<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
(AMENDMENT NO. 1)
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D/A
(AMENDMENT NO. 3)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
FUISZ TECHNOLOGIES LTD.
(Name of Subject Company)
ABCI ACQUISITION SUB. CORPORATION
BIOVAIL CORPORATION INTERNATIONAL
(Bidders)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
359536109
(CUSIP Number of Class of Securities)
--------------------------
KENNETH C. CANCELLARA, ESQ.
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
2488 DUNWIN DRIVE
MISSISSAUGA, ONTARIO
CANADA, L5L 1J9
(905) 608-8008
COPY TO:
ROGER ANDRUS, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
(212) 701-3000
(Name, Address; and Telephone Numbers of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$46,096,575 $0
</TABLE>
* For purposes of calculating the filing fee only. The filing fee was
calculated, pursuant to Section 13(e)(3) of the Securities Exchange Act of
1934, as amended and Rule 0-11 thereunder, on the basis of 22,030,723 shares
of Common Stock (the number of shares of Common Stock outstanding on the
date hereof, including vested options to acquire Common Stock, but excluding
unvested options to acquire Common Stock and excluding 4,209,829 Common
Stock owned by Biovail Corporation International, multiplied by the proposed
acquisition price U.S. $7.00 per share.
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: $9,219.32 Filing ABCI Acquisition Sub. Corporation
Party: and Biovail Corporation
International
Form or Registration Schedule 14D-1 and Schedule 13D/A Date Filed: 7/30/99
No.: Amendment No. 2
</TABLE>
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(CONTINUED ON FOLLOWING PAGE(S))
(Page 1 of 6 Pages)
<PAGE>
SCHEDULE 14D-1 AND 13D
CUSIP NO. 359536109 Page 2 of 6 Pages
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BIOVAIL CORPORATION INTERNATIONAL
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
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3. SEC USE ONLY
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4. SOURCES OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/ /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,209,829
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES
/ /
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
19.2%
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
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<PAGE>
SCHEDULE 14D-1
CUSIP NO. 359536109 Page 3 of 6 Pages
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
ABCI ACQUISITION SUB. CORPORATION
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
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3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
/ /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 SHARES
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES
/ /
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7)
0%
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE>
This Amendment No. 1 to Schedule 14D-1 and Amendment No. 3 to the Schedule
13D/A (the "Schedule 14D-1 and Schedule 13D/A") relate to the offer by ABCI
Acquisition Sub. Corporation, a newly organized Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Biovail Corporation International,
an Ontario, Canada corporation ("Parent"), to purchase for cash up to 6,585,225
of the outstanding shares of common stock, par value $0.01 per share (the
"Shares"), of Fuisz Technologies Ltd., a Delaware corporation (the "Company"),
at a purchase price of $7.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
July 30, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal
(the "Letter of Transmittal", together with the Offer to Purchase, the "Offer").
The Offer is conditioned upon, among other things, there being validly tendered
and not withdrawn prior to the expiration date of the Offer (the "Expiration
Date") at least 4,602,460 Shares (the "Minimum Condition"). This Schedule 14D-1
and 13D/A are being filed on behalf of the Purchaser and Parent.
The purpose of this Amendment No. 1 to the Schedule 14D-1 and Amendment No.
3 to the Schedule 13D is to refile the Offer to Purchase previously filed with
Schedule 14D-1 and Amendment No. 2 to the Schedule 13D which were filed on July
30, 1999.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 of the Schedule 14D-1 and Schedule 13D is hereby amended by
substituting the amended Offer to Purchase filed herewith for the Offer to
Purchase filed as Exhibit (a)(1) to the Schedule 14D-1 and Schedule 13D.
(Page 4 of 6 Pages)
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
<TABLE>
<S> <C> <C> <C>
Dated: August 3, 1999 BIOVAIL CORPORATION INTERNATIONAL
By: /s/ KENNETH C. CANCELLARA
--------------------------------------
Kenneth C. Cancellara
Name: Senior Vice President, General Counsel and
Title: Secretary
ABCI ACQUISITION SUB. CORPORATION
By: /s/ KENNETH C. CANCELLARA
--------------------------------------
Name: Kenneth C. Cancellara
Title: Secretary
</TABLE>
(Page 5 of 6 Pages)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. EXHIBIT NAME NUMBER
- --------- -------------------------------------------------------------------------------------------- ---------
<S> <C> <C>
(a)(1) Offer to Purchase.
(a)(2)* *** Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification
Number on Form W-9).
(a)(3)* *** Letter to brokers, dealers, commercial banks, trust companies and nominees.
(a)(4)* *** Letter to be used by brokers, dealers, commercial banks, trust companies and nominees to
their clients.
(a)(5)* *** Notice of Guaranteed Delivery.
(a)(6)* Press Release issued by Parent, dated July 26, 1999.
(a)(7)* *** Press Release issued by Parent, dated July 28, 1999.
(a)(8)* *** Form of newspaper advertisement, dated July 30, 1999.
(b) Not applicable.
(c)(1)* *** Agreement and Plan of Merger (the "Merger Agreement"), dated July 25, 1999 by and among
Parent, the Purchaser and the Company.
(c)(2)* * Option Agreement, dated as of July 13, 1999, by and between Richard C. Fuisz, M.D. and
Biovail Corporation International.
(c)(3)* * Escrow Agreement, dated as of July 13, 1999, by and between Richard C. Fuisz, M.D., Biovail
Corporation International and U.S. Trust Company, National Association.
(c)(4)* ** Letter of Commitment, dated as of July 23, 1999, between Salisbury Ltd. and Biovail
Corporation International.
(c)(5)* ** Letter of Commitment, dated as of July 23, 1999, between Westbury Ltd. and Biovail
Corporation International.
(c)(6)* ** Letter of Acceptance, dated as of July 25, 1999, between Biovail Corporation International
and Salisbury Ltd.
(c)(7)* ** Letter of Acceptance, dated as of July 25, 1999, between Biovail Corporation International
and Westbury Ltd.
(c)(8)* *** Letter Agreement dated as of July 13, 1999, between Biovail Corporation International and
Richard C. Fuisz, M.D. regarding the Consulting Agreement.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
- ------------------------
* Incorporated by reference from Parent's Report on Form 6-K, dated July 28,
1999.
** Incorporated by reference from the Parent's statement on Schedule 13D, dated
July 23, 1999.
*** Incorporated by reference from the Parent's statement on Schedule 13D/A
(Amendment No. 1), dated July 26, 1999.
****Filed previously on Schedule 14D-1 and Amendment No. 2 to Schedule 13D on
July 30, 1999.
(Page 6 of 6 Pages)
<PAGE>
OFFER TO PURCHASE FOR CASH
UP TO 6,585,225 OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
FUISZ TECHNOLOGIES LTD.
AT
$7.00 NET PER SHARE IN CASH
BY
ABCI ACQUISITION SUB. CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
BIOVAIL CORPORATION INTERNATIONAL
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 26, 1999 (THE "EXPIRATION
DATE"), UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF JULY 25, 1999, BY AND AMONG BIOVAIL CORPORATION INTERNATIONAL ("PARENT"),
ABCI ACQUISITION SUB. CORPORATION (THE "PURCHASER") AND FUISZ TECHNOLOGIES LTD.
(THE "COMPANY"). THE COMPANY'S BOARD OF DIRECTORS HAS APPROVED THE OFFER, THE
MERGER AND THE MERGER AGREEMENT AND DETERMINED THAT THE TERMS OF THE OFFER AND
THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS,
AND RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER ALL
OF THEIR 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 DATE (AS DEFINED IN "THE
TENDER OFFER--1. TERMS OF THE OFFER; PRORATION; EXPIRATION DATE" AT LEAST
4,602,460 SHARES OF THE OUTSTANDING COMMON STOCK ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION") AND (II) THE EXPIRATION OF ANY WAITING PERIOD UNDER THE
ANTITRUST LAWS (AS DEFINED IN "THE TENDER OFFER--14. CERTAIN CONDITIONS OF THE
OFFER") APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER AND THE
MERGER (THE "ANTITRUST CONDITION"). THE PURCHASER RESERVES THE RIGHT, SUBJECT
ONLY TO THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION"), TO WAIVE EACH OF THE CONDITIONS TO THE
OBLIGATIONS OF THE PURCHASER TO CONSUMMATE THE OFFER TO THE EXTENT PERMITTED BY
LAW.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
DONALDSON, LUFKIN & JENRETTE
-------------
July 30, 1999
<PAGE>
IMPORTANT
According to the Company, there were 22,030,723 shares of common stock,
$0.01 par value per share, of the Company outstanding as of July 25, 1999. The
Purchaser and its affiliates beneficially own 4,209,829 of such shares. Upon
completion of the purchase of the 6,585,225 Shares pursuant to the Offer, Parent
will benefically own approximately 49% of the outstanding Shares of the Company.
Any shareholder desiring to tender all or any portion of such shareholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal, or a facsimile thereof, in accordance with the instructions in the
Letter of Transmittal, mail or deliver it and any other required documents to
the Depositary and either deliver the certificates for such Shares to the
Depositary along with the Letter of Transmittal or tender such Shares pursuant
to the procedures for book-entry transfer set forth in this Offer to Purchase
under the caption "THE TENDER OFFER--3. Procedures for Tendering Shares" or (2)
request such shareholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for the shareholder. Shareholders having
Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if they desire to tender such Shares.
A shareholder who desires to tender Shares and whose certificates for Shares
are not immediately available, or who cannot comply with the procedures for
book-entry transfer described in this Offer to Purchase on a timely basis, may
tender such Shares by following the procedures for guaranteed delivery set forth
in this Offer to Purchase under the caption "THE TENDER OFFER--3. Procedures for
Tendering Shares."
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials,
may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Holders of Shares may also contact brokers, dealers,
commercial banks and trust companies for assistance concerning the Offer.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<C> <S> <C>
INTRODUCTION.................................................................................................... 1
THE TENDER OFFER................................................................................................ 4
1. Terms of the Offer; Proration; Expiration Date....................................................... 4
2. Acceptance for Payment and Payment for Shares........................................................ 6
3. Procedures for Tendering Shares...................................................................... 7
4. Withdrawal Rights.................................................................................... 11
5. Certain United States Federal Income Tax Consequences of the Offer and the Merger.................... 11
6. Price Range of Shares; Dividends..................................................................... 12
7. Effect of the Offer on the Market for the Shares; NASDAQ Listing and Exchange Act Registration;
Margin Regulations................................................................................. 13
8. Certain Information Concerning the Company........................................................... 14
9. Certain Information Concerning Parent and the Purchaser.............................................. 16
10. Source and Amount of Funds........................................................................... 20
11. Background of the Offer and the Merger; Contacts with the Company.................................... 20
12. Purpose of the Offer and the Merger; Plans for the Company; the Merger Agreement..................... 22
13. Dividends and Distributions.......................................................................... 31
14. Certain Conditions of the Offer...................................................................... 31
15. Certain Legal Matters; Regulatory Approvals.......................................................... 33
16. Fees and Expenses.................................................................................... 34
17. Miscellaneous........................................................................................ 34
Schedule I-- Information Concerning the Directors and Executive Officers of Parent and the Purchaser............
I-1
</TABLE>
ii
<PAGE>
To the Holders of Common Stock of Fuisz Technologies Ltd.:
INTRODUCTION
THE OFFER
ABCI Acquisition Sub. Corporation, a Delaware company (the "Purchaser") and
a wholly-owned subsidiary of Biovail Corporation International, an Ontario,
Canada corporation ("Parent"), hereby offers to purchase up to 6,585,225 of the
outstanding shares (collectively, the "Shares") of common stock, par value $.01
per share (the "Company Common Stock"), of Fuisz Technologies Ltd., a Delaware
corporation (the "Company"), at a purchase price of $7.00 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"). The Company has informed the Purchaser that
there were 22,030,723 Shares of Company Common Stock outstanding as of July 25,
1999. The Purchaser and its affiliates beneficially own 4,209,829 of such
Shares. If 6,585,225 Shares are purchased pursuant to the Offer, Parent will
beneficially own approximately 49% of the outstanding Company Common Stock.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR
WAIVER OF CERTAIN CONDITIONS, INCLUDING (I) THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION DATE SUCH NUMBER OF SHARES THAT WOULD SATISFY
THE MINIMUM CONDITION AND (II) THE EXPIRATION OF ANY WAITING PERIOD UNDER THE
ANTITRUST LAWS (AS DEFINED IN "THE TENDER OFFER--14. CERTAIN CONDITIONS OF THE
OFFER") APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER AND THE
MERGER (THE "ANTITRUST CONDITION"). THE OFFER IS SUBJECT TO OTHER TERMS AND
CONDITIONS AS DESCRIBED IN "THE TENDER OFFER--14. CERTAIN CONDITIONS OF THE
OFFER." THE PURCHASER RESERVES THE RIGHT, SUBJECT ONLY TO THE APPLICABLE RULES
AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), TO
WAIVE EACH OF THE CONDITIONS (OTHER THAN THE MINIMUM CONDITION) TO THE
OBLIGATIONS OF THE PURCHASER TO CONSUMMATE THE OFFER TO THE EXTENT PERMITTED BY
LAW.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 25, 1999 (the "Merger Agreement"), by and among Parent, the Purchaser
and the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by the Purchaser and further provides that, after the
purchase of Shares pursuant to the Offer and subject to the satisfaction or
waiver of certain conditions set forth therein, the Purchaser will be merged
with and into Company (the "Merger"), with the Company surviving the Merger as a
wholly-owned subsidiary of Parent. The surviving corporation of the Merger is
referred to herein as the "Surviving Corporation."
In the Merger, each Share issued and outstanding immediately prior to the
effective time of the Merger (other than shares held by Parent, the Purchaser,
any direct or indirect wholly-owned subsidiary of Parent, in the treasury of the
Company or by any direct or indirect wholly-owned subsidiary of the Company)
will be converted into the right to receive a fraction of a common share, no par
value, of Parent (the "Parent Common Stock") based on an exchange ratio
determined as follows: (i) if the average of the daily closing prices per share
of Parent Common Stock on the New York Stock Exchange ("NYSE") Composite
Transactions Reporting System, as reported in The Wall Street Journal for the
fifteen trading days ending on the date immediately prior to the second full
NYSE trading day immediately preceding the Closing Date ("the Average Trading
Price"); is less than $45.00, the Exchange Ratio shall equal .1556; (ii) if the
Average Trading Price is greater than or equal to $45.00, but less than or equal
to $58.625, the Exchange Ratio shall equal a fraction (rounded to the nearest
ten-thousandth) determined by dividing $7.00 by the Average Trading Price; (iii)
if the Average Trading Price is greater than $58.625 but less than or equal to
$62.810, the Exchange Ratio shall equal .1194 and (iv) if the Average Trading
Price is greater than $62.810, the Exchange Ratio shall equal a fraction
(rounded to the nearest ten-thousandth) determined by dividing $7.50 by the
Average Trading Price subject to adjustment as provided in the Merger Agreement
(the "Merger Consideration" and, together with the Offer Price, the
"Consideration"). On July 23, 1999, the last full day of trading prior to the
announcement of the execution of the Merger Agreement, the reported last sale
price of the Parent Common Stock on the NYSE was $58 5/8 per share of Parent
Common Stock. Shareholders are urged to obtain a current market quotation for
the Parent
<PAGE>
Common Stock. The consummation of the Merger is subject to the satisfaction or
waiver of certain conditions, including (i) the Minimum Condition and (ii) the
Antitrust Condition See "THE TENDER OFFER--12. Purpose of the Offer and the
Merger; Plans for the Company; the Merger Agreement."
