<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D/A
(AMENDMENT NO. 2)
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 $9,219.32
</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.
** 1/50 of 1% of Transaction Value.
/ / 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>
Filing
Amount Previously Paid: Party:
------------- -------------
Form or Registration
No.: Date Filed:
------------- -------------
</TABLE>
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- --------------------------------------------------------------------------------
(CONTINUED ON FOLLOWING PAGE(S))
(Page 1 of 8 Pages)
<PAGE>
SCHEDULE 14D-1 AND 13D
CUSIP NO. 359536109 Page 2 of 8 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) / /
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCES OF FUNDS
WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/ /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
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 8 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) / /
- --------------------------------------------------------------------------------
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 Schedule 14D-1 and Amendment No. 2 to the Schedule 13D/A (the "Schedule
14D-1 and Schedule 13D/A") relates 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"), both of which
are annexed to and filed with this Schedule 14D-1 and 13D/A as Exhibits (a)(1)
and (a)(2), respectively. 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 is being filed on behalf of the
Purchaser and Parent. The item numbers and responses thereto below are in
accordance with the requirements of Schedule 14D-1 and Schedule 13D/A
respectively of the Securities Exchange Act of 1934, as amended.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Fuisz Technologies Ltd., a Delaware
corporation (the "Company"), and the address of its principal executive offices
is 14555 Avion at Lakeside, Suite 250, Chantilly, Virginia 20151.
(b) The information set forth in the "INTRODUCTION" of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in "THE TENDER OFFER--6. Price Range of
Shares; Dividends" of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) This Statement is being filed by the Purchaser and Parent. The
information set forth in the "INTRODUCTION", in "THE TENDER OFFER--9. Certain
Information Concerning Parent and the Purchaser" and in "SCHEDULE I--Information
Concerning the Directors and Executive Officers of Parent and the Purchaser" of
the Offer to Purchase is incorporated herein by reference.
(e); (f) During the last five years, neither Parent nor the Purchaser, nor,
to their knowledge, any of the directors or executive officers of Parent or
Purchaser has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
any such person was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the "INTRODUCTION", in "THE TENDER
OFFER--11. Background of the Offer; Contacts with the Company", in "THE TENDER
OFFER--8. Certain Information Concerning the Company "and in "THE TENDER
OFFER--9. Certain Information Concerning Parent and the Purchaser" with the
Company" of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "THE TENDER OFFER--10. Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
(Page 4 of 8 Pages)
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the "INTRODUCTION", in "THE TENDER
OFFER--12. Purpose of the Offer and the Merger; Plans for the Company; the
Merger Agreement", in "THE TENDER OFFER--11 Background of the Offer; Contacts
with the Company", and in "THE TENDER OFFER--7. Effect of the Offer on the
Market for the Shares, NASDAQ Listing and Exchange Act Registration; Margin
Regulations" of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the "INTRODUCTION", in "THE TENDER
OFFER--9. Certain Information Concerning Parent and the Purchaser", and in "THE
TENDER OFFER--11. Background of the Offer and the Merger; Contacts with the
Company" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "INTRODUCTION", in "THE TENDER OFFER--9.
Certain Information Concerning Parent and the Purchaser" and in "THE TENDER
OFFER--11. Background of the Offer and the Merger; Contacts with the Company"
and in "THE TENDER OFFER--12. Purpose of the Offer and the Merger; Plans for the
Company; the Merger Agreement" of the Offer to Purchase is incorporated herein
by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "THE TENDER OFFER--11. Background of the Offer
and the Merger; Contacts with the Company" and in "THE TENDER OFFER--16. Fees
and Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in "THE TENDER OFFER--9. Certain Information
Concerning Parent and the Purchaser" is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in "THE TENDER OFFER--11. Background of
the Offer and the Merger; Contacts with the Company" and in "THE TENDER
OFFER--9. Certain Information Concerning Parent and the Purchaser" of the Offer
to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in "THE TENDER OFFER--15. Certain Legal
Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein
by reference.
(d) The information set forth in "THE TENDER OFFER--7. Effect of the
Offer on the Market for the Shares, NASDAQ Listing and Exchange Act
Registration; Margin Regulations" of the Offer to Purchase is incorporated
herein by reference.
(e) The information set forth in "THE TENDER OFFER--15. Certain Legal
Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein
by reference.
(f) The information set forth in the entire Offer to Purchase and the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively, is incorporated herein by reference in its
entirety.
(Page 5 of 8 Pages)
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
<S> <C>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal (including Guidelines for Certification 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 as of 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>
(Page 6 of 8 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: July 30, 1999 BIOVAIL CORPORATION INTERNATIONAL
By: /s/ EUGENE N. MELNYK
--------------------------------------
Name: Eugene N. Melnyk
Title: Chairman
ABCI ACQUISITION SUB. CORPORATION
By: /s/ EUGENE N. MELNYK
--------------------------------------
Name: Eugene N. Melnyk
Title: Chairman
</TABLE>
(Page 7 of 8 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.
(Page 8 of 8 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........................................................................... 21
11. Background of the Offer; Contacts with the Company................................................... 21
12. Purpose of the Offer and the Merger; Plans for the Company; the Merger Agreement..................... 24
13. Dividends and Distributions.......................................................................... 32
14. Certain Conditions of the Offer...................................................................... 32
15. Certain Legal Matters; Regulatory Approvals.......................................................... 34
16. Fees and Expenses.................................................................................... 35
17. Miscellaneous........................................................................................ 35
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
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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.
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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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<PAGE>
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
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<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
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<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
10
<PAGE>
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.
11
<PAGE>
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.
17
<PAGE>
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>
18
<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.
19
<PAGE>
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 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.
20
<PAGE>
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.
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.
21
<PAGE>
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 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
22
<PAGE>
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,
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 possibility
of Parent's acquisition of one million shares of the Company, the legal
ownership of which was the 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.
23
<PAGE>
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
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
24
<PAGE>
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
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
25
<PAGE>
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.
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 any change or effect that is materially adverse to (i) the business,
properties, operations, results of operations or financial condition of the
referenced person and its subsidiaries, taken as a whole, other than any effects
or changes arising out of, resulting from or relating to general economic,
financial or industry conditions or (ii) the ability of any of the referenced
person and its subsidiaries to perform its obligations under the Merger
Agreement.
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
34
<PAGE>
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
35
<PAGE>
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).
36
<PAGE>
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)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
FUISZ TECHNOLOGIES LTD.
PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 30, 1999, BY
ABCI ACQUISITION SUB. CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
BIOVAIL CORPORATION INTERNATIONAL
- --------------------------------------------------------------------------------
THE OFFER (AS DEFINED BELOW), PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 26, 1999,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<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 Ridgefield Park, NJ 07660 Attn: Reorganization
Department Attn: Reorganization Department
Department
</TABLE>
By Facsimile Transmission:
(201) 296-4293
To Confirm:
(201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
DESCRIPTION OF TENDERED SHARES
------------------------------------------------------------------------------------------------
SHARE CERTIFICATE(S) TENDERED
(ATTACHED ADDITIONAL SIGNED
LIST IF NECESSARY)
-------------------------------------------------------
TOTAL NUMBER
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE OF SHARES NUMBER OF
(PLEASE FILL IN EXACTLY AS CERTIFICATE REPRESENTED BY SHARES
NAME(S) APPEAR(S) ON CERTIFICATE(S) NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
TOTAL SHARES
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Shareholders.
(2) Unless otherwise indicated, it will be assumed that all Shares Certificates
delivered to the Depositary are being tendered. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be completed by shareholders either if
certificates for Shares (the "Share Certificates") are to be forwarded with this
Letter of Transmittal or, unless an Agent's Message (as defined in Instruction 2
herein) is utilized, if delivery of Shares is to be made by book-entry transfer
to an account maintained by the Depositary at the Book-Entry Transfer Facility
(as defined in Section 2 of the Offer to Purchase, dated July 30, 1999 (the
"Offer to Purchase")) pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Shareholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Shareholders" and all other shareholders are
referred to as "Certificate Shareholders." DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal must be accompanied by Share Certificates unless
the holder complies with the procedures for guaranteed delivery set forth in
Section 3 of the Offer to Purchase. Holders whose Share Certificates are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary on or prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) or who cannot complete the
procedures for book-entry transfer on a timely basis, must tender their Shares
according to the guaranteed delivery procedures. See Instruction 2 herein.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
If delivered by Book-Entry Transfer, check box / /
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to ABCI Acquisition Sub. Corporation, a
Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Biovail
Corporation International, an Ontario, Canada corporation ("Parent"), the above
described shares of common stock, $.01 par value (the "Shares"), Fuisz
Technologies Ltd., a Delaware corporation (the "Company") at a price of $7.00
per Share, net to the seller in cash, without interest thereon, 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 this Letter of Transmittal (which, as
amended or supplemented from time to time, together with the Offer to Purchase
constitute the "Offer") receipt of which is hereby acknowledged. The undersigned
understands that the Purchaser reserves the right to transfer or assign, in
whole or from time to time in part, to one or more of its subsidiaries or
affiliates the right to purchase all or any portion of the Shares tendered
pursuant to the Offer.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of and payment for the Shares tendered herewith in accordance with the
terms of the Offer, the undersigned hereby sells, assigns, and transfers to, or
upon the order of, the Purchaser all right, title and interest in and to all of
the Shares that are being tendered hereby (and any and all other Shares or other
securities or rights issued or issuable in respect thereof on or after July 30,
1999) and constitutes and irrevocably appoints ChaseMellon Shareholder Services,
L.L.C. (the "Depositary") the true and lawful agent, attorney-in-fact and proxy
of the undersigned to the full extent of the undersigned's rights with respect
to such Shares with full power of substitution (such power of attorney and proxy
being deemed to be an irrevocable power coupled with an interest), to (a)
deliver Share Certificates (and any such other Shares or securities or rights),
or transfer ownership of such Shares (and any such other Shares or securities or
rights) on the account books maintained by the Book-Entry Transfer Facility,
together in either such case with all accompanying evidences of transfer and
authenticity, to or upon the order of the Purchaser, upon receipt by the
Depositary, as the undersigned's agent, of the purchase price, (b) present such
Shares (and any such other Shares or securities or rights) for transfer on the
books of the Company and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares (and any such other Shares or
securities or rights), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Eugene N. Melnyk and Kenneth C.
Cancellara, and each of them, and any other designees of the Purchaser as the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote in such manner as each such attorney and proxy or his
substitute shall, in his sole discretion, deem proper, and otherwise act
(including pursuant to written consent) with respect to all of the Shares
tendered hereby (and any and all other Shares or other securities or rights
issued or issuable in respect thereof on or after July 30, 1999) which have been
accepted for payment by the Purchaser prior to the time of such vote or action
which the undersigned is entitled to vote at any meeting of shareholders
(whether annual or special and whether or not an adjourned meeting) of the
Company, or by written consent in lieu of such meeting, or otherwise. This power
of attorney and proxy is coupled with an interest in the Company and in the
Shares and is irrevocable and is granted in consideration of, and is effective
upon, the acceptance for payment of such Shares by the Purchaser in accordance
with the terms of the Offer. Such acceptance for payment shall revoke, without
further action, any other power of attorney or proxy granted by the undersigned
at any time with respect to such Shares and no subsequent powers of attorney or
proxies will be given (and if given will be deemed not to be effective) with
respect thereto by the undersigned. The undersigned understands that the
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser is able to exercise full voting rights with respect
to such Shares and other securities, including voting at any meeting of
shareholders then scheduled or acting by written consent without a meeting.
3
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or other securities or rights issued or
issuable in respect thereof on or after July 30, 1999) and that, when the same
are accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and the same will not be subject to any
adverse claim. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby (and any such other Shares or securities or rights).
All authority herein conferred or herein agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall-be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer, as
well as the undersigned's representation and warranty to Parent, the Purchaser
and the Company that (i) the undersigned has a net long position in the Shares
or equivalent securities being tendered within the meaning of Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and (ii) the tender of such Shares complies with Rule 14e-4 of the
Exchange Act. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, the Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates not tendered or accepted for payment in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates not tendered or accepted for payment (and any accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the "Special Delivery
Instructions" and the "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any Share Certificates not
tendered or accepted for payment in the name(s) of, and deliver said check
and/or return certificates to, the person or persons so indicated. Shareholders
tendering Shares by book-entry transfer may request that any Shares not accepted
for payment be returned by crediting such account maintained at such Book-Entry
Transfer Facility as such shareholder may designate by making an appropriate
entry under "Special Payment Instructions." The undersigned recognizes that the
Purchaser has no obligation pursuant to the "Special Payment Instructions" to
transfer any Shares from the name of the registered holder thereof if the
Purchaser does not accept for payment any of the Shares so tendered.
4
<PAGE>
- -------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not tendered or not purchased
and/or the check for the purchase price of Shares purchased are to be issued
in the name of someone other than the undersigned, or if Shares tendered by
book-entry transfer which are not purchased are to be returned by credit to
an account maintained at a Book-Entry Transfer Facility other than that
designated on the front cover. Issue check and/or certificates to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON BACK COVER)
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not tendered or not purchased
and/or the check for the purchase price of Shares purchased are to be sent
to someone other than the undersigned, or to the undersigned at an address
other than that shown on the front cover. Mail check and/or certificates to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON BACK COVER)
- -----------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
____________________________________________________________________________
____________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
Dated: __________________, 1999
(Must be signed by the registered holder(s) EXACTLY as name(s) appear(s)
on the Share Certificate(s) or on a security position listing or by
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please provide the
necessary information. See Instruction 5.)
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ( )_______________________________________
Tax Identification or Social Security No.: _________________________________
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ______________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
Area Code and Telephone Number:Address: ( )_______________________________
Dated: __________________, 1999
- --------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares of the Shares tendered
herewith, unless such holder has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
this Letter of Transmittal or (ii) if such Shares are tendered for the
account of a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the
Securities Transfer Agent's Medallion Program (each, an "Eligible
Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction
5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined below) is utilized, if
tenders are to be made pursuant to the procedures for tender by book-entry
transfer set forth in Section 3 of the Offer to Purchase. Share
Certificates, or timely confirmation (a "Book-Entry Confirmation") of a
book-entry transfer of such Shares into the Depositary's account at a
Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in the case of a book-entry
delivery and any other documents required by this Letter of Transmittal,
must be received by the Depositary at one of its addresses set forth herein
prior to the Expiration Date. Shareholders whose Share Certificates are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary prior to the Expiration Date or
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis may tender their Shares by property completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the
Purchaser, must be received by the Depositary on or 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 Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or, in the case of a
book-entry delivery, an Agent's Message) and any other documents required by
this Letter of Transmittal, must be received by the Depositary within three
New York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery, as provided in Section 3 of the Offer to
Purchase. If Share Certificates are forwarded separately to the Depositary,
a properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each such delivery.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER AND THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY
7
<PAGE>
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.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal or a facsimile thereof, waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS. (APPLICABLE TO CERTIFICATE SHAREHOLDERS ONLY) If fewer
than all the Shares evidenced by any certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such case, new Share Certificate(s)
for the remainder of the Shares that were evidenced by the old Share
Certificate(s) will be sent to the registered holder, unless otherwise
provided in the appropriate box marked "Special Payment Instructions" and/or
"Special Delivery Instructions" on this Letter of Transmittal, as soon as
practicable after the acceptance for payment of, and payment for, the Shares
tendered herewith. All Shares represented by certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this
Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the Share Certificate(s) without alteration,
enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on Share
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Share
Certificates.
