the "Stockholder
Agreement") providing for certain matters with respect to its shares of Company
Common Stock (as hereinafter defined), the tender of such shares and certain
other actions relating to the Offer (as hereinafter defined) and the other
transactions contemplated by this Agreement;
WHEREAS, to effectuate the Merger, Parent and the Company each desire that
Parent cause Merger Sub to commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $.01 per share, of the Company
(the "Company Common Stock"), upon the terms and subject to the conditions set
forth in this Agreement and the Offer Documents (as defined in Section 1.02),
and the Board of Directors of the Company has approved the Offer (as defined in
Section 1.01) and is recommending to its stockholders that they accept the Offer
and tender their shares of Company Common Stock pursuant thereto;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER. (a) Provided that none of the events set forth in
clause (iii) of Annex A hereto shall have occurred and be continuing, as
promptly as practicable (but in any event not later than five business days
after the public announcement of the execution and
<PAGE> 6
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delivery of this Agreement), 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")), a tender offer to purchase (the "Offer") all the
outstanding shares of Company Common Stock at a price of $11.00 per share, net
to the seller in cash (the "Offer Consideration"). The obligation of Parent and
Merger Sub to accept for payment and to pay for shares of Company Common Stock
validly tendered in the Offer and not withdrawn shall be subject only to those
conditions set forth in Annex A hereto.
(b) Merger Sub reserves the right to modify the terms of the Offer, except
that, without the prior written consent of the Company, Merger Sub shall not
(and Parent shall cause Merger Sub not to) (i) decrease the Offer Consideration
or change the form of consideration therefor or decrease the number of shares of
Company Common Stock sought pursuant to the Offer, (ii) change the conditions to
the Offer (other than to increase the Offer Consideration), (iii) impose
additional conditions to the Offer, (iv) waive the condition that there shall be
validly tendered and not withdrawn prior to the time the Offer expires a number
of shares of Company Common Stock which, together with any shares of Company
Common Stock beneficially owned by Parent and its affiliates, constitutes at
least a majority of the shares of Company Common Stock outstanding on a
fully-diluted basis (excluding options the exercise price of which is equal to
or greater than the Offer Consideration) as of the date of purchase, (v)
terminate or withdraw the Offer or extend the expiration date of the Offer
(except as required by law), or (vi) amend any term of the Offer in any manner
adverse to holders of shares of Company Common Stock; provided, however, that:
(A) except as set forth above, Merger Sub may waive any other condition to the
Offer, in whole or in part, in its sole discretion; (B) the Offer may be
extended in connection with an increase in the consideration to be paid pursuant
to the Offer so as to comply with applicable rules and regulations of the United
States Securities and Exchange Commission (the "SEC"); (C) if all of the
conditions to the Offer set forth on Annex A are not satisfied on any scheduled
expiration date, and if all of such conditions are then still reasonably capable
of being satisfied prior to the Termination Date, Merger Sub shall extend the
Offer from time to time (each such individual extension not to exceed ten (10)
business days after the previously scheduled expiration date) until such
conditions are satisfied or waived; provided, however, that Merger Sub shall not
be required to extend the Offer beyond the Termination Date; and (D) the Offer
may be extended for one additional period of up to ten (10) business days, if on
such expiration date the conditions of the Offer described on Annex A hereto
shall have been satisfied or earlier waived, but the number of shares of Company
Common Stock that have been validly tendered and not withdrawn represents less
than ninety (90) percent of the then issued and outstanding shares of Company
Common Stock on a fully diluted basis (excluding options the exercise price of
which is equal to or greater than the Offer Consideration); provided, however,
that as to such final extension any condition satisfied or waived at the
commencement of such extension (other than a requirement of law) shall deemed
satisfied at the end of such extension. Assuming the prior satisfaction or
waiver of the conditions to the Offer, Merger Sub shall accept for payment, and
pay for, in accordance with the terms of the Offer, all shares of Company Common
Stock validly tendered and not withdrawn pursuant to the Offer as soon as it is
permitted to do so under applicable law.
<PAGE> 7
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SECTION 1.02. OFFER DOCUMENTS. As soon as practicable on the date of
commencement of the Offer, Parent and Merger Sub shall (x) file or cause to be
filed with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") with respect to the Offer which shall contain the offer to purchase and
related letter of transmittal and other ancillary Offer documents and
instruments pursuant to which the Offer will be made (collectively with any
supplements or amendments thereto, the "Offer Documents") and shall contain (or
shall be amended in a timely manner to contain) all information which is
required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and any other applicable law, and shall comply
in all material respects with the requirements of the Exchange Act and any other
applicable law and (y) mail or cause to be mailed the Offer Documents to the
record holders of the Company Common Stock. Parent, Merger Sub and the Company
each agree promptly to correct any information provided by them for use in the
Offer Documents if and to the extent that it shall have become false or
misleading in any material respect and Merger Sub further agrees to take all
lawful action necessary to cause the Offer Documents as so corrected to be filed
promptly with the SEC and disseminated to the holders of Company Common Stock,
in each case as and to the extent required by applicable law. In conducting the
Offer, Parent and Merger Sub shall comply in all material respects with the
provisions of the Exchange Act and any other applicable law. The Company and its
counsel shall be given the opportunity to review and comment on the Offer
Documents and any amendments thereto prior to the filing thereof with the SEC.
SECTION 1.03. COMPANY ACTIONS. The Company hereby consents to the Offer
and represents that (a) its Board of Directors (at a meeting duly called and
held) has (i) determined that each of the Offer and the Merger is fair to and in
the best interests of the holders of Company Common Stock, (ii) approved and
declared advisable this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, and such approval constitutes approval of
the Offer, this Agreement and the transactions contemplated hereby, including
the Merger, for purposes of Section 203 of the Delaware General Corporation Law,
as amended (the "DGCL"), and (iii) resolved to recommend acceptance of the Offer
and approval and adoption of this Agreement and the Merger by the holders of
Company Common Stock (subject to the fiduciary duties of the Board of Directors
under Delaware Law), and (b) CIBC World Markets Corp. has delivered to the Board
of Directors of the Company its written opinion that the consideration to be
received by the holders of Company Common Stock (other than HC and its
affiliates) in the Offer and the Merger is fair, from a financial point of view,
to such holders, subject to the assumptions and qualifications set forth in such
opinion (a photocopy of which has been delivered to Parent). The Company hereby
agrees to file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto, the "Schedule
14D-9") containing the recommendation of the Board of Directors of the Company
referred to in clause (a) (iii) of the preceding sentence (subject to the
fiduciary duties of the Board of Directors under Delaware Law) and shall mail or
cause to be mailed the Schedule 14D-9 to the holders of the Company Common
Stock. The Company will use its reasonable efforts to cause the Schedule 14D-9
to be filed with the SEC on the same date as Parent's and Merger Sub's Schedule
14D-1 is filed with the SEC and mailed together with the Offer Documents;
provided that in any event the Schedule 14D-9 shall be filed with the SEC and
mailed to the holders of Company Common Stock no later than 10 business days
following the
<PAGE> 8
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commencement of the Offer. The Schedule 14D-9 shall comply in all material
respects with the Exchange Act and any other applicable law and shall contain
(or shall be amended in a timely manner to contain) all information which is
required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and any other applicable law. The information
contained in the Schedule 14D-9 (other than information furnished in writing by
Parent or Merger Sub expressly for inclusion in the Schedule 14D-9, as to which
the Company makes no representations or warranties) will not, at the respective
times the Schedule 14D-9 is filed with the SEC (or such filings are amended or
supplemented) and first published, sent or given to holders of Company Common
Stock, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company, Parent and Merger Sub each agree promptly to
correct any information provided by them 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 lawful action necessary to cause the
Schedule 14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the holders of Company Common Stock, in each case as and to the
extent required by applicable law. Parent, Merger Sub and their counsel shall be
given the opportunity to review and comment on the Schedule 14D-9 and any
amendments thereto prior to the filing thereof with the SEC. In connection with
the Offer, the Company shall promptly furnish Merger Sub with security position
listings and all available listings or computer files containing the names and
addresses of the record holders of the Company Common Stock as of the latest
practicable date and shall furnish Parent and Merger Sub with such information
and assistance (including updated lists of stockholders and lists of security
positions) as Parent and Merger Sub or any of their agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Company Common Stock. Subject to the requirements of applicable law, and except
for such actions as are necessary to disseminate the Offer Documents and any
other documents necessary to consummate the Offer and the Merger, Parent and
Merger Sub and each of their affiliates, associates, partners, employees, agents
and advisors shall hold in confidence the information contained in such lists
and files, shall use such information only in connection with the Offer and the
Merger, and, if this Agreement is terminated, shall deliver promptly to the
Company all copies of such information then in their possession.
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. At the Effective Time (as defined in Section
2.03), and subject to and upon the terms and conditions of this Agreement and
the laws of the State of Delaware ("Delaware Law"), Merger Sub shall be merged
with and into the Company, the separate corporate existence of Merger Sub shall
cease, and the Company shall continue as the surviving corporation. The Company
as the surviving corporation after the Merger is hereinafter sometimes referred
to as the "Surviving Corporation."
<PAGE> 9
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SECTION 2.02. CLOSING. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 9.01, the consummation of the Merger (the "Closing") will take place at
10:00 a.m., New York time, as soon as practicable (but in no event later than
the second business day) after satisfaction or waiver of the conditions set
forth in Article VIII (the "Closing Date"), at the offices of Testa, Hurwitz &
Thibeault, LLP, 125 High Street, Boston, Massachusetts, unless another date,
time or place is agreed to in writing by the parties hereto.
SECTION 2.03. EFFECTIVE TIME. On the Closing Date, the parties hereto
shall cause the Merger to be consummated by filing a certificate of merger (the
"Certificate of Merger") as contemplated by Section 251 of the DGCL, together
with any required related certificates, with the Secretary of State of the State
of Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, Delaware Law (the time of such filing being the
"Effective Time").
SECTION 2.04. EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.05. CERTIFICATE OF INCORPORATION; BY-LAWS .
(a) Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by Delaware Law and such
Certificate of Incorporation; provided, however, that Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended to
read as follows: "FIRST: The name of the corporation is Copley Pharmaceutical,
Inc."; and provided further, however, that the Certificate of Incorporation of
the Surviving Corporation shall include the provisions contemplated by Section
7.04(a).
(b) By-Laws. At the Effective Time, the By-Laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by Delaware Law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
SECTION 2.06. DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
<PAGE> 10
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ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, the Company, the
holders of any shares of Company Common Stock or the holders of any capital
stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each share of the capital stock of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and become one fully paid and nonassessable share of Common
Stock, par value $1.00 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each
share of Company Common Stock and all other shares of capital stock of the
Company that are owned by the Company and all shares of Company Common Stock and
other shares of capital stock of the Company owned by Parent, Merger Sub or any
other wholly-owned subsidiary of Parent or the Company shall be canceled and
retired and shall cease to exist and no consideration shall be delivered or
deliverable in exchange therefor. As used in this Agreement, the word
"subsidiary," with respect to any party, means any corporation, partnership,
joint venture, limited liability company or partnership, 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 others performing similar functions with
respect to such corporation, partnership, joint venture, limited liability
company or partnership, 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 51% of the equity, 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; provided, however, that the term "subsidiary" with respect to the
Company shall not include MIR Partnership or Chia Tai-Copley Pharmaceutical
Limited.
SECTION 3.02. CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub, the Company, the
holders of any shares of Company Common Stock or the holders of any capital
stock of Merger Sub:
(a) Subject to Section 3.01(b) and to the other provisions of this
Section 3.02, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (excluding Dissenting Shares (as defined
in Section 3.06)) shall be converted into the right to receive the Offer
Consideration (or the highest price paid for each share of Company Common Stock
pursuant to the Offer, if greater than the Offer Consideration), without any
interest thereon (the "Merger Consideration").
<PAGE> 11
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(b) All such shares of Company Common Stock, when converted as
provided herein, no longer shall be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each Certificate (as defined
in Section 3.03) previously evidencing shares of Company Common Stock shall
thereafter represent only the right to receive the Merger Consideration. The
holders of Certificates previously evidencing shares of Company Common Stock
outstanding immediately prior the Effective Time shall cease to have any rights
with respect to the Company Common Stock except as otherwise provided herein or
by law and, upon the surrender of Certificates in accordance with the provisions
of Section 3.03, shall only represent the right to receive for their shares of
Company Common Stock, the Merger Consideration, without any interest thereon. 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 of Company Common
Stock thereafter on the records of the Company or the Surviving Corporation.
SECTION 3.03. PAYMENT FOR SHARES.
(a) Paying Agent. Within five (5) business days of the date of this
Agreement Parent shall select, and then Parent shall promptly appoint, a United
States bank or trust company which is acceptable to the Company to act as paying
agent (the "Paying Agent") for the payment of the Merger Consideration, and
prior to the Effective Time 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 of Company Common Stock, for payment in accordance with this
Article III, through the Paying Agent (the "Payment Fund"), cash in United
States dollars in immediately available funds in amounts necessary to make the
payments pursuant to Section 3.02(a) and Section 3.03(b). The Paying Agent
shall, pursuant to irrevocable instructions, pay the Merger Consideration out of
the Payment Fund as provided in Section 3.03(b).
The Paying Agent shall invest 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 Company Common Stock entitled thereto as contemplated by this Section
3.03. All earnings on Permitted Investments shall be paid to Parent at such
times and in such amounts as Parent directs the Paying Agent. If for any reasons
(including losses) the Payment Fund is inadequate to pay the amounts to which
holders of shares of Company Common Stock shall be entitled under this Section
3.03, 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) Payment Procedures. As soon as 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, or holders of Dissenting Shares) of a
Certificate or Certificates which, immediately prior to the
<PAGE> 12
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Effective Time, evidenced outstanding shares of Company Common Stock (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, the holder of such Certificate shall be entitled to receive,
and the Paying Agent shall promptly pay, in respect thereof cash in an amount
equal to the product of (x) the number of shares of Company Common Stock
represented by such Certificate and (y) the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled. Absolutely 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 3.03(b), each Certificate (other than Certificates
representing shares of Company Common Stock 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.
(c) Termination of Payment Fund; Interest. Any portion of the
Payment Fund which remains undistributed to the holders of Company Common Stock
for six months after the Effective Time shall be delivered to Parent, upon
demand, and any holders of Company Common Stock who have not theretofore
complied with this Article III 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) No Liability. Neither Parent nor the Surviving Corporation shall
be liable to any holder of shares of Company Common Stock for any cash or
interest thereon from the Payment Fund delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(e) Withholding Rights. Parent and Paying Agent, as applicable,
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as is required to be deducted and withheld with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of state, local or foreign Tax law. To the extent
that amounts are so deducted and withheld by Parent or Paying Agent (on behalf
of Parent), such deducted and withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the shares of Company
Common Stock in respect of which such deduction and withholding was made by
Parent or Paying Agent.
<PAGE> 13
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SECTION 3.04. TREATMENT OF OPTIONS. At the Effective Time, each then
outstanding option to purchase shares of Company Common Stock under the
Company's 1986 Incentive Stock Option Plan, 1990 Stock Option Plan, Amended and
Restated 1992 Stock Plan, 1992 Non-Employee Director Stock Option Plan and 1995
Non-Employee Director Stock Option Plan (collectively, the "Company Stock Option
Plans," which term expressly does not include the Company's 1992 Employee Stock
Purchase Plan (the "Common Stock Purchase Plan")), whether or not then
exercisable or vested (individually, an "Option" and collectively, the
"Options"), shall be cancelled, and in consideration for such cancellation each
holder thereof shall receive at the Effective Time from the Surviving
Corporation for each share of Company Common Stock subject to such Option
(whether or not such Option is then vested or exercisable for each such share of
Company Common Stock) an amount (subject to any applicable withholding Tax) in
cash equal to the difference, if any, between the Merger Consideration and the
per share exercise price of such Option to the extent such difference is a
positive number (such amount being hereinafter referred to as the "Option
Consideration"). Upon receipt of the Option Consideration, the Option
Consideration shall be deemed a release of any and all rights the holder had or
may have had in respect of such Option. The Company has obtained all consents or
releases from holders of Options under the Company Stock Option Plans (including
any consents or releases in connection with the cancellation of the Options
where the difference between the Merger Consideration and the per share exercise
price of any such Option is a negative number) as are necessary to give effect
to the transactions contemplated by this Section 3.04. Except as otherwise
agreed to by the Company and Parent, the Company shall use its reasonable best
efforts to ensure that (i) all Company Stock Option Plans shall terminate as of
the Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any subsidiary thereof shall be canceled as of
the Effective Time, and (ii) following the Effective Time no participant in any
Company Stock Option Plan or any other plan, program or arrangement providing
for the issuance or grant of any other interest in respect of the capital stock
of the Company or any subsidiary thereof shall have any right thereunder to
acquire equity securities of the Company, the Surviving Corporation or any
subsidiary or affiliate thereof and to terminate all such plans.
SECTION 3.05. COMPANY EMPLOYEE STOCK PURCHASE PLAN. Effective immediately
prior to the Effective Time, the Board of Directors of the Company shall
terminate the Common Stock Purchase Plan and no other further issuances of
Company Common Stock under the Common Stock Purchase Plan shall be permitted.
Each participant in the Common Stock Purchase Plan shall, in consideration for
the termination of the right to purchase shares of Company Common Stock
thereunder, receive at the Effective Time from the Surviving Corporation in lieu
of each share of Company Common Stock that could have been purchased under the
Common Stock Purchase Plan had the then applicable Payment Period (as defined in
the Common Stock Purchase Plan) ended on such termination date, an amount
(subject to any applicable withholding Tax) in cash equal to the difference
between the Merger Consideration and the Option Price (as defined in the Common
Stock Purchase Plan) determined with reference only to the first business day of
the applicable Payment Period (as defined in the Common Stock Purchase Plan) to
the extent such difference is a positive number. All funds contributed to the
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Common Stock Purchase Plan which have not been used to purchase Company Common
Stock as of the termination date shall be returned, in cash, without interest,
to participants of the Common Stock Purchase Plan as soon as administratively
feasible after such termination date.
SECTION 3.06. DISSENTING SHARES. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders 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 262 of the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be entitled to receive
payment in cash of the appraised value of such shares of Company Common Stock
held by them in accordance with the provisions of such Section 262, except that
all Dissenting Shares held by stockholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their rights to appraisal of such
shares of Company Common Stock under such Section 262 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 3.03, of their
Certificate or Certificates. The Company shall give Parent (i) prompt notice of
any written demand for appraisal received by the Company pursuant to the
applicable provisions of the DGCL and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, voluntarily make any
payment with respect to any such demands or offer to settle or settle any such
demands.
SECTION 3.07. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
make payment of the Merger Consideration in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof; provided, however, that Parent may, in its discretion and as a
condition precedent to the payment of the Merger Consideration, require the
owner of any such lost, stolen or destroyed Certificate or Certificates to
either (i) deliver a bond in such sum as Parent may reasonably direct as
indemnity against any claim that may be made against the Surviving Corporation,
Parent or the Paying Agent with respect to the Certificates alleged to have been
lost, stolen or destroyed or (ii) agree in writing in customary form to fully
indemnify the Surviving Corporation, Parent and the Paying Agent against any
claim that may be made against them with respect to the Certificates alleged to
have been lost, stolen or destroyed.
<PAGE> 15
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and Merger
Sub as follows:
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the
Company and its subsidiaries is an entity duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of incorporation
or organization and has the power and authority necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted. Each of the Company and its subsidiaries
is duly qualified or licensed as a foreign entity to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect (as defined below) on the Company. A true and complete list of all of the
Company's subsidiaries, together with the jurisdiction of organization of each
subsidiary and the percentage of each subsidiary's outstanding capital stock or
interest owned by the Company or another subsidiary, is set forth in Section
4.01 of the written disclosure schedule delivered by the Company to Parent
("Company Disclosure Schedule"). All of such capital stock or other interest has
been duly authorized by the subsidiary that is the issuer thereof, is validly
issued and is fully paid and nonassessable, is not subject to, nor was it issued
in violation of, any preemptive rights, and is owned, of record and
beneficially, directly or indirectly, by the Company, free and clear of all
Liens (other than Permitted Liens). No shares of capital stock of any of the
Company's subsidiaries are reserved for issuance and there are no outstanding or
authorized options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to the issued or unissued capital
stock or other securities of any subsidiary of the Company, pursuant to which
such subsidiary is or may become obligated to issue or purchase or otherwise
acquire, deliver or sell any shares of capital stock of such subsidiary or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of capital stock of such subsidiary. Except as set
forth in Section 4.01 of the Company Disclosure Schedule and except for
restrictions imposed by applicable law, there are no restrictions of any kind
which prevent the payment of dividends by any of the Company's subsidiaries.
Except as set forth in Section 4.01 of the Company Disclosure Schedule, the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or entity. The Company does not have any subsidiaries that
would constitute a "significant subsidiary" within the meaning of Rule 1-02 of
Regulation S-X promulgated by the SEC. For purposes of this Agreement, a
"Material Adverse Change" or a "Material Adverse Effect" shall mean, with
respect to Parent on the one hand and the Company on the other hand, the result
of one or more events, changes or effects which, individually or in the
aggregate, has had or would reasonably be expected to have a material adverse
effect or impact on the business,
<PAGE> 16
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results of operations or financial condition of such party and its subsidiaries,
taken as a whole, or on such party's ability to consummate the transactions
contemplated hereby.