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER, THE MERGER AND
THE MERGER AGREEMENT AND DETERMINED THAT THE TERMS OF EACH OF THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS, AND
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER ALL OF
THEIR SHARES PURSUANT TO THE OFFER.
THE COMPANY'S FINANCIAL ADVISOR, WARBURG DILLON READ LLC ("WARBURG DILLION
READ"), HAS DELIVERED TO THE COMPANY'S SPECIAL COMMITTEE AND THE BOARD OF
DIRECTORS A WRITTEN OPINION, DATED JULY 25, 1999, TO THE EFFECT THAT, AS OF THE
DATE OF SUCH OPINION AND BASED ON AND SUBJECT TO THE MATTERS STATED THEREIN, THE
CONSIDERATION TO BE RECEIVED IN THE OFFER AND THE MERGER, TAKEN TOGETHER, BY THE
HOLDERS OF COMPANY COMMON STOCK (OTHER THAN PARENT AND ITS AFFILIATES) WAS FAIR
FROM A FINANCIAL POINT OF VIEW TO SUCH HOLDERS. THE FULL TEXT OF WARBURG DILLION
READ'S OPINION, WHICH SETS FORTH THE MATTERS CONSIDERED, ASSUMPTIONS MADE AND
LIMITATIONS ON THE REVIEW UNDERTAKEN BY WARBURG DILLION READ, ARE CONTAINED IN
THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE
"SCHEDULE 14D-9"), WHICH IS BEING MAILED TO THE COMPANY'S SHAREHOLDERS HEREWITH.
SHAREHOLDERS ARE URGED TO, AND SHOULD, READ WARBURG DILLION READ'S OPINION
CAREFULLY IN ITS ENTIRETY.
Tendering shareholders will not be obligated to pay brokerage commissions,
solicitation fees or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. However, any tendering shareholder or other payee who fails to complete
and sign the Substitute Form W-9 included in the Letter of Transmittal may be
subject to a required backup federal income tax withholding of 31% of the gross
proceeds payable to such shareholder or other payee pursuant to the Offer. See
"THE TENDER OFFER--5. Certain United States Federal Income Tax Consequences."
Purchaser will pay all charges and expenses of Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), which is acting as the Dealer Manager (the
"Dealer Manager"), ChaseMellon Shareholder Services, L.L.C., as depositary (the
"Depositary"), and MacKenzie Partners, Inc. as Information Agent (in such
capacity, the "Information Agent"), incurred in connection with the Offer. For a
description of the fees and expenses, see "THE TENDER OFFER--16. Fees and
Expenses."
The Merger Agreement is more fully described in "THE TENDER OFFER--12.
Purposes of the Offer and the Merger; Plans for the Company; the Merger
Agreement." Certain federal income tax consequences of the sale of Shares
pursuant to the Offer and the exchange of Shares for the Merger Consideration
pursuant to the Merger Agreement are described in "THE TENDER OFFER--5. Certain
United States Federal Income Tax Consequences."
* * *
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER. ALSO SEE "THE TENDER OFFER--17. MISCELLANEOUS" FOR
INFORMATION REGARDING CERTAIN ADDITIONAL DOCUMENTS FILED WITH THE COMMISSION IN
CONNECTION WITH THE OFFER.
INFORMATION APPEARING OR INCORPORATED HEREIN IN RESPECT OF THE COMPANY, THE
COMPANY'S BOARD OF DIRECTORS AND WARBURG DILLION READ'S OPINION HAS BEEN
FURNISHED TO THE PARENT AND PURCHASER BY THE COMPANY OR OBTAINED FROM PUBLISHED
SOURCES. WHILE PARENT AND THE PURCHASER HAVE NO REASON, AS OF THE DATE OF THIS
OFFER TO PURCHASE, TO BELIEVE THAT SUCH INFORMATION IS INCORRECT IN ANY MATERIAL
RESPECT, NONE OF THE PARENT, THE PURCHASER OR ANY REPRESENTATIVE OF ANY OF THE
FOREGOING ASSUMES ANY LIABILITY THEREFOR.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE SHAREHOLDERS OF THE COMPANY OR ANY OFFER TO SELL OR SOLICITATION OF OFFERS
TO BUY PARENT COMMON STOCK OR OTHER SECURITIES. ANY SUCH SOLICITATION WILL BE
MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS PURSUANT TO THE REQUIREMENTS OF
2
<PAGE>
SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE
ACT"), AND ANY OFFER WILL BE MADE ONLY THROUGH A REGISTRATION STATEMENT AND
PROSPECTUS PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1993, AS
AMENDED (THE "SECURITIES ACT"), WHICH PROSPECTUS WILL ALSO CONSTITUTE A PROXY
STATEMENT FOR THE MEETING OF SHAREHOLDERS OF THE COMPANY RELATING TO THE MERGER
(THE "PROXY STATEMENT/PROSPECTUS").
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
SHAREHOLDERS OF THE COMPANY ARE URGED TO READ THIS OFFER TO PURCHASE AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
SHARES.
3
<PAGE>
THE TENDER OFFER
1. TERMS OF THE OFFER; PRORATION; EXPIRATION DATE
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 extension or
amendment), the Purchaser will accept for payment and pay for up to 6,585,225 of
the outstanding Shares of Company Common Stock (the "Maximum Number of Shares")
validly tendered prior to the Expiration Date and not withdrawn in accordance
with "THE TENDER OFFER--4. Withdrawal Rights." The Offer is conditioned upon,
among other things, there being validly tendered and not withdrawn prior to the
Expiration Date at least 4,602,460 Shares (the "Minimum Condition"). The term
"Expiration Date" means 12:00 midnight, New York City time, on August 26, 1999,
unless and until the 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 the Purchaser, shall expire.
If more than the Maximum Number of Shares are validly tendered prior to the
Expiration Date and not properly withdrawn, the Purchaser will, upon the terms
and subject to the conditions of the Offer, accept for payment and pay for only
the Maximum Number of Shares on a pro rata basis, with adjustments to avoid
purchases of fractional Shares, based upon the number of Shares validly tendered
prior to the Expiration Date and not properly withdrawn.
In the event that proration of tendered Shares is required, because of the
difficulty of determining precisely the number of Shares validly tendered and
not withdrawn (due in part to the guaranteed delivery procedure described in
"THE TENDER OFFER--3. Procedures for Tendering Shares"), the Purchaser does not
expect to be able to announce the final results of such proration or pay for any
Shares until at least five Nasdaq National Market ("NASDAQ") trading days after
the Expiration Date. Preliminary results of proration will be announced by press
release as promptly as practicable after the Expiration Date. Shareholders may
obtain such information from the Information Agent and may also be able to
obtain such information from their brokers.
Consummation of the Offer is conditioned upon, among other things,
satisfaction of each of the Minimum Condition and the Antitrust Condition. The
Offer also is subject to certain other conditions set forth in "THE TENDER
OFFER--14. Certain Conditions of the Offer" (together with the Minimum Condition
and the Antitrust Condition, the "Offer Conditions").
Pursuant to the terms of the Merger Agreement, Parent and the Purchaser
expressly reserve the right (but are not obligated) to waive any or all of the
Offer Conditions to the extent permitted by law. If any of the Offer Conditions
are not satisfied prior to the Expiration Date, Parent and the Purchaser reserve
the right (but are not obligated) to (i) decline to purchase any or all of the
Shares tendered and terminate the Offer, and return all such tendered Shares to
tendering shareholders, (ii) waive any or all Offer Conditions and, subject to
complying with applicable rules and regulations of the Commission, purchase all
Shares validly tendered and not theretofore withdrawn, (iii) subject to the
terms of the Merger Agreement, extend the Offer and, subject to the right of
shareholders to withdraw Shares until the Expiration Date, retain the Shares
which have been tendered during the period or periods for which the Offer is
extended or (iv) subject to the terms of the Merger Agreement, otherwise amend
the Offer. In addition, Parent has agreed in the Merger Agreement that it will
not, without the consent of the Company, (i) decrease the Offer Price, (ii)
waive the Minimum Condition, (iii) change the form of consideration payable in
the Offer, (iv) decrease the number of Shares sought to be purchased in the
Offer, (v) change the conditions set forth in "THE TENDER OFFER--14. Certain
Conditions of the Offer," (vi) impose additional conditions to the Offer or
(vii) amend any other term of the Offer in a manner adverse to the Company's
shareholders.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Commission, except as described below, the Purchaser
expressly reserves the right, in its sole discretion, at
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any time and from time to time, and regardless of the occurrence of any of the
events specified in "THE TENDER OFFER--14. Certain Conditions of the Offer," by
giving oral or written notice to the Depositary, as described below, to (i)
extend the period of time during which the Offer is open, and thereby delay
acceptance of such payment of, and the payment for any Shares and (ii) amend the
Offer in any other respect. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
OFFER PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the rights of a tendering shareholder to withdraw any
tendered Shares. See "THE TENDER OFFER--4. Withdrawal Rights."
There can be no assurance that Parent will exercise its right to extend the
Offer (other than as required by the Merger Agreement). In the Merger Agreement,
Parent has agreed to extend the Offer, from time to time to the extent any
conditions to the Offer reasonably capable of being satisfied have not been
satisfied on the applicable expiration date but not beyond the 55th business day
from and including the business day the Offer commences. Any such extension
shall not be for a period greater than the period of time Parent reasonably
expects to be necessary to satisfy such conditions.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or is unable to pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser,
and such Shares may not be withdrawn except to the extent tendering shareholders
are entitled to withdrawal rights as described in "THE TENDER OFFER--4.
Withdrawal Rights." However, the ability of the Purchaser to delay the payment
for Shares that the Purchaser has accepted for payment is limited by Rule 14e-1
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.
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-1(d) under the Exchange Act.
Without limiting the obligations of the Purchaser under such Rules or the manner
in which the Purchaser may choose to make any public announcement, the Purchaser
currently intends to make announcements by issuing a press release to the
Business Wire. As used in this Offer to Purchase, "business day" has the meaning
set forth in Rule 14d-1 under the Exchange Act. The minimum period during which
an offer must remain open following material changes in the terms of the Offer
or information concerning the Offer, other than a change in price or a change in
the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the materiality of the changed terms or
information. With respect to a change in price or a change in the percentage of
securities sought, a minimum period of ten business days generally is required
to allow for adequate dissemination of information concerning the change to
shareholders.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of the Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and will be furnished by the Purchaser to brokers, dealers, banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
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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), the Purchaser will purchase, by accepting for payment, and will pay
for, the Maximum Number of Shares validly tendered prior to the Expiration Date
(and not properly withdrawn in accordance with "THE TENDER OFFER--4. Withdrawal
Rights") promptly after the Expiration Date. Any determination concerning the
satisfaction of such terms and conditions shall be within the sole discretion of
the Purchaser. See "THE TENDER OFFER--4. Withdrawal Rights." Subject to the
terms of the Merger Agreement, the Purchaser expressly reserves the right, in
its sole discretion, to delay acceptance for payment of, or, subject to the
applicable rules of the Commission, payment for, Shares in order to comply in
whole or in part with any applicable law. See "THE TENDER OFFER--15. Certain
Legal Matters; Regulatory Approvals." Any such delays will be effected in
compliance with Rule 14e-1(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Shares promptly after the
termination or withdrawal of the Offer).
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificate(s) representing tendered Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Shares (if such procedure is available) into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in "THE TENDER
OFFER--3. Procedures for Tendering Shares," (ii) the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, or an Agent's Message
(as defined herein) in connection with a book-entry transfer, and (iii) any
other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares if, as and when the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance of
such Shares for payment. Payment for Shares accepted pursuant to the Offer will
be made by deposit of the aggregate purchase price therefor with the Depositary,
which will act as agent for tendering shareholders for the purpose of receiving
payment from the Purchaser and transmitting payment to such tendering
shareholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE FOR SHARES
BE PAID BY THE PURCHASER BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT.
In the Merger Agreement, Parent has agreed that, following the satisfaction
or waiver of all of the conditions to the Offer, the Purchaser shall accept for
payment, in accordance with the terms of the Offer, the Maximum Number of Shares
which are validly tendered and not withdrawn as soon as practicable thereafter,
except as otherwise consented to by the Company. If, for any reason whatsoever,
acceptance for payment of or payment for any Shares tendered pursuant to the
Offer is delayed, or the Purchaser is unable to accept for payment or pay for
Shares tendered pursuant to the Offer, then, without prejudice to the
Purchaser's rights set forth herein, the Depositary may, nevertheless, on behalf
of the Purchaser and subject to Rule 14e-1(c) under the Exchange Act, retain
tendered Shares and such Shares may not be withdrawn except to the extent that
the tendering shareholder is entitled to and duly exercises withdrawal rights as
described in "THE TENDER OFFER--4. Withdrawal Rights."
If more than 6,585,225 Shares are validly tendered prior to the Expiration
Date and not withdrawn, Purchaser will, upon the terms and subject to the
conditions of the Offer, accept such Shares for payment
6
<PAGE>
on a PRO RATA basis, with adjustments to avoid purchases of fractional Shares,
based upon the number of Shares validly tendered prior to the Expiration Date
and not withdrawn.
Because of the difficulty of determining precisely the number of Shares
validly tendered and not withdrawn, if proration is required, Purchaser would
not expect to announce the final results of proration until approximately seven
NASDAQ trading days after the Expiration Date. Preliminary results of proration
will be announced by press release as promptly as practicable after the
Expiration Date. Holders of Shares may obtain such preliminary information from
the Depositary, and may also be able to obtain such preliminary information from
their brokers. Purchaser will not pay for any Shares accepted for payment
pursuant to the Offer until the final proration factor is known.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer (including due to proration if more
than the Maximum Number of Shares of the Company are tendered) or if Share
Certificates are submitted evidencing more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned,
without expense to the tendering shareholder (or, in the case of Shares tendered
by book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedure set forth in "THE TENDER OFFER--3. Procedures
for Tendering Shares," such Shares will be credited to an account maintained at
the Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
offered to shareholders pursuant to the Offer, such increased consideration will
be paid to all shareholders whose Shares are purchased pursuant to the Offer,
regardless of whether those Shares were tendered prior to or after the increase
in consideration.
Subject to the provisions of the Merger Agreement, Parent may assign its
rights and obligations under the Merger Agreement or those of Acquisition Sub to
Parent or any subsidiary of Parent, but in each case no such assignment shall
relieve Parent or Acquisition Sub, of its obligations under the Merger
Agreement.
Parent and the Company each will file a Notification and Report Form with
respect to the transactions contemplated by the Merger Agreement under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). The waiting period under the HSR Act will expire at 11:59 p.m., New York
City Time, on the 30th calendar day after filing of the HSR forms by Parent and
the Company, unless the Antitrust Division of the United States Department of
Justice (the "Antitrust Division") or the United States Federal Trade Commission
(the "FTC") extends the waiting period by requesting additional information or
documentary material from Parent and the Company. If such a request is made,
such waiting period will expire at 11:59 p.m., New York City Time, on the 20th
day after substantial compliance by Parent and the Company with such request.