If this Letter of Transmittal or any Share Certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in fiduciary or representative
capacity, such persons should so indicate when signing, and should submit proper
evidence satisfactory to the Purchaser of their authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment is to be made to, or Share
Certificates for Shares not tendered or purchased are to be issued in, the name
of a person other than the registered owner(s). Signatures on such Share
Certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the Share Certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner(s) appear(s) on the Share
Certificates. Signatures on such Share Certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect
to the transfer and sale of purchased Shares to it or its order pursuant to
the Offer for which the Purchaser is liable in connection with the Offer,
whether or not another person is jointly liable therefor. If, however,
payment of the purchase price is
8
<PAGE>
to be made to, or if Share Certificates not tendered or purchased are to be
registered in the name of, any person other than the registered holder, or
if tendered Share Certificates are registered in the name of any person
other than the person(s) signing this Letter of Transmittal, the amount of
any stock transfer taxes (whether imposed on the registered holder or such
person) payable on account of the transfer to such person will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER
OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of and/or Share Certificates for unpurchased Shares are to be
returned to a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such Share Certificates are to be returned
to someone other than the signer of this Letter of Transmittal or to an
address other than that shown on the front cover hereof, the appropriate
boxes on this Letter of Transmittal should be completed. Shareholders
tendering Shares by book-entry transfer may request that Shares not
purchased be credited to such account maintained at such Book-Entry Transfer
Facility as such shareholder may designate hereon. If no such instructions
are given, such Shares not purchases will be returned by crediting the
account at the Book-Entry Transfer Facility designated above. See
Instruction 1.
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right in its sole
discretion to waive any of the specified conditions of the Offer, in whole
or in part, in the case of any Shares tendered.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase and this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may
be directed to the Information Agent at its address set forth below.
10. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income tax
law, a shareholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such shareholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the
shareholder does not provide the Depositary with the correct TIN, the
Internal Revenue Service (the "IRS") may subject the shareholder or other
payee to a $50 penalty. In addition, payments that are made to such
shareholder or other payee with respect to Shares exchanged pursuant to the
Offer may be subject to 31% backup withholding.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the shareholder or other payee. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the shareholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
To prevent backup withholding, each tendering shareholder must provide his
or her correct TIN by completing Substitute Form W-9 set forth below, certifying
that the TIN provided is correct (or that the shareholder is awaiting a TIN) and
that (a) the shareholder has not been notified by the IRS that he or she is
subject to backup withholding as a result of failure to report all interest or
dividends or (b) the IRS has
9
<PAGE>
notified the shareholder that he or she is no longer subject to backup
withholding. To prevent possible erroneous backup withholding, exempt
shareholders (other than certain foreign individuals) should certify in
accordance with the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" that such shareholder is exempt
from backup withholding. If a shareholder has been notified by the IRS that he
or she is subject to backup withholding because of underreporting interest or
dividends on his or her tax return, he or she should nevertheless complete and
sign Substitute Form W-9 but should (unless after being so notified by the IRS
he or she received a notification from the IRS that he or she is no longer
subject to backup withholding) cross out item (2) of the certification on the
form.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The shareholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any Share Certificate(s)
has been lost, destroyed or stolen, the shareholder should promptly notify
the Transfer Agent for the Company. The shareholder will then be instructed
as to the steps that must be taken in order to replace the Share
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Share
Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF),
TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE AND ANY OTHER REQUIRED DOCUMENTS MUST BE RECEIVED
BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR
TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED
PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING SHAREHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
10
<PAGE>
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------
SUBSTITUTE Part I: PLEASE PROVIDE YOUR --------------------------------
FORM W-9 NAME, ADDRESS AND TIN IN THE Name
Department of the Treasury BOX AT RIGHT AND CERTIFY BY --------------------------------
Internal Revenue Service SIGNING AND DATING BELOW. Name
Social Security Number
Payer's Request for Taxpayer OR ------------------------
Identification Number (TIN) Employer Identification Number
and Certification for Payee
Exempt from Back Withholding
- ---------------------------------------------------------------------------------------------------
PART 2--CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a Taxpayer Identification Number to be issued to me) and
(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, (b) I
have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or dividends or, (c) the IRS has
notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--YOU MUST CROSS OUT ITEM (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS
THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF A FAILURE TO REPORT ALL INTEREST OR
DIVIDENDS ON YOUR TAX RETURN. HOWEVER, IF AFTER BEING NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO
BACKUP WITHHOLDING, YOU RECEIVED ANOTHER NOTIFICATION FROM THE IRS THAT YOU ARE NO LONGER SUBJECT
TO BACKUP WITHHOLDING, DO NOT CROSS OUT SUCH ITEM (2). (ALSO SEE INSTRUCTIONS IN THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9).
- ---------------------------------------------------------------------------------------------------
PART 3--/ / Check this box if you have not been issued a TIN and have applied for one or intend
to apply for one in the near future.
SIGNATURE ----------------------------------------------------------- DATE ---------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY
PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU
MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
SIGNATURE ----------------------------------------------------------- DATE ---------------------
- ---------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to
me, and either (1) I have mailed or delivered an application to receive a Taxpayer Identification
Number to the appropriate Internal Revenue Service Center or Social Security Administration Office
or (2) I intend to mail or deliver an application in the near future. I understand that if I do
not provide a taxpayer identification number within sixty (60) days, 31% of all payments made to
me will be withheld until I provide such a number.
SIGNATURE ----------------------------------------------------------- DATE ---------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, Share Certificates 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
By Facsimile Transmission:
(201) 296-4293
To Confirm:
(201) 296-4860
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at 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)
12
<PAGE>
GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help you to determine the
number to give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF--
- -----------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined
funds, the first individual on the account(1)
3. Husband and wife (joint account) The actual owner of the account or, if joint funds,
either person(1)
4. Custodian account of a minor (Uniform Gift to Minors The minor(2)
Act)
5. Adult and minor (joint account) The adult or, if the minor is the only contributor,
the minor(1)
6. Account in the name of guardian or committee for a The ward, minor, or incompetent person(3)
designated ward, minor, or incompetent person
7. a. A revocable savings trust account (in which The grantor trustee(1)
grantor is also trustee)
b. Any "trust" account that is not a legal or valid The actual owner(1)
trust under State law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or pension trust The legal entity (do not furnish the identifying
number of the personal representative or trustee
unless the legal entity itself is not designated in
the account title)(5)
10. Corporate account The corporation
11. Religious, charitable or educational organization The organization
account
12. Partnership account held in the name of the business The partnership
13. Association, club, or other tax-exempt organization The organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of Agriculture in the The public entity
name of a public entity (such as a State or local
government, school district, or prison) that receives
agricultural program payments
</TABLE>
- ------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
13
<PAGE>
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), or Form W-7 for International Taxpayer
Identification Number (for alien individuals required to file U.S. tax returns),
at an office of the Social Security Administration or the Internal Revenue
Service.
To complete Substitute Form W-9, if you do not have a taxpayer
identification number, write "Applied For" in the space for the taxpayer
identification number in Part 1, sign and date the Form, and give it to the
requester. Generally, you will then have 60 days to obtain a taxpayer
identification number and furnish it to the requester. If the requester does not
receive your taxpayer identification number within 60 days, backup withholding,
if applicable, will begin and will continue until you furnish your taxpayer
identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Unless otherwise noted herein, all references below to section numbers or to
regulations are references to the Internal Revenue Code and the regulations
promulgated thereunder.
Payees specifically exempted from backup withholding on ALL payments include
the following:
- A Corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
- A foreign government or a political subdivision, agency or instrumentality
thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a)
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
14
<PAGE>
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if (i) this interest is $600 or more, and
(ii) the interest is paid in the course of the payer's trade or business
and (iii) you have not provided your correct taxpayer identification
number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICES. Section 6109 requires most Recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividends,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail
to include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an underpayment attributable to the
failure.
15
<PAGE>
(3) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--If you falsify
certifications or affirmations, you are subject to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
16
<PAGE>
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 PARK AVENUE
NEW YORK, NEW YORK 10172
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
BY
ABCI ACQUISITION SUB. CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
BIOVAIL CORPORATION INTERNATIONAL
---------------------------------------------------------
THE OFFER (AS DEFINED BELOW), PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 26, 1999 UNLESS THE
OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
July 30, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by ABCI Acquisition Sub. Corporation, a Delaware
corporation (the "Purchaser"), and a wholly owned subsidiary of Biovail
Corporation International, an Ontario, Canada corporation ("Parent"), to act as
dealer manager (the "Dealer Manager") in connection with the Purchaser's offer
to purchase 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, without interest thereon, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated July 30, 1999
(the "Offer to Purchase") and the related Letter of Transmittal (the "Letter of
Transmittal", and together with the Offer to Purchase, the "Offer"), copies of
which are enclosed herewith. 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").
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase;
2. Letter of Transmittal (together with Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding);
<PAGE>
3. A printed form of letter which may be sent to your clients for whose
account you hold Shares in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer; and
4. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available, if time will not
permit all required documents to reach ChaseMellon Shareholder Services,
L.L.C., as depositary (the "Depositary"), prior to the Expiration Date (as
defined in the Offer to Purchase) or if the procedure for book-entry
transfer cannot be completed on a timely basis.
The Company's Board of Directors has approved the Offer, the Merger (as
defined in the Offer to Purchase) and the Merger Agreement (as defined in the
Offer to Purchase) 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.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 26, 1999,
UNLESS THE OFFER IS EXTENDED.
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 accept for payment and pay for up to 6,585,225
Shares validly tendered prior to the Expiration Date and not theretofore
properly withdrawn. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of certificates evidencing such Shares (or a confirmation of a book-entry
transfer of such Shares into the Depositary's account at The Depositary Trust
Company), a Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase) in
lieu of the Letter of Transmittal) and any other required documents. See the
section of the Offer to Purchase entitled "THE OFFER--3. Procedures for
Tendering Shares".
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedure described in the section of the Offer to Purchase entitled "THE
OFFER--3. Procedures for Tendering Shares".
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other persons (other than the fees of the Dealer Manager and Information
Agent (as defined in the Offer to Purchase)) in connection with the solicitation
of tenders of Shares pursuant to the Offer. You will be reimbursed for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to your clients. The Purchaser will pay or cause to be paid any stock
transfer taxes payable on the transfer of Shares to it, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
PLEASE NOTE THAT THE OFFER EXPIRES AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, AUGUST 26, 1999, UNLESS THE OFFER IS EXTENDED.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained by contacting,
the Information Agent or the Dealer Manager, at their addresses and telephone
numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL APPOINT YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEALER MANAGER, THE
DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR
MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<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
BY
ABCI ACQUISITION SUB. CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
BIOVAIL CORPORATION INTERNATIONAL
THE OFFER (AS DEFINED BELOW), PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 26, 1999, UNLESS THE
OFFER IS EXTENDED.
July 30, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated July 30,
1999 (the "Offer to Purchase") and the related Letter of Transmittal (the
"Letter of Transmittal", and, together with the Offer to Purchase, the "Offer")
pertaining to the offer by ABCI Acquisition Sub. Corporation (the "Purchaser"),
a Delaware corporation and a wholly owned subsidiary of Biovail Corporation
International, an Ontario, Canada corporation ("Parent"), to purchase 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,
without interest thereon, upon the terms and subject to the conditions set forth
in 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 material is being forwarded to you as the beneficial owner of Shares
carried by us in your account but not registered in your name.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any or
all of the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Please note the following:
1. The tender offer price is $7.00 per Share, net to you in cash, without
interest thereon.
<PAGE>
2. The Offer is being made for up to 6,585,225 of the outstanding Shares
not currently owned directly or indirectly by Parent.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Thursday, August 26, 1999, unless the Offer is extended.
4. The Offer is conditioned upon the Minimum Condition and (ii) the
expiration of any waiting period under the Antitrust Laws (as defined in
the Offer to Purchase: "The Tender Offer--14. Certain Conditions of the
Offer") applicable to the purchase of Shares pursuant to the Offer and
the Merger (as defined in the Offer to Purchase) (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 Offer is also subject to other terms and conditions
contained in the Offer to Purchase.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to
the Offer.
6. The Company's Board of Directors has approved the Offer, the Merger (as
defined in the Offer to Purchase) and the Merger Agreement (as defined in
the Offer to Purchase) 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.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
contained in this letter. An envelope in which to return your instructions to us
is enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise indicated in such instruction form. Please forward
your instructions to us as soon as possible to allow us ample time to tender
Shares on your behalf prior to the expiration of the Offer.
The Offer is made solely by the Offer to Purchase and the Letter of
Transmittal and any amendments or supplements thereto. The Purchaser is not
aware of any state where the making of the Offer is prohibited by the
administrative or judicial action pursuant to any valid state statute. If the
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of the Shares pursuant thereto, the Purchaser will make
a good faith effort to comply with such statute. If, after such good faith
effort, the Purchaser cannot comply with such statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In those jurisdictions where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Purchaser by Donaldson, Lufkin
& Jenrette Securities Corporation or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH UP TO 6,585,225 OUTSTANDING
SHARES OF COMMON STOCK
OF
FUISZ TECHNOLOGIES LTD.
AT
$7.00 NET PER SHARE
BY
ABCI ACQUISITION SUB. CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
BIOVAIL CORPORATION INTERNATIONAL
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Purchase dated July 30, 1999 (the "Offer to Purchase") and the related Letter of
Transmittal (the "Letter of Transmittal", and, together with the Offer to
Purchase, the "Offer") relating to the above-referenced Offer.
You are instructed to tender the number of Shares indicated below (or, if no
number is indicated below, all Shares) that are held by you for the account of
the undersigned, upon the terms and subject to the conditions set forth in the
Offer.
- --------------------------------------------------------------------------------
Number of Shares to be Tendered*
/ / Shares: ______ shares
/ / All Shares
- --------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s) ___________________________________________________________________
Name(s) ________________________________________________________________________
(PLEASE PRINT OR TYPE)
Address(es) ____________________________________________________________________
- --------------------------------------------------------------------------------
Area Code(s) and Telephone No(s). ______________________________________________
Tax Identification or Social Security No(s). ___________________________________
Dated: _________________________________________________________________________
3
<PAGE>
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN
ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU SHOULD SEEK YOUR OWN FINANCIAL
ADVICE IMMEDIATELY FROM YOUR OWN APPROPRIATELY AUTHORIZED INDEPENDENT FINANCIAL
ADVISOR.
IF YOU HAVE SOLD OR TRANSFERRED ALL OF YOUR REGISTERED HOLDINGS OF COMMON STOCK
OF FUISZ TECHNOLOGIES LTD., PLEASE FORWARD THIS DOCUMENT AND ALL ACCOMPANYING
DOCUMENTS TO THE STOCKBROKER, BANK OR OTHER AGENT THROUGH WHOM THE SALE OR
TRANSFER WAS EFFECTED, FOR SUBMISSION TO THE PURCHASER OR TRANSFEREE.
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF COMMON STOCK
OF
FUISZ TECHNOLOGIES LTD.
PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 30, 1999
BY
ABCI ACQUISITION SUB. CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
BIOVAIL CORPORATION INTERNATIONAL
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially equivalent hereto,
must be used to accept the Offer (as defined below) if certificates representing
shares of common stock, $.01 par value (the "Shares"), of Fuisz Technologies
Ltd., a Delaware corporation (the "Company"), are not immediately available or
time will not permit all required documents to reach ChaseMellon Shareholder
Services L.L.C. (the "Depositary") on or prior to the Expiration Date (as
defined in the Offer to Purchase), or the procedures for delivery by book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand or sent by facsimile transmission or mail to
the Depositary and must include a guarantee by an Eligible Institution (as
defined in the Offer to Purchase (as defined below)). See Section 3 of the Offer
to Purchase.
<PAGE>
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
Post Office Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Drop--Reorg 13th Floor
Attn: Reorganization Department Ridgefield Park, NJ 07660 New York, NY 10271
Attn: Reorganization Department Attn: Reorganization Department
</TABLE>
By Facsimile Transmission:
(201) 296-4293
To Confirm:
(201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
Shares may not be tendered pursuant to the Guaranteed Delivery Procedures.
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to ABCI Acquisition Sub. Corporation, a
Delaware corporation and a wholly-owned subsidiary of Biovail Corporation
International, an Ontario, Canada corporation, 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 (which, together with
any Supplements or amendments thereto, collectively constitute the "Offer"),
receipt of each of which is hereby acknowledged, the number of Shares indicated
below pursuant to the guaranteed delivery procedures set forth in Section 3 of
the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: ------------------------- Name(s) of Record Holder(s): ----------
Certificate No(s). (if available): -------- Address(es): --------------------------
- ------------------------------------------- ---------------------------------------
Check box if Share(s) will be tendered by Area Code and
Book-Entry Transfer Telephone Number(s): ------------------
/ / The Depository Trust Company Signatures: ---------------------------
Account Number: --------------------------- ---------------------------------------
Date: ------------------------------------- Dated: --------------------------------
</TABLE>
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
3
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution, hereby guarantees: (i) that the
above-named person(s) has a net long position in the Shares being tendered
within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act
of 1934, as amended; (ii) that such tender of Shares complies with Rule 14e-4;
and (iii) delivery to the Depositary, at one of its addresses set forth above,
certificates ("Share Certificates") evidencing the tendered Shares hereby, in
proper form for transfer, or confirmation of book-entry transfer of such Shares
into the Depositary's account at The Depository Trust Company with delivery of a
Letter of Transmittal (or facsimile thereof) properly completed and duly
executed, or an Agent's Message (as defined in the Letter of Transmittal) in the
case of a book-entry delivery, and any other required documents, all within
three Nasdaq National Market trading days after the date of execution hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal, Share
Certificates and any other required documents to the Depositary within the time
period shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
<TABLE>
<S> <C>
Name of Firm: ---------------------------- -----------------------------------
(Authorized Signature)
Address: --------------------------------- Name: -----------------------------
(Please Type or Print)
- --------------------------------- Title: ----------------------------
(Zip Code)
Area Code and Date: -----------------------------
Telephone Number: ------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
4
<PAGE>
Biovail Corporation International (ticker: BVF, exchange: The New York Stock
Exchange) News Release - Wednesday, July 28, 1999
- -----------------------------------------------------------------------------
BIOVAIL REPORTS RECORD 1999 SECOND QUARTER AND YEAR TO DATE FINANCIAL RESULTS
TORONTO--(BW HealthWire)--July 28, 1999--Biovail Corporation International
(NYSE:BVF) (TSE:BVF.) today reported record second quarter and six month
financial results for the period ended June 30, 1999.
Revenue for the second quarter and first half of 1999 increased by 43% and
37% respectively to $36.2 million and $64.4 million, compared to second
quarter 1998 revenue of $25.3 million and first half 1998 revenue of $47.1
million.
Operating income for the quarter was $15.5 million and for the first half of
1999 was $27.1 million, representing increases of 53% and 46% respectively
over the comparable periods of 1998.
Net income of $12.1 million or $0.49 per share was achieved in the quarter, a
26% increase over the net income of $9.5 million or $0.36 per share earned in
1998. For the first half of 1999, net income of $20.4 million or $0.83 per
share was achieved, a 17% increase over $17.4 million or $0.65 per share in
the comparable period of 1998.
Revenue and income improvements in both the second quarter and first half of
1999 are primarily attributable to increasing market penetration of
Tiazac-Registered Trademark-, Biovail's prescription drug used in the
treatment of angina and hypertension, in the United States and Canada. In
addition, the launch of a generic version of the angina/hypertension drug
Verelan in the United States and the Canadian launches of Retavase, a
fibrinolytic clot dissolving product, Brexidol, used for the relief of pain
and Celexa, an anti-depressant have all contributed to the company's
increasing revenue and income performance.
Eugene Melnyk, Chairman of the Board commented, "We are very pleased to
report that the strategic initiatives undertaken at Biovail historically are
today generating continually improving financial results. Our pipeline of
products is very strong and is expected to contribute significantly in the
near future. In addition, completion of the recently announced merger
agreement with Fuisz Technologies Ltd. will provide the combined operations
with leading edge drug delivery technology platforms that can be applied to a
wide array of important drugs. This acquisition provides Biovail greater
leverage to take advantage of the many exciting opportunities available to
the company."
Biovail Corporation International is an international full-service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug
delivery technologies.
"Safe Harbor" statement under the Private Securities Litigation
<PAGE>
Reform Act of 1995.
To the extent any statements made in this release contain information that is
not historical, these statements are essentially forward looking and are
subject to risks and uncertainties, including the difficulty of predicting
FDA approvals, acceptance and demand for new pharmaceutical products, the
impact of competitive products and pricing, new product development and
launch, reliance on key strategic alliances, availability of raw materials,
the regulatory environment, fluctuations in operating results and other risks
detailed from time to time in the company's filings with the Securities and
Exchange Commission.
BIOVAIL CORPORATION INTERNATIONAL
CONSOLIDATED BALANCE SHEETS
(All dollar amounts are expressed in thousands of U.S. dollars)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- ------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current
Cash and short-term deposits $ 86,358 $ 78,279
Accounts receivable 36,521 42,768
Inventories 15,199 10,542
Executive stock purchase plan loans 3,025 2,924
Deposits and prepaid expenses 3,264 3,357
-------- --------
144,367 137,870
LONG-TERM INVESTMENTS 10,055 10,055
CAPITAL ASSETS, net 25,464 23,677
OTHER ASSETS, net 29,072 28,317
-------- --------
$208,958 $199,919
-------- --------
-------- --------
LIABILITIES
Current
Accounts payable $ 7,300 $ 12,244
Accrued liabilities 5,561 4,129
Income taxes payable 1,293 1,004
Customer prepayments 16,126 4,516
Current portion of long-term debt 751 653
-------- --------
31,031 22,546
LONG-TERM DEBT 125,856 126,182
-------- --------
156,887 140,728
-------- --------
SHAREHOLDERS' EQUITY
Share capital 21,019 19,428
Warrants 8,244 8,244
Retained earnings 22,059 24,748
Cumulative translation adjustment 749 (1,229)
-------- --------
52,071 51,191
-------- --------
$208,958 $199,919
-------- --------
-------- --------
</TABLE>
<PAGE>
BIOVAIL CORPORATION INTERNATIONAL
CONSOLIDATED STATEMENTS OF INCOME
(All dollar amounts except per share data are expressed in thousands
of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUE
Product sales $ 24,979 $ 17,296 $ 37,541 $ 28,763
Research and development 8,635 4,109 15,352 11,953
Royalty and licensing 2,550 3,850 11,502 6,428
---------- ---------- ---------- ----------
36,164 25,255 64,395 47,144
---------- ---------- ---------- ----------
EXPENSES
Cost of goods sold 7,848 6,867 12,887 12,009
Research and development 6,459 4,103 11,783 8,132
Selling, general and
administrative 6,359 4,143 12,604 8,454
---------- ---------- ---------- ----------
20,666 15,113 37,274 28,595
---------- ---------- ---------- ----------
OPERATING INCOME 15,498 10,142 27,121 18,549
INTEREST EXPENSE (2,657) (89) (5,449) (157)
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 12,841 10,053 21,672 18,392
PROVISION FOR INCOME TAXES 775 510 1,308 1,001
---------- ---------- ---------- ----------
NET INCOME $ 12,066 $ 9,543 $ 20,364 $ 17,391
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
EARNINGS PER SHARE $ 0.49 $ 0.36 $ 0.83 $ 0.65
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 24,533,987 26,849,900 24,533,987 26,849,900
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
BIOVAIL CORPORATION INTERNATIONAL
CONSOLIDATED STATEMENTS OF CASH FLOW
(All dollar amounts are expressed in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
-------- --------
<S> <C> <C>
NET INFLOW (OUTFLOW) OF CASH RELATED TO THE
FOLLOWING ACTIVITIES
OPERATING
Net income for the period $ 20,364 $ 17,391
Depreciation and amortization 3,154 2,346
-------- --------
23,518 19,737
Change in non-cash operating items 10,771 6,966
-------- --------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
34,289 26,703
-------- --------
INVESTING
Additions to capital assets, net (2,785) (2,235)
Executive stock purchase plan loans 31 116
Acquisition of product rights (1,811) -
Acquisition of royalty interest - (15,000)
Increase in other assets - (170)
Long-term investments - (7,500)
-------- --------
(4,565) (24,789)
-------- --------
FINANCING
Acquisition of share capital (23,550) -
Issuance of share capital 2,088 3,858
Reduction in other long-term debt (300) (7,840)
Increase in other long-term debt - 14,706
-------- --------
(21,762) 10,724
-------- --------
Effect of exchange rate changes on cash 117 (31)
-------- --------
INCREASE IN CASH 8,079 12,607
-------- --------
CASH AND SHORT-TERM DEPOSITS,
BEGINNING OF PERIOD 78,279 8,275
-------- --------
CASH AND SHORT-TERM DEPOSITS,
END OF PERIOD $ 86,358 $ 20,882
-------- --------
-------- --------
</TABLE>
CONTACT: Biovail Corporation International
Eugene Melnyk, Robert Podruzny, John Miszuk
416/285-6000
Web Page: www.biovail.com
Investor Relations e-mail: [email protected]
"SAFE HARBOUR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995: STATEMENTS IN THIS PRESS RELEASE REGARDING BIOVAIL CORPORATION
INTERNATIONAL'S BUSINESS WHICH ARE NOT HISTORICAL FACTS ARE "FORWARD-LOOKING
STATEMENTS" THAT INVOLVE RISKS AND UNCERTAINTIES. FOR A DISCUSSION OF SUCH
RISKS AND UNCERTAINTIES, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER FROM
THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS, SEE "RISK FACTORS" IN THE
COMPANY'S ANNUAL REPORT OR FORM 10-K FOR THE MOST RECENTLY ENDED FISCAL YEAR.
<PAGE>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE,
DATED JULY 30, 1999, AND THE RELATED LETTER OF TRANSMITTAL AND ANY AMENDMENTS
OR SUPPLEMENTS THERETO, AND IS BEING MADE TO ALL HOLDERS OF SHARES. THE OFFER
IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF)
HOLDERS OF SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR
ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER
LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER
SHALL BE DEEMED TO BE MADE ON BEHALF OF ABCI ACQUISITION SUB. CORPORATION BY
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION OR ONE OR MORE REGISTERED
BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF 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
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, UNLESS THE OFFER
IS EXTENDED.
ABCI Acquisition Sub. Corporation, a Delaware corporation (the
"Purchaser") and a wholly-owned subsidiary of Biovail Corporation
International, an Ontario, Canada corporation ("Parent"), is offering to
purchase 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, without interest thereon (the "Offer Price"), 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 (which together with any amendments or supplements thereto,
collectively constitute the "Offer").
The Offer is conditioned upon, among other things, (1) 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")
and (2) the expiration of any waiting period under the Antitrust Laws (as
defined in the Offer to Purchase) applicable to the purchase of the 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, to waive each of the
conditions to the obligations of the Purchaser to consummate the Offer to the
extent permitted by law. The intention of Parent is to acquire 100% of the
Company pursuant to the Offer and the merger described below.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated July 25, 1999, (the "Merger Agreement") by and among Parent, 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 the Company (the "Merger"), with the Company surviving
the Merger as a wholly-owned subsidiary of Parent.
In the Merger, each Share issued and outstanding immediately prior to
the effective time of the Merger (other than Shares, if any, held in the
treasury of the Company, held by the Purchaser and held by Parent or any
direct or indirect wholly-owned subsidiary of Parent) 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 (the "Exchange Ratio")
determined as follows: (i) if the average of the daily closing price 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 of
the Merger (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 SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF THE COMPANY HAVE
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 RECOMMEND THAT THE COMPANY'S SHAREHOLDERS
ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT TO THE OFFER.
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 ChaseMellon Shareholder Services,
L.L.C. (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 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") with timely confirmation of a book-entry transfer 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 section 3 of the Offer to Purchase, (ii) the Letter
of Transmittal (or a facsimile thereof), properly completed and duly
executed, or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry transfer, and (iii) any other documents required
by the Letter of Transmittal. 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 unaccepted or
unpurchased 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 Section 3 of the Offer to Purchase, 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.
Except as otherwise provided in the Offer to Purchase, 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. 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 in the
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and (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 (as defined in the Offer to Purchase),
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 Section 3 of the Offer to Purchase, 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 Section 3 of the Offer to
Purchase. Withdrawals of Shares may not be rescinded. Withdrawn Shares may be
retendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3 of the Offer to Purchase. 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, which determination will be final and binding.
The Purchaser may amend the Offer, from time to time in accordance with
the terms of the Merger Agreement to extend the period of time during which
the Offer is open by giving oral or written notice of such extension to the
Depositary. Any such extension will be followed as promptly as practicable by
public announcement thereof no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled date on which the Offer
was to expire. During any such extension, all Shares previously tendered and
not withdrawn will remain subject to the Offer, subject to the right of a
tendering shareholder to withdraw such shareholder's Shares.
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 SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "EXCHANGE ACT") AND ANY SUCH OFFER WILL BE MADE ONLY THROUGH A
REGISTRATION STATEMENT AND PROSPECTUS PURSUANT TO THE REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, WHICH PROSPECTUS WILL ALSO CONSTITUTE A
PROXY STATEMENT FOR THE MEETING OF THE SHAREHOLDERS OF THE COMPANY RELATING
TO THE MERGER.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 of the General Rules and Regulations under the Exchange Act, is
contained in the Offer to Purchase and is incorporated herein by reference.
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 Shares. The Offer to Purchase, the related Letter of
Transmittal and, if required, any other relevant materials will be mailed to
record holders of Shares and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the shareholder list or, if applicable,
who are listed as participants in a clearing agency's security position
listing for subsequent transmittal to beneficial owners of Shares by
Purchaser.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal
and other tender offer materials may be directed to the Information Agent or
the Dealer Manager as set forth below and copies will be furnished promptly
at the Purchaser's expense. Questions or requests for assistance may be
directed to the Information Agent or the Dealer Manager. Neither the
Purchaser nor the Parent will pay any fees or commissions to any broker or
dealer or any other person (other than the Dealer Manager, the Depositary and
the Information Agent) in connection with the solicitation of tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
[MacKenzie Logo]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
DONALDSON, LUFKIN & JENRETTE
277 PARK AVENUE
NEW YORK, NEW YORK 10172
(877) 233-9567 (TOLL-FREE)
JULY 30, 1999
<PAGE>
==============================================================================
AMENDED AND RESTATED
AGREEMENT
AND
PLAN OF MERGER
DATED AS OF JULY 25, 1999
BY AND AMONG
BIOVAIL CORPORATION INTERNATIONAL
ABCI ACQUISITION SUB. CORPORATION
AND
FUISZ TECHNOLOGIES LTD.