SECTION 4.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws, as amended to date. Such Certificate of Incorporation
and By-Laws are in full force and effect. The Company is not in violation of any
of the provisions of its Certificate of Incorporation or By-Laws. The Company
has heretofore furnished to Parent complete and correct copies of the
Certificate of Incorporation and By-laws or other governing document of each of
its subsidiaries, as amended to, and in effect on, the date hereof. No corporate
action is required by or on behalf of any of the Company's subsidiaries to
authorize this Agreement or the transactions contemplated hereby.
SECTION 4.03. CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 3,000,000 shares of Preferred Stock, par value $.01 per share,
of which no shares are issued and outstanding, and (ii) 60,000,000 shares of
Common Stock, par value $.01 per share, of which 19,343,766 shares were issued
and outstanding as of July 30, 1999 (excluding 6,026,979 shares of Company
Common Stock held by the Company in its treasury). All issued and outstanding
shares of Company Common Stock are duly authorized, validly issued, fully paid
and nonassessable, and are not subject to preemptive or other similar rights.
Except as set forth in the first sentence of this Section 4.03 or in Section
4.03 of the Company Disclosure Schedule, as of July 30, 1999 there were no
outstanding (i) shares of capital stock or other voting securities of the
Company, (ii) securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company or (iii) options,
warrants, exchange rights, subscription rights or other agreements, commitments
or rights to purchase or otherwise acquire from the Company, or agreements,
commitments or obligations of the Company to issue or sell, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company, in each case to which the Company is
a party or by which the Company is bound (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "Company Securities"). Section 4.03
of the Company Disclosure Schedule sets forth a complete and correct list
(including number of shares, exercise price and the plans under which such
options were granted) of all Company Securities described in clause (iii) of the
definition of Company Securities. Except for the issuance of shares of Common
Stock upon the exercise of Options identified in Section 4.03 of the Company
Disclosure Schedule, since July 30, 1999, the Company has not issued or reserved
for issuance any Company Securities.
SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and, subject, if required with respect to the consummation of the Merger, to the
approval of the Merger by the holders of a majority of the outstanding shares of
Company Common Stock at any meeting of such stockholders called for such purpose
(the "Company Stockholders Meeting"), to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Company, and no other
corporate proceedings on
<PAGE> 17
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the part of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than the approval of the
Merger by the holders of a majority of the outstanding shares of Company Common
Stock at the Company Stockholders Meeting, if required). This Agreement has been
duly and validly executed and delivered by the Company and, assuming approval of
the Merger by the holders of a majority of the outstanding shares of Company
Common Stock at the Company Stockholders Meeting, if required, and the due
authorization, execution and delivery hereof by Parent and Merger Sub, as
applicable, constitutes the legal, valid and binding obligation of the Company,
except that the enforcement hereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity). The Company has complied with, or has taken all actions necessary to
render inapplicable, any state takeover statute or similar statute or regulation
applicable to the Merger, this Agreement and the transactions contemplated
hereby.
SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Section 4.05(a) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the consummation of the transactions contemplated hereby and the compliance
with and the performance of this Agreement by the Company will not, (i) conflict
with or violate the Certificate of Incorporation or By-Laws or equivalent
organizational documents of the Company or any of its subsidiaries, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, any Material Contract (as hereinafter defined), (iv) give to others any
rights of termination, amendment, acceleration or cancellation of any Material
Contract, or (v) result in the creation of a lien or encumbrance on any of the
properties or assets of the Company or any of its subsidiaries, except in the
case of clauses (ii), (iii), (iv) and (v) for any such conflicts, violations,
breaches, defaults or other occurrences that would not individually or in the
aggregate have a Material Adverse Effect on the Company.
(b) Except as set forth in Section 4.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the consummation of the transactions contemplated hereby and the compliance
with and the performance of its obligations under this Agreement by the Company
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act,
the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the filing and
recordation of appropriate merger or other documents as required by Delaware Law
and (ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not have a Material
Adverse Effect on the Company.
<PAGE> 18
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SECTION 4.06. MATERIAL CONTRACTS; PERMITS.
(a) Section 4.06(a) of the Company Disclosure Schedule sets forth a
list of all of the following agreements, contracts and commitments, written or
oral, to which the Company or any of its subsidiaries is a party or by which any
of them or any of their respective properties is bound as of the date of this
Agreement: (i) mortgages, indentures, security agreements and other material
agreements and instruments relating to the borrowing of money by or extension of
credit to the Company or any of its subsidiaries or the guarantee by the Company
or any of its subsidiaries of the indebtedness of any person where the amount of
such borrowed money, credit extension or indebtedness exceeds $50,000
individually; (ii) employment agreements; (iii) consulting agreements not
cancelable by the Company or its subsidiaries on not more than 90 days notice as
well as all other consulting agreements which involved payments in excess of
$25,000 for the period from January 1, 1999 through and including June 30, 1999
or requiring payments in excess of $50,000 for 1999; (iv) union, guild or
collective bargaining agreements; (v) agreements, orders or commitments not
cancelable by the Company or its subsidiaries (without penalty) on not more than
90 days notice for the purchase by the Company or any of its subsidiaries of
supplies or finished products exceeding $150,000 per year; (vi) motor vehicle,
equipment and other personal property leases involving payments in excess of
$25,000 per year; (vii) agreements or commitments for capital expenditures
involving payments in excess of $100,000 for any single item or $250,000 in the
aggregate for all items that do not involve payments in excess of $100,000
singly; (viii) brokerage or finder's agreements; (ix) agreements that restrict
the Company's or any of its subsidiaries' ability to compete in any business or
in any geographic region; (x) agreements, contracts and commitments other than
those described in the foregoing clauses (i) through (ix) which in any case
involve aggregate payments or receipts of more than $75,000 per year (excluding
purchases of raw materials in amounts and at prices consistent with past
practice and in the ordinary course of business) and which are not cancelable
with no more than 90 days' notice without penalty; (xi) agreements pursuant to
which the Company or any subsidiary of the Company manufactures products for
third parties, other than products manufactured for private label; (xii)
Insurance Agreements (as defined below); (xiii) indemnification agreements or
subrogation agreements; (xiv) agreements for the development, manufacture,
marketing, distribution, and/or purchase of raw materials used in the production
of any Product (as defined below) which (A) accounted for more than $100,000 of
the consolidated revenues of the Company and its subsidiaries during the fiscal
year ended December 31, 1998, (B) involved the Company or any of its
subsidiaries receiving or paying royalty, license or other fees in excess of
$100,000 during the said fiscal year or (C) is reasonably expected to account
for more than $50,000 of the consolidated revenues of the Company and its
subsidiaries in the first 12 months following its launch or is reasonably
expected to require the payment of royalty, license or other fees of more than
$100,000 in the first 12 months following its launch; and (xv) agreements,
contracts and commitments which are currently effective and which have been, or
as of the date of this Agreement will be, required to be filed by the Company
with the SEC pursuant to the requirements of the Exchange Act and the rules and
regulations thereunder (the items in (i) through (xv) above being, collectively,
the "Material Contracts"). The Company has heretofore furnished to Parent a
complete and correct copy of each Material Contract (unless any such Material
Contract has not been reduced to writing, in which case the Company has provided
<PAGE> 19
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a complete and correct written description thereof). Each such Material Contract
identified in Section 4.06(a) of the Company Disclosure Schedule is a valid and
binding obligation of the Company or one of its subsidiaries, as the case may
be, and is in full force and effect without amendment, except where not being a
valid and binding obligation or in full force and effect without amendment would
not have a Material Adverse Effect on the Company. Except as set forth in
Section 4.06(a) of the Company Disclosure Schedule, the Company or one of its
subsidiaries, as the case may be, has performed, and to the Company's knowledge,
each other party to any such Material Contract has performed, in all material
respects, the obligations required to be performed by it under the Material
Contracts, the Company is not, and to the Company's knowledge, no other party to
any such Material Contract is (with or without lapse of time or the giving of
notice, or both), in material breach or default thereunder, and to the Company's
knowledge no event has occurred which, after notice or the passage of time or
both, would constitute a default under any such Material Contract or impair the
Company's or any of its subsidiaries material rights under any Material
Contract, or give to any person rights of termination, amendment, acceleration
or cancellation of the Material Contract.
(b) Except as set forth in Section 4.06(b) of the Company Disclosure
Schedule, (i) the Company and its subsidiaries hold all material permits,
licenses, easements, variances, exemptions, consents, certificates, orders and
approvals from governmental authorities which are necessary to the operation of
the business of the Company and its subsidiaries taken as a whole as currently
conducted (collectively, the "Company Permits"); and (ii) the Company and its
subsidiaries are in compliance in all material respects with the terms of the
Company Permits.
SECTION 4.07. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company and its subsidiaries have filed, and the Company has
provided Parent with complete and correct copies of, all forms, reports,
statements and other documents required to be filed from January 1, 1998 through
the date of this Agreement (A) with the SEC, including without limitation (u)
all Annual Reports on Form 10-K, (v) all Quarterly Reports on Form 10-Q, (w) all
proxy statements relating to meetings of stockholders (whether annual or
special), (x) all Current Reports on Form 8-K, (y) all other reports, schedules,
registration statements or other documents, and (z) all amendments and
supplements to the items set forth in clauses (u), (v), (w), (x) and (y) above
(the items set forth in clauses (u), (v), (w), (x), (y) and (z) above
collectively referred to as the "Company SEC Reports"), and (B) with any
applicable state securities authorities (all such forms, reports, statements and
other documents referred to in this Section 4.07(a) being referred to herein,
collectively, as the "Company Reports"). From the date hereof through the
Effective Time, the Company will furnish to Parent copies of any reports and
registration statements to be filed with the SEC after the date hereof (the
"Interim SEC Reports") within a reasonable amount of time prior to the filing
thereof. The Company Reports complied, and the Interim SEC Reports will comply,
in all material respects with the requirements of applicable law (including,
with respect to the Company SEC Reports and the Interim SEC Reports, the
Securities Act of 1933 or the Exchange Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such Company SEC
Reports and Interim SEC Reports) and the Company SEC Reports did not at the time
they were filed and the Interim SEC Reports will not at the time they are filed
contain any untrue
<PAGE> 20
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statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
the Company's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) The audited consolidated balance sheets of the Company as of
December 31, 1998 and December 31, 1997, together with the related audited
consolidated statements of operations, equity and cash flows of the Company for
the years ended December 31, 1998, 1997 and 1996, and the notes thereto,
accompanied by the reports thereon of the Company's independent public
accountants for such years (such audited financial statements collectively being
referred to as the "Financial Statements") set forth in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, were prepared in
accordance with generally accepted accounting principles in the United States
("GAAP") applied on a consistent basis throughout the periods covered thereby
(except to the extent disclosed therein or required by changes in GAAP) and
present fairly in all material respects the consolidated financial position,
results of operations and changes in shareholders' equity and cash flows of the
Company and its subsidiaries as of such dates and for the periods then ended.
The consolidated financial statements (including, in each case, any related
notes thereto) relating to any period subsequent to December 31, 1998 contained
in the Company SEC Reports filed subsequent to January 1, 1999 or to be
contained in the Interim SEC Reports (A) complied (or, in the case of the
Interim SEC Reports, will comply) as to form in all material respects with the
published rules and regulations of the SEC; (B) have been (or, in the case of
the Interim SEC Reports, will be) prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except (1) to the extent
required by changes in GAAP, (2) as may be indicated in the notes thereto, and
(3) in the case of the unaudited financial statements, as permitted by the rules
and regulations of the SEC); (C) fairly present (or in the case of the Interim
SEC Reports, will fairly present) in all material respects the consolidated
financial position of the Company and its subsidiaries as of the respective
dates thereof and the consolidated results of operations and changes in
shareholders' equity and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not reasonably expected to
be material in amount and (D) are (or, in the case of the Interim SEC Reports,
will be) in all material respects in agreement with the books and records of the
Company and its subsidiaries.
(c) The Company and its subsidiaries keep proper accounting records
in which all material assets and liabilities, and all material transactions, of
the Company and its subsidiaries are recorded in conformity with GAAP. No part
of the Company's or any subsidiary's accounting system or records, or access
thereto, is under the control of a person who is not an employee of the Company
or such subsidiary.
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 4.08 of the Company Disclosure Schedule or in the Company SEC Reports or
as contemplated by this Agreement, during the period commencing on January 1,
1999 through and including the date of this Agreement, the Company and each of
its subsidiaries has conducted its business in the ordinary course and there has
not occurred: (i) any Material Adverse Change with
<PAGE> 21
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respect to the Company; or (ii) any action or event that would have required the
consent of Parent pursuant to Section 6.01 had such action or event occurred
after the date of this Agreement.
SECTION 4.09. NO UNDISCLOSED MATERIAL LIABILITIES. Except as set forth in
Section 4.09 of the Company Disclosure Schedule or as disclosed in the Company
SEC Reports, there are no liabilities (absolute, accrued, contingent or
otherwise) of the Company or any of its subsidiaries that individually or in the
aggregate could reasonably be expected as of the date hereof to have a Material
Adverse Effect on the Company, except liabilities (a) adequately provided for in
the Company's audited balance sheet (including any related notes thereto) for
the year ended December 31, 1998 included in the Company's Annual Report on Form
10-K for the year ended December 31, 1998, as filed with the SEC on March 31,
1999 (the "Company Balance Sheet"), or (b) incurred in the ordinary course of
business and not required under GAAP to be reflected on the Company Balance
Sheet or on any balance sheet contained in the Company SEC Reports filed for any
subsequent period.
SECTION 4.10. ABSENCE OF LITIGATION. Except as set forth in Section 4.10
of the Company Disclosure Schedule or as disclosed in the Company SEC Reports,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of the Company, threatened against the Company or any of its
subsidiaries or affecting their respective businesses or properties, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on the Company. Except
as disclosed in Section 4.10 of the Company Disclosure Schedule, neither the
Company nor any of its subsidiaries is subject to any judgment, order,
injunction or decree entered in any lawsuit or proceeding to which the Company
or any of its subsidiaries is a party which could reasonably be expected to have
a Material Adverse Effect on the Company.
SECTION 4.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS.
(a) Section 4.11(a) of the Company Disclosure Schedule lists all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), regardless of whether ERISA
is applicable thereto, all other bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, change in control, severance or
termination pay, medical or life insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plans, agreements or arrangements, and any
employment or executive compensation or severance agreements, written or
otherwise, for the benefit of, or relating to, any employee (or former employee
for which a current or future obligation exists) of the Company or any other
entity which is treated as a single employer with the Company under Section 414
of the Code (each an "ERISA Affiliate" ), which the Company or any ERISA
Affiliate maintains or to which the Company or any ERISA Affiliate has any
obligations or liability to contribute (together, the "Employee Plans"), and
true, correct and complete copies of (i) each such Employee Plan and its Summary
Plan description (if applicable), (ii) the most recent Form 5500 Annual Report
and actuarial reports, if applicable, and (iii) any currently applicable
material communications with any governmental entity or to
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employees or former employees with respect to such Employee Plan have previously
been made available or delivered to Parent.
(b) Except as set forth in Section 4.11(b) of the Company Disclosure
Schedule, (i) none of the Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person and none of the Employee Plans is a
"multi-employer plan" as such term is defined in Section 3(37) of ERISA; (ii)
there has been no transaction or failure to act with respect to any Employee
Plan which could reasonably be expected to have a Material Adverse Effect on the
Company; (iii) all Employee Plans have been administered in accordance with
their respective terms and are in compliance with the requirements prescribed by
any and all statutes, orders, or governmental rules and regulations currently in
effect with respect thereto, and the Company and each of its ERISA Affiliates
have performed all obligations required to be performed by them under, and are
not in default under or violation of any of the Employee Plans, except for such
failures to administer, comply or perform and for such defaults and violations
which, individually and in the aggregate, would not result in a material
liability to the Company or to any ERISA Affiliate; (iv) each Employee Plan
intended to qualify under Section 401(a) of the Code has received, and is
entitled to rely upon, a favorable determination letter from the Internal
Revenue Service ("IRS"), and nothing has occurred with respect to the operation
of any such Employee Plan which could cause the loss of such qualification; (v)
all contributions required to be made to any Employee Plan pursuant to the terms
of the Employee Plan or any collective bargaining agreement have been made on or
before their due dates and a reasonable amount has been accrued in accordance
with prior funding and accrual practices for contributions to each Employee Plan
for the current plan years; (vi) neither the Company nor any ERISA Affiliate
maintains any Employee Plan subject to Title IV of ERISA or Section 412 of the
Code; and (vii) the Company and each ERISA Affiliate that maintains a "group
health plan," as defined in Section 4980B of the Code, has complied in all
material respects with the notice and coverage continuation requirements of
Section 4980B of the Code and Section 601 of ERISA, and the regulations
thereunder.
(c) With respect to each Employee Plan, to the extent applicable,
(i) no event has occurred and no condition exists that would subject the Company
or any ERISA Affiliate, either directly or by reason of their affiliation with
any ERISA Affiliate, to any material tax, fine, lien, penalty or other material
liability imposed by ERISA, the Code or other applicable laws, rules and
regulations; (ii) no material change, except changes to the investment options,
investment providers and similar changes has occurred with respect to the
matters covered by the most recent Form 5500 since the date thereof; and (iii)
no "reportable event" (as such term is defined in ERISA section 4043),
"prohibited transaction" (as such term is defined in ERISA section 406 and Code
section 4975) or "accumulated funding deficiency" (as such term is defined in
ERISA section 302 and Code section 412 (whether or not waived)) has occurred
with respect to any Employee Plan.
(d) Neither the Company nor any ERISA Affiliate has any liability or
contributes to any plan that is subject to Title IV of ERISA or Section 412 of
the Code or to any multiemployer plan within the meaning of ERISA Section
4001(a)(3).
<PAGE> 23
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(e) With respect to any Employee Plan, no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or,
to the Company's knowledge, threatened, that individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the Company.
(f) Except as set forth in Section 4.11(a) of the Company Disclosure
Schedule or as contemplated in this Agreement, no Employee Plan exists that
could result in the payment to any present or former employee of the Company or
its subsidiaries of any money or other property or accelerate or provide any
other rights or benefits to any present or former employee of the Company or its
subsidiaries as a result of the transactions contemplated by this Agreement,
whether or not such payment would constitute a parachute payment within the
meaning of Code Section 280G.
(g) Neither the Company nor any subsidiary of the Company has any
contract, plan or commitment, whether legally binding or not, to create any
additional employee benefit plan or to modify any existing Employee Plans in
such a way that would materially increase the expense of maintaining such
Employee Plans, except with respect to changes required by ERISA, the Code or
other applicable law.
SECTION 4.12. LABOR MATTERS. Except as set forth in Section 4.12 of the
Company Disclosure Schedule: (i) there are no unfair labor practice charges,
grievances, claims or complaints pending or, to the knowledge of the Company,
threatened, by or on behalf of any employee or group of employees of the Company
or any of its subsidiaries which, if resolved against the Company or any such
subsidiary, have had or could reasonably be expected to have a Material Adverse
Effect on the Company; (ii) neither the Company nor any of its subsidiaries is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or its subsidiaries nor does the
Company or any of its subsidiaries know of any activities or proceedings of any
labor union to organize any such employees; and (iii) neither the Company nor
any of its subsidiaries has any knowledge of any strikes, slowdowns, work
stoppages, lockouts, or threats thereof, pending or threatened against or
involving the Company or any of its subsidiaries.
SECTION 4.13. INTELLECTUAL PROPERTY.
(a) "Intellectual Property" means all of the following as they exist
in all jurisdictions throughout the world, in each case, owned by, licensed to,
or otherwise used by the Company or a subsidiary of the Company:
(i) patents, patent applications, and other patent rights
(including any divisions, continuations, continuations-in-part, substitutions,
or reissues thereof, whether or not patents are issued on any such applications
and whether or not any such applications are modified, withdrawn, or
resubmitted);
(ii) trademarks, service marks, trade dress, trade names,
brand names, Internet domain names and Web sites, designs, logos, or corporate
names, whether registered or
<PAGE> 24
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unregistered, and all registrations and applications for registration thereof
and all goodwill associated therewith;
(iii) copyrights, including all renewals and extensions
thereof, copyright registrations and applications for registration thereof, and
non-registered copyrights;
(iv) trade secrets, concepts, ideas, designs, research,
processes, procedures, techniques, methods, know-how, data, mask works,
discoveries, inventions, modifications, extensions, improvements, and other
proprietary rights (whether or not patentable or subject to copyright, mask
work, or trade secret protection) (collectively, "Technology"); and
(v) computer software programs, including, without limitation,
all source code, object code, and documentation related thereto (the
"Software").
(b) Section 4.13(b) of the Company Disclosure Schedule:
(i) sets forth all United States and foreign patents and
patent applications, trademark and service mark registrations and applications,
Internet domain name registrations and applications, and copyright registrations
and applications owned by or licensed to the Company or a subsidiary of the
Company;
(ii) sets forth all material licenses, sublicenses, and other
agreements or permissions under which the Company or a subsidiary of the Company
is a licensor or licensee or otherwise is authorized to use or practice any
Intellectual Property, other than "off the shelf" software; and
(iii) sets forth and describes the status of any material
agreements involving Intellectual Property currently in negotiation or proposed
by the Company or a subsidiary of the Company.