See "THE TENDER OFFER--15. Certain Legal Matters; Regulatory Approvals" for
additional information concerning the HSR Act and the applicability of the
antitrust laws to the Offer.
3. PROCEDURES FOR TENDERING SHARES
VALID TENDER OF SHARES. Except as set forth below, in order for Shares to
be validly tendered pursuant to the Offer, the Letter of Transmittal or a
facsimile thereof, properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares 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 (i) the Share Certificates
evidencing tendered Shares must be received by the Depositary along with the
Letter of Transmittal, (ii) Shares must be tendered pursuant to the procedure
for book-entry transfer described below and a Book-Entry Confirmation must be
received by the Depositary, in each case, prior to the Expiration Date, or (iii)
the tendering shareholder must comply with the guaranteed delivery procedures
described below.
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If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) must accompany each delivery. No alternative, conditional or
contingent tenders will be accepted and no fractional Shares will be purchased.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. 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 MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account at the
Book-Entry Transfer Facility with respect to the Shares for purposes of the
Offer within two business days after the date of this Offer to Purchase, and 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 at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through book-entry transfer at the Book-Entry Transfer Facility, the
Letter of Transmittal or a facsimile thereof, with any required signature
guarantees, or an Agent's Message in connection with a book-entry delivery of
Shares, 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 guaranteed
delivery procedures described below must be complied with.
REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT
ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS OFFER TO PURCHASE.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal if the Shares tendered thereby are tendered (i) by a registered
holder of Shares who has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (ii) for the account of a bank, broker, dealer, credit union,
savings association or other entity that is a member in good standing of the
Securities Transfer Agents Medallion Program (each, an "Eligible Institution").
In all other cases, all signatures on the Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal or if payment is to be made to a person
other than the registered holder(s), or if a Share Certificate not accepted for
payment is to be returned to a person other than the registered holder(s), or if
a portion of the Shares evidenced by such Share Certificate are to be returned
because fewer than all of the Shares evidenced by such Share Certificate are to
be tendered to a person other than the registered holder(s), then the Share
Certificate must be endorsed or accompanied by appropriate stock powers, in any
of these cases, signed exactly as the name(s) of the registered holder(s) appear
on the Share Certificate, with the signature(s) on such Share Certificate or
stock powers guaranteed as described above. See Instructions 1 and 5 of the
Letter of Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer
8
<PAGE>
cannot be completed on a timely basis, such Shares may nevertheless be tendered
if all the following conditions are satisfied:
(i) the 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 the Purchaser herewith, is
received by the Depositary as provided below prior to the Expiration Date;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) representing
all tendered Shares in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the Letter
of Transmittal are received by the Depositary within three NASDAQ trading
days after the date of execution of such Notice of Guaranteed Delivery.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mailed to the Depositary, and must include a guarantee
by an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
Notwithstanding any other provisions hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering shareholders at the same
time and will depend upon when Share Certificates are received by the Depositary
or Book-Entry Confirmations with respect to such Shares are received into the
Depositary's account at the Book-Entry Transfer Facility.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
APPOINTMENT AS PROXY. Except as otherwise prohibited by Law, by executing a
Letter of Transmittal as set forth above, a tendering shareholder irrevocably
appoints certain designees of the Purchaser as such shareholder'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
shareholder's rights with respect to the Shares tendered by such shareholder and
accepted for payment by the Purchaser (and any and all non-cash dividends,
distributions, rights or other securities issued or issuable in respect of such
Shares on or after the date of the Offer). All such proxies shall be considered
coupled with an interest in the tendered Shares. This appointment will be
effective if, when and only to the extent that the Purchaser accepts such Shares
for payment pursuant to the Offer. Upon such acceptance for payment, all prior
proxies given by such shareholder with respect to such Shares and other
securities will, without further action, be revoked, and no subsequent proxies
may be given. The designees of the Purchaser will, with respect to the Shares
and other securities for which the appointment is effective, be empowered to
exercise all voting and other rights of such shareholder as they, in their sole
discretion, may deem proper at any annual, special, adjourned or postponed
meeting of the Company's shareholders, or otherwise, and the Purchaser reserves
the right to require that in order for Shares or other securities to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting rights with
respect to such Shares.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, whose determination will be
final and binding on all parties. The Purchaser reserves the absolute right, in
its sole discretion, to reject any or all tenders of
9
<PAGE>
Shares determined by it not to be in proper form or if the acceptance for
payment of, or payment for, such Shares may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right, in its
sole discretion, to waive any defect or irregularity in any tender with respect
to Shares of any particular shareholder, whether or not similar defects or
irregularities are waived in the case of other shareholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. None of Parent, the Purchaser, the Dealer Manager, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments of the Offer Price pursuant to the Offer, a shareholder
surrendering Shares in the Offer must, unless an exemption applies, provide the
Depositary with such shareholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalty of perjury that such
TIN is correct and that such shareholder is not subject to backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. If a
shareholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such shareholder and payment of the Offer Price to such shareholder
pursuant to the Offer may be subject to backup withholding of 31% of the amount
payable to such shareholder. All shareholders surrendering Shares pursuant to
the Offer should complete and sign the main signature form and the Substitute
Form W-9 included as part of the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proven in a manner satisfactory to the
Purchaser and the Depositary). Noncorporate foreign shareholders 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 Instruction 10 to the Letter of Transmittal.
TENDERING SHAREHOLDER'S REPRESENTATION AND WARRANTY; PURCHASER'S ACCEPTANCE
CONSTITUTES AN AGREEMENT. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the Offer, as well as the tendering shareholder's
representation and warranty to Parent, Purchaser and the Company that (a) such
shareholder has a net long position in the Shares being tendered within the
meaning of Rule 14e-4 promulgated by the Commission under the Exchange Act and
(b) the tender of such Shares complies with Rule 14e-4. It is a violation of
Rule 14e-4 for a person acting alone or in concert with others, directly or
indirectly, to tender Shares for such person's own account unless at the time of
tender and at the Expiration Date such person has a "net long position" equal to
or greater than the amount tendered in (i) Shares and will deliver or cause to
be delivered such Shares for the purpose of tender to the Purchaser within the
period specified in the Offer, or (ii) other securities immediately convertible
into, exercisable for or exchangeable into Shares ("Equivalent Securities") and,
upon the acceptance of such tender, will acquire such Shares by conversion,
exchange or exercise of such Equivalent Securities to the extent required by the
terms of the Offer and will deliver or cause to be delivered such Shares so
acquired for the purpose of tender to the Purchaser within the period specified
in the Offer. Rule 14e-4 provides a similar restriction applicable to the tender
or guarantee of a tender on behalf of another person. The Purchaser's acceptance
for payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the tendering shareholder and the Purchaser upon the terms and
conditions of the Offer.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED LETTER OF
TRANSMITTAL AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL, MUST
BE DELIVERED TO THE DEPOSITARY AND NOT TO THE COMPANY OR THE DEALER MANAGERS.
ANY SUCH DOCUMENTS DELIVERED TO THE COMPANY
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OR THE DEALER MANAGER WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL
NOT BE DEEMED TO BE VALIDLY TENDERED.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless previously
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after September 27, 1999.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares or is unable to accept Shares for payment pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
shareholders are entitled to withdrawal rights as described in this Section 4;
subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c) under
the Exchange Act, to pay for the tendered Shares or return those Shares promptly
after termination or withdrawal of the Offer. Any such delay will be accompanied
by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and (if Share Certificates have
been tendered) the name of the registered holder, if different from that of the
person who tendered such Shares. If Share Certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then
prior to the release of such Share Certificates, the serial numbers shown on the
particular Share Certificates to be withdrawn must be submitted to the
Depositary, and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution, unless such Shares have been tendered for the
account of an Eligible Institution. If Shares have been tendered pursuant to the
procedure for book-entry transfer as set forth in "THE TENDER OFFER--3.
Procedures for Tendering Shares," 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, in which case a notice of withdrawal will be
effective if delivered to the Depositary by any method of delivery described in
"THE TENDER OFFER--3. Procedures for Tendering Shares." Withdrawals of Shares
may not be rescinded.
All questions as to the form and validity (including, without limitation,
time of receipt) of notices of withdrawal will be determined by the Purchaser,
in its sole discretion, the determination of which will be final and binding.
None of Parent, the Purchaser, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Any Shares properly withdrawn will thereafter be deemed to not have been
validly tendered for purposes of the Offer. Withdrawn Shares may be retendered
at any time prior to the Expiration Date by following one of the procedures
described in "THE TENDER OFFER--3. Procedures for Tendering Shares."
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE
MERGER
The following discussion is a summary of the material federal income tax
consequences of the Offer and the Merger to holders of Shares who hold the
Shares as capital assets. The discussion set forth below is for general
information only and may not apply to certain categories of holders of Shares
subject to special treatment under the Internal Revenue Code of 1986, as amended
(the "Code"), such as foreign holders and holders who acquired such Shares
pursuant to the exercise of employee stock options or otherwise as compensation.
This summary is based upon laws, regulations, rulings, and decisions currently
in effect, all of which are subject to change, retroactively or prospectively.
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A shareholder of the Company will recognize gain or loss with respect to
Shares exchanged pursuant to the Offer equal to the difference between the
amount of cash received and such shareholder's adjusted tax basis in the Shares
surrendered pursuant to the Offer, and will recognize gain or loss with respect
to Shares exchanged pursuant to the Merger equal to the difference between the
fair market value of the Parent Common Stock received and such shareholder's
adjusted tax basis in the Shares exchanged pursuant to the Merger.
CHARACTERIZATION OF GAIN OR LOSS
The gain or loss recognized, if any, by a shareholder of the Company
pursuant to the Offer or the Merger will be capital gain or loss and if, as of
the date of the exchange pursuant to the Offer or the Merger, as the case may
be, the shareholder has held the Shares surrendered for more than one year, such
capital gain will be long-term. The amount of any gain or loss recognized and
its character as short-term or long-term will be calculated and determined
separately for each identifiable block of Shares surrendered pursuant to the
Offer and the Merger.
BACKUP WITHHOLDING
Unless a shareholder complies with certain reporting and/or certification
procedures or is an exempt recipient under applicable provisions of the Code and
Treasury Regulations promulgated thereunder, such shareholder may be subject to
withholding tax of 31% with respect to any cash payments received pursuant to
the Offer. See the discussion regarding backup withholding in "THE TENDER
OFFER--3. Procedures for Tendering Shares." Foreign shareholders should consult
with their own tax advisors regarding withholding taxes in general.
THE ABOVE DISCUSSION MAY NOT APPLY TO CERTAIN CATEGORIES OF SHAREHOLDERS
SUBJECT TO SPECIAL TREATMENT UNDER THE CODE, SUCH AS FOREIGN SHAREHOLDERS AND
SHAREHOLDERS WHOSE SHARES WERE ACQUIRED PURSUANT TO THE EXERCISE OF ANY EMPLOYEE
STOCK OPTION OR OTHERWISE AS COMPENSATION. SHAREHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE OFFER
AND THE MERGER, INCLUDING ANY FEDERAL, STATE, LOCAL OR OTHER TAX CONSEQUENCES
(INCLUDING ANY TAX RETURN FILING OR OTHER TAX REPORTING REQUIREMENTS) OF THE
OFFER AND THE MERGER.
6. PRICE RANGE OF SHARES; DIVIDENDS
The principal market for the Shares is the Nasdaq National Market as
reported by the Nasdaq National Market and the Dow Jones News Retrieval Service,
where the shares of Company Common Stock are traded under the symbol "FUSE." The
Company has not paid any dividends or made any distributions to its
shareholders. The following table sets forth, for the periods indicated, the
high and low sales prices per Share on the Nasdaq National Market as reported by
the Nasdaq National Market and the Dow Jones News Retrieval Service and as
otherwise reported by published financial sources.
<TABLE>
<CAPTION>
SALES PRICE
--------------------
YEAR HIGH LOW
- ------------------------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
1997
First Quarter.................................................................................... $ 9 1/2 $ 5 5/8
Second Quarter................................................................................... 10 1/2 5 3/8
Third Quarter.................................................................................... 14 7/8 8 1/2
Fourth Quarter................................................................................... 16 8
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
SALES PRICE
--------------------
YEAR HIGH LOW
- ------------------------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
1998
First Quarter.................................................................................... 13 3/4 7 5/8
Second Quarter................................................................................... 14 3/8 10 7/16
Third Quarter.................................................................................... 12 5/8 7 1/8
Fourth Quarter................................................................................... 14 1/8 6
1999
First Quarter.................................................................................... 15 5/8 6 1/4
Second Quarter................................................................................... 9 1/2 3
Third Quarter (through July 29, 1999)............................................................ 6 9/32 3 3/16
</TABLE>
On July 23, 1999, the last full trading day prior to the announcement of the
execution of the Merger Agreement, the last reported sales price of the Shares
on NASDAQ was $5 11/16 per Share. On July 29, 1999, the last full trading day
prior to the date hereof, the last reported sales price of the Shares on NASDAQ
was $6 1/4 per Share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET
QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ LISTING AND
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS
MARKET FOR THE SHARES. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public. Neither Parent nor the
Purchaser can predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause future
market prices to be greater or less than the Offer Price.
NASDAQ NATIONAL MARKET. The purchase of the Shares tendered in response to
the Offer will reduce the number of Shares that might otherwise trade publicly
and probably will significantly reduce the number of holders of Shares, which
could adversely affect the liquidity and market value of the remaining Shares
held by the public. Depending upon the number of shares of Company Common Stock
purchased pursuant to the Offer, the Shares may no longer meet the standards of
the National Association of Securities Dealers, Inc. (the "NASD") for continued
inclusion in NASDAQ (the top tier market of the Nasdaq Stock Market), which
require that the issuer have at least 200,000 publicly held shares with a market
value of $1 million held by at least 400 stockholders (or 300 stockholders
holding round lots) and have net tangible assets of at least $1 million, $2
million or $4 million depending on profitability levels during the issuer's four
most recent fiscal years. If these standards are not met, the Company Common
Stock might nevertheless continue to be included in the NASDAQ with quotations
published in the NASDAQ "additional list" or in one of the "local lists."
However, if the number of holders of Company Common Stock falls below 300 or the
number of publicly held Company Common Stock falls below 100,000, or if there
are not at least two market makers for Company Common Stock, the Company Common
Stock would no longer qualify for Nasdaq Stock Market reporting, and the Nasdaq
Stock Market would cease to provide any quotations. Company Common Stock held
directly or indirectly by an officer or director of the Company, or by a
beneficial owner of more than 10% of the Company Common Stock, ordinarily will
not be considered as being publicly held for this purpose. According to the
Company, as of July 28, 1999, there were approximately 272 holders of record of
the Company Common Stock and approximately 9,800 beneficial owners and
22,030,723 shares of Common Stock were outstanding. If, as a result of the
purchase of Company Common Stock pursuant to the Offer or otherwise, the Company
Common Stock no longer meet the NASD requirements for continued inclusion on
NASDAQ or in any other tier of the Nasdaq Stock Market, the market of the
Company Common Stock could be adversely affected.