==============================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
THE OFFER
SECTION 1.01. The Offer.......................................................2
SECTION 1.02. Company Actions.................................................4
SECTION 1.03. Directors.......................................................5
ARTICLE II
THE MERGER
SECTION 2.01. The Merger......................................................6
SECTION 2.02. Effective Time; Closing.........................................6
SECTION 2.03. Effects of the Merger...........................................7
SECTION 2.04. Certificate of Incorporation and By Laws of the Surviving
Corporation..................................................7
SECTION 2.05. Directors.......................................................7
SECTION 2.06. Officers........................................................7
SECTION 2.07. Conversion of Shares............................................7
SECTION 2.08. Conversion of Purchaser Common Stock............................8
SECTION 2.09. Company Option Plans............................................8
SECTION 2.10. Shareholders' Meeting...........................................8
SECTION 2.11. Earliest Consummation...........................................9
ARTICLE III
EXCHANGE PROVISIONS
SECTION 3.01. Exchange Provisions.............................................9
SECTION 3.02. Stock Transfer Books...........................................14
SECTION 3.03. No Appraisal Rights............................................14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization and Qualification; Subsidiaries...................14
SECTION 4.02. Authority Relative to This Agreement...........................15
SECTION 4.03. No Conflict; Required Filings and Consents.....................16
-i-
<PAGE>
SECTION 4.04. Certain Approvals..............................................17
SECTION 4.05. Opinion of Financial Advisor...................................17
SECTION 4.06. Brokers........................................................17
SECTION 4.07. Capitalization.................................................17
SECTION 4.08. Registration Statement; Proxy Statement........................19
SECTION 4.09. SEC Reports and Financial Statements...........................19
SECTION 4.10. Information....................................................20
SECTION 4.11. Litigation.....................................................21
SECTION 4.12. Compliance with Applicable Laws; Permits.......................21
SECTION 4.13. Employee Benefit Plans.........................................24
SECTION 4.14. Intellectual Property..........................................27
SECTION 4.15. Environmental Matters..........................................28
SECTION 4.16. Material Adverse Change........................................31
SECTION 4.17. Taxes..........................................................32
SECTION 4.18. Material Contracts.............................................33
SECTION 4.19. Insurance......................................................35
SECTION 4.20. Year 2000......................................................35
SECTION 4.21 Affiliates.....................................................36
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
SECTION 5.01. Organization and Qualification.................................37
SECTION 5.02. Authority Relative to this Agreement...........................37
SECTION 5.03. No Conflict; Required Filings and Consents.....................38
SECTION 5.04. Brokers........................................................38
SECTION 5.05 Capitalization.................................................38
SECTION 5.06. Registration Statement; Proxy Statements.......................40
SECTION 5.07. SEC Reports and Financial Statements...........................40
SECTION 5.08 Material Adverse Change........................................41
SECTION 5.09. Information....................................................41
SECTION 5.10 Financing......................................................42
SECTION 5.11. Litigation.....................................................42
SECTION 5.12. Compliance with Applicable Laws; Permits.......................42
SECTION 5.13. Employee Benefit Plans.........................................45
SECTION 5.14. Environmental Matters..........................................46
SECTION 5.15. Year 2000......................................................48
-ii-
<PAGE>
ARTICLE VI
COVENANTS
SECTION 6.01. Conduct of Business of the Company.............................48
SECTION 6.02. Access to Information..........................................52
SECTION 6.03. Reasonable Best Efforts........................................53
SECTION 6.04. Public Announcements...........................................54
SECTION 6.05. Indemnification................................................55
SECTION 6.06. No Solicitation................................................57
SECTION 6.07. Notification of Certain Matters................................60
SECTION 6.08. State Takeover Laws............................................60
SECTION 6.09. Environmental Approvals........................................60
SECTION 6.10. Stock Exchange Listings........................................61
SECTION 6.11 Affiliates.....................................................61
SECTION 6.12. Resignation of Directors; Certain Agreements...................61
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger.....62
SECTION 7.02. Conditions to the Obligations of Parent and Purchaser..........62
SECTION 7.03. Conditions to the Obligations of the Company...................63
ARTICLE VIII
TERMINATION AND ABANDONMENT
SECTION 8.01. Termination....................................................63
SECTION 8.02. Termination by Parent..........................................64
SECTION 8.03. Termination by the Company.....................................65
SECTION 8.04. Procedure for Termination......................................66
SECTION 8.05. Effect of Termination and Abandonment..........................66
SECTION 8.06. Extension; Waiver..............................................67
ARTICLE IX
CLOSING
SECTION 9.01. Time and Place.................................................68
SECTION 9.02. Filings at the Closing.........................................68
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<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Non-Survival of Representations and Warranties................68
SECTION 10.02. Entire Agreement; Assignment..................................68
SECTION 10.03. Validity......................................................69
SECTION 10.04. Notices.......................................................69
SECTION 10.05. Governing Law; Jurisdiction...................................70
SECTION 10.06. Descriptive Headings..........................................70
SECTION 10.07. Counterparts..................................................70
SECTION 10.08. Parties in Interest...........................................70
SECTION 10.09. Certain Definitions...........................................71
SECTION 10.10. Remedies......................................................72
ANNEX I - Conditions To The Offer
ANNEX II - Merger Consideration
ANNEX III - Form of Company Affiliate Letter
-iv-
<PAGE>
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as
of July 25, 1999, by and among Biovail Corporation International, an Ontario
corporation ("Parent"), ABCI Acquisition Sub. Corporation, a Delaware
corporation and an indirect wholly owned subsidiary of Parent (the
"Purchaser"), and Fuisz Technologies Ltd., a Delaware corporation (the
"Company").
WHEREAS, as a condition and inducement to Parent's willingness
to enter into this Agreement, Parent and Dr. Richard Fuisz have entered into a
Stock Option Agreement, dated July 13, 1999 (the "Stock Option Agreement");
WHEREAS, the respective Boards of Directors of Parent, the
Purchaser and the Company have approved the acquisition of the Company by Parent
on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause the Purchaser to make a tender offer (as it may be amended from time to
time as permitted under this Agreement, the "Offer") to purchase such number of
shares of Common Stock, par value $.01 per share, of the Company (the "Common
Shares" or "Shares"), as will cause Parent and its affiliates to beneficially
own up to 49% of the outstanding Common Shares, but, except as otherwise
provided herein, not less than 40% of the outstanding Common Shares, at a price
per Common Share of $7.00 net to the seller in cash (such price, as it may
hereafter be changed in accordance with the terms of this Agreement, the "Offer
Price") upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the Board of Directors of the Company has unanimously
approved this Agreement, the Offer and the Merger (as hereinafter defined), has
determined that the Offer and the Merger are fair and in the best interests of
the Company's shareholders (the "Shareholders") and is recommending that the
Shareholders accept the Offer and tender all their Shares and adopt and approve
this Agreement;
WHEREAS, the respective Boards of Directors of Parent, the
Purchaser and the Company have approved the merger of the Purchaser with and
into the Company, as set forth below (the "Merger"), in accordance with the
General Corporation Law of the State of Delaware (the "GCL") and upon the terms
and subject to the conditions set forth in this Agreement, whereby
<PAGE>
each issued and outstanding Share not owned directly or indirectly by Parent
or the Company will be converted into the right to receive the number of
shares of the common stock of Parent (the "Parent Common Stock") as described
on Annex II (the "Merger Consideration");
WHEREAS, Parent, the Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger and also to prescribe various conditions to the Offer
and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, Parent, the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER.
(a) So long as none of the events set forth in clauses (a)
through (f) of Annex I hereto (the "conditions to the Offer") shall have
occurred or exist, the Purchaser shall, and Parent shall cause the Purchaser to,
commence (within the meaning of Rule 14d-2(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) as promptly as practicable after the date
hereof, but in any event not later than July 30, 1999, the Offer for such number
of Shares as will cause Parent and its affiliates to beneficially own up to 49%,
but except as otherwise provided herein, not less than 40%, of the outstanding
Shares (with such Shares to be purchased on a PRO RATA basis among Shares
validly tendered and not withdrawn), at the Offer Price, net to the seller in
cash. The initial expiration date for the Offer shall be the twentieth business
day from and after the date the Offer is commenced, including the date of
commencement as the first business day in accordance with Rule 14d-2 under the
Exchange Act. As promptly as practicable, the Purchaser shall file with the
Securities and Exchange Commission (the "SEC" or the "Commission") the
Purchaser's Tender Offer Statement on Schedule 14D-1 (together with any
supplements or amendments thereto, the "Offer Documents"), which shall contain
(as an exhibit thereto) the Purchaser's Offer to Purchase (the "Offer to
Purchase") which shall be mailed to the holders of Shares with respect to the
-2-
<PAGE>
Offer. The obligation of the Purchaser to accept for payment or pay for any
Shares tendered pursuant to the Offer will be subject only to the satisfaction
or waiver of the conditions to the Offer set forth on Annex I. Without the prior
written consent of the Company, the Purchaser shall not decrease the price per
Share, waive the Minimum Condition, or change the form of consideration payable
in the Offer, decrease the number of Shares sought to be purchased in the Offer,
change the conditions to the Offer, impose additional conditions to the Offer or
amend any other term of the Offer in any manner adverse to the holders of
Shares; PROVIDED, HOWEVER, that Parent shall be required 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.
Subject to the terms of the Offer and this Agreement and the satisfaction or
waiver of all the conditions of the Offer as of any expiration date, Parent will
accept for payment and pay for Shares validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after such expiration date of the
Offer (the "Tender Offer Effective Date").
(b) The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Shareholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent or the
Purchaser with respect to information supplied by or on behalf of the Company in
writing for inclusion in the Offer Documents. Each of Parent and the Purchaser,
on the one hand, and the Company, on the other hand, agrees promptly to correct
any information provided by or on behalf of it for use in the Offer Documents if
and to the extent that it shall have become false or misleading in any material
respect, and the Purchaser further agrees to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to Shareholders, in each case as and to the extent required by
applicable federal securities laws.
-3-
<PAGE>
SECTION 1.02. COMPANY ACTIONS.
(a) Contemporaneously with the filing of the Offer Documents,
the Company shall file with the SEC and shall promptly mail to the Shareholders
a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (together with any amendments or supplements thereto, the "Schedule
14D-9"). The Schedule 14D-9 will set forth, and the Company hereby represents,
that the Board of Directors of the Company, at a meeting duly called and held on
July 6, 1999 has approved the Stock Option Agreement in accordance with Section
203 of the GCL. The Schedule 14D-9 will set forth, and the Company hereby
represents, that the Board of Directors of the Company, at a meeting duly called
and held on July 25, 1999 (the "Company Board Meeting"), has (i) determined that
the Offer and the Merger are fair to and in the best interests of the Company
and its Shareholders, (ii) approved the Offer and the Merger in accordance with
Section 203 of the GCL (and for purposes of any other applicable state takeover
law), and (iii) resolved to recommend acceptance of the Offer and approval and
adoption of the Merger and this Agreement by the Company's Shareholders (in
accordance with the requirements of the Company's Amended and Restated
Certificate of Incorporation and of applicable law); PROVIDED, HOWEVER, that,
subject to Section 8.02(c), such recommendation may be withdrawn, modified or
amended to the extent that the Board of Directors of the Company determines
reasonably and in good faith that it is necessary under applicable law to do so
in the exercise of its fiduciary obligations after consultation with outside
counsel; PROVIDED, FURTHER, HOWEVER, that notwithstanding any withdrawal,
modification or amendment of such recommendation, the Company agrees that if the
Purchaser purchases Shares pursuant to the Offer, this 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 this Agreement is no longer advisable and recommends
that Shareholders reject it.
(b) The Schedule 14D-9 will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Shareholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to information supplied by or on behalf of the Parent or Purchaser
-4-
<PAGE>
in writing for inclusion in the Schedule 14D-9. Each of the Company, on the
one hand, and Parent and the Purchaser, on the other hand, agrees promptly to
correct any information provided by either of them for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in
any material respect, and the Company further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to the Shareholders, in each case as and to the
extent required by applicable federal securities law.
(c) In connection with the Offer, the Company will promptly
furnish the Purchaser with such information and assistance as the Purchaser or
its agents or representatives may reasonably request in connection with
communicating the Offer to the record and beneficial holders of the Securities,
including, without limitation, its stockholders list, mailing labels, security
position listings and non-objecting beneficial owners list. The Purchaser will
keep such information confidential and not use it for any other purpose.
SECTION 1.03. DIRECTORS.
(a) 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 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 of 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 to
cause Parent's designees to be so elected, including, if necessary, seeking the
resignations of one or more existing directors; PROVIDED, HOWEVER, that prior to
the Effective Time (as defined in Section 2.02), the members of the Board which
are officers, directors or designees of the Parent ("Purchaser Insiders") shall
at all times be less than 50% of the total number of Board members.
(b) From and after the election or appointment of Parent's
designees pursuant to this Section 1.03 and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of
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Parent or the Purchaser or waiver of any of the Company's rights hereunder,
or any other action taken by the Board of Directors of the Company in connection
with this Agreement, will require the concurrence of a majority of the directors
of the Company then in office who are not Purchaser Insiders.
(c) 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) to
address such matters of contract negotiation and administration as Parent shall
reasonably request and the Board of Directors of the Company, acting reasonably,
shall approve. Such officer shall work together with other business development
officers at the Company with comparable duties and responsibilities, and shall
be subject to the same currently existing reporting and procedural limitations
as such other officers. Such officer shall report to and serve at the pleasure
of 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 (including Purchaser Insiders).
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the GCL, at the Effective Time (as
defined in Section 2.02) the Purchaser shall be merged with and into the
Company. Following the Merger, the separate corporate existence of the Purchaser
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation").
SECTION 2.02. EFFECTIVE TIME; CLOSING. As soon as practicable
after the satisfaction or waiver of the conditions described in Article VII
hereof, the Company shall execute in the manner required by the GCL and deliver
to the Secretary of State of the State of Delaware a duly executed and verified
certificate of merger. The parties shall take such other and further actions as
may be required by law to make the Merger effective. The Merger shall become
effective upon filing of the certificate of merger unless a later time is
specified in such certificate. The time the Merger becomes effective in
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cordance with applicable law is referred to as the "Effective Time."
SECTION 2.03. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the GCL.
SECTION 2.04. CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE
SURVIVING CORPORATION.
(a) The certificate of incorporation of the Purchaser, as in
effect immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
(b) Subject to the provisions of Section 6.05 of this
Agreement, the by-laws of the Purchaser in effect at the Effective Time shall be
the by-laws of the Surviving Corporation, until thereafter amended in accordance
with the provisions thereof and hereof and applicable law.
SECTION 2.05. DIRECTORS. Subject to applicable law, the
directors of the 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.
SECTION 2.06. OFFICERS. The officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation or removal.
SECTION 2.07. CONVERSION OF SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
each Share issued and outstanding immediately prior to the Effective Time shall
be converted into the right to receive the Merger Consideration described in
Annex II (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 ("Excluded
Shares"), which Shares, by virtue of the Merger and without any action on the
part of the holder thereof, shall be canceled and retired and shall cease to
exist with no payment being made with respect thereto).
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SECTION 2.08. CONVERSION OF PURCHASER COMMON STOCK. At the
Effective Time, each share of common stock, par value $.01 per share, of the
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.