(c) Except as set forth in Section 4.13(c) of the Company Disclosure
Schedule, the Company or a subsidiary of the Company owns or has the right to
use all Intellectual Property necessary to the conduct of the business of the
Company or a subsidiary of the Company. Except as set forth in Section 4.13(c)
of the Company Disclosure Schedule, all Intellectual Property, excluding
Intellectual Property used pursuant to a license to the Company, necessary to
the conduct of the business of the Company or a subsidiary of the Company, is
owned by the Company or a subsidiary of the Company free and clear of all Liens
other than Permitted Liens.
(d) Except as set forth on Section 4.13(d) of the Company Disclosure
Schedule, to the Company's knowledge, none of its Intellectual Property
infringes on the intellectual property or other proprietary rights of third
parties.
(e) Except as set forth in Section 4.13(d) of the Company Disclosure
Schedule, neither the Company nor any subsidiary of the Company is or has been,
during the
<PAGE> 25
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three (3) years preceding the date hereof, a party to any claim or action, nor,
to the knowledge of the Company, is any claim or action threatened, that
challenges the validity, enforceability, ownership, or right to use, sell, or
license any Intellectual Property, or alleges the infringement of or by the
Intellectual Property, except for claims that would not have a Material Adverse
Effect on the Company. To the knowledge of the Company, no third party is
infringing upon any Intellectual Property.
(f) The Company or a subsidiary of the Company has taken all
necessary action to maintain and protect each item of Intellectual Property
owned by the Company or a subsidiary of the Company, except for failures to take
such actions as would not have a Material Adverse Effect on the Company.
(g) The Company or a subsidiary of the Company has taken all
reasonable precautions to protect the secrecy, confidentiality, and value of its
trade secrets and the proprietary nature and value of the Technology, except for
failures to take such precautions as would not have a Material Adverse Effect on
the Company.
(h) All material Software (other than related documentation) is
described in Section 4.13(h) of the Company Disclosure Schedule.
(i) Except as set forth in the Company SEC Reports or in Section
4.13(i) of the Company Disclosure Schedule, all Software, hardware, databases,
and embedded control systems used by the Company or a subsidiary of the Company
(collectively, the "Systems") are Year 2000 Compliant, except for failures to be
Year 2000 Compliant as would not have a Material Adverse Effect on the Company.
The Company has substantially completed its Year 2000 contingency plan (a copy
of which has been previously provided to Parent) and believes that it adequately
addresses all Year 2000 contingencies in all material respects. As used herein,
the term "Year 2000 Compliant" means that the Systems (i) accurately process
date and time data (including, without limitation, calculating, comparing, and
sequencing) from, into, and between the twentieth and twenty-first centuries,
the years 1999 and 2000, and leap year calculations and (ii) operate accurately
with other software and hardware that use standard date format (4 digits) for
representation of the year.
SECTION 4.14. TAXES.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean
taxes, fees, levies, duties, tariffs, imposts and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, provincial, local or foreign taxing authority, including,
without limitation (i) income, franchise, profits, gross receipts, ad valorem,
net worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports and
information statements with respect to Taxes required to be filed with the IRS
or any other
<PAGE> 26
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taxing authority, domestic or foreign, including, without limitation,
consolidated, combined and unitary tax returns.
(b) Except as set forth in Section 4.14 of the Company Disclosure
Schedule, each of the Company and its subsidiaries has filed within the time and
in the manner prescribed by law, or has timely applied for extensions of time to
file, all material Tax Returns required to be filed, and all such Tax Returns
which have been filed are accurate and complete in all material respects. Except
as set forth in Section 4.14 of the Company Disclosure Schedule, each of the
Company and its subsidiaries has paid and discharged (or there has been paid and
discharged on its behalf) within the time and manner prescribed by law all Taxes
required to be paid, withheld or deducted or for which any of the Company or its
subsidiaries is liable, except such Taxes as are being contested in good faith
by appropriate proceedings (to the extent that such proceedings are required)
and with respect to which the Company has set up an adequate reserve under GAAP
for the payment of such Taxes. The Company has set up an adequate reserve under
GAAP on the Company Balance Sheet for all Taxes required to be paid by the
Company and each of its subsidiaries through the date thereof and no Taxes have
been incurred by the Company or any of its subsidiaries after such date which
were not incurred in the ordinary course of business. Except as set forth in
Section 4.14 of the Company Disclosure Schedule, no material deficiencies for
any Taxes have been proposed to, or asserted or assessed against the Company or
any of its subsidiaries or are pending, and no requests for waivers of time to
assess any such Taxes are pending or have been consented to by the Company or
any of its subsidiaries. Except as set forth in Section 4.14 of the Company
Disclosure Schedule, neither the Company nor any subsidiary has requested any
extension of time within which to file any Tax Return in respect of any taxable
year, which Tax Return has not since been filed. Except as set forth in Section
4.14 of the Company Disclosure Schedule, the federal income Tax Returns of the
Company and its subsidiaries have not been examined by the IRS during the past
three years. None of the Company or its subsidiaries has filed a consent under
Section 341(f) of the Code, or has been a member of an affiliated group of
corporations which has filed a consolidated federal income Tax Return (other
than the group of which the Company is the common parent) or otherwise has any
liability for the Taxes of any person (other than the Company and its
subsidiaries) under Treas. Reg. Section 1.1502-6, any similar provision of
state, local or foreign law, or by reason of its status as a transferee,
successor, indemnitor or otherwise. The Company will not be required to include
any item of income in any taxable period (or portion thereof) ending after the
Effective Time as a result of any (x) change in method of accounting made by the
Company prior to the Offer Closing Date (except for any changes of general
applicability required by the SEC or any tax or accounting authority effective
after December 31, 1998) for a taxable period ending on or prior to the Offer
Closing Date, (y) "closing agreement," as described in Section 7121 of the Code
(or any corresponding provision of state, local or foreign Tax law) entered into
on or prior to the Offer Closing Date, or (z) ruling received from the IRS on or
prior to the Offer Closing Date; except in each case to the extent of any
reserve for Taxes set forth in the Company Balance Sheet or any balance sheet
set forth in the Company SEC Reports.
SECTION 4.15. COMPLIANCE WITH LAWS. Except as set forth in Section 4.15 of
the Company Disclosure Schedule or as disclosed in the Company SEC Reports and
except with respect to environmental matters (which are covered exclusively by
Section 4.23 hereof) and
<PAGE> 27
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regulatory matters (which are covered exclusively by Section 4.24 hereof),
neither the Company nor any of its subsidiaries is in violation of any
applicable laws, regulations and ordinances relating to its business and
operations, or any judgment, order or injunction relating to its business and
operations, except for violations which have not had, and (if determined
adversely to the Company and its subsidiaries) could not reasonably be expected
as of the date hereof to have, individually or in the aggregate, a Material
Adverse Effect on the Company, and to the Company's knowledge there is no
pending inspection or investigation relating to any violation thereof nor has
any government agency indicated an intention to conduct the same.
SECTION 4.16. BROKERS. No broker, finder, investment banker or other
person or entity (other than CIBC World Markets Corp.) is entitled to any
brokerage or finder's fee or commission from the Company in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and CIBC World
Markets Corp. pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated hereunder.
SECTION 4.17. VOTE REQUIRED. Unless a meeting of the holders of the
Company Common Stock is not required pursuant to Section 253 of the DGCL, the
affirmative vote of the holders of a majority of the outstanding shares of the
Company Common Stock is the only vote of the holders of any class or series of
the Company's capital stock necessary to approve the Merger.
SECTION 4.18. INTERESTED PARTY TRANSACTIONS. Except as contemplated by
this Agreement, disclosed in Section 4.18 of the Company Disclosure Schedule or
disclosed in the Company SEC Reports, since December 31, 1998, no event has
occurred that would be required to be reported pursuant to Item 404 of
Regulation S-K promulgated by the SEC.
SECTION 4.19. INSURANCE. Section 4.19 of the Company Disclosure Schedule
sets forth a list of all fire, general liability, malpractice liability, theft
and other forms of insurance and all fidelity bonds held by or applicable to the
Company or any of its subsidiaries (the "Insurance Agreements"). All such
Insurance Agreements (i) are with insurance companies that are, to the knowledge
of the Company, financially sound and reputable and are in full force and
effect; (ii) are sufficient in all material respects for compliance with all
requirements of law and of all applicable agreements; and (iii) are valid,
outstanding and enforceable policies to their fullest extent. To the knowledge
of the Company, no event has occurred, including, without limitation, the
failure by the Company or any of its subsidiaries to give any notice or
information or the delivery of any inaccurate or erroneous notice or
information, which limits or impairs the rights of the Company or any of its
subsidiaries under any Insurance Agreements in such a manner as could have a
Material Adverse Effect on the Company. Excluding Insurance Agreements that have
expired and been replaced in the ordinary course of business, no Insurance
Agreement has been canceled within the last two years prior to the date hereof.
<PAGE> 28
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SECTION 4.20. REAL ESTATE.
(a) Each of the Company and its subsidiaries has good and marketable
title in fee simple to all real properties owned by it and valid leaseholds in
the Leased Real Property (as defined herein), subject only to Permitted Liens
(as defined in Section 4.22). Section 4.20 of the Company Disclosure Schedule
sets forth the street address and use description of each parcel of real
property owned by the Company or any of its subsidiaries (the "Owned Real
Property") and (ii) the street address and use description of each parcel of
real property leased by the Company or any of its subsidiaries (the "Leased Real
Property" and, together with Owned Real Property, "Real Property"). The Company
has no leases or subleases of the Owned Real Property. The Company has
heretofore delivered to Parent true, correct and complete copies of all real
property leases (including all modifications, amendments and supplements, "Real
Property Leases") of Leased Real Property. Each Real Property Lease is valid,
binding and in full force and effect, except where the failure to be valid,
binding and in full force and effect would not have a Material Adverse Effect on
the Company. All rent and other sums and charges payable by the Company or a
subsidiary as tenant under such Real Property Leases are current, no notice of
default or termination under any Real Property Lease has been received by the
Company or any of its subsidiaries which remains uncured, and no termination
event or condition or uncured default on the part of the Company or the
applicable subsidiary or, to the Company's knowledge, the lessor, exists under
any Real Property Lease (and to the Company's knowledge no event has occurred
which, with due notice or lapse of time or both, may constitute such a default).
Neither the Company nor any of its subsidiaries has knowledge of nor has
received notice of any condemnation proceeding or any casualty affecting any
Owned Real Property or any Leased Real Property.
(b) To the Company's knowledge, there are no outstanding
requirements or recommendations by any insurance company which has issued a
policy covering any such property, or by any board of fire underwriters or other
body exercising similar functions, requiring or recommending any repairs or work
to be done on any such property.
(c) The Company has furnished Parent with a true, correct and
complete copy of all of the policies of title insurance insuring the Company's
or its subsidiaries' interest in the Owned Real Properties (collectively, the
"Title Policies"). All of the Title policies are in full force and effect. There
is no claim by the Company, its subsidiaries or any other person pending under
any of the Title Policies as to which coverage has been questioned, denied or
disputed by the underwriters or issuers of such Title Policies.
SECTION 4.21. PERSONAL PROPERTY. The Company or a subsidiary of the
Company has good title to all the items of machinery, equipment, furniture,
fixtures, inventory, receivables and other tangible or intangible personal
property reflected on the Balance Sheet and all such property acquired since the
Balance Sheet Date, except for any such property or assets sold or otherwise
disposed of in the ordinary course of business and consistent with past
practices since such date or which would not have a Material Adverse Effect on
the Company. The tangible property owned or used by the Company and its
subsidiaries and that are necessary for the continued operation of the Company
and its subsidiaries' business are in good operating
<PAGE> 29
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condition and repair (subject to normal wear and tear). The Company or any of
its subsidiaries owns or holds under valid leases all of the tangible personal
property and fixtures necessary to conduct the business of the Company and its
subsidiaries as presently conducted except where the failure to own or hold
under valid lease any tangible property or fixtures would not have a Material
Adverse Effect on the Company.
SECTION 4.22. LIENS AND ENCUMBRANCES. All Owned Real Property and assets,
including leases, owned by the Company and its subsidiaries are free and clear
of all liens, pledges, claims, security interests, restrictions, mortgages,
tenancies and other possessory interests, conditional sale or other title
retention agreements, assessments, easements, rights of way, covenants,
restrictions, rights of first refusal, defects in title, encroachments and other
burdens, options or encumbrances of any kind (collectively, "Liens") except (i)
statutory Liens securing payments not yet delinquent or the validity of which
are being contested in good faith by appropriate actions, (ii) purchase money
Liens arising in the ordinary course, (iii) Liens for taxes not yet due or
delinquent, (iv) Liens reflected in the Balance Sheet (which have not been
discharged), (v) Liens which in the aggregate do not materially detract from the
value of, or materially impair the present and continued use or operation of,
the properties or assets subject thereto in the usual and normal conduct of the
business of the Company and the subsidiaries, (vi) any liens set forth on the
title reports for the Owned Real Property, copies of which reports have been
provided to Parent and (vii) any other Liens set forth in Section 4.22 of the
Company Disclosure Schedule (the Liens referred to in clauses (i) through (vii)
being "Permitted Liens"). None of the Permitted Liens materially interferes with
or has interfered with the maintenance, use or operation of the Real Property as
such Real Property is maintained, used or operated as of the date hereof.
SECTION 4.23. ENVIRONMENTAL MATTERS.
Except as set forth in Section 4.23 of the Company Disclosure
Schedule, as disclosed in the Company SEC Reports or to the extent the
inaccuracy of any of the following would not have a Material Adverse Effect on
the Company:
(a) The Company and its subsidiaries are in compliance with,
and for the past three years have been in compliance with, all applicable
federal, state and local laws, statutes, codes, rules, regulations, ordinances,
orders, determinations or rules of common law pertaining to the environment,
natural resources and public or employee health and safety including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Resource Conservation and Recovery
Act of 1976, as amended, the Oil Pollution Act of 1990, as amended, the Safe
Drinking Water Act, as amended, the Hazardous Materials Transportation Act, as
amended, the Toxic Substances Control Act, as amended, and other environmental
conservation or protection laws ("Environmental Laws").
<PAGE> 30
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(b) No judicial or administrative proceedings are pending or,
to the Company's knowledge, threatened against the Company or its subsidiaries
alleging the violation of, or liability under, Environmental Laws.
(c) The Company and its subsidiaries have obtained all
permits, registrations, licenses, authorizations required to be obtained or
filed by each of the Company and its subsidiaries under any Environmental Laws
in connection with the Company's and its subsidiaries' operations and each of
the Company and its subsidiaries are in compliance with the terms and conditions
of all such Permits.
(d) There have been no reports of environmental
investigations, studies, audits, tests, reviews or other analyses conducted
within the past three years by, on behalf of, or which are in the possession of
the Company or its subsidiaries with respect to any property or facility
currently or formerly owned, operated or leased by the Company or its
subsidiaries which have not been delivered to Parent prior to execution of this
Agreement.
(e) No Liens have been placed upon any assets of the Company
or any of its subsidiaries in connection with any actual or alleged liability
under Environmental Laws.
(f) There are no hazardous or toxic substances, wastes,
materials, chemicals, petroleum or petroleum products, asbestos or asbestos
containing materials, pollutants or contaminants as defined under any
Environmental Law present (x) on, at, or beneath any facility currently or (y)
to the knowledge of the Company, on, at or beneath any facility formerly owned
or operated by the Company or its subsidiaries, except in each case as used in
the ordinary course of business and in compliance with Environmental Laws.
SECTION 4.24. REGULATORY COMPLIANCE.
(a) As to each product subject to the jurisdiction of the U.S.
Food and Drug Administration ("FDA") under the Federal Food, Drug and Cosmetic
Act and the regulations thereunder ("FDCA") that is manufactured, tested,
distributed and/or marketed by the Company or any of its subsidiaries (each such
product, a "Product"), such Product is being manufactured, tested, distributed
and/or marketed in substantial compliance with all applicable requirements under
FDCA and similar state and foreign laws and regulations, including but not
limited to those relating to good manufacturing practices, labeling,
advertising, record keeping, filing of reports and security.
(b) Section 4.24(b) of the Company Disclosure Schedule sets
forth a list of each Product manufactured, marketed, sold or licensed by the
Company or any subsidiary as of the date hereof.
(c) Except as set forth in Section 4.24(c) of the Company
Disclosure Schedule, no Products have been recalled, withdrawn, suspended or
discontinued (other than voluntary discontinuance for legitimate business
reasons) by the Company or any of its subsidiaries in the United States and
outside the United States during the period commencing
<PAGE> 31
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January 1, 1997 and ending on the date hereof, and (ii) no proceedings in the
United States or outside of the United States of which the Company has knowledge
(whether completed or pending) seeking the recall, withdrawal, suspension or
seizure of any Product are pending against the Company or any of its
subsidiaries, nor have any such proceedings been pending at any time during the
period commencing January 1, 1997 and ending on the date hereof.
(d) Section 4.24(d) of the Company Disclosure Schedule sets
forth a list of each of the Company's and its subsidiaries' approved and pending
Abbreviated New Drug Applications ("ANDAs") and any similar state or foreign
regulatory filings, as of the date hereof. True and complete copies of such
ANDAs, including all supplements, amendments and annual reports, have heretofore
been made available to Parent. Neither the Company nor any subsidiary has any
approved or pending New Drug Application. Copies of correspondence from the FDA,
and any similar state or foreign regulatory authorities, and the Company's and
its subsidiaries' responses have heretofore been made available to Parent. As to
each drug for which an ANDA has been approved, the Company and its subsidiaries
are in substantial compliance with 21 U.S.C. Section 355 and 21 C.F.R. Part 314,
and similar state and foreign laws and regulations and all terms and conditions
of such applications. As to each drug that is the subject of such an ANDA, the
Company is in substantial compliance with all applicable provisions of the
Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Sections 321 et seq., and
of the implementing regulations thereunder as codified in Title 21 of the Code
of Federal Regulations, and with similar state and foreign laws and regulations
and with all terms and conditions of such applications. As to each such drug,
the Company and any relevant subsidiary, and the officers, employees or agents
of the Company or such subsidiary, have included in the application for such
drug, where required, the certification described in 21 U.S.C. Section 335 a
(k)(1) or any similar state or foreign law or regulation and the list described
in 21 U.S.C. Section 335 a (k)(2) or any similar state or foreign law or
regulation, and the certification and/or disclosure described in 21 C.F.R. Part
54 or any similar state or foreign law or regulation, and such certification,
list, and/or disclosure was in each case true and accurate in all material
respects when made and remained true and accurate in all material respects
thereafter. In addition, the Company and its subsidiaries are in substantial
compliance with all applicable registration and listing requirements set forth
in 21 U.S.C. Section 360 and 21 C.F.R. Part 207 and all similar state and
foreign laws and regulations.
(e) To the Company's knowledge, no Product manufactured and/or
distributed by the Company or any of its subsidiaries is adulterated within the
meaning of 21 U.S.C. Section 351 (or similar state or foreign laws or
regulations) or misbranded within the meaning of 21 U.S.C. Section 352 (or
similar state or foreign laws or regulations), or, except as set forth in
Section 4.24(e) of the Company Disclosure Schedule, is a product that is in
violation of 21 U.S.C. Section 355 (or similar state or foreign laws or
regulations).
(f) Section 4.24(f) of the Company Disclosure Schedule sets
forth a list of (i) Forms 483, (ii) Notices of Adverse Findings and (iii)
warning letters or other correspondence from the FDA or state or foreign
regulatory authorities in which the FDA or any such authority asserted that the
operations of the Company or any subsidiary may not be in compliance with
applicable laws, regulations, orders, judgments or decrees, in each case
received by the Company or such subsidiary from the FDA or any such authority
since January 1, 1996 to
<PAGE> 32
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the date hereof and the response of the Company or such subsidiary to the FDA or
any such authority to such notices from the FDA or any such authority. True and
complete copies of such Forms 483, Notices of Adverse Findings, letters and
other correspondence and the Company's or subsidiary's responses have heretofore
been made available to Parent. All manufacturing operations of the Company and
its subsidiaries are being conducted in substantial compliance with the good
manufacturing practice regulations set forth in 21 C.F.R. Parts 210 and 211 and
similar state or foreign regulations.
(g) Section 4.24(g) of the Company Disclosure Schedule sets
forth all Adverse Reaction Reports filed by the Company and its subsidiaries
with the FDA or state or foreign regulatory authorities during the period
commencing January 1, 1997 and ending on the date hereof.
(h) Except as set forth in Section 4.24(h) of the Company
Disclosure Schedule, to the Company's knowledge, neither the Company, nor any
subsidiary, nor any officer, employee or agent of either the Company or any
subsidiary has made an untrue statement of a material fact or fraudulent
statement to the FDA or any state or foreign regulatory authority, failed to
disclose a material fact required to be disclosed to the FDA or any state or
foreign regulatory authority, or committed an act, made a statement, or failed
to make a statement that, at the time such disclosure was made, could reasonably
be expected to provide a basis for the FDA or any state or foreign regulatory
authority to invoke its policy respecting "Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities", set forth in 56 Fed. Reg. 46191
(September 10, 1991) or any similar policy. Except as set forth on Section
4.24(h) of the Company Disclosure Schedule, neither the Company nor any
subsidiary, nor any officer, employee or agent of either the Company or any
subsidiary, has been convicted of any crime or engaged in any conduct for which
debarment is mandated by 21 U.S.C. Section 335a(a) or any similar state or
foreign law or regulation or authorized by 21 U.S.C. Section 335a(b) or any
similar state or foreign law or regulation.