13
<PAGE>
If the Common Shares no longer meet the requirements for inclusion in any
tier of the Nasdaq Stock Market, quotations might or might not still be
available from other sources. The extent of the public market, and availability
of quotations, for the Common Shares would depend upon the number of holders of
Common Stock after the purchase of the Shares tendered in response to the Offer,
whether securities firms are interested in maintaining a market in the Common
Shares, the possible termination of registration under the Exchange Act, as
described below, and other factors.
EXCHANGE ACT REGISTRATION. The Shares currently are registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its shareholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with shareholders' meetings and the related
requirement of furnishing an annual report to shareholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act may
be impaired or eliminated. If registration of the Shares under the Exchange Act
were terminated, the Shares would no longer be "margin securities" or be
eligible for NASDAQ reporting.
If registration of the Company Common Stock is not terminated prior to the
Merger, then the Company Common Stock will be delisted from all stock exchanges
and the registration of the Company Common Stock under the Exchange Act will be
terminated following the consummation of the Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, Shares would no longer constitute "margin
securities" for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for Loans made by
brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL. Unless otherwise indicated, the information concerning the Company
contained in this Offer to Purchase, including financial information (except the
information described below under "Other Financial Information"), has been taken
from or is based upon publicly available documents and records on file with the
Commission and other public sources. None of Parent, the Purchaser, the Dealer
Manager, the Depositary or the Information Agent assumes any responsibility for
the accuracy or completeness of the information concerning the Company contained
in such documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of any
such information but which are unknown to Parent, the Purchaser, the Dealer
Manager, the Depositary or the Information Agent.
The Company is an international company that is engaged in the development,
manufacture, and commercialization of a wide range of drug delivery,
nutraceutical, and food ingredient products utilizing its proprietary
CEFORM(TM), SHEARFORM(TM), and other drug delivery technologies with research
and manufacturing facilities in Virginia, USA as well as in Dublin and Clonmel,
Ireland. The Company has been publicly traded since December 1995 and is listed
under the "FUSE" ticker symbol on NASDAQ.
14
<PAGE>
The Company is a Delaware corporation founded in June 1988 by Dr. Richard
Fuisz. Its principal executive offices are located at 14555 Avion Parkway, Suite
250, Chantilly, Virginia 20151. The telephone number of the Company at such
location is (703) 995-2200.
FINANCIAL INFORMATION. Set forth below is a summary of certain selected
consolidated financial information with respect to the Company, excerpted or
derived from the audited financial information of the Company contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998
and unaudited information of the Company contained in the Quarterly Report on
Form 10-Q of the Company for the quarterly period ended March 31, 1999. More
comprehensive financial information is included in such reports and other
documents filed with the Commission, and the following summary is qualified in
its entirety by reference to such reports and other documents, including the
financial information and related notes contained therein. Such reports and
other documents may be inspected and copies may be obtained from the offices of
the Commission or NASDAQ in the manner set forth below under "Available
Information."
FUISZ TECHNOLOGIES, LTD.
SUMMARY CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- ---------------------------------
1999 1998 1998 1997 1996
---------- ---------- ---------- ---------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Revenues.............................................. $ 20,620 $ 14,003 $ 61,219 $ 22,198 $ 8,526
Operating expenses.................................... 19,015 19,722 81,464 43,322 18,305
Operating income...................................... 1,605 (5,719) (20,245) (21,124) (9,779)
Income from continuing operations..................... (1,542) (6,504) (23,579) (19,601) (6,806)
Net income (loss)..................................... (1,386) (6,504) (23,579) (19,601) (6,806)
Earnings (loss) per share--assuming dilution:
Income from continuing operations................... (0.06) (0.29) (1.07) (0.92) (0.35)
Net income (loss)................................... (0.06) (0.29) (1.07) (0.92) (0.35)
BALANCE SHEET DATA (at end of period)
Total assets.......................................... 138,945 165,252 145,736 170,120 69,083
Long-term debt........................................ 89,470 90,110 90,639 90,164 --
Stockholders, equity.................................. 30,742 52,030 34,448 59,608 64,191
DIVIDENDS
Dividends paid........................................ -- -- -- -- --
Dividends paid per share.............................. -- -- -- -- --
</TABLE>
RECENT RESULTS. On July 30, 1999, the Company reported a net loss for its
1999 second quarter of $13.2 million, or $0.60 per share. The loss included
non-recurring and other charges of approximately $6.9 million. For the second
quarter of 1998, the Company reported a net loss of $5.9 million, or $0.26 per
share. For the six months ended June 30, 1999, the Company posted a net loss of
$14.7 million, or $0.67 per share, compared to a comparable period 1998 net loss
of $12.4 million or $0.56 per share. Non-recurring charges recorded in the
quarter ended June 30, 1999 included expenses related to an employee head-count
reduction program and impairment of goodwill associated with the Company's
Pangea subsidiary.
OTHER FINANCIAL INFORMATION. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent with financial projections and other information
relating to the Company which is not publicly available. The information
included projections of the Company's estimated revenues, net income (loss) and
earnings per share as an independent Company (i.e., without regard to the impact
to the Company of a transaction with Parent) of
15
<PAGE>
approximately: $(18.6) million, $5.2 million $17.5 million, and $23.0 million,
and $($0.85), $0.23, $0.73, $0.92 per share, respectively, for the years 1999,
2000, 2001 and 2002, respectively. The foregoing projections were prepared
solely for internal use and not for publication or with a view to complying with
the published guidelines of the Commission regarding projections or with the
guidelines established by the American Institute of Certified Public
Accountants. The projections are "forward-looking" and inherently subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company, including: potentially adverse changes in laws,
regulations or rules applicable to the Company or the pharmaceutical industry
generally; changes in the demand and competition for pharmaceuticals and similar
products, dependence on collaborative partners, capital requirements, risk of
manufacturing scale-up, product commercialization, including delays of
introductions of new products or enhancements, size and timing of individual
orders, rapid technolgical changes, acquisitions of marketing and sales
distribution organizations, market acceptance of new products, regulatory
approvals, future competition; general business and economic conditions; changes
in tax and accounting matters affecting the Company; and other matters.
Representatives of the Company have informed Parent that certain of the
assumptions used by the Company in preparing the projections have changed
significantly. Accordingly, the Company's actual results over the periods
indicated may differ materially than those described above. The inclusion of
this information should not be regarded as an indication that Parent, the
Purchaser, the Company or anyone who received this information considers it a
reliable predictor of future events, and this information should not be relied
upon as such. This information is being included in this Offer to Purchase only
because it was furnished by the Company to Parent. None of Parent, the Purchaser
or the Company assumes any responsibility for the validity, reasonableness,
accuracy or completeness of the projections, and the Company has made no
representations to Parent or the Purchaser regarding the financial projections
described above.
AVAILABLE INFORMATION. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational and reporting
requirements of the Exchange Act and is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Information, as of particular dates, concerning the Company's
directors and officers, their remuneration, stock options or restricted stock
units granted to them, the principal holders of the Company's securities, any
material interests of such persons in transactions with the Company and other
matters is required to be disclosed in proxy statements distributed to the
Company's shareholders and filed with the Commission. These reports, proxy
statements and other information are available for inspection at the public
reference facilities of the Commission located in Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and also are available for inspection and
copying at prescribed rates at the following regional offices of the Commission:
Seven World Trade Center, New York, New York 10048; and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this
material may also be obtained by mail, upon payment of the Commission's
customary fees, from the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains an internet site on
the World Wide Web at http://www.sec.gov that contains reports, proxy statements
and other information. Reports, proxy statements and other information
concerning the Company should also be available for inspection at the offices of
NASDAQ, 1735 K. Street, N.W., Washington, D.C. 20006.
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER
THE PURCHASER. The Purchaser is a newly formed Delaware corporation
organized in connection with the Offer and the Merger and has not carried on any
activities since its organization other than with respect to the Offer and the
Merger. The principal executive offices of the Purchaser are located at c/o
Biovail Corporation International, 2488 Dunwin Drive, Mississauga, Ontario,
Canada, L5L 1J9. The Purchaser is a wholly-owned subsidiary of Parent.
PARENT. Parent is a global integrated pharmaceutical company specializing
in the development of advanced oral controlled-release drugs.
16
<PAGE>
Parent's proprietary technologies are used in formulations which either
improve upon conventional dosage forms of existing products by providing the
therapeutic benefits of controlled release drug delivery or are generically
equivalent to existing once-daily branded products, while in both instances
providing significant cost advantages. Parent develops controlled release
formulations for the branded and generic market segments which are manufactured
by it or by others under license. Parent does not engage in basic research to
discover new chemical entities.
Parent was established under the Business Corporations Act (Ontario R.S.O.
1990), as amended, on March 29, 1994. Parent operates its business through
various subsidiaries. Parent's executive offices are located at 2488 Dunwin
Drive, Mississauga, Ontario, L5L 1J9, and its telephone number is (416)
285-6000.
FINANCIAL INFORMATION. The most recently available interim unaudited
financial statements for Parent are for the quarter ended June 30, 1999 and will
be delivered to security holders of Parent. These interim unaudited financial
statements will be sent without charge to anyone requesting a copy of the same
from the Secretary of Parent.
BIOVAIL CORPORATION INTERNATIONAL
SUMMARY CONSOLIDATED FINANCIAL DATA
Set forth below is a summary of certain consolidated financial information
of Parent and its subsidiaries. The financial information has been derived from
the audited consolidated financial statements included in Parent's Annual Report
on Form 20-F for the year ended December 31, 1998 (the "Parent Annual Report")
and from the unaudited consolidated financial statements for the fiscal quarter
ended June 30, 1999 which were the subject of a public announcement by Parent on
July 28, 1999. Such announcement has been filed as an exhibit to Parent's
Schedule 14D-1 filed with the Commission in connection with the Offer (the
"Parent Press Release"). The Parent Annual Report and the Parent Press Release
are hereby incorporated by reference. The Summary Consolidated Financial Data of
Parent included herein are prepared and presented in accordance with generally
accepted accounting principles in Canada ("Canadian GAAP"), which differ in
certain significant respects from generally accepted accounting principles in
the U.S. ("U.S. GAAP"). The financial information which follows is qualified in
its entirety by reference to the Parent Annual Report and the Parent Press
Release and all of the financial statements and related notes contained therein,
copies of which may be obtained as set forth below under the caption
"--Available Information." All information set forth below is in U.S. Dollars.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEARS ENDED DECEMBER 31,
--------------------- ----------------------------------
1999 1998 1998 1997 1996
---------- --------- ------------ --------- ---------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenue
Product Sales........................................ 37,541 28,763 69,154 50,333 54,313
Research and Development............................. 15,352 11,953 32,070 19,559 4,374
Royalty, Licensing................................... 11,502 6,428 11,612 12,487 7,743
---------- --------- ------------ --------- ---------
64,395 47,144 112,836 82,379 66,430
---------- --------- ------------ --------- ---------
Expenses
Cost of Goods Sold................................... 12,887 12,009 28,593 16,471 21,757
Research and Development............................. 11,783 8,132 17,490 14,386 10,901
Selling, General and Administrative.................. 12,604 8,454 17,608 13,989 10,166
---------- --------- ------------ --------- ---------
37,274 28,595 63,691 44,846 42,824
---------- --------- ------------ --------- ---------
Operating Income....................................... 27,121 18,549 49,145 37,533 23,606
Interest (Expense) Income, net......................... (5,449) (157) (1,702) (351) 392
---------- --------- ------------ --------- ---------
Income before Income Taxes............................. 21,672 18,392 47,443 37,182 23,998
Provision for Income Taxes............................. 1,308 1,001 2,024 1,941 714
---------- --------- ------------ --------- ---------
---------- --------- ------------ --------- ---------
Net Income............................................. 20,364 17,391 45,419 35,241 23,284
Earnings per Share(1).................................. $ 0.83 $ 0.65 $ 1.70 $ 1.38 $ 0.92
---------- --------- ------------ --------- ---------
---------- --------- ------------ --------- ---------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEARS ENDED DECEMBER 31,
--------------------- ----------------------------------
1999 1998 1998 1997 1996
---------- --------- ------------ --------- ---------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
U.S. GAAP
Net Income(1).......................................... $ 18,305 $ 14,966 $ 41,577 $ 32,822 $ 22,661
Earnings per Share
Basic................................................ $ 0.75 $ 0.56 $ 1.56 $ 1.28 $ 0.89
Diluted.............................................. $ 0.69 $ 0.55 $ 1.53 $ 1.23 $ 0.84
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEARS ENDED DECEMBER 31,
---------------------- --------------------------------
1999 1998 1998 1997 1996
---------- ---------- ---------- --------- ---------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and Short-term deposits........................... $ 86,358 $ 20,882 $ 78,279 $ 8,275 $ 4,526
Working Capital........................................ 113,336 53,460 115,324 47,663 9,606
Total Assets........................................... 208,958 126,230 119,919 93,739 58,606
Long-term Debt (excluding current portion)............. 125,856 9,857 126,182 2,960 4,670
Shareholders' Equity................................... 52,071 96,425 51,191 75,458 36,943
U.S. GAAP
Shareholder's Equity(1)(2)............................. $ 44,944 $ 92,291 $ 45,362 $ 73,169 $ 36,323
</TABLE>
- ------------------------
(1) For purposes for reporting under U.S. GAAP, Parent accounts for compensation
expense for certain employee stock option plans under the provisions of
Accounting Principles Board Opinion 25. No such expense is required to be
determined under Canadian GAAP. As such, the compensation expense not
reported under Canadian GAAP for years ended December 31, 1998, 1997, and
1996, six months ended June 30, 1999 and 1998 was $2,237,000, $1,669,000,
$620,000, $900,000 and $1,888,000 respectively.
For purposes for reporting under U.S. GAAP, net-income is reduced by a
non-cash charge representing amortization of a warrant subscription
receivable, which is a contra equity account which under U.S. GAAP would
have been offset against shareholders' equity at the time of the initial
public offering of Intelligent Polymers, a company organized by Parent. As
such, initial amortization expense reported under U.S. GAAP for years ended
December 31, 1998 and 1997, six months ended June 30, 1999 and 1998 was
$1,179,000, $750,000, $1,397,000, and $537,000 respectively.
For purposes of reporting under U.S. GAAP, companies are required to write
off certain product launch and advertising costs incurred during the year.
This adjustment represents the portion of product launch and advertising
costs deferred under Canadian GAAP and required to be written off under U.S.
GAAP. Net income for the year ended December 31, 1998 and six months ended
June 30, 1999 is $426,000 and ($238,000) respectively, less than net income
for such periods under Canadian GAAP.
(2) Under U.S. GAAP, specifically SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", Parent has classified certain of
its long term investments as securities available-for-sale and reported as
fair value, with unrealized gains and losses excluded from earnings and
reported in a separate component of shareholders' equity. Under Canadian
GAAP, the long-term investment is reported at the lower of cost and net
realizable value.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of Parent and the Purchaser are set forth in Schedule I hereto.
Except as described in this Offer to Purchase, none of Parent or the
Purchaser or, to the best knowledge of Parent or the Purchaser, any of the
persons listed in Schedule I hereto or any associate or majority-owned
subsidiary of Parent, the Purchaser or such persons beneficially owns any equity
securities
18
<PAGE>
of the Company, and none of Parent or the Purchaser or, to the best knowledge of
Parent or the Purchaser, any of the persons referred to above, or any of the
respective directors, executive officers or subsidiaries of any of the foregoing
has effected any transaction in any equity security of the Company during the
past 60 days.