SECTION 2.09. COMPANY OPTION PLANS. 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.
SECTION 2.10. SHAREHOLDERS' MEETING.
(a) As required by the Company's Amended and Restated
Certificate of Incorporation and/or applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its Shareholders (the "Special 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
considering and taking action upon this Agreement, whether or not the
Board of Directors determines at any time subsequent to the Company
Board Meeting that this Agreement is no longer advisable and recommends
that Shareholders reject it;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to the Merger and this Agreement and use its
reasonable best efforts (x) to comply with Section 6.03(b) and (y) to
obtain the necessary approvals of the Merger and this Agreement by its
Shareholders; and
(iii) subject to the fiduciary obligations of the Board of
Directors of the Company under applicable law as advised by outside
counsel, include in the Statement the
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recommendation of the Board of Directors of the Company that
Shareholders vote in favor of the approval of the Merger and the
adoption of this 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 this 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 this Agreement is no
longer advisable and recommends that Shareholders reject it.
(b) 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 this
Agreement.
SECTION 2.11. EARLIEST CONSUMMATION. Each party hereto shall
use its reasonable best efforts to consummate the Merger as soon as practicable.
ARTICLE III
EXCHANGE PROVISIONS
SECTION 3.01. EXCHANGE PROVISIONS.
(a) EXCHANGE AGENT. From and after the Effective Time, (i)
Parent shall make available to a bank or trust company designated by Parent
subject to the Company's consent, which shall not be unreasonably withheld (the
"Exchange Agent"), for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Section through the Exchange Agent,
certificates evidencing a sufficient number of shares of Parent Common Stock as
would permit the Exchange Agent to issue such number of shares of Parent Common
Stock issuable to holders of Company Common Stock pursuant to Section 2.07 (such
certificates for Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"). As promptly as practicable after the Effective Time, Parent
shall cause the Exchange Agent to deliver the Parent Common Stock contemplated
to be issued pursuant to Section 2.07 out of the Exchange Fund in accordance
with the procedures specified in this Section 3.01. Except as contemplated by
Section
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3.01(g) hereof, the Exchange Fund shall not be used for any other purpose.
(b) EXCHANGE PROCEDURES. As promptly as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each record
holder of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock (the "Certificates")
(i) a letter of transmittal (which shall be in customary form and shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange Agent)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration.
(c) EXCHANGE OF CERTIFICATES. Upon surrender to the Exchange
Agent of a Certificate for cancellation, together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Parent Common Stock, if any, to which such holder is entitled pursuant to this
Section 3.01 (including any cash in lieu of any fractional Parent Common Stock
to which such holder is entitled pursuant to Section 3.01(f) and any dividends
or other distributions to which such holder is entitled pursuant to Section
3.01(d) (together, the "Additional Payments")), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of shares of Company Common Stock which is not registered in the transfer
records of the Company, the applicable Merger Consideration and Additional
Payments, if any, may be issued to a transferee if the Certificate representing
such shares of Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 3.01, each Certificate shall be
deemed at all times after the Effective Time to represent only the right to
receive upon such surrender the applicable Merger Consideration with respect to
the shares of Company Common Stock formerly represented thereby and Additional
Payments, if any.
(d) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES.
No dividends or other distributions declared or made after the Effective Time
with respect to Parent Common Stock with a record date after the Effective Time
shall be paid
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to the holder of any unsurrendered Certificate with respect to the Parent
Common Stock the holder of such Certificate is entitled to receive upon
surrender thereof, and no cash payment in lieu of any fractional shares shall
be paid to any such holder pursuant to Section 3.01(f), until the holder of
such Certificate shall surrender such Certificate. Subject to the effect of
escheat, tax or other applicable Laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) promptly, the amount of any cash payable with respect
to a fractional Parent Common Stock to which such holder is entitled pursuant
to Section 3.01(f) and the amount of dividends or other distributions with a
record date after the Effective Time and theretofore paid with respect to
such whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions, with a record date
after the Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such whole Parent Common Stock.
After the Effective Time, each outstanding Certificate which theretofore
represented shares of Company Common Stock shall, until surrendered for
exchange in accordance with this Section 3.01, be deemed for all purposes to
evidence ownership of the number of shares of Parent Common Stock into which
the shares of Company Common Stock (which, prior to the Effective Time, were
represented thereby) shall have been so converted.
(e) NO FURTHER RIGHTS IN COMPANY COMMON STOCK. At the
Effective Time all outstanding shares of Company Common Stock, by virtue of the
Merger and without any action on the part of the holders thereof, shall no
longer be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Common Stock shall thereafter cease to have any rights with respect to such
shares of Company Common Stock, except the right to receive the Merger
Consideration for such shares of Company Common Stock. All Parent Common Stock
issued upon conversion of the shares of Company Common Stock in accordance with
the terms hereof (including any cash paid pursuant to Section 3.01(d) or (f))
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock.
(f) NO FRACTIONAL SHARES. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner
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thereof to vote or to any other rights of a holder of Parent Common Stock.
Each holder of a fractional share interest shall be paid an amount in cash
equal to the product obtained by multiplying (i) such fractional share
interest to which such holder (after taking into account all fractional share
interests then held by such holder) would otherwise be entitled by (ii) the
Average Trading Price (as defined on Annex II). As promptly as practicable
after the determination of the amount of cash, if any, to be paid to holders
of fractional share interests, the Exchange Agent shall so notify Parent, and
Parent shall deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional share
interests subject to and in accordance with the terms of Sections 3.01(b),
(c) and (d).
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Company Common Stock for
three months after the Effective Time shall be delivered to Parent, upon demand,
and any holders of Company Common Stock who have not theretofore complied with
this Article III shall thereafter look only to Parent for the applicable Merger
Consideration and any Additional Payments to which they are entitled. Any
portion of the Exchange Fund remaining unclaimed by holders of shares of Company
Common Stock as of a date which is immediately prior to such time as such
amounts would otherwise escheat to or become property of any government entity
shall, to the extent permitted by applicable Law, become the property of Parent
free and clear of any claims or interest of any person previously entitled
thereto.
(h) NO LIABILITY. None of the Exchange Agent, Parent or the
Surviving Corporation shall be liable to any holder of Certificates for any
shares of Parent Common Stock (or dividends or distributions with respect
thereto), or cash delivered to a public official pursuant to any abandoned
property, escheat or similar law.
(i) WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Certificates such amounts as
it is required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by the Surviving Corporation or Parent, as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Certificates
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in respect of which such deduction and withholding was made by the Surviving
Corporation or Parent, as the case may be.
(j) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation or Parent, the posting by such person of a
bond, in such reasonable amount as the Surviving Corporation or Parent may
direct, as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the applicable Merger Consideration and
Additional Payments, if any.
(k) FURTHER ASSURANCES. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
reasonably necessary to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Purchaser or the Company acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of the Purchaser and the Company or otherwise, all such
deeds, bills of sale, assignments and assurances and to take and do, in such
names and on such behalves or otherwise, all such other actions and things as
may be reasonably necessary to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out the purposes of this Agreement.
(l) As of the Effective Time, Parent shall enter into the
agreements with the holders of the warrants set forth on the Company Disclosure
Statement (the "Company Warrants") required by such warrants.
SECTION 3.02 STOCK TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall be converted into
the applicable Merger Consideration and Additional Payments, if any.
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SECTION 3.03. NO APPRAISAL RIGHTS. In accordance with Section
262(b) of the Delaware Act, no holder of shares of Company Common Stock shall be
entitled to appraisal rights.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the
Purchaser that except as set forth in the section or subsection of the Company
Disclosure Statement corresponding to the section or subsection of this Article
IV delivered to Parent and the Purchaser prior to the execution hereof (the
"Company Disclosure Statement"):
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each subsidiary (as defined in
Section 10.09) of the Company (the "Subsidiaries") is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Company and each of the Subsidiaries has
the requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failures to have such power or authority, or the
failures to be so qualified, licensed or in good standing, individually, and in
the aggregate, would not have a Material Adverse Effect on the Company (as
defined below). The Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation (other than a
Subsidiary), partnership, joint venture or other business association or entity.
The term "Material Adverse Effect on the Company" means any change in, or effect
on, the business, results of operations, assets, financial condition or
prospects of the Company or any of the Subsidiaries that is or would reasonably
be expected to be materially adverse to the Company and the Subsidiaries taken
as a whole.
SECTION 4.02. AUTHORITY RELATIVE TO THIS AGREEMENT.
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(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized and
approved by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize or approve
this Agreement or to consummate the transactions contemplated hereby or thereby
(other than, with respect to the Merger, the approval and adoption of the Merger
and this Agreement by holders of a majority of the outstanding Shares to the
extent required by the Company's Amended and Restated Certificate of
Incorporation and by applicable law). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally (the "Bankruptcy Exceptions") and (ii) is subject to general
principles of equity. The Board of Directors of the Company has, at the Company
Board Meeting approved and adopted this Agreement, the Offer, the Merger and the
other transactions contemplated hereby and thereby, determined that the Offer
and the Merger is fair to the Shareholders, recommended that the Shareholders
approve and adopt this Agreement, the Merger and tender their Shares pursuant to
the Offer and approved the submission of this Agreement to the Shareholders at
the Special Meeting if the Purchaser purchases Shares pursuant to the Offer
whether or not the Board of Directors of the Company determines at any time
subsequent to the Company Board Meeting that this Agreement is no longer
advisable and recommends that Shareholders reject it.
(b) To the knowledge of the Company as of the date of this
Agreement, all of its directors and executive officers intend to tender their
Shares pursuant to the Offer.
SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) None of the execution and delivery of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or thereby or compliance by the Company with any of the provisions hereof
or thereof
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will require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing being a
"Consent"), any government, subdivision thereof, or any administrative,
governmental, regulatory or self-regulatory authority, agency, commission,
tribunal or body, domestic, foreign or supranational (a "Governmental
Entity") or person who is not a Governmental Entity, except for (i)
compliance with any applicable requirements of the Exchange Act, the
Securities Act of 1933, as amended, or applicable state securities "Blue Sky"
laws or filings in connection with the maintenance of qualification to do
business in other jurisdictions, (ii) the filing of a certificate of merger
pursuant to the GCL and (iii) compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
(b) Except as set forth in clause (a) of this Section 4.03,
none of the execution and delivery of this Agreement by the Company, the
consummation by the Company of the transactions contemplated hereby and thereby
or compliance by the Company with any of the provisions hereof or thereof
will (i) conflict with or violate the Amended and Restated Certificate of
Incorporation or bylaws of the Company or the comparable organizational
documents of any of the Subsidiaries, (ii) conflict with or violate any
statute, ordinance, rule, regulation, order, judgment or decree applicable to
the Company or the Subsidiaries, or by which any of them or any of their
respective properties or assets may be bound or affected, or (iii) result in
a violation or breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in any loss of any material benefit or the creation of any Lien (as
defined) on any of the property or assets of the Company or any of the
Subsidiaries (any of the foregoing referred to in clause (ii) or this clause
(iii) being a "Violation") pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their respective
properties may be bound or affected, except, in the case of clause (ii) and
(iii), for any such Violation which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
SECTION 4.04. CERTAIN APPROVALS. The Board of Directors of the
Company has taken appropriate action such that the provisions of Section 203 of
the GCL will not apply to the
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Offer, the Merger or any of the other transactions contemplated by this
Agreement or the Stock Option Agreement.
SECTION 4.05. OPINION OF FINANCIAL ADVISOR. The Board of
Directors of the Company has received the opinion of Warburg Dillon Read LLC to
the effect that, as of the date of this Agreement, 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) is fair, from a financial
point of view, to such holders.
SECTION 4.06. BROKERS. Except for the engagement of Warburg
Dillon Read LLC (a copy of whose engagement letter previously has been delivered
by the Company to Parent), none of the Company, any of the Subsidiaries or any
of their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated by this Agreement.
SECTION 4.07. CAPITALIZATION. The Company has heretofore made
available to Parent and the Purchaser a complete and correct copy of the Amended
and Restated Certificate of Incorporation and the by-laws, each as amended to
the date hereof, of the Company. The authorized capital stock of the Company
consists of 50,000,000 Common Shares and 2,323,356 shares of Preferred Stock,
par value $.01 per share (the "Preferred Stock"). Except as set forth on the
Company Disclosure Statement, as of the close of business on the day prior to
execution of this Agreement, there were no shares of Preferred Stock issued and
outstanding. As of the close of business on the day prior to execution of this
Agreement, there were 22,668,923 Common Shares issued, of which 638,200 were
owned by the Company or a wholly-owned Subsidiary. The Company has no shares of
capital stock reserved for issuance, except that, as of the day prior to
execution of this Agreement, there were 3,432,625 Common Shares reserved for
issuance pursuant to Options outstanding on the date hereof pursuant to the
Option Plans and 5,660,337 Common Shares reserved for issuance pursuant to the
Company's 7% Convertible Subordinated Debentures due 2004 (the "Convertible
Debentures"). Since the day prior to execution of this Agreement, the Company
has not issued any Options or shares of capital stock except pursuant to the
exercise of Options outstanding as of such date and in accordance with their
terms. All the outstanding Common Shares are, and all Common Shares which may be
issued pursuant to the exercise of outstanding Options will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
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fully paid and nonassessable. Except for the Convertible Debentures, there are
no bonds, debentures, notes or other indebtedness having general voting rights
(or convertible into securities having such rights) ("Voting Debt") of the
Company or any of the Subsidiaries issued and outstanding. Except for the
Options, the Convertible Debentures and the warrants set forth on the Company
Disclosure Statement, there are no existing options, warrants, calls,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Company or
any of the Subsidiaries, obligating the Company or any of the Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of the Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests or obligations of the Company or any of the
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment. There are no
outstanding contractual obligations of the Company or any of the Subsidiaries to
repurchase, redeem or otherwise acquire any capital stock of the Company or any
of its Subsidiaries. Each of the outstanding shares of capital stock of each of
the Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and such shares of the Subsidiaries as are owned by the Company
or by a wholly owned Subsidiary are free and clear of any lien, claim, option,
charge, security interest, limitation, encumbrance and restriction of any kind
(any of the foregoing being a "Lien"). Section 4.07 of the Company Disclosure
Statement contains a complete list as of the date hereof of each Subsidiary and
sets forth with respect to each of the Subsidiaries its name and jurisdiction of
organization and the number of shares of capital stock or share capital owned by
the Company and each other person.
SECTION 4.08. REGISTRATION STATEMENT; PROXY STATEMENT. Except
for information concerning the Parent that the Parent has provided for inclusion
or incorporation by reference in the Proxy Statement, such information, at the
date the Proxy Statement is first mailed to stockholders, at the time of the
Special Meetings and at the Effective Time, shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event with respect to
the Company or any of its Subsidiaries shall occur which is required to be
described in the Proxy Statement, such event shall be so described, and an
amendment or supplement shall be
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promptly filed with the SEC and, as required by law, disseminated to the
stockholders of the Company. The Proxy Statement will (with respect to the
Company and its Subsidiaries) comply as to form in all material respects with
the applicable provisions of the Securities Act and Exchange Act, as the case
may be.
SECTION 4.09. SEC REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements required to
be filed by the Company with the SEC until the date hereof (the "SEC Reports").