(i) Except as disclosed in Section 4.24(i) of the Company
Disclosure Schedule, neither the Company nor any subsidiary has received any
written notice that the FDA or any state or foreign regulatory authority has
commenced, or threatened to initiate, any action to withdraw its approval or
request the recall of any product of the Company or any subsidiary, or
commenced, or overtly threatened to initiate, any action to enjoin production at
any facility of the Company or any subsidiary.
(j) The Company and its subsidiaries are, and have at all
times since January 1, 1998 been, in substantial compliance with federal and
state Health Care Fraud and Abuse statutes and regulations, including but not
limited to, the Medicare Anti-kickback Statute, 42 U.S.C. Section 1320a-7b, and
implementing regulations codified at 42 C.F.R. Section 1001 and with all similar
state or foreign laws and regulations. The Company and its subsidiaries have not
been excluded from any federal or state health care program for violation of
Health Care Fraud and Abuse statutes or regulations
<PAGE> 33
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(k) As to each Product that is a controlled substance, such
Product is being manufactured, tested, distributed and/or marketed in
substantial compliance with all federal, state and foreign laws and regulations
applicable to such controlled substances, including but not limited to those
relating to labeling, record keeping, filing of reports and security. Neither
the Company nor any subsidiary has at any time received notice of any proceeding
or investigation by any federal governmental agency or authority (including but
not limited to the U.S. Drug Enforcement Administration (the "DEA"), and the
U.S. Department of Justice) or any state or foreign governmental agency or
authority involving any controlled substance manufactured, tested, distributed
and/or marketed by the Company. The Company has received all required licenses
and permits required by the DEA and comparable state authorities, and such
licenses and permits are in full force and effect.
SECTION 4.25. SUPPLIERS AND CUSTOMERS. Except as set forth in Section 4.25
of the Company Disclosure Schedule, the Company has good commercial
relationships with each of its suppliers of active ingredients, bulk chemical
products and finished drug products and to the Company's knowledge, there are no
facts concerning such suppliers that would reasonably be expected to result in
any material interruption in the timely supply by such suppliers to the Company
of any such materials other than ordinary course delays experienced from time to
time. No such supplier has notified the Company in writing that it intends to
terminate or materially alter the terms of its supply relationship with the
Company. The Company has provided Parent with a list of the Products (including
the name of the supplier) for which the Company has only one FDA approved source
for the active ingredient raw material. Except as set forth in Section 4.25 of
the Company Disclosure Schedule, the Company has good commercial relationships
with its customers of finished drug products and no such customer has notified
the Company in writing that it intends to terminate or materially alter its
relationship with the Company.
SECTION 4.26. INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company in writing for inclusion or incorporation by
reference in (i) any of the Offer Documents will, at the time the Offer
Documents are first published, sent or given to holders of Company Common Stock
and at any time they are amended or supplemented, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, (ii) the Schedule 14D-1
and all amendments or supplements thereto will, at the respective times filed
with the SEC, stock exchange or any other regulatory agency, and on the date
mailed to the holders of Company Common Stock, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (iii) the proxy statement or
information statement relating to the Company Stockholders' Meeting (such proxy
statement or information statement as amended or supplemented from time to time
being hereinafter referred to as the "Proxy Statement") will, at the respective
times filed with the SEC, stock exchange or any other regulatory agency, on the
date mailed to the holders of Company Common Stock and at the time of the
Company Stockholders Meeting contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in
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light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event relating to the Company or any of its
subsidiaries, affiliates, officers or directors should be discovered by the
Company which is required to be set forth in a supplement to the Proxy Statement
or an amendment or supplement to the Offer Documents or the Schedule 14D-9, the
Company shall promptly inform Parent and Merger Sub. The Proxy Statement will
comply as to form in all material respects with the applicable provisions of the
Exchange Act and the rules and regulations thereunder. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Parent or Merger Sub which is contained in any of the
foregoing documents.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby jointly and severally represents and
warrants to the Company that:
SECTION 5.01. ORGANIZATION AND QUALIFICATION. Each of 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 the power and
authority necessary to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being conducted.
SECTION 5.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Parent and
Merger Sub, and no other corporate proceedings on the part of Parent or Merger
Sub are necessary to authorize this Agreement or to consummate the transactions
so contemplated. This Agreement has been duly and validly executed and delivered
by Parent and Merger Sub and, assuming the due authorization, execution and
delivery hereof by the Company, constitutes the legal, valid and binding
obligation of Parent and Merger Sub, except that the enforcement hereof may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
SECTION 5.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) the
execution and delivery of this Agreement by Parent and Merger Sub do not, and
the consummation of the transactions contemplated hereby and the compliance with
and the performance of this Agreement by Parent and Merger Sub will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws of Parent
or the Certificate of Incorporation or By-Laws of Merger Sub, (ii) conflict with
or violate any law, rule, regulation, order, judgment or decree applicable to
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Parent, Merger Sub or any of their subsidiaries or by which they or their
respective properties are bound or affected, or (iii) except as set forth in
Section 5.03(a) of the written disclosure schedule delivered by Parent to the
Company ("Parent Disclosure Schedule"), result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or impair Parent's, Merger Sub's or any of their subsidiaries'
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any material contract, agreement, commitment, arrangement, lease or other
instrument to which Parent, Merger Sub or any of their subsidiaries is a party
or by which Parent, Merger Sub or any of their subsidiaries is bound, or result
in the creation of a lien or encumbrance on any of the properties or assets of
Parent, Merger Sub or any of their subsidiaries pursuant to any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent, Merger Sub or any
of their subsidiaries is a party or by which Parent, Merger Sub or any of their
subsidiaries or any of their respective properties are bound or affected, except
in the case of clauses (ii) and (iii) for any such breaches, defaults or other
occurrences that would not have a Material Adverse Effect on Parent.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the consummation of the transactions contemplated hereby
and the compliance with and the performance of this Agreement by Parent and
Merger Sub will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Exchange Act, the pre-merger notification requirements of the HSR Act and the
filing and recordation of appropriate merger and other documents as required by
Delaware Law and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
have a Material Adverse Effect on Parent.
SECTION 5.04. INFORMATION SUPPLIED. The Offer Documents and the Schedule
14D-1 will contain (or will be amended in a timely manner so as to contain) all
information which is required to be included therein in accordance with the
Exchange Act and the rules and regulations thereunder and any other applicable
law, and will conform in all material respects with the requirements of the
Exchange Act and any other applicable law. The information contained in the
Schedule 14D-1 and the Offer Documents (other than information furnished in
writing by the Company expressly for inclusion in the Schedule 14D-1 or the
Offer Documents, as to which Parent and Merger Sub make no representations or
warranties) will not, at the respective times the Schedule 14D-1 and such Offer
Documents are filed with the SEC, stock exchange or other regulatory agency (or
such filings are amended or supplemented) and first published, sent or given to
holders of Company Common Stock, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by Parent or Merger Sub or any affiliate of Parent for inclusion or
incorporation by reference in (i) the Schedule 14D-9 will, at the time the
Schedule 14D-9 is filed with the SEC, stock exchange or any other regulatory
agency, and at any time it is amended or supplemented, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make
<PAGE> 36
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the statements therein, in light of the circumstances under which they are made,
not misleading or (ii) the Proxy Statement will, at the respective times filed
with the SEC, stock exchange or any other regulatory agency, on the date it is
mailed to the holders of Company Common Stock or at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event
relating to Parent, Merger Sub or any of their respective subsidiaries,
affiliates, officers or directors should be discovered by Parent or Merger Sub
which is required to be set forth in a supplement to the Proxy Statement or an
amendment or supplement to the Offer Documents, the Schedule 14D-1 or the
Schedule 14D-9, Parent and Merger Sub shall promptly inform the Company.
SECTION 5.05. ABSENCE OF LITIGATION. There are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of Parent or Merger
Sub, threatened against Parent, Merger Sub or any of their subsidiaries, before
any court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on Parent. Neither
Parent, Merger Sub nor any of their subsidiaries is subject to any judgment,
order, injunction or decree entered in any lawsuit or proceeding to which
Parent, Merger Sub or any of their subsidiaries is a party which is reasonably
likely to have a Material Adverse Effect on Parent.
SECTION 5.06. FINANCING. Parent and/or Merger Sub have available funds
sufficient in amount to consummate the Offer and the Merger and the respective
transactions contemplated hereby, and to pay related fees and expenses.
SECTION 5.07. OWNERSHIP OF COMPANY COMMON STOCK. As of the date hereof,
neither Parent nor Merger Sub, nor any of their affiliates, beneficially owns
any shares of Company Common Stock except as set forth in Section 5.07 of the
Parent Disclosure Schedule.
ARTICLE VI
CONDUCT OF BUSINESS OF THE COMPANY
SECTION 6.01. CONDUCT OF BUSINESS OF THE COMPANY. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the date of acceptance for payment of and payment for
shares of Company Common Stock by Merger Sub in the Offer (the "Offer Closing
Date"), the Company covenants and agrees that, unless Parent shall otherwise
agree in writing or except as set forth in Section 6.01 of the Company
Disclosure Schedule, the Company shall conduct its business and shall cause the
businesses of its subsidiaries to be conducted only in, and the Company and its
subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries,
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to prevent the loss, cancellation, abandonment, forfeiture or expiration of any
intellectual property rights of the Company and its subsidiaries, to preserve in
full force and effect all material licenses and approvals held by the Company
and its subsidiaries and to preserve the present relationships of the Company
and its subsidiaries with customers, suppliers and other persons with which the
Company or any of its subsidiaries has significant business relations. By way of
amplification and not limitation, except as expressly contemplated or permitted
by this Agreement or except as set forth in Section 6.01 of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries shall,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Offer Closing Date, directly
or indirectly do, or propose to do, any of the following without the prior
written consent of Parent:
(a) amend or otherwise change the Company's or any of its
subsidiaries' Certificate of Incorporation or By-Laws;
(b) issue or sell, pledge, dispose or encumber, or authorize the
issuance or sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) of the
Company or any of its subsidiaries (except for the issuance of shares of Company
Common Stock issuable pursuant to Options under the Company Stock Option Plans
or pursuant to rights to purchase such shares under the Common Stock Purchase
Plan, which Options or rights, as the case may be, are outstanding on the date
of this Agreement or are issued after the date of this Agreement in accordance
with the following proviso); provided, however, that the Company may grant stock
options pursuant to the formula grant provisions of the Company's 1995
Non-Employee Director Stock Option Plan and may continue to offer rights to
purchase Company Common Stock pursuant to the Company Stock Purchase Plan as in
effect on the date of this Agreement;
(c) sell, pledge, dispose of or encumber any material assets of the
Company or any of its subsidiaries (except for (i) sales of assets in the
ordinary course of business and in a manner consistent with past practice and
(ii) dispositions of obsolete or worthless assets);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary of
the Company may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; or (iii) amend the terms of, repurchase, redeem
or otherwise acquire, or permit any subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries;
(e) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof or make any investment therein (other than the acquisition of
equity and debt securities of issuers for
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investment purposes where such securities represent less than 5% of the issuer's
outstanding voting securities on an as-converted basis); (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee (other than guarantees of bank debt of the Company's subsidiaries
entered into in the ordinary course of business) or endorse or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans or advances, except in each case in the ordinary course of business
consistent with past practice and except that the Company may incur short-term
indebtedness for borrowed money in an amount not to exceed in the aggregate
$1,000,000 on terms that do not include the payment of any prepayment penalty or
premium and which the Company will repay within five (5) business days from the
proceeds of maturing short-term investments; (iii) enter into any agreement or
arrangement that would have qualified as a Material Contract if it had been in
effect on the date of this Agreement, or amend or terminate any Material
Contract; (iv) authorize any capital expenditures or purchase of fixed assets or
bioequivalence studies other than in the ordinary course of business consistent
with Section 6.01 of the Company Disclosure Schedule; or (v) enter into or amend
any contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 6.01(e);
(f) amend or enter into any employment, severance or change of
control agreement, increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees of
the Company or its subsidiaries who are not officers of the Company in
accordance with past practices, and except for any such increases in salary of
officers of the Company approved by the Board of Directors prior to the date of
this Agreement and identified in Section 6.01 of the Company Disclosure Schedule
and payment of bonuses to Company officers with respect to the fiscal year ended
December 31, 1998 in accordance with the Company's bonus plan or agreements
previously approved by the Board of Directors (a copy of which has been provided
to Parent and identified in Section 6.01 of the Company Disclosure Schedule); or
grant any severance or termination pay to (other than pursuant to pre-existing
arrangements which are identified in Section 6.01 of the Company Disclosure
Schedule), or enter into any employment or severance agreement with any
director, officer or other employee of the Company or any of its subsidiaries;
or establish, adopt, enter into, amend or terminate any Employee Plan except as
may be required by law;
(g) take any action, other than as required by GAAP or the SEC, to
change accounting policies or procedures (including, without limitation,
procedures with respect to revenue recognition, payments of accounts payable and
collection of accounts receivable);
(h) make any material Tax election inconsistent with past practices
or settle or compromise any material Federal, state, local or foreign Tax
liability or agree to an extension of a statute of limitations for any
assessment of any Tax, except to the extent the amount of any such settlement
has been reserved for on the financial statements included in the Company's most
recent Company SEC Report;
(i) waive or release any rights material to the Company and its
subsidiaries or pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (A) in
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the ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the financial statements of the Company or
incurred in the ordinary course of business and consistent with past practice or
(B) of claims for injury related to use of the Company's albuterol sulfate
solution consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.01(a) through (i) above, or any action which
would make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect in any material respect or prevent the
Company from performing in any material respect or cause the Company not to
perform in any material respect its covenants hereunder or result in any of the
conditions to the Merger set forth herein not being satisfied.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. STOCKHOLDER APPROVAL. (a) To the extent stockholder approval
of this Agreement is required by law, the Company will take all action necessary
in accordance with Delaware law, the Company's Certificate of Incorporation, as
amended, and its By-laws to convene the Company Stockholders' Meeting as
promptly as practicable following the Offer Closing Date to consider and vote
upon the Merger, this Agreement and the transactions contemplated hereby.
(b) The Proxy Statement shall include the recommendation of the
Board of Directors of the Company to the holders of Company Common Stock that
they vote in favor of the adoption of this Agreement and the Merger, except to
the extent that the Board of Directors of the Company shall have withdrawn or
modified its approval or recommendation of this Agreement or the Merger in
accordance with Section 7.11.
(c) Subject to its fiduciary duties under Delaware Law, the
Company's Board of Directors shall (i) cause the Company to use its reasonable
best efforts (through its agents or otherwise) to solicit from the holders of
the Company Common Stock proxies in favor of the Merger, this Agreement and the
transactions contemplated hereby and (ii) cause the Company to take all other
lawful action reasonably necessary to secure stockholder approval of the Merger,
this Agreement and the transactions contemplated hereby.
(d) Notwithstanding the foregoing, if Merger Sub shall acquire at
least 90% of the outstanding Company Common Stock in the Offer, the parties
shall take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
meeting of stockholders in accordance with Section 253 of the DGCL.
(e) To the extent stockholder approval of this Agreement is required
by law, the Company shall prepare a preliminary Proxy Statement relating to the
Company Stockholders
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Meeting and a form of proxy for use at the Company Stockholders' Meeting
relating to the vote of the holders of the Company Common Stock with respect to
the Merger, this Agreement and the transactions contemplated hereby. The Company
shall cause the preliminary Proxy Statement to be filed with the SEC at the
earliest practicable date following the Offer Closing Date. Parent and the
Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify Parent of the receipt of any comments of
the SEC with respect to the preliminary Proxy Statement and of any requests by
the SEC for any amendment or supplement thereto or for additional information
and shall provide to Parent promptly copies of all correspondence between the
Company or any representative of the Company and the SEC. As promptly as
practicable after comments are received from the SEC with respect to the
preliminary Proxy Statement, the Company shall use its commercially reasonable
efforts to respond to the comments of the SEC and, to the extent comments of the
SEC relate to Parent or Merger Sub, Parent and Merger Sub shall use their
commercially reasonable efforts to respond to the comments of the SEC. The
Company shall give Parent and its counsel the opportunity to review all
amendments and supplements to the Proxy Statement and all responses to requests
for additional information and replies to comments of the SEC prior to their
being filed with or sent to the SEC and Parent and Merger Sub shall provide the
Company with such information about them as may be required to be included in
the Proxy Statement or as may be reasonably required to respond to any comment
of the SEC. After all the comments received from the SEC have been cleared by
the SEC staff and all information required to be contained in the Proxy
Statement has been included therein by the Company, the Company shall file with
the SEC the definitive Proxy Statement and the Company shall use its
commercially reasonable efforts to have the Proxy Statement cleared by the SEC
as soon thereafter as practicable. The Company shall cause the Proxy Statement
to be mailed to record holders of Company Common Stock as promptly as
practicable after clearance by the SEC.
(f) Parent and Merger Sub agree to cause all shares of Company
Common Stock purchased pursuant to the Offer and all other shares of Company
Common Stock owned by Parent, Merger Sub or any affiliate of Parent, or with
respect to which Parent, Merger Sub or any affiliate of Parent exercise voting
control, to be voted in favor of the approval and adoption of the Merger and
this Agreement. Parent, in its capacity as the sole stockholder of Merger Sub,
by its execution hereof, approves and adopts the Merger, this Agreement and the
transactions contemplated hereby.
SECTION 7.02. ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which the Company and its subsidiaries are subject, the Company shall (and shall
cause its subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of Parent and Merger Sub and their financing
sources, reasonable access during normal business hours, during the period prior
to the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, the Company shall (and shall cause its
subsidiaries to) furnish promptly to Parent and Merger Sub all information
concerning its business, properties and personnel as Parent and Merger Sub
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may reasonably request, and the Company shall make available to Parent and
Merger Sub the appropriate individuals (including attorneys, accountants and
other professionals) for discussion of its business, properties and personnel as
Parent and Merger Sub may reasonably request. The Company will deliver to Parent
all of the Company's regularly prepared monthly and quarterly financial
statements for periods and dates subsequent to June 30, 1999, as soon as
practicable after the same are available to the Company. Parent and Merger Sub
shall keep such information confidential in accordance with the terms of the
currently effective confidentiality agreement dated March 30, 1999 (the
"Confidentiality Agreement") between Teva Pharmaceuticals USA, Inc. and the
Company. Any investigation pursuant to this Section 7.02 shall not affect the
representations and warranties contained in this Agreement.
SECTION 7.03. CONSENTS; APPROVALS. (a) The Company, Parent and Merger Sub
shall each (i) use their best efforts to file as soon as practicable
notifications under the HSR Act in connection with the Offer, the Merger and the
transactions contemplated hereby, and to respond as promptly as practicable to
any inquiries received from the Federal Trade Commission and the Antitrust
Division of the Department of Justice for additional information or
documentation and to respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with antitrust matters and (ii) use their reasonable
best efforts to obtain all consents, waivers, approvals, authorizations or
orders (including, without limitation, all United States and foreign
governmental and regulatory rulings and approvals) from, and the Company, Parent
and Merger Sub shall promptly make all filings (including, without limitation,
all filings with United States and foreign governmental or regulatory agencies)
with, any governmental or regulatory agency having jurisdiction, in each case to
the extent required in connection with the authorization, execution and delivery
of this Agreement by the Company, Parent and Merger Sub and the consummation by
them of the transactions contemplated hereby; provided, however, that nothing
contained in this Agreement shall require either party or its affiliates to
enter into a divestiture, hold-separate, business limitation or similar
agreement or undertaking except any such divestiture, hold-separate, business
limitation or similar agreement or undertaking which would not, individually or
in the aggregate, in the reasonable judgment of the board of directors of
Parent, materially and adversely impact the economic or business benefits to
Parent and its affiliates of the transactions contemplated by this Agreement or
the ability of Parent or the Surviving Corporation to conduct its business
(including without limitation, its product development efforts) substantially in
the manner such business is being conducted as of the date of this Agreement.
The Company and Parent shall furnish all information required to be included in
any application or other filing to be made pursuant to the rules and regulations
of any United States or foreign governmental or regulatory agency in connection
with the transactions contemplated by this Agreement. If either party receives a
request for additional information or documentary material from any governmental
or regulatory agency with respect to the transactions contemplated hereby, then
such party shall use its reasonable best efforts to make, or cause to be made,
as soon as reasonably practicable and after consultation with the other party,
an appropriate response in compliance with such request.
(b) After the date hereof and prior to the Closing, the Company
shall use its reasonable best efforts to obtain the written consent from any
party to an agreement or instrument identified in Section 7.03(b) of the Company
Disclosure Schedule.
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SECTION 7.04. INDEMNIFICATION AND INSURANCE.
(a) The Certificate of Incorporation of the Surviving Corporation
shall contain the provisions with respect to indemnification (including, without
limitation, Article SEVENTH thereof) set forth in the Certificate of
Incorporation of the Company as of the date of this Agreement, which provisions
shall not be amended, repealed or otherwise modified for a period of six years
after the Effective Time in any manner that would adversely affect the rights
thereunder existing at the Effective Time of individuals who at the Effective
Time were directors, officers, employees or agents of the Company, unless such
modification is required by law.