Except as described in this Offer to Purchase, none of Parent or the
Purchaser or, to the best knowledge of Parent or the Purchaser, 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, including, without limitation, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
Except as described in this Offer to Purchase, none of Parent or the Purchaser
or, to the best knowledge of Parent or the Purchaser, any of the persons listed
in Schedule I hereto has had any transactions with the Company or any of its
executive officers, directors or affiliates that would require reporting under
the rules of the Commission.
There are no directors in common between the Parent and the Company and no
director or officer of the Parent holds any shares or options of the Company.
Except with respect to the transactions contemplated by the Merger
Agreement, the Option Agreement (as defined in "THE TENDER OFFER--11. Background
of the Offer and the Merger; Contacts with the Company") and the Escrow
Agreement (as defined in "THE TENDER OFFER--11. Background of the Offer and the
Merger; Contacts with the Company") and as described in this Offer to Purchase,
there have been no contacts, negotiations or transactions between Parent or the
Purchaser, or their respective subsidiaries, or to the best knowledge of Parent
or the Purchaser, 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.
Parent and its affiliates have, from time to time, had contractual
relationships with the Company and its affiliates in the ordinary course of
their respective businesses. Parent is a customer of the Company and most
recently, in December 1997, entered into a contract with the Company to conduct
development studies with respect to a Parent drug.
AVAILABLE INFORMATION. Parent is subject to the information and reporting
requirements of the Business Corporations Act (Ontario), Canadian provincial
securities laws and the rules of the Toronto Stock Exchange ("TSE") and the NYSE
and the Exchange Act (applicable to foreign issuers) and in accordance therewith
files periodic reports and other information with securities regulatory
authorities in Canada, the TSE, the NYSE and the Commission, relating to its
business, financial condition and other matters. Parent is required to disclose
in such reports certain information, as of particular dates, concerning Parent's
directors and officers, their compensation, stock options granted to them, the
principal holders of Parent's securities and any material interest of such
persons in transactions with Parent. Copies of such documents are also available
to shareholders on request to Parent's Secretary. The reports and other
information filed by Parent with the Commission can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661-2511. Copies of such material can also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains an internet web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission
(http://www.sec.gov). Although Parent may not be required to file electronically
materials which would be required to be filed electronically by domestic
issuers, it is the current intention of Parent to make such material available
electronically. In addition, such material may be inspected and copied at the
offices of the NYSE, 20 Broad Street, New York, New York 10005, on which
exchange Parent's shares are listed.
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10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to acquire
the shares of common stock of the Company beneficially owned by it at the time
of commencement of the Offer, to consummate the Offer and the Merger and to pay
related fees and expenses will be approximately $85 million. See "THE TENDER
OFFER--12. Purpose of the Offer and the Merger; Plans for the Company" and "THE
TENDER OFFER--16. Fees and Expense." The Purchaser expects to obtain these funds
from Parent by means of a capital contribution or advance at the time Shares
tendered pursuant to the Offer are accepted for payment. Parent, in turn,
expects to obtain the funds necessary to make the capital contribution from cash
on hand. Certain covenants in Parent's Indenture with respect to its outstanding
10 7/8% Senior Notes (the "Indenture") currently limit the amount Parent can
invest to acquire the stock of an entity which is less than 50% owned by Parent.
Parent may seek a waiver of this limitation or, in lieu of such waiver, issue
common shares in a private placement in an amount sufficient to overcome this
limitation. No final decision has been made by Parent concerning the method to
be used to satisfy the requirements of the Indenture. The Offer is not
conditioned on obtaining financing. The covenant provision in Parent's Indenture
is not applicable to the Merger. In addition, Parent understands that upon
consummation of the Merger the holders of the 7% Convertible Subordinated
Debentures due 2004 of the Company (the "Convertible Debentures") will have the
right to require the Surviving Company to offer to purchase such debentures at
100% of the principal amount. The Company's annual report states that the
outstanding principal amount of the Convertible Debentures as of the date hereof
is $75 million.
11. BACKGROUND OF THE OFFER AND THE MERGER; CONTACTS WITH THE COMPANY
Parent, a global integrated pharmaceutical company specializing in the
development of advanced oral controlled-release drugs, has identified as a
strategic objective the expansion of its pipeline of products and drug delivery
platforms. The management and Board of Directors of Parent have periodically
reviewed various expansion strategies, including but not limited to the
possibility of internal investments, joint ventures and strategic alliances and
acquisitions and business combinations with companies participating in the oral
pharmaceuticals industry.
In early 1997, the then Chief Executive Officer of the Company contacted the
Chairman of Parent to discuss the possibility of a business relationship between
the two companies. On April 17, 1997, members of the senior management of the
companies met at the Company's business premises in Chantilly, Virginia, to
discuss potential business collaborations between Parent and the Company.
Later in 1997, further discussions occurred and a number of meetings were
held between scientific representatives of the Company and Parent regarding a
possible agreement for the development of a specific drug of Parent. During this
period, Parent undertook an extensive review of the Company's technology
platform for the purpose of implementing a proposed development agreement. A
development agreement was executed on December 18, 1997 pursuant to which the
Company undertook development work with respect to the incorporation of its
patented technology into a drug Parent was developing. Implementation of the
development agreement required numerous additional contacts between
representatives of Parent and representatives of the Company during 1998.
In early June, 1999, the Chairman of Parent and the Chairman of the Company
began to discuss potential business alliances between Parent and the Company. In
the course of such discussions, it was decided that both companies would
consider the feasibility of a business combination. The Chairman of Parent and
the Chairman of the Company had numerous discussions concerning a possible
combination between the two entities.
In late June, 1999, the Chairman of Parent and the Chairman of the Company
discussed the possibility of Parent acquiring the shares Company Common Stock
owned by the Chairman of the Company and retaining the Chairman as a consultant
following a possible acquisition. The Chairman of Parent expressed the position
that the grant of an option for the shares of Company Common Stock was a
necessary condition to the Parent's further exploration of a transaction between
the two companies. He orally
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proposed the terms of a possible option agreement for these shares and suggested
various alternatives relating to the acquisition of the Company. On June 30,
1999, the Chairman of Parent submitted a preliminary draft of the terms of such
an option with the understanding that such an option would be the first step
towards a possible acquisition of the Company.
On July 2, 1999, representatives of Parent and of the Chairman of the
Company discussed the terms of an option and a related escrow arrangement
without reaching an agreement or understanding.
On July 6, 1999, the Board of Directors of the Company approved, for
purposes of Section 203 of the General Corporation Law of the State of Delaware,
a possible option agreement between the Parent and the Chairman of the Company
and the acquisition of the Chairman's shares in the Company thereunder.
On July 6, 1999, July 8, 1999 and July 12, 1999 representatives of Parent,
representatives of the Chairman of the Company and representatives of the
Company discussed the terms of the option, the terms of a potential acquisition
transaction and the possibility of entering into a confidentiality agreement.
On July 9, 1999, counsel for the Chairman of the Company submitted a draft
of a consulting agreement and a form of a letter agreement to Parent which,
together, provided for the Chairman of the Company to provide business,
strategic, marketing, business planning, special projects and other consulting
services to Parent. The form of consulting agreement imposes certain
restrictions on the Chairman of the Company with respect to competitive
activities and Parent's employees, customers and suppliers. The consulting
agreement would be effective if Parent, having exercised its option to acquire
the shares of Company Common Stock owned by the Chairman of the Company,
acquires more than 50% of the Company. If the consulting agreement becomes
effective, the Chairman of the Company is entitled to receive a fee of
$2,000,000 on the first anniversary of the effective date, provided that if
Parent has acquired an interest of 80% or more in the Company prior to July 13,
2010 the Chairman of the Company will be entitled to receive a fee of $500,000
per calendar quarter until he has received aggregate fees under the consulting
agreement of $6,000,000.
On July 13, 1999, the Chairman of Parent, representatives of Parent, the
Chairman of the Company and representatives of the Chairman of the Company
negotiated the terms of an option agreement between the Chairman of the Company
and Parent and an escrow to hold the option shares and the purchase price after
the exercise of the option. On that date Parent and the Chairman of the Company
entered into an option agreement (the "Option Agreement") which granted Parent a
ten day option to purchase all the shares of the Company owned by the Chairman
of the Company at a price of $7.00 per share and the letter agreement providing
that Parent and the Chairman of the Company would enter into a consulting
agreement on the terms outlined above. Parent, the Chairman of the Company and a
bank acting as escrow agent entered into an escrow agreement (the "Escrow
Agreement") which provided for distribution of the option shares and the
purchase price upon termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the Chairman of the
Company made arrangements to deposit his shares into escrow pending exercise or
termination of the option period. If the option shares and the purchase price
are not distributed as provided in the preceding sentence by October 31, 1999,
the option shares will be returned to the Chairman of the Company and the
purchase price will be returned to Parent.
Also on July 13, 1999, representatives of Parent and representatives of the
Company negotiated the terms of a confidentiality agreement and discussed the
timing of due diligence. Parent and the Company entered into a confidentiality
agreement relating to the Company's confidential information which also granted
Parent an exclusivity period, subject to the fiduciary obligations of the
Company's Board of Directors, terminating July 26, 1999 while it conducted its
due diligence.
On July 14, 15 and 16, 1999, numerous representatives of Parent, including
its entire senior management team, regulatory consultants and intellectual
property and licensing attorneys, conducted due diligence at the Company's
Chantilly, Virginia premises. In the course of the due diligence investigations,
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the senior management representatives of Parent met individually and
collectively with key executive, scientific and management personnel of the
Company.
On July 19, 1999, the General Counsel of Parent contacted Mr. D. Tierny, a
member of the Board of Directors of the Company, to discuss with him the
possibility of Parent's acquisition of one million shares of the Company, the
legal ownership of which was lodged in Westbury Ltd. (as to 900,000 of such
shares) and Salisbury Ltd. (as to 100,000 of such shares).
On July 19 and 20, 1999, various representatives of Parent continued due
diligence at the Company's Chantilly, Virginia premises.
At about the same time, the Company executed a confidentiality agreement
relating to Parent's confidential information. On July 19, 20 and 21, 1999,
various representatives of the Company conducted due diligence at Parent's
Mississauga, Ontario, Canada premises. In the course of that investigation,
various representatives of the Company met with representatives of Parent for
the purpose of determining, clarifying or enhancing their due diligence
requirements.
During the period from July 22, 1999 through July 25, 1999, representatives
of Parent and representatives of the Company negotiated the terms of a
definitive merger agreement.
On July 22, 1999, the General Counsel of Parent and Mr. Tierny agreed that
Parent would purchase from Salisbury Ltd. and Westbury Ltd., their entire
shareholdings in the Company at $7.00 per share.
On July 22, 1999 and July 23, 1999 the Board of Directors of Parent met and
approved the proposed terms of the Merger Agreement and adopted resolutions
ratifying the negotiations to date, approving the possible acquisition of the
Company and authorizing the appropriate officers of Parent to negotiate the
terms of and enter into a definitive Merger Agreement.
On July 23, 1999, Purchaser was formed and its Board of Directors met and
approved the proposed terms of the Merger Agreement and adopted resolutions
ratifying the negotiations to date, approving the possible acquisition of the
Company and authorizing the appropriate officers of Parent to negotiate the
terms of and enter into a definitive Merger Agreement.
On July 23, 1999 Parent and the Chairman of the Company extended the option
period until 11:59 p.m. Prior to such time, Parent wired payment to the escrow
agent and exercised its option.
On July 23, 1999, Westbury Ltd. and Salisbury Ltd. confirmed by letter to
Parent their agreement to sell their respective shares to Parent, subject to a
restriction on the transfer of certain of such shares which expires on September
1, 1999.
On July 25, 1999, Parent acknowledged by letter its agreement with Westbury
Ltd. and Salisbury Ltd. to consummate the purchase of their respective shares
following the termination or expiration of a possible tender offer.
On July 25, 1999, the Board of Directors of the Company approved the Merger
Agreement, the Offer and the Merger. The factors considered in approving the
Merger Agreement, the Offer and the Merger, and in recommending that
shareholders tender their Shares pursuant to the Offer, are described in the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, which is
being mailed to shareholders of the Company herewith.
On July 25, 1999, the parties executed the Merger Agreement and, on July 26,
1999, publicly announced the transaction.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT
PURPOSE OF THE OFFER AND THE MERGER. The purpose of the Offer is to enable
Parent to acquire a significant equity interest in the Company. Following the
Offer, Parent and Purchaser intend to acquire the remaining equity interest in
the Company not acquired in the Offer by consummating the Merger. Upon
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consummation of the Merger, the Surviving Corporation will become a wholly-owned
subsidiary of Parent. Accordingly, the Shares will cease to be publicly traded
and will no longer be quoted on the NASDAQ.
PLANS FOR THE COMPANY. It is expected that, initially following the Merger,
the business and operations of the Company will continue without substantial
change and that Parent will integrate the Company with Parent's existing
business. Parent will continue to evaluate the business and operations of the
Company during the pendency of the Offer and the Merger and after the
consummation of the Offer and the Merger, and will take such further actions as
it deems appropriate under the circumstances then existing. Such actions could
include changes in the Company's business, corporate structure, capitalization
or management, although, except as disclosed in this Offer to Purchase, Parent
has no current plans with respect to any of such matters. Following consummation
of the Offer but prior to consummation of the Merger, Parent shall be entitled
to designate such number of directors, rounded up to the next whole number, on
the Board of Directors of the Company as is equal to the product to the total
number of directors on the Board of Directors of the Company (determined after
giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of shares beneficially owned by Parent
or its affiliates bears to the total number of Shares then outstanding, and the
Company shall, upon request of Parent, promptly take all actions necessary,
seeking the resignations of one or more existing directors, provided that, prior
to the Effective Time, the members of the Board which are officers, directors or
designees of the Parent shall at all times be less than 50% of the total number
of Board members. Following consummation of the Offer but prior to the
consummation of the Merger, Parent shall also be entitled to designate an
officer of the Company as provided in the Merger Agreement.
THE MERGER AGREEMENT.
The following is a summary of certain provisions of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement
which is incorporated herein by reference and a copy of which has been filed
with the Commission as an exhibit to the Schedule 14D-1. The Merger Agreement
may be examined and copies may be obtained at the place and in the manner set
forth in "THE TENDER OFFER--8. Certain Information Concerning the Company" of
this Offer to Purchase.
THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the Offer Conditions (which are set forth in "THE TENDER OFFER--14.
Certain Conditions of the Offer"), the Purchaser will purchase such number of
Shares of the Company as will cause Parent and its affiliates to beneficially
own up to 49% of the outstanding Company Common Stock, but, except as otherwise
provided in the Merger Agreement, not less than 40% of the outstanding Company
Common Stock of the Shares validly tendered pursuant to the Offer. The Merger
Agreement provides that the Purchaser may modify and extend the terms of the
Offer as described in "THE TENDER OFFER--1. Terms of the Offer; Proration;
Expiration Date." Subject to the terms and conditions of the Offer, the
Purchaser shall accept for payment and shall pay, as soon as practicable after
the expiration date of the Offer for Shares validly tendered and not withdrawn
(subject to proration, if applicable). See "THE TENDER OFFER--1. Terms of the
Offer; Proration; Expiration Date" and "THE TENDER OFFER--4. Withdrawal Rights."