As of their respective dates and except as subsequently amended prior to the
date hereof, the SEC Reports complied in all material respects with the
requirements of the Exchange Act or the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder applicable, as the
case may be, to such SEC Reports, and none of the SEC Reports contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(b) The consolidated balance sheets as of December 31, 1998
and 1997 and the related consolidated statements of income, shareholders' equity
and cash flows (including the notes thereto) for each of the three years in the
period ended December 31, 1998 (including the related notes and schedules
thereto) of the Company contained in the Company's Form 10-K for the year ended
December 31, 1998 included in the SEC Reports present fairly the consolidated
financial position and the consolidated results of operations and cash flows of
the Company and its consolidated subsidiaries as of the dates or for the periods
presented therein in conformity with United States generally accepted accounting
principles applied on a consistent basis as of and during the periods involved
("GAAP").
(c) The consolidated balance sheets and the related statements
of income and cash flows (including in each case the related notes thereto) of
the Company contained in the Forms 10-Q for the periods ended March 31, 1999,
included in the SEC Reports (the "Quarterly Financial Statements") have been
prepared in accordance with the requirements for interim financial statements
contained in Regulation S-X under the Exchange Act. The Quarterly Financial
Statements reflect all adjustments, which include only normal recurring
adjustments, necessary to
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present fairly and do present fairly the consolidated financial position,
results of operations and cash flows of the Company and its consolidated
Subsidiaries for the period presented therein in conformity with GAAP applied
on a consistent basis during the periods involved.
(d) The Company and the Subsidiaries have no liabilities or
obligations of any nature (whether absolute, accrued, contingent, unliquidated,
conditional or otherwise) except for liabilities or obligations (i) reflected or
reserved against on the balance sheet as at March 31, 1999 included in the
Quarterly Financial Statements (the "Company Balance Sheet") or (ii) which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
SECTION 4.10. INFORMATION. None of the information supplied by
the Company in writing specifically for inclusion or incorporation by reference
in (i) the Offer Documents, (ii) the Schedule 14D-9 (including the information
included therein in order to comply with Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder), (iii) the Proxy Statement or (iv) any other document to
be filed with the SEC or any other Governmental Entity in connection with the
transactions contemplated by this Agreement (the "Other Filings") will, at the
respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to Shareholders, at the time of the Special Meeting and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, no representation is made by the
Company with respect to statements made in any such documents based on
information supplied by or on behalf of Parent or the Purchaser in writing
specifically for inclusion in the Statement.
SECTION 4.11. LITIGATION. There is no suit, action, proceeding
or governmental investigation before any commission or other administrative
authority pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of the Subsidiaries, with respect to or affecting
the Company's or any of the Subsidiaries' operations, business, products, sales
practices or financial condition, except for suits, actions and proceedings
that, individually or in the aggregate,
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would not have a Material Adverse Effect on the Company, nor is there any
judgment, decree, injunction or order of any Governmental Entity or
arbitrator outstanding against the Company or any of the Subsidiaries, except
for judgments, decrees, injunctions and orders that would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. There are
no facts known to the Company which, if known by a potential claimant or any
Governmental Entity, would reasonably give rise to a claim or proceeding
which, if asserted or conducted would be reasonably likely to have a Material
Adverse Effect on the Company.
SECTION 4.12. COMPLIANCE WITH APPLICABLE LAWS; PERMITS.
(a) The Company and the Subsidiaries have been in compliance
with all laws, regulations and orders of any Governmental Entity applicable to
it or the Subsidiaries, except for such failures so to comply which,
individually and in the aggregate, would not have a Material Adverse Effect on
the Company. The business operations of the Company and the Subsidiaries have
not been conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which, individually or in
the aggregate, would not have a Material Adverse Effect on the Company.
(b) Each of the Company and the Subsidiaries is in possession
of all franchises, grants, authorizations, licenses, establishment
registrations, product listings, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity,
including, without limitation, the FDA, the United States Drug Enforcement
Administration (the "DEA"), and similar authorities in other jurisdictions,
necessary for the Company or any Subsidiary to own, lease and operate its
properties or to produce, store, distribute and market its products or otherwise
to carry on its business as it is now being conducted (the "Company Permits"),
except where the failure to have, or the suspension or cancellation of, any of
the Company Permits would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, and, as of the date of this Agreement, no
suspension or cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Neither the Company nor any Subsidiary is in conflict with, or in default or
violation of, (i) any Law applicable to the Company or
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any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or affected or (ii) any Company Permits, except in the
case of clauses (i) and (ii) for any such conflicts, defaults or violations
that would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. As used in this Agreement, "Law" means any federal,
state or local statute, law, ordinance, regulation, rule, code, order, other
requirement or rule of law of the United States or any other jurisdiction,
including, without limitation, the Federal Food, Drug, and Cosmetic Act (the
"FDCA"), the Controlled Substances Act, and any other similar act or law.
(c) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Company:
(i) all manufacturing operations of the Company and the
Subsidiaries are being conducted in substantial compliance with
applicable good manufacturing practices;
(ii) all necessary clearances or approvals from governmental
agencies for all drug and device products which are manufactured or
sold by the Company and the Subsidiaries have been obtained, and the
Company and the Subsidiaries are in substantial compliance with the
most current form of each applicable clearance or approval with respect
to the manufacture, storage, distribution, promotion and sale by the
Company and the Subsidiaries of such products;
(iii) all of the clinical studies which have been, or are
being, conducted by or for the Company and the Subsidiaries are being
conducted in substantial compliance with generally accepted good
clinical practices and all applicable government regulatory
requirements;
(iv) as of the date of this Agreement, neither the Company
nor any of the Subsidiaries has received written notice of any petition
or other attempt by a brand name drug company to have the therapeutic
equivalence rating of a Subsidiary product withheld or altered;
(v) none of the Company, the Subsidiaries or, to the
Company's knowledge, any of their respective officers, employees or
agents (during the term of such person's employment by the Company or a
Subsidiary or while acting as an agent of the Company or a Subsidiary)
has made any untrue statement of a material fact or fraudulent
statement to the FDA or any similar governmental agency, failed to
disclose a material fact required to be disclosed to the
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FDA or similar governmental agency, or committed an act, made a
statement or failed to make a statement that could reasonably be
expected to provide a basis for the FDA or similar governmental
agency to invoke its policy respecting "Fraud, Untrue Statements of
Material Facts, Bribery, and Illegal Gratuities" or similar
governmental policy, rule, regulation or law;
(vi) neither the Company nor any of the Subsidiaries has
received any written notice that the FDA or any similar governmental
agency has commenced, or threatened to initiate, any action to withdraw
its approval or request the recall of any product of the Company or any
of the Subsidiaries, or commenced, or overtly threatened to initiate,
any action to enjoin production at any facility of the Company or any
of the Subsidiaries.
(vii) as to each article of drug, device, cosmetic or vitamin
manufactured and/or distributed by the Company or any of the
Subsidiaries, such article is not adulterated or misbranded within the
meaning of the FDCA or any similar governmental act or Law of any
jurisdiction; and
(viii) none of the Company, the Subsidiaries or, to the
Company's knowledge, any of their respective officers, employees or
agents (during the term of such person's employment by the Company or a
Subsidiary or while acting as an agent of the Company or a Subsidiary,
subsidiaries or affiliates has been convicted of any crime or engaged
in any conduct for which debarment or similar punishment is mandated or
permitted by any applicable law.
(d) As to each product subject to FDA's jurisdiction under the
Federal Food, Drug and Cosmetic Act ("FDCA") and the jurisdiction of the Drug
Enforcement Agency under the Comprehensive Drug Abuse Prevention and Control Act
of 1970 ("CSA") which is manufactured, tested, distributed, held, and/or
marketed by the Company, such product is being manufactured, held and
distributed in compliance with all applicable requirements under the FDCA and
the CSA including, but not limited to, those relating to investigational use,
premarket clearance, good manufacturing practices, labeling, advertising, record
keeping, filing of reports, and security.
(e) The Company will promptly provide Parent with copies of
any document that is issued, prepared, or otherwise becomes available from the
date of this Agreement until the Effective Time which bears on the regulatory
status under the
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FDCA or the CSA of the Company or any product of the Company, including, but
not limited to, any deficiency letter, warning letter, non-approvable
letter/order, and withdrawal letter/order, except for documents reflecting
such matters which, individually and in the aggregate, would not have a
Material Adverse Effect on the Company.
SECTION 4.13. EMPLOYEE BENEFIT PLANS.
(a) Section 4.13 of the Company Disclosure Statement includes
a complete list of all bonus, profit sharing, thrift, compensation, stock
option, restricted stock, stock purchase, pension, retirement, savings, welfare,
deferred compensation, employment, termination, severance, incentive, or other
employee benefit plans, programs and agreements providing benefits to any
employee, former employee, director or former director of the Company or any of
the Subsidiaries sponsored or maintained by or on behalf of the Company or any
of the Subsidiaries or to which the Company or any of the Subsidiaries
contributes or is obligated to contribute or otherwise may have liability
(collectively, the "Plans"). Without limiting the generality of the foregoing,
the term "Plans" includes all employee welfare benefit plans within the meaning
of Section 3(l) of the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder ("ERISA") and all employee pension
benefit plans within the meaning of Section 3(2) of ERISA.
(b) With respect to each Plan, the Company has made available
to Parent a true, correct and complete copy of: (i) all plan documents, benefit
schedules, trust agreements, and insurance contracts and other funding vehicles,
if any; (ii) the most recent Annual Report (Form 5500 Series) and accompanying
schedule, if any; (iii) the current summary plan description, if any; (iv) the
most recent annual financial report, if any; (v) the most recent actuarial
report, if any; and (vi) the most recent determination letter from the Internal
Revenue Service (the "IRS"), if any.
(c) The Company and each of the Subsidiaries has complied, and
is now in compliance, in all material respects with all provisions of ERISA, the
Code and all laws and regulations applicable to the Plans. With respect to each
Plan that is intended to be a "qualified plan" within the meaning of Section
401(a) of the Code, the IRS has issued a favorable determination letter, and to
the knowledge of the Company nothing has occurred at the date hereof that would
reasonably be expected to cause the loss of such qualification.
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(d) All contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, for any period through the date hereof have been timely made
or paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected in the financial statements of the
Company included in the SEC Reports to the extent required under GAAP.
(e) With respect to each plan which is subject to Title IV or
Section 302 of ERISA or Section 412 of the Code maintained or contributed to (or
required to be contributed to) by the Company, any Subsidiary or any ERISA
Affiliate (as hereinafter defined), (i) there does not now exist, nor do any
circumstances exist that could result in, any liability of the Company or any of
the Subsidiaries under Title IV of ERISA (other than for the payment of
premiums, all of which have been paid when due), (ii) neither the Company nor
any of the Subsidiaries has incurred any accumulated funding deficiency within
the meaning of Section 302 of ERISA or Section 412 of the Code (whether or not
waived) and there has been no waiver or application for a waiver of any minimum
funding standard or extension of any amortization period under Section 412 of
the Code or Part 3 of Subtitle B of Title I of ERISA, (iii) no "reportable
event" (as such term is defined in Section 4043 of ERISA and the regulations
thereunder), except as waived by PBGC regulation, has occurred or is expected to
occur, (iv) no notice of intent to terminate has been filed with the Pension
Benefit Guaranty Corporation, (v) the Pension Benefit Guaranty Corporation has
not instituted any proceedings to terminate the plan or to appoint a trustee to
administer the plan, and (vi) there has been no event requiring disclosure under
Section 4063(a) of ERISA. For purposes of this Section 4.13, the term "ERISA
Affiliate" shall mean any business or entity (whether or not incorporated) which
is a member of the same "controlled group of corporations", under "common
control" or an "affiliated service group" with the Company or any Subsidiary
within the meaning of Section 414(b), (c) or (m) of the Code, or is under
"common control" with the Company or any Subsidiary within the meaning of
Section 4001(a)(14) of ERISA.
(f) Neither the Company nor any Subsidiary nor any ERISA
Affiliate has been required to contribute to, or incurred any withdrawal
liability (within the meaning of Section 4201 of ERISA) with respect to any plan
which is a multiemployer plan as defined in ERISA Section 3(37) (a
"Multiemployer Plan"). Neither the Company nor any Subsidiary nor any ERISA
Affiliate
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has completely or partially withdrawn from any Multiemployer Plan. No
Multiemployer Plan as to which the Company, any Subsidiary or any ERISA
Affiliate is required to contribute is in reorganization within the meaning of
Part 3 of Subtitle E of Title IV of ERISA. The Company has delivered to Parent a
schedule showing the contributions of the Company, any of the Subsidiaries, and
any ERISA Affiliates to each of the Multiemployer Plans for the most recent five
plan years.
(g) The execution of, and performance of the transactions
contemplated in, this Agreement will not, either alone or upon the occurrence of
subsequent events, result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any employee
or former employee of the Company or any of the Subsidiaries. The only severance
agreements or severance policies applicable to the Company or any of the
Subsidiaries in the event of a change of control of the Company are the
agreements referred to in Section 4.13 of the Company Disclosure Statement.
(h) There are no pending actions, claims or lawsuits which
have been asserted, instituted or, to the knowledge of the Company, threatened
in connection with any of the Plans (other than routine claims for benefits).
(i) Neither the Company nor any of the Subsidiaries maintains
or contributes to any plan or arrangement which provides or has any liability to
provide life insurance or medical or other welfare benefits to any employee,
former employee, director or former director upon his retirement or termination
of service (other than continuation coverage required under Section 4980B of the
Code), and neither the Company nor any of the Subsidiaries has ever represented,
promised or contracted (whether in oral or written form) to any employee, former
employee, director or former director that such benefits would be provided.
(j) The Company, the Subsidiaries and their ERISA Affiliates
are in compliance with the continuation coverage provisions of Section 601 et
seq. of ERISA and Section 4980B of the Code.
(k) None of the Company, any of its Subsidiaries or any
employee of the foregoing, nor any trustee, administrator, other fiduciary or
any other "party in interest" or "disqualified person" with respect to the
Plans, has engaged in a "prohibited transaction" (as such term is defined in
Section 4975
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of the Code or Section 406 of ERISA) that could result in a material tax or
penalty on the Company or its Subsidiaries under Section 4975 of the Code or
Section 502(i) of ERISA.
SECTION 4.14. INTELLECTUAL PROPERTY.
(a) Except as would not, individually and in the aggregate,
have a Material Adverse Effect on the Company, (i) the Company and each of the
Subsidiaries owns, has the right to acquire or is licensed or otherwise has the
right to use and has maintained in good standing (in each case, clear of any
Liens of any kind), all Intellectual Property (as defined below) used in or
necessary for the conduct of its business as currently conducted, including the
items listed in Section 4.14 of the Company Disclosure Statement, (ii) no claims
are pending or, to the knowledge of the Company, threatened that the Company or
any of the Subsidiaries is infringing on or otherwise violating the rights of
any person with regard to any Intellectual Property, (iii) to the knowledge of
the Company, no person is infringing on or otherwise violating any right of the
Company or any of the Subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or the Subsidiaries (iv) to the
knowledge of the Company, no other firm, corporation, association or person
claims the right to use in connection with similar or closely related goods and
in the same geographic area, any mark which is identical or confusingly similar
to any of the Intellectual Property; (v) the Company has no knowledge of any
claim that any third party asserts ownership rights in any of the Intellectual
Property; (vi) the Company has no knowledge of any claim or knowledge of any
facts that would give the Company any reason to reasonably believe that the
Company's or its Subsidiaries' use of any Intellectual Property infringes any
right of any third party; (vii) the Company has no knowledge and there are no
facts known to the Company that would give the Company any reasonable basis to
believe that any third party is infringing on any of the Company's or its
Subsidiaries' rights in any of the Intellectual Property; (viii) the Company has
no knowledge and there are no facts known to the Company that would give the
Company any reasonable basis to believe that any of its actions or the actions
of its Subsidiaries has infringed or is infringing on any third party's
Intellectual Property rights; (ix) to the knowledge of the Company, there are no
undisclosed government restrictions, domestic or foreign, which specifically
limit the manner in which any of the Intellectual Property may be used or
licensed; and (x) to the knowledge of the Company, neither the Company, its
Subsidiaries nor any of their respective officers or directors has disclosed any
confidential information of the Company
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or any of its Subsidiaries which would constitute trade secrets, except in
the ordinary course of business of the Company and its Subsidiaries or with
the authority of the Company or its Subsidiaries.