(b) From and after the Effective Time, the Surviving Corporation and
Parent shall, to the fullest extent permitted under applicable law, indemnify,
defend and hold harmless each person who is now, or has been at any time prior
to the date of this Agreement or who becomes prior to the Effective Time, a
director, officer, employee, fiduciary or agent of the Company or any of its
subsidiaries (collectively, the "Indemnified Parties") against any costs or
expenses (including reasonable attorneys' fees and expenses), judgments, fines,
losses, claims, damages, liabilities and amounts paid in settlement in
connection with any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to (in whole or in part) any action or omission occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) and will pay expenses in advance of
the final disposition of any such claim, action, suit, proceeding or
investigation to the fullest extent permitted by law. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) the Indemnified Parties may retain counsel
satisfactory to them, provided that any counsel retained by the Indemnified
Parties shall be reasonably satisfactory to the Surviving Corporation and
Parent, (ii) after the Effective Time, the Surviving Corporation and Parent
shall pay the reasonable fees and expenses of such counsel in a timely manner
after statements therefor are received, and (iii) the Surviving Corporation and
Parent will cooperate in the defense of any such matter; provided, however, that
neither the Surviving Corporation nor Parent shall be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld). The Indemnified Parties as a group may retain only one law firm to
represent them with respect to any single action unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
(c) From and after the Effective Time, Parent and the Surviving
Corporation shall honor all of the indemnity agreements entered into prior to
the date of this Agreement by the Company with its officers, employees,
directors and consultants (each of which has been identified in Section 4.06(a)
of the Company Disclosure Schedule), whether or not such persons continue in
their positions with Parent or the Surviving Corporation following the Effective
Time. Each indemnity agreement referred to in the preceding sentence either (i)
is substantially in the form provided to Parent prior to the date hereof or (ii)
has been previously provided to Parent.
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(d) From and after the Effective Time until at least six years after
the Effective Time, Parent shall, or shall cause the Surviving Corporation to,
maintain in effect directors' and officers' liability insurance covering those
persons who are currently covered by the Company's directors' and officers'
liability insurance policies (a copy of which has been heretofore delivered to
Parent) of at least the same coverage and amounts, containing terms that are no
less advantageous with respect to claims arising at or before the Effective Time
than the Company's policies in effect immediately prior to the Effective Time;
provided, however, that in no event shall Parent or the Surviving Corporation be
required to pay an annual premium in excess of 150% of the last annual premium
paid by the Company for such coverage prior to the date of this Agreement, in
which event the Parent shall purchase such coverage as is available for such
150% of such annual premium.
(e) The provisions of this Section 7.04 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his heirs and
his personal representatives and shall be binding on all successors and assigns
of Parent, Merger Sub, the Company and the Surviving Corporation. In the event
Parent, Merger Sub or the Surviving Corporation or any of their successors or
assigns transfers or conveys all or substantially all of its properties or
assets to any person, then, in each such case, to the extent necessary to
effectuate the purposes of this Section 7.04, proper provision shall be made so
that such person assumes the obligations of Parent, Merger Sub or the Surviving
Corporation, as applicable, set forth in this Section 7.04.
SECTION 7.05. EMPLOYEE BENEFIT PLANS. From and after the Effective Time,
Parent shall cause the Surviving Corporation to honor and satisfy all
obligations and liabilities that are vested as of the Effective Time under any
Employee Plan. The Surviving Corporation hereby reserves the right to amend or
terminate any Employee Plan after the Effective Time, in accordance with its
terms and applicable law; provided that, until at least the first anniversary of
the Effective Time, Parent shall either (a) continue the Employee Plans as
currently in effect, except for the Common Stock Purchase Plan and the Company
Stock Option Plans, or (b) arrange for each individual who is then a participant
in any Employee Plan which is to be terminated to participate in a comparable
benefit plan (both as to type of plan and to the benefits provided thereunder)
maintained by Parent or any of its affiliates in accordance with the eligibility
criteria thereof, provided further that (i) such participants shall receive full
credit for years of service with the Company or any of its subsidiaries prior to
the Merger for all purposes for which such service was recognized under the
applicable Employee Plan, including, but not limited to, recognition of service
for eligibility, vesting (including acceleration thereof pursuant to the terms
of the applicable Employee Plan) and, to the extent not duplicative of benefits
received under such Employee Plan, the amount of benefits and (ii) to the extent
individuals who are participants in Employee Plans become participants in Parent
or Parent affiliate benefit plans, such participants shall participate in the
Parent or Parent affiliate benefit plans on terms no less favorable than those
offered by Parent or the Parent affiliate to similarly situated employees of
Parent or the Parent affiliate.
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SECTION 7.06. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of:
(a) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental entity
in connection with the transactions contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting any of Parent, Merger Sub or the Company, as
the case may be, or any of their respective subsidiaries which relate to the
consummation of the transactions contemplated by this Agreement; and
(d) (i) any event known to the Company or Parent the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect,
and (ii) any failure of the Company, Parent or Merger Sub, as the case may be,
materially to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice; and provided
further, that failure to give such notice shall not be treated as a breach of
covenant for purposes of this Agreement unless the failure to give such notice
is willful by the party required to give notice or results in material prejudice
to the other party.
SECTION 7.07. FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto in good faith shall use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and to
otherwise satisfy or cause to be satisfied all conditions precedent to its
obligations under this Agreement; provided, however, that nothing contained in
this Agreement shall require either party or its affiliates to enter into a
divestiture, hold-separate, business limitation or similar agreement or
undertaking except any such divestiture, hold-separate, business limitation or
similar agreement or undertaking which would not, individually or in the
aggregate, in the reasonable judgment of the board of directors of Parent,
materially and adversely impact the economic or business benefits to Parent and
its affiliates of the transactions contemplated by this Agreement or the ability
of Parent or the Surviving Corporation to conduct its business (including,
without limitation, its product development efforts) substantially in the manner
such business is being conducted as of the date of this Agreement.
SECTION 7.08. PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with
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respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the other
party, which shall not be unreasonably withheld or delayed; provided, however,
that a party may, without the prior consent of the other party, issue such press
release or make such public statement as may upon the advice of counsel be
required by law, the National Association of Securities Dealers or the Nasdaq
National Market if it has provided prior notice to the other party and used all
reasonable best efforts to consult with the other party prior thereto.
SECTION 7.09. CONVEYANCE TAXES. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp Taxes, any transfer,
recording, registration and other fees, and any similar Taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time.
SECTION 7.10. CONDUCT OF BUSINESS OF MERGER SUB. Prior to the Effective
Time, Merger Sub shall not engage in any activities of any nature except as
provided in or contemplated by this Agreement.
SECTION 7.11. NO SOLICITATION. (a) From the date hereof until the
termination of this Agreement, except as permitted hereby, the Company shall
not, nor shall it permit any of its subsidiaries, or any of its or their
respective officers, directors, employees, agents or representatives (including,
without limitation, any investment banker, attorney or accountant retained by
the Company or any of its subsidiaries) (collectively, the "Company
Representatives"), to, directly or indirectly, (i) initiate, solicit or
knowingly encourage any inquiries, offers or proposals that constitute, or could
reasonably be expected to lead to, an Acquisition Proposal, (ii) engage in
negotiations or discussions concerning, or provide to any person or entity any
non-public information or data relating to the Company or any of its
subsidiaries for the purposes of making, or take any other action to facilitate
knowingly, the making of any Acquisition Proposal or inquiry that could
reasonably be expected to lead to an Acquisition Proposal, or (iii) agree to,
approve or recommend any Acquisition Proposal; provided, however, that, subject
to the Company's compliance with this Section 7.11, nothing contained in this
Agreement shall prevent the Company or its Board of Directors, prior to the
adoption of this Agreement at the Company Stockholder Meeting, from (A) entering
into a definitive agreement providing for the implementation of a Superior
Proposal (as defined below) if the Company or the Board of Directors is
simultaneously terminating this Agreement pursuant to Section 9.01(f), (B)
providing non-public information or data to, entering into customary
confidentiality agreements with, or entering into discussions or negotiations
with, any person or entity in connection with an unsolicited (the existence of
discussions or negotiations with a person prior to the date of this Agreement
shall not create a presumption that a proposal from that person was "solicited")
bona fide, written Acquisition Proposal to the Company or its stockholders, if
the Board of Directors of the Company, by action of a majority of Independent
Directors (as defined below) determines in good faith after consultation with
nationally-recognized independent financial advisors that such Acquisition
Proposal, if accepted, constitutes, or is reasonably likely to lead to, a
Superior Proposal or (C) taking and disclosing to
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its stockholders a position with respect to such Acquisition Proposal
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
making any other public disclosure that, after consultation with and based on
the advice of outside legal counsel, is determined to be required by applicable
law; provided, further, that except as otherwise permitted in this Section 7.11,
the Company does not withdraw or modify its position with respect to the Merger
or approve or recommend an Acquisition Proposal. For purposes of this Agreement,
"Superior Proposal" means a bona fide written Acquisition Proposal (i) for which
financing, to the extent required, is committed, (ii) which in the good faith
judgment of a majority of the Independent Directors is reasonably likely to be
consummated without undue delay and (iii) which a majority of the Independent
Directors determine in their good faith judgment (based upon the opinion
(written or oral) of nationally-recognized independent financial advisors that
the value of the consideration provided for in such proposal exceeds the value
of the consideration provided for in the Offer and the Merger) and after taking
into account all legal, financial, regulatory and other material aspects of the
Acquisition Proposal, and the person making the proposal, to be more favorable
to the Company's stockholders than the Merger. For purpose of this Agreement,
"Independent Directors" shall be such members of the Company's Board of
Directors who are directors on the date hereof and who are otherwise not (1)
employees, officers, directors, appointees, nominees or affiliates of HC or any
of its affiliates (other than the Company), Parent or Merger Sub or any of their
affiliates, or (2) employees or officers of the Company. The Company will
immediately cease and cause to be terminated any existing discussions or
negotiations with any third parties conducted heretofore with respect to any
Acquisition Proposals, and will promptly inform the Company Representatives of
the obligations undertaken in this Section 7.11(a).
(b) The Company shall (i) promptly, and in any event within 24
hours, notify Parent orally and in writing after receipt by the Company (or its
advisors) of any Acquisition Proposal or any inquiries which could reasonably be
expected to lead to an Acquisition Proposal, including the material terms and
conditions thereof and the identity of the person making it, (ii) (x) promptly,
and in any event within 24 hours, notify Parent orally and in writing after
receipt of any request for non-public information relating to it or any of its
subsidiaries or for access to its or any of its subsidiaries' properties, books
or records by any person that, to the Company's knowledge, is considering
making, or has made, an Acquisition Proposal and (y) promptly provide to Parent
any nonpublic information regarding the Company provided to any such person
which was not previously provided to Parent, (iii) receive from any person
identified in clause (ii) an executed confidentiality letter in reasonably
customary form and containing terms that are as stringent in all material
respects as those contained in the Confidentiality Agreement prior to delivery
of any such non-public information, and (iv) keep Parent advised on a prompt
basis of the status of any such Acquisition Proposal, inquiry or request
(including notifying Parent within 24 hours of any material changes to the terms
and conditions of any Acquisition Proposal).
(c) The Company will not withdraw or modify, in any manner adverse
to Parent, its approval or recommendation of this Agreement or the Merger and
will not approve or recommend an Acquisition Proposal, except in each case in
connection with a Superior Proposal and then only upon or after the termination
of this Agreement pursuant to Section 9.01(f). For
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purposes of this Agreement, "Acquisition Proposal" shall mean any of the
following (other than the transactions between the Company, Parent and Merger
Sub contemplated hereunder and the transactions contemplated by the Stockholder
Agreement and the Registration Rights Agreement dated as of the date hereof
between HC and the Company) involving the Company or any of its subsidiaries:
(i) a proposal for any transaction pursuant to which any person or its
affiliates (a "Third Party") proposes to acquire beneficial ownership of at
least twenty percent (20%) of the outstanding equity securities of the Company,
whether from the Company or pursuant to a tender offer, exchange offer,
recapitalization, reorganization or otherwise, (ii) a proposal for any merger,
consolidation or other business combination involving the Company pursuant to
which any Third Party proposes to acquire beneficial ownership of at least
twenty percent (20%) of the outstanding equity securities of the Company or the
entity surviving such merger, consolidation or other business combination, (iii)
a proposal for any other transaction or series of related transactions pursuant
to which any Third Party proposes to acquire control of assets (including for
this purpose the outstanding equity securities of subsidiaries of the Company,
and the entity surviving any merger, consolidation or business combination
including any of them) of the Company and its subsidiaries having a fair market
value equal to or greater than twenty percent (20%) of the fair market value of
all of the assets of the Company and its subsidiaries, taken as a whole,
immediately prior to such transaction, or (iv) 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.
SECTION 7.12. DIRECTORS. (a) Promptly upon the Offer Closing Date, Merger
Sub shall be entitled to designate such number of directors on the Board of
Directors of the Company as will give Merger Sub, subject to compliance with
Section 14(f) of the Exchange Act, representation on such Board of Directors
equal to that number of directors, rounded up to the next whole number (and in
no event less than a majority of the Board of Directors), which is the product
of (a) the total number of directors on such Board of Directors (giving effect
to the directors elected pursuant to this sentence) multiplied by (b) the
percentage that (i) such number of shares of Company Common Stock so accepted
for payment and paid for by Merger Sub or otherwise owned by Merger Sub and its
affiliates bears to (ii) the number of shares of Company Common Stock
outstanding, and the Company shall, at such time, cause Merger Sub's designees
to be so elected; provided, however, that in the event that Merger Sub's
designees are appointed or elected to the Board of Directors of the Company,
until the Effective Time of the Merger such Board of Directors shall have at
least two Independent Directors, provided further that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, any remaining Independent Director shall be entitled to designate
such a person to fill any such vacancy who shall be deemed to be an Independent
Director for purposes of this Agreement or, if no Independent Directors then
remain, the other directors shall designate two persons to fill such vacancies
who shall not be (1) employees, officers, directors, appointees, nominees or
affiliates of HC or any of its affiliates (other than the Company), Parent or
Merger Sub or (2) employees or officers of the Company, to serve as the
Independent Directors, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. Subject to applicable law, the Company
shall take all action requested by Merger Sub necessary to effect any such
election, including mailing to its shareholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-
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9 (provided that Merger Sub shall have provided to the Company on a timely basis
all information required to be included in the Information Statement with
respect to Merger Sub's designees). In connection with the foregoing, the
Company will promptly, at the option of Merger Sub, either increase the size of
the Company's Board of Directors or obtain the resignation of such number of its
current directors as is necessary to enable Merger Sub's designees to be elected
to the Company's Board of Directors as provided above.
(b) Following the election or appointment of Merger Sub's designees
pursuant to this Section and prior to the Effective Time, in addition to any
approval required by Section 10.04 or 10.05 hereof, the approval of the
Independent Directors shall be required to authorize any matter relating to this
Agreement or the Merger on behalf of the Company, including without limitation
any termination of this Agreement by the Company, any amendment of this
Agreement, the selection of a Paying Agent, any extension of time for the
performance of any obligation or any other act of Parent or Merger Sub under
this Agreement and any waiver of compliance by Parent or Merger Sub with any
provision of this Agreement for the benefit of the Company or the holders of the
Company Common Stock (including, without limitation, Section 7.05).
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. CONDITIONS OF ALL PARTIES TO THE MERGER. The respective
obligations of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of the
Company if and as required by Delaware Law and the Company's Certificate of
Incorporation and By-laws;
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; and there shall
not be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger, which makes the
consummation of the Merger illegal; and
(d) Acceptance for Payment and Payment. Merger Sub shall have
accepted for payment and paid for shares of Company Common Stock tendered
pursuant to the Offer, provided that this condition will be deemed satisfied if
(i) Merger Sub fails to accept for payment and pay for Company Common Stock
pursuant to the Offer in violation of the terms thereof or
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(ii) Parent or any affiliate of Parent acquires any shares of Company Common
Stock other than pursuant to the Offer, which shares, when added to the shares
acquired by Parent pursuant to any stock options and the Offer would result in
Parent owning at least a majority of the outstanding shares of Company Common
Stock on a fully diluted basis (excluding options the exercise price of which is
equal to or greater than the Offer Consideration).
ARTICLE IX
TERMINATION
SECTION 9.01. TERMINATION. This Agreement may be terminated and the Offer
and Merger abandoned at any time prior to the Offer Closing Date or the
Effective Time, as set forth below, notwithstanding approval thereof by the
stockholders of the Company:
(a) prior to the Effective Time, by mutual written consent of Parent
and the Company for any reason, or by mutual action of their respective Boards
of Directors;
(b) prior to the Effective Time, by Parent or the Company if there
shall be any law or regulation of any competent authority that makes
consummation of the Merger illegal or otherwise prohibited or if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a non-appealable final order, decree or ruling or
taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger;
(c) prior to the Offer Closing Date, by the Company if (i) any of
the representations and warranties of Parent or Merger Sub set forth herein
shall fail to be true and correct (in the case of representations and warranties
qualified as to materiality) or true and correct in all material respects (in
the case of other representations and warranties), in each case as of a given
date as though made on and as of such date (except for representations and
warranties made as of a specified date, which shall fail to be so true and
correct as of such date), or (ii) either Parent or Merger Sub shall have failed
to perform or comply in all material respects with its obligations, agreements
or covenants contained in this Agreement, which failure, in the case of (i) or
(ii), is not curable or, if curable, is not cured by the earlier of (x) 15
calendar days after written notice of such failure is given by the Company to
Parent or Merger Sub and (y) the Termination Date;
(d) prior to the Offer Closing Date, by Parent if (i) the
representations and warranties of the Company set forth herein (without giving
effect to any materiality limitations contained therein) shall fail to be true
and correct on a given date as though made on and as such date (except for
representations and warranties made as of a specified date, which shall fail to
be so true and correct as of such date) and the failure of such representations
and warranties to be so true and correct in the aggregate has a material adverse
effect on the business, financial condition or results of operations of the
Company and its subsidiaries taken as a whole, or (ii) the Company shall have
failed to perform or comply in all material respects with its obligations,
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agreements or covenants contained in this Agreement, which failure, in the case
of (i) or (ii), is not curable or, if curable, is not cured by the earlier of
(x) 15 calendar days after written notice of such failure is given by Merger Sub
to the Company and (y) the Termination Date;
(e) prior to the Effective Time, by Parent or the Company, if, at
the Company Stockholders Meeting (including any adjournment or postponement
thereof), if required, the requisite vote of the stockholders of the Company
shall not have been obtained (provided that the right to terminate this
Agreement under this Section 9.01(e) shall not be available to Parent if it has
failed to vote as specified in Section 7.01(f));
(f) prior to the Effective Time, by the Company, if prior to the
adoption of this Agreement at the Company Stockholder Meeting the Board of
Directors of the Company shall have approved, and the Company shall concurrently
enter into, a definitive agreement providing for the implementation of a
Superior Proposal; but only if (i) the Company is not then in breach of Section
7.11, (ii) the Company's Board of Directors shall have authorized the Company,
subject to complying with the terms of this Agreement, to enter into a binding
written agreement concerning a transaction that constitutes a Superior Proposal
and the Company shall have notified the Parent in writing that it intends to
enter into such an agreement, (iii) during the ten (10) business day period
after the Company's notice, (A) the Company shall have offered to negotiate
with, and, if accepted, negotiate in good faith with, Parent to attempt to make
such commercially reasonable adjustments in the terms and conditions of this
Agreement as would enable the Company to proceed with the Merger and (B) the
Board of Directors of the Company shall have concluded, after considering the
results of such negotiations and the revised proposals made by the Parent, if
any, that any Superior Proposal giving rise to the Company's notice continues to
be a Superior Proposal; (iv) such termination is within five (5) business days
following the ten (10) business day period referred to above, and (v) no
termination pursuant to this Section 9.01(f) shall be effective unless the
Company shall simultaneously make the payment of the termination fee required by
Section 9.05;
(g) prior to the Offer Closing Date, by the Company, if Merger Sub
shall have failed to commence the Offer within five (5) business days following
the date of the initial public announcement of the Offer;
(h) prior to the Offer Closing Date, by the Company, (x) if the
Offer shall have expired or have been withdrawn or terminated without any shares
of Company Common Stock being purchased thereunder or (y) if no shares of
Company Common Stock have been purchased thereunder on or prior to the
Termination Date; provided, however, that the Company's right to terminate this
Agreement pursuant to Section 9.01(h) (y) shall not be available to the Company
if the Company is in material breach of this Agreement and such breach has been
the proximate cause of the failure of the Offer to be consummated; or
(i) prior to the Offer Closing Date, by Parent, (x) if the Offer
shall have been withdrawn or terminated without any shares of Company Common
Stock being purchased thereunder, whether or not the Offer has commenced, or (y)
if no shares of Company Common Stock have been purchased thereunder on or prior
to the Termination Date, or (z) if the
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Stockholder Agreement shall have been terminated by HC in accordance with its
terms as in effect on the date hereof; provided, however, that Parent's right to
terminate this Agreement pursuant to this Section 9.01(i) shall not be available
to Parent if Merger Sub has withdrawn or terminated the Offer or failed to
extend the Offer in breach of this Agreement or if Parent or Merger Sub is in
material breach of this Agreement and such breach has been the proximate cause
of the failure of the Offer to be consummated.
SECTION 9.02. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 9.01, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement, except as provided in
Section 10.01, shall forthwith become void and there shall be no liability on
the part of any party hereto or any of its affiliates, directors, officers or
stockholders except (i) as set forth in Section 9.03, Section 9.04 and 9.05
hereof, and (ii) nothing herein shall relieve any party from liability for any
breach hereof.