Subject to compliance with applicable law, promptly upon the payment by the
Purchaser or Parent, as the case may be, for Shares pursuant to the Offer, and
from time to time thereafter, Parent shall be entitled to designate a number of
directors which is proportionate to the number of Shares beneficially owned by
Parent or its affiliates, provided, however, that prior to the Effective Time
(as defined), the members of the Board which are officers, directors or
designees of the Parent shall at all times be less than 50% of the total number
of Board members.
Promptly upon the payment by the Purchaser or Parent, as the case may be,
for Shares pursuant to the Offer, Parent shall be entitled to designate one
officer of the Company (reasonably acceptable to the Company) as described in
the Merger Agreement. Such officer shall report to and serve at the pleasure of
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the Board of Directors of the Company; PROVIDED, that such officer shall not be
terminated without the approval of at least two-thirds of the members of the
Board of Directors.
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with the Delaware General Corporation Law
(the "DGCL"), at the effective time of the Merger (the "Effective Time"), the
Merger will be effected as soon as practicable following the satisfaction or
waiver of certain conditions to the Merger (as outlined in "THE TENDER
OFFER--12. Purpose of the Offer and the Merger; Plans for the Company; the
Merger Agreement") or on such other date as the parties hereto may agree. At the
Effective Time, the Purchaser shall be merged with and into the Company and the
separate corporate existence of the Purchaser shall cease.
If the Merger is consummated, the Certificate of Incorporation and By-Laws
of Purchaser, each as in effect immediately prior to the Effective Time, shall
be the Certificate of Incorporation and By-Laws of the Surviving Corporation,
until amended in accordance with the provisions thereof, the Merger Agreement
and applicable law.
CONSIDERATION TO BE PAID IN THE MERGER. In the Merger, each Share (other
than Shares held by Parent, the Purchaser, any direct or indirect wholly-owned
subsidiary of Parent, in the treasury of the Company or by any direct or
indirect wholly-owned subsidiary of the Company) issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive a fraction of a common share of Parent Common Stock, based on an
exchange ratio determined as follows: (i) if the average of the daily closing
prices per share of Parent Common Stock on the NYSE Composite Transactions
Reporting System, as reported in the Wall Street Journal for the fifteen trading
days ending on the date immediately prior to the second full NYSE trading day
immediately preceding the Closing Date (the "Average Trading Price"), is less
than $45.00, the Exchange Ratio shall equal .1556; (ii) if the Average Trading
Price is greater than or equal to $45.00, but less than or equal to $58.625, the
Exchange Ratio shall equal a fraction (rounded to the nearest ten-thousandth)
determined by dividing $7.00 by the Average Trading Price; (iii) if the Average
Trading Price is greater than $58.625 but less than or equal to $62.810, the
Exchange Ratio shall equal .1194 and (iv) if the Average Trading Price is
greater than $62.810, the Exchange Ratio shall equal a fraction (rounded to the
nearest ten-thousandth) determined by dividing $7.50 by the Average Trading
Price (the "Merger Consideration").
The Merger Agreement provides that each share of Company Common Stock held
by Parent, the Purchaser, any direct or indirect wholly-owned subsidiary of
Parent, in the treasury of the Company or by any direct or indirect wholly-owned
subsidiary of the Company, if any, immediately prior to the Effective Time shall
be canceled and retired and shall cease to exist with no payment being made with
respect thereto.
In addition, the Merger Agreement provides that each share of common stock,
par value $0.01 per share, of Purchaser issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and become the number of
validly issued, fully paid and nonassessable shares of common stock, par value
$.01 per share, of the Surviving Corporation equal to the number of shares of
Common Stock outstanding on a fully diluted basis immediately prior to the
Effective Time.
RECOMMENDATION. The Merger Agreement states that the Company's Board of
Directors has (i) determined that the Offer and the Merger are fair to and in
the best interests of the Company and its stockholders, (ii) approved the Offer
and the Merger in accordance with Section 203 of the DGCL and (iii) resolved to
recommend that the Company's stockholders accept the Offer, tender all of their
Shares in response to the Offer and adopt and approve the Merger Agreement and
the Merger. The Board may withdraw, modify or amend its recommendation if it
determines reasonably and in good faith that it is necessary under applicable
law to do so in the exercise of the directors' fiduciary duties after
consultation with outside counsel.
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SURVIVING CORPORATION'S DIRECTORS AND OFFICERS. Subject to applicable law,
the directors of Purchaser immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal. The officers of the Company at the Effective Time shall
be the initial officers of the Surviving Corporation and will hold office from
the Effective Time until their respective successors are duly elected or
appointed.
STOCK OPTIONS AND AWARDS. The Merger Agreement provides that, the Board of
Directors of the Company and the Committee (as defined in the Option Plan (as
defined below)) have adopted such resolutions, and shall take such other actions
as may be necessary, so that each outstanding option (an "Option") granted under
the Company's 1991 Stock Option Plan, 1994 Director Stock Option Plan and 1994
Stock Incentive Plan (collectively, the "Option Plans"), whether or not then
exercisable or vested, shall, if not exercised within five business days, be
terminated immediately prior to the Effective Time.
APPROVAL REQUIRED; SHAREHOLDERS MEETING. Under the DGCL, the affirmative
vote of holders of a majority of the outstanding Shares (including any Shares
owned by the Purchaser) is required to approve the Merger. The Board of
Directors of the Company has approved the Offer, the Merger and the Merger
Agreement; consequently, the only additional corporate action of the Company
that is necessary to effect the Merger is approval by the Company's
shareholders. See also "--Conditions to the Merger" and "Certain Conditions of
the Offer" for a discussion of other conditions that must be satisfied prior to
the consummation of the Offer and the Merger.
Pursuant to the Merger Agreement, the Company will duly call a special
meeting of its shareholders (the "Company Shareholders Meeting") as soon as
practicable following the acceptance for payment of and payment for Shares by
the Purchaser pursuant to the Offer for the purpose of voting upon the Merger
Agreement, whether or not the Board of Directors determines at any time
subsequent to the July 25, 1999 meeting of the Company's Board of Directors that
this Agreement is no longer advisable and recommends that Shareholders reject
it. The Merger Agreement provides that in connection with the Company
Shareholders Meeting, the Company shall prepare and file with the Commission a
preliminary proxy statement (the "Company Proxy Statement") relating to the
Merger and the Merger Agreement and that Parent shall file a registration
statement, in which the Company Proxy Statement shall be included (the
"Registration Statement" and together with the Company Proxy Statement, the
"Proxy Statement/ Prospectus") with respect to the issuance of Parent Common
Stock in the Merger. Each of Parent and the Company shall use all commercially
reasonable best efforts to have such Proxy Statement/Prospectus and any
supplement or amendment thereto cleared by the Commission and the Registration
Statement declared effective by the Commission. The Proxy Statement/Prospectus
will be mailed to the shareholders of the Company prior to the Company
Shareholders Meeting. The Company has agreed, subject to its fiduciary duties
under applicable law, as advised by outside counsel, to include in the proxy
statement the recommendation of the Board of Directors that shareholders of the
Company vote in favor of the approval of the Merger and the adoption of the
Merger Agreement; provided, however, that notwithstanding any withdrawal,
modification or amendment of the recommendation of the Board of Directors of the
Company made at the Company Board Meeting, the Company agrees that the Merger
Agreement shall be submitted to the Shareholders for approval and adoption at
the Special Meeting whether or not the Board of Directors determines at any time
subsequent to the Company Board Meeting that the Merger Agreement is no longer
advisable and recommends that Shareholders reject it. Parent agrees that it will
vote, or cause to be voted, all of the Shares then owned by it, the Purchaser or
any of its other subsidiaries or affiliates in favor of the approval of the
Merger and the adoption of the Merger Agreement.
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THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE SHAREHOLDERS OF THE COMPANY. ANY SUCH SOLICITATION WHICH THE COMPANY, PARENT
OR THE PURCHASER MIGHT MAKE WOULD BE MADE ONLY PURSUANT TO SEPARATE PROXY OR
SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE
EXCHANGE ACT, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
NO APPRAISAL RIGHTS. In accordance with Section 262(b) of the DGCL, no
holder of shares of Company Common Stock shall be entitled to appraisal rights.
INTERIM OPERATIONS. Except as required by the Merger Agreement or with the
prior written consent of Parent, during the period from the date of the Merger
Agreement to the Effective Time, the Company has agreed to conduct its
operations only in the ordinary course of business consistent with past
practice. In addition, subject to certain exceptions, the Company will not,
prior to the Effective Time, without the prior written consent of Parent: amend
its organizational documents; modify existing compensation arrangements except
in the ordinary course of business consistent with past practice; acquire or
dispose of any assets; incur, assume or pre-pay any debt; modify, amend or
terminate any material contracts; change its accounting methods; adopt a plan of
liquidation or take certain other actions.
NO SOLICITATION. The Merger Agreement provides that neither the Company nor
any of the Subsidiaries has any agreement, arrangement or understanding
regarding an Acquisition Transaction (as defined below) with any party
expressing an interest in an Acquisition Transaction that, directly or
indirectly, would be violated, or require any payments, by reason of the
execution, delivery and/or consummation of the Merger Agreement. The Company
shall, and shall cause the Subsidiaries and its and their officers, directors,
employees, investment bankers, attorneys and other agents and representatives
to, immediately cease any existing discussions or negotiations with any person
other than Parent or the Purchaser (a "Third Party") heretofore conducted with
respect to any Acquisition Transaction. The Company shall not, and the Company
shall cause the Subsidiaries and its and their respective officers, directors,
employees, investment bankers, attorneys and other agents and representatives
not to, directly or indirectly, (x) solicit, initiate, continue, facilitate or
encourage (including by way of furnishing or disclosing non-public information)
any inquiries, proposals or offers from any Third Party with respect to, or that
could reasonably be expected to lead to, (i) any acquisition or purchase of 25%
or more of the assets or business of the Company and its Subsidiaries, taken as
a whole or a 25% or more voting equity interest in (including by way of a tender
offer), or (ii) any amalgamation, merger, consolidation or business combination
with, or any recapitalization or restructuring, or any similar transaction
involving, the Company (the foregoing clauses (i) and (ii) being referred to
collectively as an "Acquisition Transaction"), or (y) negotiate, explore or
discuss in any way with any Third Party with respect to any Acquisition
Transaction or enter into, approve or recommend any agreement, arrangement or
understanding requiring the Company to abandon, terminate or fail to consummate
the Offer and/or the Merger or any other transaction contemplated under the
Merger Agreement. Notwithstanding anything to the contrary in the foregoing, the
Company may, prior to the Company Special Meeting, in response to an unsolicited
written proposal with respect to an Acquisition Transaction involving the
acquisition of all or substantially all of the Shares (or all or substantially
all of the assets of the Company and the Subsidiaries) from a Third Party (i)
furnish or disclose non-public information to such Third Party, (ii) negotiate,
discuss or otherwise communicate with such Third Party and (iii) in the case of
an unsolicited tender offer for Shares, withdraw or modify (or resolve to
withdraw or modify) in a manner adverse to Parent the approval or recommendation
of the Merger Agreement and the transactions contemplated hereby or recommend
(or resolve to recommend) such Acquisition Transaction with a Third Party to
Shareholders, (including disclosing to the Company's stockholders such position
contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act) in
each case only if the Board of Directors of the Company determines reasonably
and in good faith: (1) after consultation with and based (as to legal matters)
upon advice of outside counsel that it is required to do so in the exercise of
its fiduciary obligations, (2) (after
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consultation with its financial advisor) that such proposed Acquisition
Transaction or tender offer is more favorable to the Shareholders from a
financial point of view than the transaction contemplated under the Merger
Agreement (including any adjustment to the terms and conditions proposed by
Parent and the Purchaser in response to such proposed Acquisition Transaction (a
proposal with respect to such Acquisition Transaction meeting the requirements
of clauses (1) and (2) is referred to herein as a "Superior Proposal"). Prior to
furnishing or disclosing any non-public information to such Third Party, the
Company shall receive from such Third Party an executed confidentiality
agreement with terms no less favorable in the aggregate to the Company than
those contained in the Confidentiality Agreement between the Company and Parent
(the "Confidentiality Agreement"), but which confidentiality agreement shall not
provide for any exclusive right to negotiate with the Company or any payments by
the Company. The Company shall give Parent one day's written notice prior to
entering into any such Confidentiality Agreement. The Company shall provide to
Parent copies of all such non-public information delivered to such Third Party
concurrently with such delivery. Notwithstanding the foregoing, the Board of
Directors of the Company shall not, and the Company shall not, withdraw or
modify (or resolve to withdraw or modify) in a manner adverse to Parent the
approval or recommendation of the Merger Agreement or any of the transactions
contemplated hereby, or recommend (or resolve to recommend) an Acquisition
Transaction with a Third Party to the Shareholders or enter into a definitive
agreement with respect to a Superior Proposal unless (x) the Company has given
Parent three business days' notice of the intention of the Board of Directors to
withdraw or modify (or resolve to withdraw or modify) in a manner adverse to
Parent the approval or recommendation of the Merger Agreement or any of the
transactions contemplated under the Merger Agreement, or recommend (or resolve
to recommend) an Acquisition Transaction with a Third Party to the Shareholders
or the intention of the Company to enter into such definitive agreement, as the
case may be, (y) if Parent makes a counter-proposal within such three business
day period, the Board of Directors of the Company shall have determined, in
light of any such counter-proposal, that the Third Party Acquisition Transaction
proposal is still a Superior Proposal, and (z) the Company concurrently
terminates the Merger Agreement in accordance with the terms hereof and pays any
Termination Fee (as defined in the Merger Agreement) required under Section
8.03(b) of the Merger Agreement.
The Company shall promptly (but in any event within one day of the Company
becoming aware of same) advise Parent of the receipt by the Company, any of the
Subsidiaries or any of its or their bankers, attorneys or other agents or
representatives of any inquiries or proposals relating to an Acquisition
Transaction and any actions taken pursuant to Section 6.06(a) of the Merger
Agreement. The Company shall promptly (but in any event within one day of the
Company becoming aware of same) provide Parent with a copy of any such inquiry
or proposal in writing and a written statement with respect to any such
inquiries or proposals not in writing, which statement shall include the
identity of the parties making such inquiries or proposal and all the material
terms thereof. The Company shall, from time to time, promptly (but in any event
within one day of the Company becoming aware of same) inform Parent of the
status and content of and developments with respect to any discussions regarding
any Acquisition Transaction with a Third Party. The Company shall, from time to
time, promptly (but in any event within one day of the Company becoming aware of
same) inform Parent in writing of: (i) the calling of meetings of the Board of
Directors of the Company to take action with respect to such Acquisition
Transaction, (ii) the execution of any letters of intent, memoranda of
understanding or similar non-binding agreements with respect to such Acquisition
Transaction, (iii) the waiver of any standstill agreement to which the Company
is or becomes a party, (iv) the determination by the Board of Directors of the
Company to recommend to the Shareholders that they approve or accept a Superior
Proposal or withdraw or modify in a manner adverse to the Parent its approval or
recommendation of the Merger Agreement or the transactions contemplated under
the Merger Agreement, (v) the determination by the Company to publicly disclose
receipt of a Superior Proposal and (vi) the waiver by the Company of any
confidentiality agreement with a person proposing a Superior Proposal.