(b) For purposes of this Agreement, "Intellectual Property"
shall mean patents, copyrights, trademarks (registered or unregistered), service
marks, brand names, trade dress, trade names, computer software programs and
applications (including imbedded software), and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing; and trade secrets and rights in any jurisdiction to limit the use or
disclosure thereof by any person.
SECTION 4.15 ENVIRONMENTAL MATTERS. Except as would not,
individually or in the aggregate, have a Material Adverse Effect on the Company,
(i) to the Company's knowledge, no Hazardous Materials (as defined below) are
present at, on or under any real property currently or to the Company's
knowledge, formerly owned, leased or operated by the Company or any Subsidiary
to an extent or in a manner or condition now requiring investigation, response,
corrective action by the Company or any Subsidiary or for which the Company or
any Subsidiary is financially responsible, or other action, or that would be
reasonably likely to result in liability of, or costs to, the Company or any of
the Subsidiaries, in each case under any Environmental Law (as defined below),
(ii) there is currently no civil, criminal or administrative action, suit,
demand, hearing, proceeding, notice of violation, investigation, notice or
demand letter, or request for information pending or to the knowledge of the
Company, threatened, under any Environmental Law against the Company or any of
the Subsidiaries, (iii) the Company and the Subsidiaries have not received any
written claims or notices alleging liability under any Environmental Law
currently pending, and the Company has no knowledge of any circumstances that
would reasonably be expected to result in such claims or notices, (iv) the
Company and each of the Subsidiaries are currently in compliance, and within the
period of applicable statutes of limitation have complied, with all, and have no
liability under any, applicable Environmental Laws, (v) no property or facility
currently or, to the Company's knowledge, formerly owned, leased or operated by
the Company or any of the Subsidiaries or any of their respective
predecessors-in-interest, or at which Hazardous Materials have been
manufactured, handled, to the Company's knowledge, tested, formulated, prepared,
encapsulated, packaged, bottled or stored for the Company or any of its
Subsidiaries, or Hazardous Materials of the Company or any of the Subsidiaries
have been
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stored, treated or disposed of, is listed or proposed for listing on the
National Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System, both promulgated under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, or on any comparable list established under any Environmental
Law, (vi) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not affect the
validity of any Environmental Permits held by the Company or any of the
Subsidiaries, and will not require any remediation under any Environmental
Law, (vii) no friable asbestos now requiring abatement is present in, on, or
at any property, facility or equipment of the Company or any of the
Subsidiaries, (viii) to the Company's knowledge, there are no past or present
events, conditions, activities, or practices, including, without limitation,
the disposal, emission or release of any Hazardous Materials, which would
reasonably be expected to prevent the Company and the Subsidiaries'
compliance with any Environmental Law, or which would reasonably be expected
to give rise to any liability of the Company or any of the Subsidiaries under
any Environmental Law, (ix) no Lien has been asserted or recorded, or to the
knowledge of the Company and each of the Subsidiaries threatened, under any
Environmental Law with respect to any assets, facility, inventory, or
property currently owned, leased or operated by the Company or any of the
Subsidiaries, (x) neither the Company nor any of the Subsidiaries has
received a written claim pursuant to a contract or agreement assuming any
liabilities or obligations arising under any Environmental Law including,
without limitation, any such liabilities or obligations with respect to
formerly owned, leased or operated real property or facilities, or former
divisions or subsidiaries, (xi) neither the Company nor any of the
Subsidiaries has entered into or agreed to any judgment, decree or order by
any judicial or administrative tribunal or agency and neither the Company nor
any of the Subsidiaries is subject to any judgment, decree order or
agreement, in each case relating to compliance with any Environmental Law or
requiring the Company or any of the Subsidiaries to conduct any
investigation, response, corrective or other action under any Environmental
Law, and (xii) there are no underground storage tanks or related piping, or
impoundments, at any real property owned, operated or leased by the Company
or any of the Subsidiaries, and any former such tanks, piping, or
impoundments, on any such property which have been removed or closed, have
been removed or closed in accordance with applicable Environmental Laws.
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For purposes of this Agreement, the term "Environmental Laws"
means the common law and all applicable federal, state, local and foreign laws,
rules, regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder relating to pollution or protection
of human safety or the environment (including, without limitation, ambient air,
indoor air, surface water, ground water, land surface, subsurface strata, and
natural resources such as wetlands, flora, fauna), including without limitation,
laws relating to experimental use of animals or disposal of animal carcasses,
emissions, discharges, releases or threatened releases of Hazardous Materials
into the environment, or otherwise relating to the manufacture, processing,
generation, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. For purposes of this Agreement, the term
"Hazardous Materials" means any pollutant, contaminant, toxic, hazardous or
extremely hazardous substance, constituent or waste, medical, biohazardous, or
infectious waste, animal carcass, any toxin, virus, infectious disease or
disease-causing agent or any other constituent, waste, chemical, compound,
material or substance, including without limitation, petroleum or any petroleum
product, including crude oil or any fraction thereof, subject to regulation by
or that can give rise to liability under any Environmental Law. For purposes of
this Agreement, the term "Environmental Permit" means any permit, license,
approval, consent or other authorization provided or issued by any government or
regulatory authority pursuant to an Environmental Law.
The Company has made available to the Purchaser and Parent all
records and files, including, but not limited to, all assessments, reports,
studies, audits, analyses, tests and data in the possession, custody or control
of the Company or any Subsidiary relating to the existence of Hazardous
Materials at facilities or properties currently or formerly owned, operated,
leased or used by the Company or any of the Subsidiaries or concerning
compliance by the Company and any Subsidiaries with, or liability of any of them
under, any Environmental Law.
SECTION 4.16. MATERIAL ADVERSE CHANGE.
(a) Since March 31, 1999, there has not been any change, or
any development that is reasonably likely to result in a change, that would have
a Material Adverse Effect on the Company. Since March 31, 1999, the Company and
the Subsidiaries have conducted their businesses only in the ordinary course of
business consistent with past practices and there has not been, directly or
indirectly:
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(i) any declaration, setting aside or payment of any
dividend or other distribution with respect to any capital stock of the
Company;
(ii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for
shares of the Company's capital stock;
(iii) any payment or granting by the Company or any of the
Subsidiaries of any increase in compensation to any director, officer
or, other than in the ordinary course of business consistent with past
practice, employee of the Company or any of the Subsidiaries;
(iv) any granting by the Company or any of the Subsidiaries
to any such director or officer, other than in the ordinary course of
business consistent with past practice, employee of any increase in
severance or termination pay;
(v) any entry by the Company or any of the Subsidiaries into
any employment, consulting, severance or termination agreement with any
such director or officer, other than in the ordinary course of business
consistent with past practice;
(vi) any adoption or increase in payments to or benefits
under any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement or other employee benefit plan for or
with any employees of the Company or any of the Subsidiaries;
(vii) any change in accounting methods, principles or
practices by the Company or any of the Subsidiaries, except insofar as
may have been required by changes in GAAP; or
(viii) any agreement to do any of the things described in the
preceding clauses (i) through (vii).
SECTION 4.17. TAXES. (i) The Company and each Subsidiary have
prepared and timely filed with the appropriate governmental agencies all Tax
Returns required to be filed for any period (or portion thereof), taking into
account any extension of time to file granted to or obtained on behalf of the
Company and/or such Subsidiary, and each such Tax Return is ac-
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curate and complete; (ii) to the Company's knowledge, the Company and each
Subsidiary have timely paid all Taxes due and payable by them and have made
adequate provision (in accordance with GAAP) for any Taxes of the Company
and/or such Subsidiary that are not yet due and payable; (iii) to the
Company's knowledge, the Company and each Subsidiary have withheld and paid
in a timely manner all Taxes required to have been withheld and paid by them;
(iv) any deficiencies or assessments asserted in writing against the Company
and/or any Subsidiary by any taxing authority have been paid or fully and
finally settled and no issue previously raised by any such taxing authority
reasonably could be expected to result in a proposed deficiency or assessment
for any prior, parallel or subsequent period (including periods subsequent to
the date hereof); (v) neither the Company nor any Subsidiary is presently
under examination or audit by any taxing authority and, to the knowledge of
the Company, no examination or audit of the Company or any Subsidiary is
pending or threatened by any taxing authority; (vi) no extension of the
period for assessment or collection of any Tax of the Company or any
Subsidiary is currently in effect and no extension of time within which to
file any Tax Return of the Company or any Subsidiary has been requested,
which Tax Return has not since been filed; (vii) neither the Company nor any
Subsidiary has made or agreed to make or was or is required to make any
adjustment under Section 481 of the Internal Revenue Code of 1986, as amended
(the "Code") (or any similar provision of state, local or foreign law);
(viii) there are no Tax sharing agreements or arrangements to which the
Company or any Subsidiary is a party; (ix) neither the Company nor any
Subsidiary has made an election under Section 341(f) of the Code (or any
similar provision of state, local or foreign law); (x) neither the Company
nor any Subsidiary is a party to any agreement or arrangement that provides
for the payment of any amount, or the provision of any other benefit, that
could constitute a "parachute payment" within the meaning of Section 280G of
the Code (or any similar provision of state, local or foreign law); (xi) no
stock of the Company is a "United States real property interest," within the
meaning of Section 897(c) of the Code; (xii) there are no "excess loss
accounts" (as defined in Treas. Reg. Section 1.1502-19) with respect to any
stock of any Subsidiary; (xiii) neither the Company nor any Subsidiary has
any (a) deferred gain or loss (1) arising from any deferred intercompany
transactions (as described in Treas. Reg. Sections 1.1502-13 and 1.1502-13T
prior to amendment by Treasury Decision 8597 (issued July 12, 1995)) or (2)
with respect to the stock or obligations of any other member of any
affiliated group (as described in Treas. Reg. Sections 1.1502-14 and
1.1502-14T prior to amendment by Treasury Decision 8597) or (b) any gain
subject to
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Treas. Reg. Section 1.1502-13, as amended by Treasury Decision 8597; (xiv)
the Company has delivered to Purchaser true and complete copies of (a) all
Federal, state, local and foreign income or franchise Tax Returns filed by
the Company and/or any Subsidiary for all open years (except for those Tax
Returns that have not yet been filed) and (b) any audit reports issued by the
IRS or any other taxing authority with respect to any period that is still
open.
SECTION 4.18. MATERIAL CONTRACTS. (a) Other than as disclosed
in Section 4.18 of the Company Disclosure Statement, there are no (i) agreements
of the Company or any of the Subsidiaries containing an unexpired covenant not
to compete applying to the Company or any of the Subsidiaries, (ii) employment
or consulting agreements, or arrangements, (iii) collective bargaining
agreements, (iv) interest rate, currency or commodity hedging, swap or similar
derivative transactions to which the Company or any of the Subsidiaries is a
party, (v) material agreements providing for payment based on revenues, sales or
profits, (vi) agreements between the Company or any of the Subsidiaries, on the
one hand, and any affiliate of the Company, on the other hand, (vii) any other
material agreement not entered into in the ordinary course of business or (viii)
other contracts or amendments thereto that would be required to be filed and
have not been filed as a exhibit to a Form 10-K filed by the Company with the
SEC as of the date of this Agreement (collectively, the "Material Contracts").
Assuming each Material Contract constitutes a valid and binding obligation of
each other party thereto, each Material Contract is a valid and binding
obligation of the Company or the applicable Subsidiary, as the case may be. To
the Company's knowledge, each Material Contract is a valid and binding
obligation of each other party thereto, and each such Material Contract is in
full force and effect and is enforceable by the Company or the applicable
Subsidiary in accordance with its terms, except as such enforcement may be
limited by the Bankruptcy Exceptions and subject to general principles of
equity. To the knowledge of the Company, there are no existing defaults (or
circumstances or events that, with the giving of notice or lapse of time or both
would become defaults) of the Company, any Subsidiary or any third party under
any of the Material Contracts. Neither the Company nor any of its Subsidiaries
is a party to, or bound by any unexpired, undischarged or unsatisfied written or
oral contract, agreement, indenture, mortgage, debenture, note or other
instrument under the terms of which performance by the Company or its
Subsidiaries according to the terms of this Agreement will be a default of a
material provision under or an event of acceleration, or grounds for
termination, or
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whereby timely performance by the Company of this Agreement may be prohibited
or delayed. Immediately after the Effective Time, except as contemplated by
this Agreement, neither the Company nor any of its Subsidiaries will be bound
by the terms of any stock option agreement, registration rights agreement,
stockholders agreement, management agreement, consulting agreement or any
other agreement relating to the equity or management of the Company or its
Subsidiaries.
(b) The Company's relationship with Merck & Co., Inc.
("Merck") is in good standing. To the Company's knowledge, Merck is willing to
negotiate a firm supply agreement with the Company for MK3 (subject to
acceptable terms).
SECTION 4.19. INSURANCE. The Company and the Subsidiaries have
obtained and maintained in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks, as is in the Company's judgment adequate to insure against
risks to which the Company is normally exposed in its day-to-day operations,
consistent with industry practice for companies (i) engaged in similar
businesses and (ii) of at least similar size to that of the Company and the
Subsidiaries, and have maintained in full force and effect public liability
insurance, insurance against claims for personal injury or death or property
damage occurring in connection with any of the activities of the Company or the
Subsidiaries or any of the properties owned, occupied or controlled by the
Company or any of the Subsidiaries, in such amount as reasonably deemed
necessary by the Company. To the Company's knowledge, each such policy is in
full force and effect, no notice of termination, cancellation or reservation of
rights has been received with respect to any such policy, there is no default
with respect to any provision contained in any such policy, and there has not
been any failure to give any notice or present any claim under any such policy
in a timely fashion or in the manner or detail required by any such policy,
except for any such failures to be in full force and effect, any such
terminations, cancellations, reservations or defaults, or any such failures to
give notice or present claims which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. The Company Balance Sheet
reflects adequate reserves for any insurance programs which require (or have
required) the Company or any of the Subsidiaries to retain a portion of each
loss, including, but not limited to, deductible and self-insurance programs.
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SECTION 4.20. YEAR 2000 Either (i) all Information Systems and
Equipment (as defined below) are in all material respects either Year 2000
Compliant (as defined below) or (ii) any reprogramming, remediation, or any
other corrective action, including the internal testing of all such Information
Systems and Equipment, will be completed in all material respects by July 31,
1999. Further, to the extent that such reprogramming/remediation and testing
action is required, the cost thereof, as well as the cost of the reasonably
foreseeable consequence of failure to become Year 2000 Compliant, to the Company
and the Subsidiaries (including, without limitation, reprogramming errors and
the failure of other systems or equipment) will not result in a Material Adverse
Effect on the Company.