SECTION 9.03. FEES AND EXPENSES PAYABLE BY THE COMPANY.
(a) Except as set forth in Section 9.04(b), all fees and expenses
incurred by the Company in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Company, whether or not the Merger is
consummated.
(b) Upon the termination of this Agreement by Parent pursuant to
Section 9.01(d) or by the Company pursuant to Section 9.01(f), the Company shall
reimburse Parent for actual, documented and reasonable out-of-pocket expenses of
Parent and Merger Sub incurred in connection with this Agreement and the
transactions contemplated by this Agreement (including, but not limited to, fees
and expenses of Parent's counsel, accountants and financial advisors) in an
aggregate amount not to exceed $1,000,000.
(c) The expenses to be reimbursed pursuant to Section 9.03(b) shall
be paid by wire transfer of immediately available funds to an account designated
by Parent or by check if Parent fails to designate an account, in either case
within ten (10) days following written demand from Parent to the Company.
SECTION 9.04. FEES AND EXPENSES PAYABLE BY PARENT.
(a) Except as set forth in Section 9.03(b), all fees and expenses
incurred by Parent or Merger Sub in connection with this Agreement and the
transactions contemplated hereby shall be paid by Parent and/or Merger Sub,
whether or not the Merger is consummated.
(b) Upon the termination of this Agreement by the Company pursuant
to Section 9.01(c), Parent shall reimburse the Company for actual, documented
and reasonable out-of-pocket expenses of the Company incurred in connection with
this Agreement and the transactions contemplated by this Agreement (including,
but not limited to, fees and expenses of the Company's counsel, accountants and
financial advisors) in an aggregate amount not to exceed $1,500,000.
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(c) The expenses to be reimbursed pursuant to Section 9.04(b) shall
be paid by wire transfer of immediately available funds to an account designated
by the Company or by check if the Company fails to designate an account, in
either case within ten (10) days following written demand from the Company to
Parent.
SECTION 9.05. TERMINATION FEE. The Company shall pay Parent $10,000,000
if: (i) this Agreement is terminated by the Company pursuant to Section 9.01(f)
or (ii) this Agreement is terminated by Parent pursuant to Section 9.01(d) and
on or prior to the 180th day after the date of termination the Company enters
into a definitive agreement providing for a Qualified Acquisition and on or
prior to the first anniversary of the date of termination, such Qualified
Acquisition is consummated. Any payment due under Section 9.05(i) shall be made
concurrently with the termination of this Agreement pursuant to Section 9.01(f),
and any payment due under Section 9.05(ii) shall be made upon consummation of
such Qualified Acquisition, in each case by wire transfer of immediately
available funds to an account designated by Parent or, if no wire transfer
instructions have been provided to the Company by Parent, by check. A "Qualified
Acquisition" shall mean an Acquisition Proposal in which the amount to be
received with respect to each share of Company Common Stock equals or exceeds
the Merger Consideration.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except as otherwise provided in this Section 10.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 9.01, as the case may be, except that the agreements set
forth in Article III, Sections 7.04, 7.05, 7.08, 9.03, 9.04 and Article X shall
survive the Effective Time indefinitely and those set forth in Sections 7.08,
9.02, 9.03, 9.04, 9.05 and Article X shall survive termination indefinitely. The
Confidentiality Agreement shall survive termination of this Agreement.
SECTION 10.02. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally, three days after being
sent by registered or certified mail (postage prepaid, return receipt requested)
(five business days, if mailed outside the country of the recipient), one day
after dispatch by recognized overnight courier (provided delivery is confirmed
by the carrier) and upon transmission by telecopy, confirmed received, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address):
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(a) If to Parent or Merger Sub:
Teva Pharmaceuticals USA, Inc.
650 Cathill Road
Sellersville, PA 18960
Attn: President
Tel: (215) 256-8400
Fax: (215) 723-6184
With a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
Attn: Peter H. Jakes, Esq.
Tel: (212) 728-8000
Fax: (212) 728-8111
(b) If to the Company:
Copley Pharmaceutical, Inc.
25 John Road
Canton, MA 02021
Attn: President
General Counsel
Tel: (781) 821-6111
Fax: (781) 575-1856
With a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attn: Steven C. Browne, Esq.
Tel: (617) 248-7000
Fax: (617) 248-7100
SECTION 10.03. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "affiliate" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person;
<PAGE> 54
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(b) "business day" means any day other than a day on which banks in
Boston, Massachusetts are required or authorized to be closed;
(c) "person" means an individual, corporation, partnership,
association, trust, limited liability company or partnership, unincorporated
organization, other entity or group (as defined in Section 13(d)(3) of the
Exchange Act); and
(d) "Termination Date" means October 31, 1999; provided, however,
that if on October 31, 1999 the only condition to the Offer set forth on Annex A
attached hereto that has not been satisfied or waived is the condition in clause
(ii) that any applicable waiting periods under the HSR Act shall not have
expired or been terminated prior to the expiration of the Offer, then the term
"Termination Date" shall mean December 31, 1999.
SECTION 10.04. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
(subject to the provisions of Section 7.12(b)) at any time prior to the
Effective Time; provided, however, that, after approval of the Merger by the
stockholders of the Company, if necessary, no amendment may be made which by law
requires further approval by such stockholders without such further approval;
provided, further, however, that, after the Offer Closing Date, no amendment may
be made to any of Article III, Sections 7.04, 7.05, 7.08, 9.03, 9.04, 9.05 or
Article X without the approval of all persons who would be adversely affected by
the amendment of any provisions of such Articles or Sections. This Agreement may
not be amended except by an instrument in writing signed by the parties hereto.
SECTION 10.05. WAIVER. At any time prior to the Effective Time, any party
hereto may, with respect to any other party hereto, (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein; provided, however, the parties agree that any
waiver of any provisions of Article III, Sections 7.04, 7.05, 7.08, 9.03, 9.04,
9.05 or Article X shall require the consent of all persons who would be
adversely affected by the waiver of any provisions of such Articles or Sections.
Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
SECTION 10.06. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.07. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an
<PAGE> 55
-51-
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
SECTION 10.08. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, are not intended to confer upon any other person any
rights or remedies hereunder.
SECTION 10.09. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent and Merger Sub may assign all
or any of their rights hereunder to any affiliate provided that no such
assignment shall relieve the assigning party of its obligations hereunder.
Parent guarantees the full and punctual performance by Merger Sub and the
Surviving Corporation of all of their respective obligations hereunder.
SECTION 10.10. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, expressed or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 7.04 (which is intended to be for the
benefit of the Indemnified Parties and may be enforced by such Indemnified
Parties) and Section 7.05 (which is intended to be for the benefit of the
Company's employees and may be enforced by such Company employees).
SECTION 10.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 10.12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware and shall in all
respects be interpreted, enforced and governed under the internal and domestic
laws of such state, without giving effect to the principles of conflicts of laws
of such state. Any claims or legal actions by one party against the other
arising out of the relationship between the parties contemplated herein (whether
or not arising under this Agreement) shall be governed by the laws of the State
of Delaware.
SECTION 10.13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 56
-52-
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have each caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
TEVA PHARMACEUTICALS USA, INC.
By: /s/ William A. Fletcher
------------------------------------
Name: William A. Fletcher
Title: President
CARIBOU MERGER CORPORATION
By: /s/ William A. Fletcher
------------------------------------
Name: William A. Fletcher
Title: President
COPLEY PHARMACEUTICAL, INC.
By: /s/ Daniel L. Korpolinski
------------------------------------
Name: Daniel L. Korpolinski
Title: President and Chief Executive Officer
<PAGE> 57
ANNEX A
CONDITIONS OF 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 (relating
to Merger Sub's obligation to pay for or return tendered shares of Company
Common Stock promptly after expiration or termination of the Offer), to pay for
any shares of Company Common Stock tendered, and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for any shares
of Company Common Stock tendered, and (subject to Section 1.01(b) of the Merger
Agreement) may amend or terminate the Offer (whether or not any shares of
Company Common Stock have theretofore been purchased or paid for) if, (i) there
have not been validly tendered and not withdrawn prior to the time the Offer
shall otherwise expire a number of shares of Company Common Stock which,
together with any shares of Company Common Stock beneficially owned by Parent
and its affiliates, constitutes at least a majority of the shares of Company
Common Stock outstanding on a fully-diluted basis (excluding options the
exercise price of which is equal to or greater than the Offer Consideration) or
(ii) any applicable waiting periods under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer or (iii) at any time on or
after the date of the Merger Agreement and before acceptance for payment of such
shares of Company Common Stock any of the following events shall occur and be
continuing:
(A) any U.S. or foreign governmental entity or foreign,
federal, state or local court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order
(other than the application to the Offer and the Merger of
applicable waiting periods under the HSR Act) which is in effect and
which (1) prevents or prohibits consummation of the Offer or the
Merger, (2) prohibits or limits the ownership or operation by the
Company, Parent or any of their affiliates or subsidiaries of 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, Merger Sub or any other subsidiary of
Parent to hold or to exercise effectively full rights of ownership
of the shares of Company Common Stock, including, without
limitation, the right to vote the shares of Company Common Stock,
acquired by Merger Sub pursuant to the Offer or otherwise on all
matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of the Merger
Agreement and the transactions contemplated thereby, (4) requires
divestiture by Parent, Merger Sub or any other affiliate of Parent
of the shares of Company Common Stock, or (5) requires Parent, the
Company or any of their respective affiliates to enter into a
divestiture, hold-separate, business limitation or similar agreement
or undertaking, except in the case of clauses (2), (3), (4) and (5)
for any prohibition, limitation or requirement which would not,
individually or in the aggregate, in the reasonable judgment of the
board of directors of Parent, materially and adversely impact the
<PAGE> 58
economic or business benefits to Parent and its affiliates of the
transactions contemplated by this Agreement or the ability of Parent
or the Surviving Corporation to conduct its business (including,
without limitation, its product development efforts) substantially
in the manner such business is being conducted as of the date of the
Merger Agreement; or
(B) the representations and warranties of the Company
contained in Article IV of this Agreement (without giving effect to
any materiality limitations contained therein) shall fail to be true
and correct (except for representations and warranties made as of a
specified date, which shall fail to be so true and correct as of
such date) and the failure of such representations and warranties to
be so true and correct in the aggregate has a material adverse
effect on the business, financial condition or results of operations
of the Company and its subsidiaries taken as a whole; or
(C) the Company shall not have performed or complied in all
material respects with its obligations, agreements or covenants
under the Merger Agreement to be performed or complied with by it;
or
(D) the Merger Agreement shall have been terminated in
accordance with its terms; or
(E) there shall have occurred a material adverse change in the
business, financial condition or results of operations of the
Company and its subsidiaries taken as a whole, excluding any change
resulting from or attributable to general economic conditions; or
(F) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities on any national
securities exchange or the over-the-counter market in the United
States (other than a shortening of trading hours or any coordinated
trading halt triggered solely as a result of a specified increase or
decrease in a market index) for a continuous period of five (5)
days, (ii) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, (iii) any
material limitation (whether or not mandatory) by any U.S. or
foreign governmental entity on the extension of credit by banks or
other lending institutions in the United States, (iv) a commencement
of a war or armed hostilities or other national calamity directly
involving the United States and Parent shall have determined that
there is a reasonable likelihood that such event would have a
material adverse significance to Parent, its subsidiaries, the
Company and its subsidiaries all taken as a whole, or (v) in the
case of any of the foregoing existing at the time of the execution
of the Merger Agreement, a material acceleration or worsening
thereof; or
(G) the Company's Board of Directors (i) shall have withdrawn
or modified in a manner adverse to Parent or Merger Sub (including
by amendment
2
<PAGE> 59
of the Schedule 14D-9) its approval or recommendation of the Merger
Agreement or the transactions contemplated thereby, including the
Offer or the Merger, (ii) shall have recommended an Acquisition
Proposal or (iii) shall have adopted any resolution to effect any of
the foregoing;
which, in the reasonable judgment of Merger Sub in any such case, and regardless
of the circumstances (including any action or inaction by Parent or Merger Sub
other than any action or inaction by Parent or Merger Sub constituting a breach
of the Merger Agreement) giving rise to any condition, makes it inadvisable to
proceed with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Merger Sub and its
affiliates and may be asserted by Merger Sub regardless of the circumstances
(including any action or inaction by Parent or Merger Sub other than any action
or inaction by Parent or Merger Sub constituting a breach of the Merger
Agreement) giving rise to any such conditions, and may be waived by 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 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 herein,
capitalized terms used herein shall have the meanings ascribed to them in the
Agreement and Plan of Merger (the "Merger Agreement") among Parent, Merger Sub
and the Company to which this Annex A is attached.
3
<PAGE> 1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT dated as of August 9, 1999
(this "Agreement") is by and between Copley Pharmaceutical, Inc., a Delaware
corporation ("Copley"), and Hoechst Corporation, a Delaware corporation
("Hoechst").
W I T N E S S E T H:
WHEREAS, Copley and Chia Tai Healthcare Group, a Hong Kong
corporation ("CT") entered into an agreement, dated as of May 20, 1994 and
amended on October 13, 1995 (the "JV Agreement"); and
WHEREAS, pursuant to the JV Agreement, Copley and CT formed
Chia Tai-Copley Pharmaceutical Limited, a corporation formed under the laws of
the British Virgin Islands (the "BVI Joint Venture"); and
WHEREAS, the BVI Joint Venture has formed, with another
investor, Wuxi Chia Tai-Copley Pharmaceutical Co., Ltd, a corporation formed
under the laws of the Peoples Republic of China (the "China Joint Venture"); and
WHEREAS, in December 1995, Copley and Hoechst reached an
agreement that Hoechst would purchase Copley's interest in the BVI Joint Venture
for $2,107,000 in cash; and
NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements contained
herein, and as a condition and inducement to the willingness of Copley and
Parent (as defined herein) to enter into the Merger Agreement (as defined
herein), the parties hereto, intending to be legally bound hereby, agree as
follows:
1. Effectiveness of Agreement; Sale of Ownership Interest.
This Agreement is being entered into in connection with the Agreement and Plan
of Merger, of even date herewith (the "Merger Agreement"), among Copley, Teva
Pharmaceuticals USA, Inc. ("Parent") and Caribou Merger Corporation ("Merger
Sub"), and the Stockholder Agreement, of even date herewith (the "Stockholder
Agreement"), among Hoechst, Parent and Merger Sub. At any time prior to the six
month anniversary of the date on which Merger Sub first accepts shares of
Copley's common stock for payment pursuant to the Offer, at the written request
of Copley (the "Put Request"), Hoechst shall as promptly as practicable, but in
any event within ten business days following delivery of the Put Request,
purchase all of Copley's ownership interest in the BVI Joint Venture. At the
closing of such purchase (the "Closing"), Hoechst shall deliver to Copley
U.S.$2,107,000 in immediately available funds, by wire transfer to an account
designated by Copley, and Copley shall deliver to Hoechst appropriate
instruments of transfer.
<PAGE> 2
2. Assumption and Indemnification. Effective as of the
Closing, Hoechst shall assume, and agrees to indemnify Copley and Parent
against, any and all liabilities of Copley or Parent as of the Closing in
respect of or arising out of the JV Agreement, the BVI Joint Venture or the
China Joint Venture, including any such liability arising out of any termination
of the JV Agreement, any assignment thereof to Hoechst or the exercise by Copley
of its rights under Section 1 hereof. Hoechst shall have the right to control,
and, at Hoechst's expense, Copley shall reasonably cooperate with Hoechst in
connection with, the defense of any claim in respect of which Copley may seek
such indemnification. Copley shall not settle any such claim without Hoechst's
prior consent (which shall not be unreasonably withheld or delayed).
3. Liabilities. Until the earlier of the Closing or the
expiration of Copley's right to deliver the Put Request without such right
having been exercised, Copley shall not agree to incur any liabilities in
respect of or arising out of the JV Agreement, the BVI Joint Venture or the
China Joint Venture, without the prior written consent of Hoechst. In addition,
at all times after the date hereof, Copley shall take such reasonable action as
Hoechst may request in order to minimize liabilities assumed under Section 2
hereof, or any liabilities of Hoechst in respect of or arising out of the JV
Agreement, the BVI Joint Venture or the China Joint Venture and incurred on or
after the Closing, and Hoechst agrees to appropriately compensate Copley for
Copley's cost in taking any such action.
4. Representations and Warranties of Copley. Copley hereby
represents and warrants to Hoechst as follows:
(a) Copley is duly organized and validly existing under the
laws of the State of Delaware and is in good standing under the laws of the
State of Delaware. Copley has all necessary corporate power and authority to
execute and deliver this Agreement and perform its obligations hereunder.
(b) This Agreement has been duly and validly executed and
delivered by Copley and constitutes the valid and binding agreement of Copley,
enforceable against Copley in accordance with its terms except (i) to the extent
limited by applicable bankruptcy, insolvency or similar laws affecting creditors
rights and (ii) that equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding therefor may be
brought.
(c) To Copley's knowledge, (i) Copley's ownership interest in
the BVI Joint Venture represents approximately 49% of the total ownership
interest in the BVI Joint Venture; (ii) the BVI Joint Venture's ownership
interest in the China Joint Venture represents approximately 85% of the total
ownership interest in the China Joint Venture; and (iii) Copley has no material
liabilities in respect of or arising out of the JV Agreement, the BVI Joint
Venture or the China Joint Venture.
2
<PAGE> 3
5. Representations and Warranties of Hoechst. Hoechst hereby
represents and warrants to Copley as follows:
(a) Hoechst is a corporation duly organized and validly
existing under the laws of the State of Delaware and is in good standing under
the laws of the State of Delaware. Hoechst has all necessary corporate power and
authority to execute and deliver this Agreement and perform its obligations
hereunder.
(b) This Agreement has been duly and validly executed and
delivered by Hoechst and constitutes a valid and binding agreement of Hoechst,
enforceable against it in accordance with its terms except (i) to the extent
limited by applicable bankruptcy, insolvency or similar laws affecting creditors
rights and (ii) that equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding therefor may be
brought.
6. Further Assurances. From time to time, at the other party's
request, each party hereto shall execute and deliver such additional documents
and take all such further lawful action as may be reasonably necessary or
desirable to consummate and make effective the transactions contemplated by this
Agreement.
7. Termination. This Agreement is entered into in
contemplation of consummation of the transactions contemplated by the Merger
Agreement. If Merger Sub shall not have purchased all Shares (as defined in the
Merger Agreement) tendered pursuant to the Offer (as defined in the Merger
Agreement), then this Agreement shall terminate automatically upon the
occurrence of a Termination Event (as such term is defined (excluding clause (i)
of such definition) in the Stockholder Agreement). If this Agreement is
terminated, the rights and obligations of Hoechst and Copley with respect to the
subject matter hereof shall be as they were immediately prior to entering into
this Agreement. Without limiting the generality of the foregoing, termination of
this Agreement shall not extinguish the existing obligation of Hoechst, subject
to any existing conditions to such obligation, to purchase and pay for Copley's
interest in the BVI Joint Venture.
8. Miscellaneous.
(a) Subject to Section 7 hereof, this Agreement constitutes
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) Except as otherwise expressly provided herein, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
3
<PAGE> 4
(c) This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns and
Parent, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either party without the prior
written consent of the other party and Parent. Nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(d) This Agreement may not be amended except by a written
agreement executed by each of the parties hereto and Parent. The parties may
waive compliance by the other parties hereto with any representation or
agreement otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party and Parent.
(e) All notices and other communications hereunder shall be in
writing and shall be deemed given upon (i) transmitter's confirmation of a
receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand or (iii) the expiration of five
business days after the day when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by like notice):
If to Hoechst:
Hoechst Corporation
86 Morris Avenue
Summit, New Jersey 07901
Attention: General Counsel
Telecopier No.: (908) 522-7216
If to Copley:
Copley Pharmaceutical, Inc.
25 John Road
Canton, Massachusetts 02021
Attention: General Counsel
Telecopier No.: (617) 575-7374
or to such other address or facsimile number as the party to whom notice is
given shall have previously furnished to the other in writing in the manner set
forth above.
4
<PAGE> 5
(f) 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 or of any other jurisdiction.
(g) 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.
(h) 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 instrument.
5
<PAGE> 6
IN WITNESS WHEREOF, Hoechst and Copley have caused this
Agreement to be duly executed as of the day and year first above written.
HOECHST CORPORATION
By:/s/ David A. Jenkins
-----------------------------------
Name: David A. Jenkins
Title: President
COPLEY PHARMACEUTICAL, INC.
By: /s/ Daniel L. Korpolinski
-----------------------------------
Name: Daniel L. Korpolinski
Title: Vice President & CEO
Teva Pharmaceuticals USA, Inc. is executing this Agreement solely for the
purpose of agreeing to be bound by the provisions of Section 3 and the second
and third sentences of Section 2 hereof to the same extent as Copley is bound by
such provisions.
TEVA PHARMACEUTICALS USA, INC.
By:/s/ William A. Fletcher
-----------------------------------
Name: William A. Fletcher
Title: President and Chief
Executive Officer
6
<PAGE> 1
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of August 9, 1999
("Agreement"), is made and entered into by and among Teva Pharmaceuticals USA,
Inc., a Delaware corporation ("Parent"), Caribou Merger Corporation, a wholly
owned subsidiary of Parent and a Delaware corporation ("Merger Sub"), and
Hoechst Corporation, a Delaware corporation (the "Stockholder").