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DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION. The Merger Agreement
provides that Parent agrees that all rights to indemnification now existing in
favor of any director or officer of the Company or its Subsidiaries as provided
in such person's certificate of incorporation or by laws, in an agreement
between any such person and the Company, or otherwise in effect on the date of
the Merger Agreement shall survive the Merger and shall continue in full force
and effect after the Effective Time. Parent also agreed to maintain directors'
and officers' liability insurance similar to that maintained by the Company for
at least six years.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the respective
obligations of the Company, Parent and Purchaser to consummate the Merger are
subject to the satisfaction or waiver of the following conditions prior to the
Closing:
(a) SHAREHOLDER APPROVAL. The Shareholders shall have duly approved and
adopted the Merger Agreement and the transactions contemplated by the
Merger Agreement, to the extent required under applicable law.
(b) INJUNCTIONS; ILLEGALITY. The consummation of the Merger shall not be
restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any
Governmental Entity and there shall not have been any statute, rule or
regulation enacted, promulgated or deemed applicable to the Merger by any
Governmental Entity which prevents the consummation of the Merger.
CONDITIONS TO THE OBLIGATIONS OF PARENT AND PURCHASER. The Merger Agreement
provides that the obligation of Parent and Purchaser to effect the Merger and to
perform their other obligations to be performed at or subsequent to the Closing
shall be subject to the fulfillment at or prior to the Closing of the following
additional conditions, any one or more of which may be waived by Parent or
Purchaser:
(a) PERFORMANCE. The Company shall have performed and complied in all
material respects with all agreements, obligations and conditions
required by the Merger Agreement to be performed or complied with by it
on or prior to the Closing Date, except for those failures to so perform
or comply which are not willful and those failures, whether or not
willful, that, individually or in the aggregate, would not either impair
the Company's ability to consummate the Merger and the other transactions
contemplated hereby or have a Material Adverse Effect on the Company.
(b) PURCHASE OF SHARES. The Purchaser shall have accepted for payment and
paid for Shares pursuant to the Offer in accordance with the terms of the
Merger Agreement, unless Purchaser's failure to accept for payment and
pay for Shares results from Purchaser's breach of any provision of the
Merger Agreement.
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The Merger Agreement provides
that the obligations of the Company under the Merger Agreement to effect the
Merger shall be subject to the fulfillment on or before the Closing Date of each
of the following additional conditions, any one or more of which may be waived
by the Company:
(a) PERFORMANCE. Parent and Purchaser shall have performed and complied in
all material respects with all agreements, obligations and conditions
required by the Merger Agreement to be performed or complied with by them
on or prior to the Closing Date except for those failures to so perform
or comply that, individually or in the aggregate, would not either impair
the ability of Parent or Purchaser to consummate the Merger and the other
transactions contemplated under the Merger Agreement or have a Material
Adverse Effect on Parent.
(b) PURCHASE OF SHARES. The Purchaser shall have accepted for payment and
paid for Shares pursuant to the Offer in accordance with the terms of the
Merger Agreement, unless Purchaser's failure to accept for payment and
pay for Shares results from the Company's breach of any provision of the
Merger Agreement.
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For purposes of the Merger Agreement the term "Material Adverse Effect"
means, as to either company, any change in, or effect on, the business, results
of operations, assets, financial condition or prospects of that company or any
of its subsidiaries that is or would reasonably be expected to be materially
adverse to that company and its subsidiaries taken as a whole.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, each party has
made customary representations and warranties with respect to, among other
things, its organization, capitalization, financial statements, public filings,
conduct of business, compliance with laws, litigation, non-contravention,
consents and approvals, opinions of financial advisors, brokers, undisclosed
liabilities and the absence of certain changes with respect to the Company since
March 31, 1999.
TERMINATION; FEES. The Merger Agreement may be terminated and the Offer and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval by the Stockholders of the Company:
(a) by the written agreement of Parent and the Company duly authorized by
their respective Boards of Directors;
(b) by either Parent or the Company if, without fault of such terminating
party, the Merger shall not have been consummated on or before March 31,
2000, which date may be extended by mutual consent of the parties hereto;
(c) by either Parent or the Company, if any court of competent jurisdiction
or other governmental body shall have issued an order (other than a
temporary restraining order), decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger, and such
order, decree, ruling or other action shall have become final and
nonappealable; or
(d) by either Parent or the Company, if the approval of a majority of the
outstanding shares of Company Common Stock cast at the Special Meeting or
any adjournment thereof is not obtained.
TERMINATION BY PARENT. The Merger Agreement may be terminated and the
Merger may be abandoned by action of the Board of Directors of Parent, at any
time prior to the Effective Time, before or after the approval by the
stockholders of the Company, if:
(a) the Company shall have willfully failed to perform in all material
respects its covenants or agreements contained in the Merger Agreement
which would have a Material Adverse Effect on the Company or materially
adversely affect (or materially delay) the ability of Purchaser to
consummate the Offer or of Parent, Purchaser or the Company to consummate
the Merger, and the Company has not cured such breach within ten business
days after notice by Parent or Purchaser thereof;
(b) there exists a breach or breaches of any representation or warranty of
the Company contained in the Merger Agreement such that the Offer
condition set forth in clause (b)(i) of Annex I of the Merger Agreement
would not be satisfied; PROVIDED, HOWEVER, that if such breach or
breaches are capable of being cured prior to the consummation of the
Offer (as required to be extended pursuant to Section 1.01(a) of the
Merger Agreement), only if such breaches shall not have been cured within
10 days of delivery to the Company of written notice of such breach or
breaches;
(c) the Board of Directors of the Company (i) fails to recommend the
approval of the Merger Agreement and the Merger to the Company's
stockholders, (ii) withdraws or amends or modifies in a manner adverse to
Parent its recommendation or approval in respect of the Merger Agreement
or the Merger (it being understood that taking no position on a tender
offer for the Company as contemplated by Rules 14d-9 and 14e-2 shall not
be deemed a withdrawal, amendment or modification) or (iii) makes any
recommendation with respect to an Acquisition Transaction, or the Board
of Directors of the Company shall have resolved to take any of the
foregoing actions referred to in this clause and publicly discloses such
resolution; or
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(d) due to an occurrence or circumstance which would result in a failure to
satisfy any of the conditions set forth in Annex I of the Merger
Agreement, Purchaser shall have (i) terminated the Offer in accordance
with the provisions of Annex I of the Merger Agreement, or (ii) failed to
pay for Shares pursuant to the Offer within 120 days following the date
hereof, unless such failure to pay for Shares is a result of the failure
of Parent or Purchaser to perform any of its covenants and agreements
contained in the Merger Agreement.
TERMINATION BY THE COMPANY. The Merger Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the stockholders of the Company, by action of the Board of the
Directors of the Company, if:
(a) Parent or Purchaser shall have failed to perform in all material
respects its covenants or agreements contained in the Merger Agreement
which would have a Material Adverse Effect on Parent or materially
adversely affect (or materially delay) the ability of Purchaser to
consummate the Offer or of Parent, Purchaser or the Company to consummate
the Merger, and Parent or the Purchaser has not cured such breach within
ten business days after notice by the Company thereof;
(b) the representations and warranties of the Parent and Purchaser contained
in the Merger Agreement at the date hereof and as of the consummation of
the Offer with the same effect as if made at and as of the consummation
of the Offer (except as to any such representation or warranty which
speaks as of a specific date) shall not be true and correct in any
respect that is reasonably likely to have a Material Adverse Effect on
Parent (or if such representations and warranties are qualified by
reference to materiality or a Material Adverse Effect on Parent, shall
not be true and correct); provided, however, that if such breach or
breaches are capable of being cured prior to the consummation of the
Offer (as required to be extended pursuant to Section 1.01(a) of the
Merger Agreement), only if such breaches shall not be cured within 10
days of delivery to Parent of written notice of such breach or breaches;
(c) if (A)(x) the Company proposes entering into a definitive agreement with
respect to a Superior Proposal or (y) the Board of Directors of the
Company recommends a Third Party Acquisition Transaction which is an
unsolicited all cash tender offer for any and all Shares and which
constitutes a Superior Proposal, (B) the Company gives Parent the three
business days' notice as required pursuant to the last sentence of
Section 6.06(a) of the Merger Agreement, (C) if a counter-proposal was
made by Parent within such three business day period, the Board of
Directors of the Company has determined, in light of the
counter-proposal, that the Third Party Acquisition Transaction (or
proposal therefor) is still a Superior Proposal as required by the last
sentence of Section 6.06(a) of the Merger Agreement and (D) the Company
has paid to Parent by wire transfer or immediately available funds to an
account specified by Parent a fee of $5.5 million immediately prior to
such termination; or
(d) if (i) Purchaser fails to commence the Offer as provided in Section 1.01
of the Merger Agreement, (ii) Purchaser fails to pay for Shares pursuant
to the Offer within 120 days following the date of the Merger Agreement,
unless such failure to pay for Shares is the result of the failure of the
Company to perform any of its covenants and agreements contained in the
Merger Agreement or (iii) Purchaser terminates the Offer in accordance
with the provisions of Annex I of the Merger Agreement.
In the event of termination of the Merger Agreement and abandonment of the
Merger pursuant to Article VIII of the Merger Agreement, no party hereto (or any
of its directors or officers) shall have any liability or further obligation to
any other party to the Merger Agreement, except as provided in Section 8.05 of
the Merger Agreement and except that nothing herein shall relieve any party from
liability for any breach of the Merger Agreement.
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In the event of a termination of the Merger Agreement by Parent pursuant to
Section 8.02(c) of the Merger Agreement then, in any such case, the Company
shall within two business days of such termination pay Parent by wire transfer
or immediately available funds to an account specified by Parent a fee of $5.5
million.
In the event of a termination of the Merger Agreement (i) pursuant to
Section 8.01(c) based on the Company's actions or omission or (d) under the
Merger Agreement or (ii) by Parent pursuant to Section 8.02(a) or (b) of the
Merger Agreement, and in the case of either clause (i) or clause (ii), prior to
such termination any person shall have made a proposal with respect to an
Acquisition Transaction with the Company or its stockholders, and, if prior to
or within twelve months after such termination the Company or any subsidiary of
the Company enters into a definitive agreement with a third party with respect
to, or consummates, an Acquisition Transaction, then the Company, as a condition
to and prior to the earlier of entering into any such definitive agreement and
consummating an Acquisition Transaction, shall pay Parent by wire transfer or
immediately available funds to an account specified by Parent, a fee of $5.5
million.
Parent and Purchaser acknowledge that whenever a fee is payable by the
Company to Parent pursuant Article VIII of the Merger Agreement, payment by the
Company of such fee in accordance with the terms of the applicable paragraph
shall be deemed a release of the Company from all liability under the Merger
Agreement.
13. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that the Company shall not, and shall not
permit any of its Subsidiaries to, prior to the Effective Time, without the
prior written consent of Parent: (a) except for issuances of capital stock of
the Subsidiaries to the Company or a wholly-owned Subsidiary, issue, reissue or
sell, or authorize the issuance, reissuance or sale of (1) additional shares of
capital stock of any class, or securities convertible into capital stock of any
class, or any rights, warrants or options (including under any existing option
plans) to acquire any convertible securities or capital stock, other than the
issuance of Shares pursuant to the exercise of Options outstanding on the date
of the Merger Agreement pursuant to the terms thereof as in effect on the date
of the Merger Agreement, or (2) any other securities in respect of, in lieu of,
or in substitution for, Shares outstanding on the date of the Merger Agreement;
(b) declare, set aside or pay any dividend or other distribution (whether in
cash, capital stock, rights thereto or other assets, securities or property or
any combination thereof) in respect of any class or series of its capital stock
other than between any of the Company and any of the wholly-owned Subsidiaries;
or (c) split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, any shares of
its capital stock, or any of its other securities.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, in addition to (and not
in limitation of) the Purchaser's right to extend and amend the Offer at any
time in its sole discretion (subject to the terms of the Merger Agreement), the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, pay for, and may delay the acceptance for payment of or,
subject to the regulations referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer, if (i) there are not validly
tendered and not withdrawn prior to the expiration date for the Offer (the
"Expiration Date") at least 4,602,460 of the outstanding Company Common Stock on
the date of purchase (the "Minimum Condition") PROVIDED; that Purchaser shall
only be required to accept for payment and to purchase up to 6,585,225 Shares,
(ii) any applicable waiting periods under the HSR Act or any applicable foreign
antitrust
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statute shall not have expired or (iii) at any time on or after July 25, 1999
and before the expiration of the Offer, any of the following events shall occur:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any
domestic or foreign court or other Governmental Entity which, directly or
indirectly, (i) prohibits, or makes illegal, the acceptance for payment,
payment for or purchase of Shares or the consummation of the Offer, the
Merger or the other transactions contemplated by the Merger Agreement,
(ii) renders Purchaser unable to accept for payment, pay for or purchase
some or all of the Shares, (iii) imposes material limitations on the
ability of Parent effectively to exercise full rights of ownership of the
Shares, including the right to vote the Shares purchased by it on all
matters properly presented to the Company's stockholders, or (iv)
otherwise has a Material Adverse Effect on the Company;
(b) (i) the representations and warranties of the Company contained in the
Merger Agreement at the date of the Merger Agreement and as of the
consummation of the Offer with the same effect as if made at and as of
the consummation of the Offer (except as to any such representation or
warranty which speaks as of a specific date) shall not be true and
correct in any respect that is reasonably likely to have a Material
Adverse Effect on the Company (or if such representations and warranties
are qualified by reference to materiality or a Material Adverse Effect on
the Company, shall not be true and correct), (ii) the Company shall have
failed to perform in all material respects its covenants or agreements
contained in the Merger Agreement which would have a Material Adverse
Effect on the Company or materially adversely affect (or materially
delay) the ability of Purchaser to consummate the Offer or of Parent,
Purchaser or the Company to consummate the Merger, and the Company has
not cured such breach within ten business days after notice by Parent or
Purchaser thereof; or
(c) it shall have been publicly disclosed that (i) any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) shall have acquired or
entered into a definitive agreement or agreement in principle to acquire
beneficial ownership of more than 25% of the Shares or any other class of
capital stock of the Company, through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted any option,
right or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 25% of the Shares and (ii) such person or group
shall not have tendered such Shares pursuant to the Offer;
(d) (i) the Company Board shall have withdrawn, or modified or changed in a
manner adverse to Parent (including by amendment of the Schedule 14D-9),
its recommendation of the Offer, the Merger Agreement or the Merger, or
recommended another proposal or offer, or the Company Board, shall have
resolved to do any of the foregoing or (ii) the Company enters into any
agreement to consummate any Acquisition Proposal with a Third Party;
(e) the Merger Agreement shall have terminated in accordance with its terms;
(f) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange, the Toronto Stock Exchange or the Nasdaq Stock
Market which lasts twenty four hours, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in Canada or
the United States (whether or not mandatory) or (iii) any limitation
(whether or not mandatory) by any United States or Canadian governmental
authority on the extension of credit generally by banks or other
financial institutions;
which in the good faith judgment of Parent, in any such case, and regardless of
the circumstances (including any action or inaction by Parent) giving rise to
such condition makes it inadvisable to proceed with the Offer or the acceptance
for payment of or payment for the Shares.