WITNESSETH:
WHEREAS, on the date hereof, Parent, Merger Sub, and Copley
Pharmaceutical, Inc., a Delaware corporation (the "Company"), entered into an
Agreement and Plan of Merger (as such agreement may hereafter be amended,
restated or renewed from time to time, the "Merger Agreement"), pursuant to
which Merger Sub will commence the Offer. Capitalized terms used and not defined
herein shall have the respective meanings ascribed to them in the Merger
Agreement;
WHEREAS, the Stockholder is the Beneficial Owner (as defined
below) and has the sole right to vote and dispose of 9,934,100 shares of the
Company Common Stock; and
WHEREAS, as an inducement and a condition to their entering
into the Merger Agreement and incurring the obligations set forth therein,
Parent and Merger Sub have required that the Stockholder enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein and in
the Merger Agreement, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified; provided that the Company shall not be deemed an Affiliate of the
Stockholder.
(b) "Beneficially Own" or "Beneficial Owner" 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 Persons with whom such
<PAGE> 2
Person would constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act.
(c) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
(d) "Representative" means, with respect to any Person, as
applicable, such Person's officers, directors, employees, agents and
representatives (including any investment banker, financial advisor, agent,
representative or expert retained by or acting on behalf of such Person or its
subsidiaries).
(e) "Termination Event" shall mean the first to occur of (i) the
Effective Time; (ii) the termination of the Merger Agreement by any party
thereto in accordance with its terms; (iii) Merger Sub's failure to commence the
Offer within five (5) business days following the date of the initial public
announcement of the Offer; (iv) the termination of the Offer, or expiration of
the Offer without Merger Sub's having accepted for payment and paid for all
shares of Company Common Stock tendered pursuant thereto, provided that
Stockholder's right to terminate pursuant to this clause (iv) shall not be
available to Stockholder if it is then in material breach of this Agreement and
such breach has been the proximate cause of the Offer having so expired or
having been terminated; (v) any modification of any term or condition of the
Offer which would require the prior written consent of the Company pursuant to
Section 1.01(b) of the Merger Agreement in the form executed and delivered as of
the date hereof (whether or not such consent is obtained); and (iv) December 31,
1999.
2. AGREEMENT TO TENDER; VOTING OF THE SHARES.
(a) During the period commencing on the date hereof and until a
Termination Event, the Stockholder shall (i) validly tender and sell (and not
withdraw), pursuant to and in accordance with the terms of the Offer, not later
than the fifth business day after the receipt by the Stockholder of the offer to
purchase, transmittal letter and other relevant Offer Documents (or as soon as
practicable thereafter as shall be permitted by the relevant court or
governmental authority), the Shares (for purposes of this Agreement the "Shares"
shall mean, collectively, 9,934,100 shares of Company Common Stock Beneficially
Owned by the Stockholder on the date hereof (the "Existing Shares") and any
shares of Company Common Stock acquired by the Stockholder after the date hereof
and prior to a Termination Event, whether upon exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise); provided that at any
time after October 31, 1999, the Stockholder shall be permitted to withdraw up
to 4,967,050 Shares in order to sell and transfer such withdrawn shares in
compliance with Section 6(a)
-2-
<PAGE> 3
hereof, and (ii) at any meeting of the Company's stockholders (whether annual or
special, and whether or not an adjourned or postponed meeting), however called
or in connection with any written consent of the Company's stockholders, vote
(or cause to be voted) all of its Shares (x) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
and adoption of the Merger and 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; (y) against any action or agreement that
would (A) result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement or of
such Stockholder under this Agreement or (B) impede, interfere with, delay,
postpone, or adversely affect the Merger or the transactions contemplated
thereby or hereby; and (z) except as otherwise agreed to in writing in advance
by Parent or Merger Sub, against the following actions (other than the Merger
and the transactions contemplated by the Merger Agreement and this Agreement):
(A) any extraordinary corporate transaction, such as a merger, consolidation or
other business combination, involving the Company or any of its subsidiaries;
(B) any sale, lease or transfer of a material amount of the assets or business
of the Company or its subsidiaries, or any reorganization, restructuring,
recapitalization, special dividend, dissolution, liquidation or winding up of
the Company or its subsidiaries; (C) any change in the present capitalization of
the Company, including any proposal to sell any equity interest in the Company
or any of its subsidiaries or any amendment of the Certificate of Incorporation
or By-laws of the Company; (D) any change in the majority of the Company's Board
of Directors; (E) any other change in the Company's corporate structure or
business; and (F) any other action which is intended or could reasonably be
expected to impede, interfere with, delay, postpone, discourage or adversely
affect the Merger, the transactions contemplated by the Merger Agreement or this
Agreement or the contemplated economic benefits of any of the foregoing. The
Stockholder shall not enter into any agreement, arrangement or understanding
with any Person the effect of which would be inconsistent with or violative of
the provisions and agreement contained in this Section 2(a).
(b) The Stockholder hereby acknowledges that Merger Sub's obligation
to accept for payment shares of the Company Common Stock purchased pursuant to
the Offer, including the Shares, is subject to the terms and conditions of the
Offer. Upon the terms and subject to the conditions of the Offer, Parent shall
cause Merger Sub to accept for payment and pay for all shares of Company Common
Stock (including the Shares) validly tendered and not withdrawn pursuant to the
Offer as soon as Merger Sub is permitted to do so under applicable law.
(c) The Stockholder shall permit Merger Sub to publish and to
disclose in the Offer Documents and, if
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<PAGE> 4
stockholder approval is required under applicable law, the Proxy Statement, if
any (including all documents and schedules filed with the SEC), the
Stockholder's identity and ownership of the Company Common Stock and the
Stockholder's commitments, arrangements and understandings under this Agreement.
Parent and Merger Sub shall permit the Stockholder to disclose the terms of this
Agreement in the Stockholder's Schedule 13D with respect to the Shares and in
any prospectus or offering circular for a Hoechst Offering permitted by Section
6(a) hereof.
3. TERMINATION AND TERMINATION FEE. Except as provided in this Section
3, all liabilities and obligations of the Stockholder under this Agreement shall
terminate upon a Termination Event. The Stockholder shall pay to Parent
$10,000,000 in cash in same day funds if the Merger Agreement is terminated in
accordance with its terms and the proximate cause of such termination has been
the Stockholder's breach of any of its representations or warranties under this
Agreement or the Stockholder's breach or failure to perform any of its covenants
or agreements under this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to Parent and Merger Sub as follows:
(a) OWNERSHIP OF SHARES. The Stockholder is the Beneficial Owner of
the Shares. As of the date hereof, the Existing Shares constitute all of the
shares of the Company Common Stock owned of record or Beneficially Owned by the
Stockholder. The Stockholder has sole power to issue instructions with respect
to the matters set forth in Section 2 hereof, sole power of disposition, 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 the Shares with no
material limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) ORGANIZATION, STANDING AND CORPORATE POWER. The Stockholder is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and the Stockholder has the corporate power and
authority to enter into and perform all of its obligations under this Agreement
and to consummate the transactions contemplated hereby.
(c) NO CONFLICTS. (i) Except for filings under the Exchange Act or
the HSR Act no filing with, and no permit, authorization, consent or approval
of, any state or federal public body or authority is necessary for the execution
of this Agreement by the Stockholder and the consummation by the Stockholder of
the transactions contemplated hereby, except where the failure to obtain such
consent, permit, authorization, approval or filing would not interfere with the
Stockholder's ability to perform its obligations hereunder, and (ii) none of
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<PAGE> 5
the execution and delivery of this Agreement by the Stockholder, the
consummation by the Stockholder of the transactions contemplated hereby or
compliance by the Stockholder with any of the provisions hereof shall (x)
conflict with or result in any breach of the charter or by-laws of the
Stockholder, (y) 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 the Stockholder is a
party or by which the Stockholder or any of the Stockholder's properties or
assets may be bound, including, without limitation, the Corporate Governance and
Standstill Agreement, by and among the Company and the Stockholder, dated as of
October 8, 1993 and as amended (the "Standstill Agreement"), or (z) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Stockholder or any of the Stockholder's properties or assets,
in each such case except to the extent that any conflict, breach, default or
violation would not interfere with the ability of the Stockholder to perform its
obligations hereunder.
(d) EXECUTION, DELIVERY AND PERFORMANCE. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Stockholder. This Agreement constitutes the valid and binding
obligation of Stockholder and is enforceable in accordance with its terms,
except as enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general principles of equity.
(e) NO ENCUMBRANCES. Subject to Section 6(a), the Shares are now,
and at all times during the term hereof will be, held by the Stockholder, or by
a nominee or custodian for the benefit of the Stockholder, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever, except this
Agreement, the Standstill Agreement and applicable securities laws.
(f) RELIANCE. The Stockholder understands and acknowledges that
Parent and Merger Sub are entering into the Merger Agreement, and are incurring
the obligations set forth therein, in reliance upon the Stockholder's execution
and delivery of this Agreement.
5. REPRESENTATIONS OF PARENT AND MERGER SUB. Parent and Merger Sub
hereby represent and warrant to the Stockholder as follows:
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<PAGE> 6
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and each
has adequate corporate power and authority to own its properties and carry on
its business as presently conducted. Each of Parent and Merger Sub has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement and to consummate the transactions contemplated hereby.
(b) NO CONFLICTS. (i) Except, for filings under the Exchange Act and
the HSR Act, no filing with, and no permit, authorization, consent or approval
of, any state or federal public body or authority is necessary for the execution
of this Agreement by either Parent or Merger Sub and the consummation by Parent
and Merger Sub of the transactions contemplated hereby, except where the failure
to obtain such consent, permit, authorization, approval or filing would not
interfere with its ability to perform their respective obligations hereunder,
and (ii) none of the execution and delivery of this Agreement by Parent or
Merger Sub, the consummation by Parent or Merger Sub of the transactions
contemplated hereby or compliance by Parent and Merger Sub with any of the
provisions hereof shall (x) conflict with or result in any breach of any
applicable organizational documents applicable to Parent or Merger Sub, (y)
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 Parent or Merger Sub is a party or
by which Parent or Merger Sub or any of Parent's or Merger Sub's properties or
assets may be bound, or (z) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to Parent or Merger Sub
or any of Parent's or Merger Sub's properties or assets, in each such case
except to the extent that any conflict, breach, default or violation would not
interfere with the ability of Parent or Merger Sub to perform their respective
obligations hereunder.
(c) EXECUTION, DELIVERY AND PERFORMANCE. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Merger Sub. This Agreement constitutes the valid and
binding obligations of Parent and Merger Sub and is enforceable in accordance
with its terms, except as enforceability may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and general principles of equity.
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<PAGE> 7
6. CERTAIN COVENANTS
(a) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Prior to
the occurrence of a Termination Event, except as required by this Agreement, the
Stockholder shall not directly or indirectly without the prior written consent
of Parent and Merger Sub: (i) 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 the offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition of, any
or all of the Shares, or any interest therein, (ii) grant any proxies or powers
of attorney, deposit any of the Shares into a voting trust or enter into a
voting agreement, understanding or arrangement with respect to any of the
Shares, or (iii) take any action that could reasonably be expected to (x) make
any representation or warranty of Stockholder contained in this Agreement untrue
or incorrect; (y) result in a breach by Stockholder of its obligations under
this Agreement or a breach by the Company of its obligations under the Merger
Agreement; or (z) have the effect of preventing or disabling the Stockholder
from performing the Stockholder's obligations under this Agreement.
Notwithstanding the foregoing or anything else in this Agreement or the Merger
Agreement to the contrary, the Stockholder, the Company and their
Representatives shall be permitted (i) from and after the date hereof, to take
customary actions in preparation for a registered or unregistered secondary
offering (a "Hoechst Offering") of up to 4,967,050 of the Shares (including,
without limitation, conducting discussions and negotiations with prospective
placement agents and due diligence activities involving the Company, and
drafting any related registration statement or offering circular); (ii) after
September 30, 1999, to file with the Securities and Exchange Commission any
registration statement for a Hoechst Offering, distribute any related prospectus
or other offering circular for a Hoechst Offering and any amendments or
supplements thereto to prospective investors, and commence marketing efforts
with respect to a Hoechst Offering; and (iii) after October 31, 1999, to
consummate any Hoechst Offering with respect to a maximum of 4,967,050 Shares;
provided, that sales of such Shares shall be made to no more than ten (10)
Persons and the Stockholder shall cause each Person who or which acquires Shares
in any Hoechst Offering to agree in writing, in form and substance reasonably
satisfactory to Parent, to have with respect to such Shares the same rights and
obligations hereunder as the Stockholder (except that no such Person shall have
the right to withdraw Shares from the Offer or transfer such Shares other than
pursuant to the Offer). Any breach by any such Person of any such obligations
shall be deemed a breach of this Agreement by the Stockholder.
(b) RESTRICTIVE LEGEND. The Stockholder shall, until the occurrence
of a Termination Event, place the following legend on any and all certificates
representing any Shares:
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<PAGE> 8
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT
TO THAT CERTAIN STOCKHOLDERS AGREEMENT, DATED AS OF
AUGUST 9, 1999, BY AND AMONG TEVA PHARMACEUTICALS
USA, INC., CARIBOU MERGER CORPORATION AND HOECHST
CORPORATION, AND ANY TRANSFER OF SUCH SHARES IN
VIOLATION OF THE TERMS OF SUCH AGREEMENT SHALL BE
NULL AND VOID AND OF NO EFFECT WHATSOEVER.
(c) WAIVER OF APPRAISAL RIGHTS. The Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that the Stockholder
may have.
(d) NO SOLICITATION.
(i) Until the occurrence of a Termination Event, except with
respect to directors of the Company serving at the request of the Stockholder or
its Affiliates (whose actions shall be restricted by the terms of the Merger
Agreement), and except in connection with a Hoescht Offering permitted hereby,
the Stockholder and its Affiliates shall not, and shall instruct their
respective Representatives not to, (A) directly or indirectly solicit, initiate,
or encourage (including by way of furnishing nonpublic information or
assistance), or take any other action to facilitate, any inquiries or proposals
from any Person that constitute, or may reasonably be expected to lead to, an
Acquisition Proposal, (B) enter into, maintain, or continue discussions or
negotiations with any party (other than Parent or Merger Sub) in furtherance of
such inquiries or to obtain an Acquisition Proposal, (C) agree to or endorse any
Acquisition Proposal, or (D) authorize or permit the Stockholder's or any of its
Affiliates' Representatives to take any such action.
(ii) Until the occurrence of a Termination Event, without the
prior written consent of Parent, and except in connection with a Hoechst
Offering permitted hereby, the Stockholder and its Affiliates shall not, and
shall instruct their respective Representatives not to, issue any press release
or make any public statement or take any action that would otherwise require any
public disclosure concerning the Merger, the Offer or the transactions
contemplated by the Merger Agreement or this Agreement; provided, however, that
the Stockholder may, without the prior written consent of Parent, issue such
press release or make such public statement or take such action as may upon the
advice of counsel be required by law, if it has provided prior notice to Parent
and used all reasonable efforts to consult with Parent.
(e) STOP TRANSFER. Prior to a Termination Event, the Stockholder
shall not request that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of the
Shares, unless such transfer is made in compliance with this Agreement.
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<PAGE> 9
(f) HSR ACT. Stockholder acknowledges that its ultimate parent
entity (which is currently Hoechst AG, but which would be Celanese AG upon the
proposed demerger of Celanese AG from Hoechst AG) is the "acquired person"
within the meaning of the HSR Act with respect to the transaction contemplated
by the Merger Agreement by virtue of such entity's indirect ownership of the
Shares. Accordingly, Stockholder shall fulfill or cause such entity to fulfill
the obligations of Section 7.03(a) of the Merger Agreement relating to HSR
filings with respect to the Company.
(g) FURTHER ASSURANCES. From time to time, at the other parties'
reasonable request and without further consideration, the Stockholder, Parent
and Merger Sub shall execute and deliver such additional documents as may be
reasonably necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the tender of the Shares by the Stockholder
contemplated by Section 2 of this Agreement.
7. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes 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) RECAPITALIZATION. In the event of a stock dividend or
distribution, or any change in shares of Company Common Stock by reason of any
stock dividend, split-up, recapitalization, combination, exchange of shares of
Company Common Stock 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 changed or
exchanged.
(c) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or delegated, in
whole or in part, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign its rights and obligations, in whole or in part, to any of its
Affiliates, but no such assignment shall relieve Merger Sub of its obligations
hereunder if such assignee does not perform such obligations, and except that
the Stockholder may assign its rights and obligations hereunder in compliance
with Section 6(a) hereof. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
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<PAGE> 10
(d) AMENDMENT, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(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, 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, or by
transmission by telecopy, confirmed received. All communications hereunder shall
be delivered to the respective parties at the following addresses:
If to Parent or Merger Sub: Teva Pharmaceuticals USA, Inc.
650 Cathill Road
Sellersville, Pennsylvania 18960
Attn: President
Fax: (215) 723-6184
copies to: Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Attn: Peter H. Jakes, Esq.
Fax: (212) 728-8111
If to the Stockholder: Hoechst Corporation
86 Morris Avenue
Summit, New Jersey 07901
Facsimile: 908-522-7216
Attention: President
copies to: Kevin Barnette
Skadden, Arps, Slate, Meagher
& Flom LLP
1440 New York Avenue N.W.
Washington, D.C. 20005
Facsimile: 202-393-5760
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.
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<PAGE> 11
(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, including, without
limitation, pursuant to Section 3 hereof.
(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.
(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.
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<PAGE> 12
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, 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. This Agreement shall not
be effective as to any party hereto until such time as this Agreement or a
counterpart thereof has been executed and delivered by each party hereto.
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<PAGE> 13
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their duly authorized officers effective as of the date and
year first above written.
TEVA PHARMACEUTICALS USA, INC.
By: /s/ WILLIAM A. FLETCHER
----------------------------------
Name: William A. Fletcher
Title: President and CEO
CARIBOU MERGER CORPORATION
By: /s/ GEORGE BARRETT
----------------------------------
Name: George Barrett
Title: Executive Vice President
HOECHST CORPORATION
By: /s/ DAVID A. JENKINS
----------------------------------
Name: David A. Jenkins
Title: President
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<PAGE> 1
PENTOXIFYLLINE AGREEMENT AMENDMENT
This Agreement Amendment (this "Agreement") is entered into as of
August 9, 1999 by and between Copley Pharmaceutical, Inc., a Delaware
corporation (the "Company"), and Hoechst Marion Roussel, Inc., a Delaware
corporation ("HMRI").
WITNESSETH
WHEREAS, the Company and HMRI entered into an agreement dated January
1, 1997 (the "Pentoxifylline Agreement") whereby HMRI would supply
pentoxifylline to the Company for resale for an agreed profit split; and
WHEREAS, the Company, concurrently with the execution of
this Agreement, is entering into an Agreement and Plan of Merger
(the "Merger Agreement") with Teva Pharmaceuticals USA, Inc.
("Parent") and Caribou Merger Corporation ("Merger Sub"); and
WHEREAS, Parent and Merger Sub, concurrently with the execution of this
Agreement, are entering into a Stockholder Agreement (the "Stockholder
Agreement") with Hoechst Corporation.
NOW, THEREFORE, in consideration of the premises and the covenants and
obligations set forth herein, and as a condition and inducement to Parent's
willingness to enter into the Merger Agreement, the parties hereto agree as
follows:
1. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Pentoxifylline
Agreement.
2. Until the Offer Closing Date (as defined in the Merger
Agreement), the Company shall conduct its business with
respect to the Products in the ordinary course of
business, including, without limitation, regarding the
Company's marketing and pricing decisions and forecasts
of its Product requirements as required by the
Pentoxifylline Agreement. For avoidance of doubt,
nothing herein shall prevent the Company from
increasing or decreasing such forecasted requirements
to the extent permitted by the Pentoxifylline
Agreement.
3. With respect to any determination of Copley Net Profit Margin
made on or after the Offer Closing Date, (i) HMRI shall
continue to receive 80% of such Copley Net Profit Margin,
assuming such Copley Net Profit Margin is a positive amount,
but in no event shall HMRI be charged with, or otherwise
required to bear, any losses
<PAGE> 2
if such Copley Net Profit Margin is a negative amount and (ii)
no such determination shall give effect to any shelf stock
adjustments made after the Offer Closing Date. With respect to
any determination of Copley Net Profit Margin prior to the
Offer Closing Date, the profit and loss sharing provisions
contained in Section 1.7 of the Pentoxifylline Agreement shall
continue to apply.
4. Every obligation of the Company to purchase Products shall
terminate at the Offer Closing Date, except that
(a) the Company shall be obligated to continue to
purchase the Products, at the price set forth in the
Pentoxifylline Agreement, in a quantity equal to 100%
of the quantity set forth in its last forecast
delivered before the Offer Closing Date, for the
three calendar months following the month in which
the Offer Closing Date occurs; and
(b) the Company shall be obligated to continue to
purchase the Products, at the price set forth in the
Pentoxifylline Agreement, in a quantity equal to 50%
of the quantities set forth in the forecast
referenced above for the fourth, fifth and sixth
calendar months following the month in which the
Offer Closing Date occurs.
5. From and after the Offer Closing Date, HMRI shall not be
obligated to sell Products to the Company except for the
Products the Company is required to purchase pursuant to
Section 4 above.
6. From and after the Offer Closing Date, HMRI shall be
permitted to agree to sell Products to any other party
to the extent such sales would occur after HMRI is
relieved of its obligation to sell Products only to the
Company. From and after the earlier of (i) the
beginning of the fourth calendar month referred to in
Section 4(b) hereof and (ii) the beginning of the first
calendar month in which the Company's forecasted
requirement of Products is 50% or less of such
forecasted requirement for July 1999, HMRI shall be
relieved of its obligation to sell Products only to the
Company and may sell Products to any other party, at
its discretion.
7. If Merger Sub shall not have purchased all Shares (as defined
in the Merger Agreement) tendered pursuant to the Offer (as
defined in the Merger Agreement), then this Agreement shall
terminate and be of no further force or effect, and shall be
null and void in all
<PAGE> 3
respects, upon the occurrence of a Termination Event (as such
term is defined (excluding clause (i) of such definition) in
the Stockholder Agreement).
8. The Pentoxifylline Agreement shall terminate
automatically at the end of the sixth calendar month
following the month in which the Offer Closing Date
occurs, without regard to Section 11.2 thereof;
provided that following such termination the parties
shall continue to have their respective rights and
obligations thereunder to the extent relating to
Products purchased by the Company prior to such
termination, including HMRI's right to receive 80% of
Copley Net Profit Margin on such Products; and
provided, further, that provisions in the
Pentoxifylline Agreement expressly intended to survive
termination shall survive as set forth therein.
9. This Agreement shall be governed by the Laws of the State of
Delaware, without giving effect to the principles of conflicts
of law thereof.
10. The provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Company, Parent and HMRI, and
their respective successors and assigns.
11. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
12. Except as amended and modified hereby, the terms and
provisions of the Pentoxifylline Agreement shall continue to
be in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
COPLEY PHARMACEUTICAL, INC.
By: /s/ Daniel L. Korpolinski
-------------------------------
Title: President & CEO
Date: August 9, 1999
HOECHST MARION ROUSSEL, INC.
By: /s/ Martin Zeiger
--------------------------------
Title: Vice President
Date: August 9, 1999
<PAGE> 1
August 9, 1999
Copley Pharmaceutical, Inc.
25 John Road
Canton, Massachusetts 02021
Teva Pharmaceuticals USA, Inc.
650 Cathill Road
Sellersville, Pennsylvania 18960
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, of even date
herewith (the "Merger Agreement") among Copley Pharmaceutical, Inc. (the
"Company"), Teva Pharmaceuticals USA, Inc. ("Parent") and Caribou Merger
Corporation ("Merger Sub"), and to the Stockholder Agreement, of even date
herewith (the "Stockholder Agreement"), among Hoechst Corporation ("HC"), Parent
and Merger Sub. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Merger Agreement.
As a condition and inducement to the Company's and Parent's willingness
to enter into the Merger Agreement, HC hereby represents, warrants and confirms
to the Company and Parent that:
(i) product liability claims based on injuries alleged to have been
caused by the Company's albuterol products are covered, and after the Offer and
the Merger will continue to be covered, under the insurance policies of HC and
its affiliated companies described on Schedule A hereto, subject to (a) the
conditions of such policies; (b) the existing letter agreements (the "Insurance
Agreements") among the Company, HC and certain of such insurers relating to the
albuterol settlement agreement; and (c) in the case of the coverage to which the
Insurance Agreements are not applicable (as described in Schedule A hereto), the
requirement that such injuries are alleged to have been caused after November
11, 1993 and prior to the consummation of the Offer;
(ii) the Company's co-insurance obligation with respect to albuterol
product liability claims under the Insurance Agreements is limited to the extent
described on Schedule A hereto;
<PAGE> 2
(iii) in connection with the Insurance Agreements, neither HC nor the
Company has, except as set forth in the Insurance Agreements, executed any
waiver of coverage under the policies described in Schedule A hereto relating to
injuries alleged to have been caused by the Company's albuterol products; and
(iv) following the consummation of the Offer, at the reasonable request
of the Company or Parent, HC shall (i) provide such information regarding the
insurance policies described on Schedule A and (ii) execute such documents, in
each case as may be reasonably necessary to permit the Company to obtain the
benefits of the coverage provided by such policies.
If Merger Sub shall not have purchased all Shares tendered pursuant to
the Offer, then this letter shall terminate and have no further force or effect
upon the occurrence of a Termination Event (as such term is defined (excluding
clause (i) of such definition) in the Stockholder Agreement).
Very truly yours,
Hoechst Corporation
By: /s/ David A. Jenkins
------------------------
President
2
<PAGE> 3
SCHEDULE A
<TABLE>
<CAPTION>
Copley Co-
Limits Subject insurance Under Amount Paid
to Insurance Insurance Through 7/27/99
Insurer Policy Limits Agreements Agreements (Insurer & Copley)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Zurich $ 5,000,000 $ (1) $ 0 $ 5,000,000
- --------------------------------------------------------------------------------------
Zurich 5,000,000 (1) 0 5,000,000
XS 5,000,000
- --------------------------------------------------------------------------------------
Reliance 5,000,000 (1) 0 5,000,000
XS 10,000,000
- --------------------------------------------------------------------------------------
HCIC 25,000,000 (2) 0 25,000,000
XS 15,000,000
- --------------------------------------------------------------------------------------
Gerling 70,000,000 70,000,000 10,500,000 70,000,000
XS 40,000,000
- --------------------------------------------------------------------------------------
London/HCIC 25,000,000 25,000,000 3,750,000 0(3)
XS 110,000,000
- --------------------------------------------------------------------------------------
Tortuga 25,000,000 25,000,000 3,750,000 0
XS 135,000,000
- --------------------------------------------------------------------------------------
XL 100,000,000 20,000,000(4) 8,000,000 0
XS 160,000,000
- --------------------------------------------------------------------------------------
Tortuga 25,000,000 N/A N/A 0
XS 250,000,000
- --------------------------------------------------------------------------------------
American 75,000,000 N/A N/A 0
Excess XS 285,000,000
- --------------------------------------------------------------------------------------
ACE 150,000,000 N/A N/A 0
XS 380,000,000
- --------------------------------------------------------------------------------------
Global/ 100,000,000 N/A N/A 0
Bowring XS 510,000,000
- --------------------------------------------------------------------------------------
ACE 50,000,000 N/A N/A 0
XS 810,000,000
- --------------------------------------------------------------------------------------
</TABLE>
- ------------
1. Limits spent and/or reserved for defense and indemnity expense for
albuterol claims, but not part of Copley Albuterol MDL settlement.
2. $16,000,000 paid to fund the Copley Albuterol MDL settlement, balance of
$8,000,000 reserved and/or spent for defense and indemnity expense for
albuterol claims, but not part of Copley Albuterol MDL settlement.
3. The Special Master supervising the settlement of the Copley Albuterol MDL
is expected in the near future to request $20,000,000 from the London
layer.
4. The Insurance Agreement applies to the first $20,000,000 of XL's limits,
but not the remaining $80,000,000.
<PAGE> 1
[CIBC OPPENHEIMER LETTERHEAD]
March 18, 1999
Teva Pharmaceuticals USA, Inc.
650 Cathill Rd.
Sellersville, PA 18960
Attention:
Gentlemen:
In connection with your consideration of a possible acquisition by you
and/or your affiliate of an equity interest in, or other business arrangement
with, Copley Pharmaceutical, Inc. (the "Company"), you have requested financial
and other information (the "Evaluation Material") concerning the business and
affairs of the Company. The term "Evaluation Material" includes written and/or
oral information furnished to you or your Representatives (as defined below) by
the Company (which shall be deemed to include its directors, officers,
employees, agents and representatives), whether furnished before or after the
date of this Confidentiality Agreement, together with all analyses,
compilations, studies or other documents or records prepared by you or your
representatives which contain or otherwise reflect or are generated from such
information, but does not include information which (i) was or becomes generally
available to the public or the pharmaceutical industry other than as a result of
a disclosure by you or your directors, officers, affiliates, employees, agents
or advisors or the respective representatives of your agents or advisors (all of
the foregoing collectively referred to as "your Representatives"), or (ii) was
or becomes available to you on a non-confidential basis from a source other than
the Company or its advisors, provided that such source is not bound by a
confidentiality agreement with the Company, or (iii) was within your possession
prior to its being furnished to you by or on behalf of the Company provided that
the source of such information was not bound by a confidentiality agreement with
the Company in respect thereof or (iv) was independently developed by you.
Notwithstanding the restrictions on use and disclosure contained herein, you
shall be entitled to develop the same or similar products through an independent
development program without using the Evaluation Material therefor and the fact
that such program shall develop the same or substantially equivalent products or
technology as those for which the Company has disclosed information to you shall
not, in and of itself, create any liability on your part to the Company and
shall not result in any restriction on the use or disclosure by you of such
independently developed products or technology. As a condition to your and your
Representatives being furnished with any evaluation Material, you agree as
follows:
<PAGE> 2
Teva Pharmaceuticals USA, Inc.
Confidentiality Agreement
March 18, 1999
Page 2
(1) You recognize and acknowledge the competitive value and
confidential nature of the Evaluation Material and the damage that could result
to the Company if information contained therein is disclosed to any third party.
The Evaluation Material will not be used by you or your affiliates or your
Representatives in any way detrimental the Company without limitation.
(2) You recognize and acknowledge that the Company is a public company
and as such is subject to the rules and regulations of the United States
Securities and Exchange Commission. You further recognize and acknowledge that
all or any portion of the Evaluation Material may constitute material non-public
information and that any transactions in any securities of the Company may be
prohibited by the Federal securities laws in addition to the prohibitions set
forth in this Confidentiality Agreement.
(3) You agree that the Evaluation Material will be used solely for the
purpose of evaluating a possible transaction involving or relating to the
Company (including its stockholders) and you. You also agree that you and your
Representatives will keep the Evaluation Material confidential and will not
disclose any of the Evaluation Material now or hereafter received or obtained
from the Company or any of its representatives to any third party without the
prior written consent of the Company; provided, however, that, subject to
Paragraph 12 hereof, any of the Evaluation Material may be disclosed (a) to the
extent required by applicable law or legal process, or (b) to your President,
Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and
Chairman of the Board of Directors and to your Representatives who need to know
the information contained in the Evaluation Material for the purpose of
evaluating a possible acquisition by you of an equity interest in, or other
business arrangement with, the Company and who agree to keep such information
confidential and to be bound by this agreement to the same extent as if they
were parties hereto (it being understood and agreed that your Representatives
shall be informed by you of the confidential and material non-public nature of
the Evaluation Material and shall be directed by you to treat the Evaluation
Material confidentially). In any event, you shall be responsible for any
improper use of the Evaluation material by your representatives.
(4) In addition, without the prior written consent of the Company, you
and your Representatives will not disclose to any person (which shall include,
without limitation, any corporation, company, group, partnership or individual)
(a) that the Evaluation Material has been made available to you, (b) that you
have inspected any portion thereof, (c) that discussions or negotiations are
taking place concerning a possible transaction with the Company or (d) any of
the terms, conditions or other
<PAGE> 3
Teva Pharmaceuticals USA, Inc.
Confidentiality Agreement
March 18, 1999
Page 3
facts with respect to any such possible transaction, including the status
thereof.
(5) You agree that for a period of one year from the date hereof you
and your affiliates as defined in Rule 12b-2 promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), will not (and
you and they will not assist or encourage others to), directly or indirectly, in
any manner, unless specifically invited in writing in advance by the Company's
Board of Directors:
(a) acquire, offer or propose to acquire, solicit an offer to
sell or agree to acquire, directly or indirectly, alone or in concert with
others, by purchase, gift or otherwise, any direct or indirect beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) or interest
in any securities or direct or indirect rights, warrants or options to acquire,
or securities convertible into or exchangeable for, any securities of the
Company;
(b) make, or in any way participate in, directly or
indirectly, alone or in concert with others, any "solicitation" or "proxies" to
vote (as such terms are used in the proxy rules of the Securities and Exchange
Commission promulgated pursuant to Section 14 of the Exchange Act) or seek to
advise or influence in any manner whatsoever any person with respect to the
voting of any voting securities of the Company;
(c) for, join or in any way participate in a "group" within
the meaning of Section 13(d)(3) of the Exchange Act with respect to any voting
securities of the Company;
(d) acquire, offer to acquire or agree to acquire, directly or
indirectly, alone or in concert with others, by purchase, exchange or otherwise,
(i) any of the assets, tangible and intangible, of the Company or (ii) direct or
indirect rights, warrants or options to acquire any assets of the Company,
except for such assets as are then being offered for sale by the Company;
(e) arrange, or in any way participate, directly or
indirectly, in any financing for the purchase of any securities or securities
convertible or exchangeable into or exercisable for any securities or assets of
the Company, except for such assets as are then being offered for sale by the
Company;
(f) otherwise act, alone or in concert with others, to seek to
propose to the Company or any of its stockholders any business combination,
restructuring, recapitalization or similar transaction to or with the Company or
otherwise seek, alone or in concert with others, to control, change or influence
the management, board of directors or policies of the Company or
<PAGE> 4
Teva Pharmaceuticals USA, Inc.
Confidentiality Agreement
March 18, 1999
Page 4
nominate any person as a director of the Company who is not nominated by the
then incumbent directors, or propose any matter to be voted upon by the
stockholders of the Company; or
(g) announce an intention to do, or enter into any arrangement
or understanding with others to do, any of the actions restricted or prohibited
under clauses (a) through (f) of this paragraph.
However, the restrictions and prohibitions under paragraph 4 and clauses (a)
through (g) of this paragraph 5 do not apply to any negotiated transaction that
may be entered into between you and Hoechst Corp. or its affiliates relating
solely to the purchase by you of the shares of Copley currently owned by Hoechst
Corp. or its affiliates.
(6) You agree that neither you nor your Representatives will initiate
any communications with any employee (other than the President and Chief
Executive Officer, Chief Financial Officer or Chairman of the Company's Board of
Directors), customer, supplier, distributor or stockholder of the Company
concerning the Evaluation Material or the Company without the prior written
consent of the Company. You agree that, unless otherwise agreed to by the
Company in writing, all (i) communications regarding any possible transaction,
(ii) requests for additional information, (iii) requests for facility tours or
management meetings, and (iv) discussions or questions regarding procedures,
will be submitted or directed to CIBC Oppenheimer Corp.
(7) Neither you nor your Representatives will initiate discussions with
respect to the prospective employment of any of the Company's employees with you
or any of your Representatives for a period of one year after the date of
signing this Agreement, except as part of the proposed transaction between you
and the Company (and only then after a definitive acquisition agreement has been
executed by both you and the Company).
(8) The Company and its representatives do not make any representations
or warranties as to the accuracy or completeness of the Evaluation Material. You
agree that neither the Company nor any of its respective officers, directors,
employees, agents or representatives shall have any liability to you or your
Representatives resulting from the use of the Evaluation Material supplied by
the Company or any of its representatives, except as may be set forth in a
definitive agreement between the Company and you.
(9) In the event that the transaction contemplated by this
Confidentiality Agreement is not consummated, or upon the Company's request, all
Evaluation Materials (and all copies, extracts or other reproductions in whole
or in part thereof)
<PAGE> 5
Teva Pharmaceuticals USA, Inc.
Confidentiality Agreement
March 18, 1999
Page 5
shall be returned to the Company or, with the Company's written permission,
destroyed (such destruction to be certified in writing to the Company by an
authorized officer supervising such destruction) and not retained by you or your
Representatives in any form or for any reason. All documents, memoranda, notes
and other writings whatsoever prepared by you or your Representatives based on
the Evaluation Material shall be destroyed, and such destruction shall be
certified in writing to the Company by an authorized officer supervising such
destruction.
(10) No delay or failure in exercising any right, power or privilege
hereunder shall be construed to be a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder.
(11) Notwithstanding anything to the contrary set forth herein, in the
event that you or any of your Representatives are requested or become legally
compelled (by oral questions, interrogatories, request for information or
documents, subpoena, civil investigative demand or similar process) to disclose
any of the Evaluation Material or take any other action prohibited hereby, you
will provide the Company with prompt written notice so that the Company may seek
a protective order or other appropriate remedy and/or waive compliance with the
provisions of this Agreement. In the event that such protective order or other
remedy is not obtained, or that the Company waives compliance with the
provisions of this Agreement, you will furnish only that portion of the
Evaluation Material or take only such action which is legally required and will
exercise your best efforts to obtain reliable assurance that confidential
treatment will be accorded any Evaluation Material so furnished.
(12) This Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. It is understood
that the Company may institute appropriate proceedings against you to enforce
its rights hereunder. Money damages would not be a sufficient remedy for any
violation of the terms of this Agreement and, accordingly, the Company shall be
entitled to specific performance and injunctive relief as remedies for any
violation. These remedies shall not be deemed to be the exclusive remedies for a
violation of the terms of this Agreement but shall be in addition to all other
remedies available to the Company at law or equity. This Agreement shall be
governed and construed in accordance with the laws of the Commonwealth of
Massachusetts without giving effect to the conflicts of law provisions thereof.
This Agreement shall have a term of three years from the date of
countersignature by you, except as otherwise specifically provided in any
provision hereof.
<PAGE> 6
Teva Pharmaceuticals USA, Inc.
Confidentiality Agreement
March 18, 1999
Page 6
Please acknowledge your agreement to the foregoing by countersigning
this letter in the place provided below.
Very truly yours,
COPLEY PHARMACEUTICAL, INC.
/s/ Gene M. Bauer
--------------------------------
By: Gene M. Bauer
Title: Executive Vice President,
General Counsel and Secretary
AGREED TO AND ACCEPTED:
Teva Pharmaceuticals USA, Inc.
By: /s/ William A. Fletcher
----------------------------------
Name: William A. Fletcher
Title: President & CEO
Date: March 30, 1999
<PAGE> 1
GUARANTEE
FOR VALUE RECEIVED, Teva Pharmaceutical Industries Limited, a
corporation organized under the laws of the State of Israel ("Teva"), hereby
guarantees to Copley Pharmaceutical, Inc. a Delaware corporation ("Copley"), the
full and faithful performance of the obligations, duties and liabilities of Teva
Pharmaceuticals USA, Inc., a Delaware corporation ("Teva-USA"), under that
certain Agreement and Plan of Merger, dated as of August 9, 1999, by and among
Copley, Teva-USA and Caribou Merger Corporation (the "Agreement"). Teva shall,
however, have any and all rights of defense, set-off and counterclaim which are
available to Teva-USA except as expressly set forth below.
1. The liability of Teva hereunder shall be absolute and irrevocable
and shall not be impaired by:
(a) any modification, renewal or amendment of the Agreement
agreed to by Teva-USA,
(b) any waiver of any breach or any condition to the Offer
contemplated by the Agreement, or
(c) any extension, moratoria or other relief granted pursuant to
any applicable law or statute.
2. Notice of acceptance hereof or of a breach by Teva-USA is
expressly waived, and Teva's performance hereunder shall be subject to no other
condition than the giving of a written request, stating the fact of a breach,
mailed to Teva at 5 Basel Street, P.O. Box 3190, Petach Tikva 49131, Israel,
Attention: Chief Executive Officer. This guarantee is direct and immediate and
may be enforced by Copley without prior resort to any other remedy and without
prior notice to or resort against Teva-USA or any other person or entity.
3. Teva represents and warrants that (a) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Israel and has the requisite corporate power and authority to enter into and
perform this guarantee, (b) it has duly authorized, executed and delivered this
guarantee, and (c) this guarantee constitutes the legal, valid and binding
obligation of Teva, enforceable against Teva in accordance with its terms,
except that the enforcement hereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
<PAGE> 2
4. (a) Teva irrevocably submits to the non-exclusive jurisdiction of
any federal or state court sitting in the State of Delaware over any suit,
action or proceeding arising out of or relating to this guarantee.
(b) Teva agrees to the fullest extent it may effectively do so under
applicable law, that a judgment in any suit, action or proceeding of the nature
referred to in paragraph 4(a) brought in any such court shall, subject to such
rights of appeal on issues other than jurisdiction as may be available to Teva,
be conclusive and binding upon Teva and may be enforced in the state or federal
courts in the United States of America (or any other courts to the jurisdiction
of which Teva is or may be subject) by a suit upon such judgment.
(c) Teva consents to service of process in any suit, action or
proceeding of the nature referred to in paragraph 4(a) by mailing a copy thereof
by registered or certified mail, postage prepaid, return receipt requested, to
Teva Pharmaceuticals USA, Inc., 650 Cathill Road, Sellersville, PA 18960,
Attention: President. Teva (i) agrees that such service shall be deemed in every
respect effective service of process upon Teva in any such suit, action or
proceeding, (ii) agrees that such service shall, to the fullest extent permitted
by law, be taken and held to be valid personal service upon and personal
delivery to Teva, and (iii) waives the benefits of any other service of process
regulations, laws or conventions to the fullest extent that it is legally able
to do so.
(d) Teva agrees that nothing in this guarantee shall affect or limit
service of process in any manner permitted by law, or limit any right to bring
proceedings against Teva in the courts of any jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
5. This guarantee shall be governed by and the rights and
obligations hereunder shall be determined in accordance with the laws of the
State of Delaware, without giving effect to the principles of conflicts of law
thereof. This guarantee shall be binding upon the successors and assigns of
Teva.
<PAGE> 3
IN WITNESS WHEREOF, Teva has caused this guarantee to be duly
executed by its duly authorized officer as of this 9th day of August, 1999.
TEVA PHARMACEUTICAL
INDUSTRIES LIMITED
By: /s/ DAN SUESSKIND
--------------------------
Name: Dan Suesskind
Title: Chief Financial Officer