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The foregoing conditions (other than the Minimum Condition) are for the sole
benefit of Parent and Purchaser and may be waived by Parent and Purchaser, in
whole or in part at any time and from time to time, in the sole discretion of
Parent and Purchaser. The failure by Parent and 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 which may be asserted
at any time and from time to time.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
GENERAL. Except as otherwise disclosed herein or as set forth in the Merger
Agreement, based on a review of publicly available filings by the Company with
the Commission, neither Parent nor the Purchaser is aware of (i) any license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by the
acquisition of Shares by the Purchaser pursuant to the Offer or the Merger or
(ii) any approval or other action by any governmental, administrative or
regulatory agency or authority, domestic or foreign, that would be required for
the acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required, the Purchaser currently
contemplates that such approval or action would be sought, except as described
below under " -- STATE TAKEOVER STATUTES." While the Purchaser does not
currently intend to delay the acceptance for payment of Shares tendered pursuant
to the Offer pending the outcome of any such matter, there can be no assurance
that any such approval or action, if needed, would be obtained or would be
obtained without substantial conditions or that adverse consequences might not
result to the business of the Company or the Purchaser or that certain parts of
the businesses of the Company or the Purchaser might not have to be disposed of
in the event that such approvals were not obtained or any other actions were not
taken. To the knowledge of Parent or Purchaser, there is no material legal
proceeding currently pending in relation to the Offer to Purchase. The
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions. See "THE TENDER OFFER--14. Certain Conditions
of the Offer."
ANTITRUST COMPLIANCE. Under the HSR Act, and the rules that have been
promulgated by the Federal Trade Commission and the Antitrust Division of the
Department of Justice, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares pursuant to the Offer and the Merger is subject to such requirements.
There is a possibility that filings may have to be made with foreign
governments under their pre-merger notification statutes. The filing
requirements of various nations are being analyzed by the parties and, where
necessary, such filings will be made.
STATE TAKEOVER STATUTES. A number of states throughout the United States
have enacted takeover statutes that purport, in varying degrees, to be
applicable to attempts to acquire securities of corporations that are
incorporated or have assets, shareholders, executive offices or places or
business in such states. In Edgar v. MITE Corp., the Supreme Court of the United
States held that the Illinois Business Takeover Act, which involved state
securities laws that made the takeover of certain corporations more difficult,
imposed a substantial burden on interstate commerce and therefore was
unconstitutional. However, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court of the United States held that a state may, as a matter of
corporate law, and, in particular, those laws concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without prior approval of the remaining shareholders;
provided that such laws were applicable only under certain conditions.
Based on information supplied by the Company, the Purchaser does not believe
that any state takeover statutes purport to apply to the Offer or the Merger.
Neither Parent nor the Purchaser has currently complied with any state takeover
statute or regulation. The Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger
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and nothing in this Offer to Purchase or any action taken in connection with the
Offer or the Merger is intended as a waiver of such right. If it is asserted
that any state takeover statute is applicable to the Offer or the Merger and if
an appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or the Merger, the Purchaser might be required to file
certain information with, or to receive approvals from, the relevant state
authorities, and the Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer, or be delayed in consummating the Offer
or the Merger. In such case, the Purchaser may not be obliged to accept for
payment or pay for any Shares tendered pursuant to the Offer.
16. FEES AND EXPENSES
Except as set forth below, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Shares pursuant to the Offer.
Parent has engaged DLJ as the Dealer Manager in connection with the Offer.
In addition, DLJ is acting as financial advisor to Parent in connection with
Parent's effort to acquire the Company. Parent has agreed to pay DLJ a fee of
$500,000 upon the commencement of the Offer. If the Merger is consummated, or if
an alternative transaction were to be completed resulting in the acquisition of
all or substantially all of the business, securities or assets of the Company,
Parent will pay to DLJ a transaction fee of $2,225,000, against which the
$500,000 fee will be credited.
Parent has also agreed to reimburse DLJ (in its capacity as Dealer Manager
and financial advisor) for its reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its legal counsel, incurred in connection with
its engagement, and to indemnify DLJ and certain related persons against certain
liabilities and expenses in connection with its engagement, including certain
liabilities under the federal securities laws. DLJ renders various investment
banking and other advisory services to Parent and its affiliates and is expected
to continue to render such services, for which it has received and will continue
to receive customary compensation from Parent and its affiliates.
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, facsimile, telegraph and personal
interviews and may request brokers, dealers and other nominee shareholders to
forward materials relating to the Offer to beneficial owners of Shares. The
Information Agent will receive reasonable and customary compensation together
with reimbursement for its reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses, including certain
liabilities under the federal securities laws.
In addition, ChaseMellon Shareholder Services, L.L.C. has been retained as
the Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses. Brokers, dealers, commercial banks and trust
companies will be reimbursed by the Purchaser for customary mailing and handling
expenses incurred by them in forwarding offering material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares 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. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
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timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
This Offer to Purchase contains statements which, to the extent that they
are not recitations of historical fact, constitute "forward looking" statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. The words "estimate," "anticipate," "project," "intend," "expect,"
and similar expressions are intended to identify forward looking statements. All
forward looking statements involve risks and uncertainties, including, without
limitations, statements and assumptions with respect to future revenues, program
performance and cash flows, the outcome of contingencies, including litigation
and environmental remediation, anticipated costs of capital investments and
planned dispositions, and the consummation of the Offer and the Merger. Readers
are cautioned not to place undue reliance on these forward looking statements
which speak only as of the date of this Offer to Purchase. Parent does not
undertake any obligation to publicly release any revisions to forward looking
statements to reflect events or circumstances or changes in expectations after
the date of this Offer to Purchase or to reflect the occurrence of unanticipated
events. The forward looking statements in this document are intended to be
subject to the safe harbor protection provided by Section 27A of the Securities
Act and 21E of the Exchange Act. For a discussion identifying some important
factors that could cause actual results to vary materially from those
anticipated in the forward looking statements, see Parent's filings with the
Commission.
Parent and the Purchaser have filed with the Commission a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1"), together with exhibits,
pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange
Act, furnishing certain additional information with respect to the Offer and may
file amendments thereto. In addition, the Company has filed with the Commission
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 such
recommendation and furnishing certain additional related information. The
Schedule 14D-9 is enclosed herewith and the Schedule 14D-1 and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the manner set forth in "THE TENDER OFFER--8. Certain
Information Concerning the Company" (except that they will not be available at
the regional offices of the Commission).
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SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth in the table
below are the names and the present principal occupations or employment and the
name, principal business and address of any corporation or other organization in
which such occupation or employment is conducted, and the five-year employment
history of each of the directors and executive officers of Parent.
Unless otherwise indicated, each person identified below is employed by
Parent and is a Canadian citizen. The principal business address of Parent and,
unless otherwise indicated, the business address of each person identified below
is 2488 Dunwin Drive, Mississauga, Ontario, Canada, L5L 1J9, (905) 608-8008.
<TABLE>
<CAPTION>
CURRENT POSITIONS AND
NAME OFFICES HELD WITH PARENT PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ---------------------------- -------------------------- -------------------------------------------------------
<S> <C> <C>
Eugene N. Melnyk............ Chairman of the Board and Chairman of the Board and a Director since March 29,
Director 1994, the effective date of the amalgamation of the
predecessor entities of Biovail, Biovail Corporation
International ("Biovail") and Trimel Corporation
("Trimel"). Prior to that time, he had been the
Chairman of the Board of Biovail since October 1991 and
was instrumental in acquiring, financing and organizing
the companies or businesses that comprised Biovail. Mr.
Melnyk also founded Trimel and served as its President
and Chief Executive Officer from 1983 through July
1991.
Bruce D. Brydon............. Chief Executive Officer Chief Executive Officer since November 1997. He joined
and Director Biovail as the Chief Executive Officer and President in
January 1995 and has been a Director since May 1995.
Prior to that time and since 1990 he had been
President, Managing Director and Chairman of the Board
of the Canadian Operations of Boehringer Mannheim. In
the late 1980s, Mr. Brydon served as President and CEO
of Beiersdorf Canada.
Robert A. Podruzny.......... President, Chief Operating President and Chief Operating Officer since November
Officer and Director 1997. He joined Biovail as Vice President, Finance and
Chief Financial Officer in January 1996. Mr. Podruzny
came to Biovail from Browning-Ferris Industries Ltd.
where he served as the Chief Financial Officer and as a
Director of the Canadian operation from 1993 to 1995.
From 1987 to 1992, Mr. Podruzny served as General
Manager of the U.S. Health Promotion Division of MDS
Health Group, a Toronto-based medical services company.
Mr. Podruzny is a Chartered Accountant in Canada and
holds an MBA in finance.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
CURRENT POSITIONS AND
NAME OFFICES HELD WITH PARENT PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ---------------------------- -------------------------- -------------------------------------------------------
<S> <C> <C>
Kenneth C. Cancellara....... Senior Vice President, Senior Vice President and General Counsel in March
General Counsel, Secretary 1996, was appointed Secretary in April 1996, and has
and Director been a Director since May 1995. Prior to that time, Mr.
Cancellara was a partner with the law firm of Cassels,
Brock and Blackwell since 1980 where he held many
positions including Chairman of the Executive Committee
and managing partner.
Rolf K. Reininghaus......... Senior Vice President and Senior Vice President and a Director since the
Director Amalgamation and has been President of Crystaal since
November 1997. Prior to that time, he had been the
President, Chief Operating Officer and a Director of
BCI since October 1991 and Executive Vice President and
a Director of Trimel Corp. or its affiliates since
November 1987. Prior to his employment by Trimel, Mr.
Reininghaus was the Marketing Manager of the Canadian
operations of Miles Pharmaceuticals, a division of
Bayer AG.
Kenneth G. Howling.......... Vice President and Chief Vice President Finance and Chief Financial Officer in
Financial Officer November 1997. Mr. Howling came to Biovail from Pharma
Patch Plc, a small bio-technology company involved in
transdermal drug delivery, where he served as Vice
President Finance and Chief Financial Officer from
November 1993 to November 1997. Mr. Howling served as
General Manager and Corporate Secretary from June 1991
to November 1993 and as Controller and Corporate
Secretary from June 1988 to June 1991 for Roberts
Company Canada Limited. Prior to that time, he spent 10
years in financial and general management positions
including positions with SmithKline Beecham, Bencard
Allergy Laboratories, McGraw Edison and Price
Waterhouse. Mr. Howling is a Certified Public
Accountant and received his Accounting degree from
Upsala College in New Jersey.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
CURRENT POSITIONS AND
NAME OFFICES HELD WITH PARENT PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ---------------------------- -------------------------- -------------------------------------------------------
<S> <C> <C>
Dr. Ken Albert.............. Vice President, Chief Vice President, Chief Scientific Officer in January,
Scientific Officer 1999. Dr. Albert came to Biovail from Schein
Pharmaceutical Inc., where he had been the Vice
President, Research and Development from 1995 to 1998.
Prior to his tenure at Schein, Dr. Albert was Corporate
Director, Research and Development at Forest
Laboratories from 1988 to 1995 and prior to that time
he spent 14 years in senior Research and Development
positions at the Upjohn Company and Merck Sharp and
Dohme.
Wilfred G. Bristow.......... Director Director since the Amalgamation. Prior to that time, he
had been a Director of BCI since January 1993. Mr.
Bristow had been a senior investment advisor at Nesbitt
Thomson Inc., a Canadian investment banking firm, since
December 1991. From September 1975 to December 1991, he
served as vice president and director of Richardson
Greenshields of Canada, an investment banking firm. Mr.
Bristow is currently a director of Conversion
Industries, Inc., a merchant bank.
Roger Rowan................. Director Board of Directors in June 1997. Mr. Rowan has been
President and Chief Operating Officer of Watt
Charmichael Inc., a private investment firm, since May
1994. Prior thereto, Mr. Rowan was the Executive Vice
President and Chief Operating Officer of Watt
Charmichael Inc. since 1991.
Robert Vujea................ Director Board of Directors in June 1997. Mr. Vujea has been
President of R & D Chemical Corporation, a chemical
manufacturer and distributor, since 1974. Prior hereto,
Mr. Vujea has held senior management positions within a
number of companies including American Greeting Card
Corporation, Cole National Corporation and Diverco
Incorporated.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. Set forth in the
table below are the name and the present principal occupations or employment and
the name, principal business and address of any corporation or other
organization in which such occupation or employment is conducted, and the
five-year employment history of each of the executive officers of the Purchaser.
Unless otherwise indicated, each person identified below is employed by Parent
and is a United States citizen. The principal business address of the Purchaser
and, unless otherwise indicated, the business address of each person identified
I-3
<PAGE>
below is c/o Parent, 2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9,
(905) 608-8008. The Purchaser is a Delaware corporation.
<TABLE>
<CAPTION>
CURRENT POSITIONS AND
NAME OFFICES HELD WITH PARENT PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ---------------------------- -------------------------- -------------------------------------------------------
<S> <C> <C>
Eugene N. Melnyk............ Chairman of the Board and Chairman of the Board and Director since formation in
Director July 1999. Chairman of the Board and a Director of
Biovail since March 29, 1994, the effective date of the
amalgamation of the predecessor entities of Biovail,
Biovail Corporation International ("Biovail") and
Trimel Corporation ("Trimel"). Prior to that time, he
had been the Chairman of the Board of Biovail since
October 1991 and was instrumental in acquiring,
financing and organizing the companies or businesses
that comprised Biovail. Mr. Melnyk also founded Trimel
and served as its President and Chief Executive Officer
from 1983 through July 1991.
Robert A. Podruzny.......... President and Director President and Director since formation in July 1999.
President and Chief Operating Officer of Biovail since
November 1997. He joined Biovail as Vice President,
Finance and Chief Financial Officer in January 1996.
Mr. Podruzny came to Biovail from Browning-Ferris
Industries Ltd. where he served as the Chief Financial
Officer and as a Director of the Canadian operation
from 1993 to 1995. From 1987 to 1992, Mr. Podruzny
served as General Manager of the U.S. Health Promotion
Division of MDS Health Group, a Toronto-based medical
services company. Mr. Podruzny is a Chartered
Accountant in Canada and holds an MBA in finance.
Kenneth C. Cancellara....... Senior Vice President, Senior Vice President, Secretary and Director since
Secretary and Director formation in July 1999. Senior Vice President and
General Counsel of Biovail in March 1996, was appointed
Secretary in April 1996, and has been a Director since
May 1995. Prior to that time, Mr. Cancellara was a
partner with the law firm of Cassels, Brock and
Blackwell since 1980 where he held many positions
including Chairman of the Executive Committee and
managing partner.
</TABLE>
I-4
<PAGE>
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 shareholder
of the Company or his broker, dealer, commercial bank, trust Company or other
nominee to the Depositary at one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand Delivery:
P.O. Box 3301 85 Challenger Road 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Mail Drop--Reorg New York, NY 10271
Attn: Reorganization Department Ridgefield Park, NJ 07660 Attn: Reorganization Department
Attn: Reorganization Department
</TABLE>
By Facsimile Transmission:
(201) 296-4293
To Confirm:
(201) 296-4860
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust Company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS
[LOGO]
156 Fifth Avenue
New York, New York 10011
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, New York 10172
(877) 233-9567 (Toll-Free)