"Year 2000 Compliant" means that all Information Systems and
Equipment accurately process date data (including, but not limited to,
calculating, comparing and sequencing), before, during and after the year 2000,
as well as same and multi-century dates, or between the years 1999 and 2000,
taking into account all leap years, including the fact that the year 2000 is a
leap year, and further, that when used in combination with, or interfacing with,
other Information Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue to function in
the same manner as it performs today and shall not otherwise materially impair
the accuracy or functionality of Information Systems and Equipment.
"Information Systems and Equipment" means all material
computer hardware, firmware and software, as well as other information
processing systems, or any equipment containing embedded microchips, whether
directly owned, licensed, leased, operated or otherwise controlled by the
Company or any of the Subsidiaries, including through third-party service
providers, and which, in whole or in part, are integral to, the Company's or any
of the Subsidiaries' conduct of their business.
SECTION 4.21 AFFILIATES. The Company has delivered to Parent
in Section 4.21 of the Company Disclosure Statement a list identifying all
persons who to the best of the Company's knowledge may be deemed to be
"affiliates" of the Company for purposes of Rule 145 under the Securities Act
("Affiliates") and, promptly after the execution of this Agreement, the Company
will deliver the written agreement of each such person promptly after execution
of this Agreement, substantially in the form of Annex III.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company
as follows:
SECTION 5.01 ORGANIZATION AND QUALIFICATION. Parent is a
corporation duly organized and validly existing under the laws of Ontario,
Canada. The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Parent and the
Purchaser has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect on Parent (as defined below). The term "Material Adverse
Effect on Parent" means any change in, or effect on, the business, results of
operations, financial condition or prospects of Parent or any of its
subsidiaries (the "Parent Subsidiaries") that is or could reasonably be expected
to be materially adverse to Parent and its subsidiaries taken as a whole.
SECTION 5.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent and the Purchaser has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
the Purchaser and the consummation by Parent and the Purchaser of the
transactions contemplated hereby have been duly and validly authorized and
approved by the respective Boards of Directors of Parent and the Purchaser and
no other corporate proceedings on the part of Parent or the Purchaser are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and the Purchaser and, assuming the due and valid
authorization, execution and delivery by the Company, constitutes a valid and
binding obligation of each of Parent and the Purchaser enforceable against each
of them in accordance with its terms, except that such enforceability
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(i) may be limited by the Bankruptcy Exceptions and (ii) is subject to
general principles of equity.
SECTION 5.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) None of the execution and delivery of this Agreement by
Parent and the Purchaser, the consummation by Parent and the Purchaser of the
transactions contemplated hereby or compliance by Parent and the Purchaser with
any of the provisions hereof will require any Consent of any Governmental Entity
or person who is not a Governmental Entity, except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of a certificate of
merger pursuant to the GCL, (iii) compliance with the HSR Act and (iv)
compliance with or receiving exemptions from the applicable requirements of the
Ontario Securities Act and the by-laws of The Toronto Stock Exchange.
(b) Except as set forth in clause (a) of this Section 5.03,
none of the execution and delivery of this Agreement by Parent or the Purchaser,
the consummation by Parent or the Purchaser of the transactions contemplated
hereby or compliance by Parent or the Purchaser with any of the provisions
hereof will (i) conflict with or violate the organizational documents of Parent
or the Purchaser, (ii) conflict with or violate any statute, ordinance, rule,
regulation, order, judgment or decree applicable to Parent or the Purchaser, or
any of their subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) result in a Violation
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
the Purchaser, or any of their respective subsidiaries, is a party or by which
any of their respective properties or assets may be bound or affected, except,
in the case of clause (ii) and (iii), for any such Violation which would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
SECTION 5.04. BROKERS. Except for the engagement of Donaldson,
Lufkin & Jenrette Securities Corporation, none of the Parent nor the Purchaser
or any of their respective officers, directors, or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement.
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SECTION 5.05 CAPITALIZATION. Parent has heretofore made
available to the Company a complete and correct copy of the Articles of
Amalgamation and the by-laws, each as amended to the date hereof, of Parent. The
authorized capital stock of Parent consists of 120,000,000 common shares and an
unlimited number of class A special shares (the "Special Stock"). As of the
close of business on the day prior to execution of this Agreement, there were no
shares of Special Stock issued or outstanding. As of the close of business on
June 30, 1999, there were 24,352,019 shares of Parent Common Stock issued, of
which none were owned by Parent or a wholly-owned subsidiary. Parent has no
shares of capital stock reserved for issuance. As of June 30, 1999 there were
options outstanding for 2,265,792 shares of Parent Common Stock under Parent's
stock option plan (the "Parent Options"). Since June 30, 1999, Parent has not
issued any Parent Options or shares of capital stock except pursuant to the
exercise of Parent Options outstanding as of such date and in accordance with
their terms. All the outstanding shares of Parent Common Stock are, and all
shares Parent Common Stock which may be issued pursuant to the exercise of
outstanding Parent Options will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Parent Voting Debt") of Parent or any of the Parent Subsidiaries issued and
outstanding. Except for the Parent Options and warrants for 3,737,000 shares of
Parent Common Stock, there are no existing options, warrants, calls,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of Parent or any of
its subsidiaries, obligating Parent or any of the Parent Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Parent Voting Debt of, or other equity interest in, Parent or
any of the Parent Subsidiaries or securities convertible into or exchangeable
for such shares or equity interests or obligations of Parent or any of the
Parent Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment. There
are no outstanding contractual obligations of Parent or any of the Parent
Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of
Parent or any of the Parent Subsidiaries. As of the date hereof, neither parent
nor any of its affiliates owns any Common Shares of the Company other than those
disclosed in Amendment No. 1 to the Schedule 13D to be filed July 26, 1999.
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SECTION 5.06. REGISTRATION STATEMENT; PROXY STATEMENTS. None
of the information provided by Parent for inclusion or incorporation by
reference in (i) the registration statement registering under the Securities Act
the Parent Common Stock to be issued at the Effective Time (such registration
statement as amended by any amendments thereto being referred to herein as the
"Registration Statement") or (ii) the Company Proxy Statement shall, in the case
of the Registration Statement, at (i) the time the Registration Statement
becomes effective and (ii) the Effective Time, and in the case of the Company
Proxy Statement, on the date the Proxy Statement is first mailed to
stockholders, at the time of the Special Meetings and at the Effective Time,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. If at any time prior to the Effective Time any event
with respect to Parent shall occur which is required to be described in the
Registration Statement or Company Proxy Statement, such event shall be so
described, and an amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the stockholders of the Company. The
Registration Statement and Company Proxy Statement will (with respect to Parent
and the Purchaser) comply as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act, as the case
may be.
SECTION 5.07. SEC REPORTS AND FINANCIAL STATEMENTS.
(a) The Parent has filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements required to
be filed by the Parent with the SEC until the date hereof (the "Parent SEC
Reports"). As of their respective dates, and except as subsequently amended
prior to the date hereof, the Parent SEC Reports complied in all material
respects with the requirements of the Exchange Act or the Securities Act of 1933
and the rules and regulations of the SEC promulgated thereunder applicable, as
the case may be, to such Parent SEC Reports, and none of the Parent SEC Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(b) The consolidated balance sheets as of December 31, 1998
and 1997 and the related consolidated statements of income, shareholders' equity
and cash flows (including the notes thereto) for each of the three years in the
period ended
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December 31, 1998 (including the related notes and schedules thereto) of the
Parent contained in the Parent's Form 20-F for the year ended December 31,
1998 included in the Parent SEC Reports present fairly the consolidated
financial position and the consolidated results of operations and cash flows
of the Parent and its consolidated subsidiaries as of the dates or for the
periods presented therein in conformity with Canadian generally accepted
accounting principles applied on a consistent basis as of and during the
periods involved ("Canadian GAAP").
(c) The consolidated balance sheets and the related statements
of income and cash flows (including in each case the related notes thereto) of
the Parent contained in the Form 6-K for the periods ended March 31, 1999,
included in the Parent SEC Reports (the "Quarterly Financial Statements") have
been prepared in accordance with the requirements for interim financial
statements contained in Regulation S-X under the Exchange Act. The Quarterly
Financial Statements reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly and do present fairly the
consolidated financial position, results of operations and cash flows of Parent
and its consolidated subsidiaries for the period presented therein in conformity
with Canadian GAAP applied on a consistent basis during the periods involved.
(d) Parent has no liabilities or obligations of any nature
(whether absolute, accrued, contingent, unliquidated, conditional or otherwise)
except for liabilities or obligations (i) reflected or reserved against on the
balance sheet as at March 31, 1999 included in the Quarterly Financial
Statements (the "Parent Balance Sheet"), (ii) incurred in the ordinary course of
business consistent with past practice since such date or (iii) which would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
SECTION 5.08 MATERIAL ADVERSE CHANGE. Since March 31, 1999,
there has not been any change, or any development that is reasonably likely to
result in a change, that would have a Material Adverse Effect on Parent.
SECTION 5.09. INFORMATION. None of the information supplied or
to be supplied by Parent and the Purchaser in writing specifically for inclusion
in (i) the Offer Documents, (ii) the Schedule 14D-9 (including the information
included therein in order to comply with Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder), (iii) the Proxy Statement or (iv) the Other Filings
will, at the respective times filed with the SEC or such other Governmental
Entity and, in addition, in
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the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to Shareholders, at the time of the Special Meeting and
at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
SECTION 5.10 FINANCING. Parent and Purchaser have made
adequate arrangements to have, and will have available to them, upon
consummation of the Offer, immediately available funds necessary to consummate
the Offer.
SECTION 5.11. LITIGATION. There is no suit, action, proceeding
or governmental investigation before any commission or other administrative
authority pending or, to the knowledge of Parent, threatened against or
affecting Parent or any of the Parent Subsidiaries, with respect to or affecting
Parent's or any of the Parent Subsidiaries' operations, business, products,
sales practices or financial condition, except for suits, actions and
proceedings that, individually or in the aggregate, would not have a Material
Adverse Effect on Parent, nor is there any judgment, decree, injunction or order
of any Governmental Entity or arbitrator outstanding against Parent or any of
the Subsidiaries, except for judgments, decrees, injunctions and orders that
would not, individually or in the aggregate, have a Material Adverse Effect on
Parent. There are no facts known to Parent which, if known by a potential
claimant or any Governmental Entity, would reasonably give rise to a claim or
proceeding which, if asserted or conducted, would be reasonably likely to have a
Material Adverse Effect on Parent.
SECTION 5.12. COMPLIANCE WITH APPLICABLE LAWS; PERMITS.
(a) Parent and the Parent Subsidiaries have been in compliance
with all laws, regulations and orders of any Governmental Entity applicable to
it or the Parent Subsidiaries, except for such failures so to comply which,
individually and in the aggregate, would not have a Material Adverse Effect on
Parent. The business operations of Parent and the Parent Subsidiaries have not
been conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which, individually or in
the aggregate, would not have a Material Adverse Effect on Parent.
(b) Each of Parent and the Parent Subsidiaries is in
possession of all franchises, grants, authorizations, licenses,
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establishment registrations, product listings, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Entity, including, without limitation, the FDA, the DEA, and similar
authorities in other jurisdictions, necessary for Parent or any Parent
Subsidiary to own, lease and operate its properties or to produce, store,
distribute and market its products or otherwise to carry on its business as
it is now being conducted (the "Parent Permits"), except where the failure to
have, or the suspension or cancellation of, any of the Parent Permits would
not, individually or in the aggregate, have a Material Adverse Effect on
Parent, and, as of the date of this Agreement, no suspension or cancellation
of any of the Parent Permits is pending or, to the knowledge of Parent,
threatened, except where the failure to have, or the suspension or
cancellation of, any of the Parent Permits would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. Neither Parent nor any
Parent Subsidiary is in conflict with, or in default or violation of, (i) any
Law applicable to Parent or any Parent Subsidiary or by which any property or
asset of Parent or any Parent Subsidiary is bound or affected or (ii) any
Parent Permits, except in the case of clauses (i) and (ii) for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
(c) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on Parent:
(i) all manufacturing operations of Parent and the Parent
Subsidiaries are being conducted in substantial compliance with
applicable good manufacturing practices;
(ii) all necessary clearances or approvals from governmental
agencies for all drug and device products which are manufactured or
sold by Parent and the Parent Subsidiaries have been obtained, and
Parent and the Parent Subsidiaries are in substantial compliance with
the most current form of each applicable clearance or approval with
respect to the manufacture, storage, distribution, promotion and sale
by Parent and the Parent Subsidiaries of such products;
(iii) all of the clinical studies which have been, or are
being, conducted by or for Parent and the Parent Subsidiaries are being
conducted in substantial compliance with generally accepted good
clinical practices and all applicable government regulatory
requirements;
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(iv) as of the date of this Agreement, neither the Parent nor
any of the Parent Subsidiaries has received written notice of any
petition or other attempt by a brand name drug company to have the
therapeutic equivalence rating of a Parent Subsidiary product withheld
or altered;
(v) none of Parent, the Parent Subsidiaries or to Parent's
knowledge, any of their respective officers, employees or agents
(during the term of such person's employment by Parent or a Parent
Subsidiary or while acting as an agent of Parent or a Parent
Subsidiary) has made any untrue statement of a material fact or
fraudulent statement to the FDA or any similar governmental agency,
failed to disclose a material fact required to be disclosed to the FDA
or similar governmental agency, or committed an act, made a statement
or failed to make a statement that could reasonably be expected to
provide a basis for the FDA or similar governmental agency to invoke
its policy respecting "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities" or similar governmental policy, rule,
regulation or law;
(vi) neither Parent nor any of the Parent Subsidiaries has
received any written notice that the FDA or any similar governmental
agency has commenced, or threatened to initiate, any action to withdraw
its approval or request the recall of any product of Parent or any of
the Parent Subsidiaries, or commenced, or overtly threatened to
initiate, any action to enjoin production at any facility of Parent or
any of the Parent Subsidiaries.
(vii) as to each article of drug, device, cosmetic or vitamin
manufactured and/or distributed by Parent or any of the Parent
Subsidiaries, such article is not adulterated or misbranded within the
meaning of the FDCA or any similar governmental act or Law of any
jurisdiction; and
(viii) none of Parent, the Parent Subsidiaries or, to Parent's
knowledge, any of their respective officers, employees or agents
(during the term of such person's employment by Parent or a Parent
Subsidiary or while acting as an agent of the Company or a Subsidiary),
subsidiaries or affiliates has been convicted of any crime or engaged
in any conduct for which debarment or similar punishment is mandated or
permitted by any applicable law.
(d) As to each product subject to FDA's jurisdiction under the
FDCA and the jurisdiction of the Drug Enforcement
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Agency under the CSA which is manufactured, tested, distributed, held, and/or
marketed by Parent, such product is being manufactured, held and distributed
in compliance with all applicable requirements under the FDCA and the CSA
including, but not limited to, those relating to investigational use,
premarket clearance, good manufacturing practices, labeling, advertising,
record keeping, filing of reports, and security.
(e) Parent will promptly provide the Company with copies of
any document that is issued, prepared, or otherwise becomes available from the
date of this Agreement until the Effective Time which bears on the regulatory
status under the FDCA or the CSA of Parent or any product of Parent, including,
but not limited to, any deficiency letter, warning letter, non-approvable
letter/order, and withdrawal letter/order, except for documents reflecting such
matters which, individually and in the aggregate, would not have a Material
Adverse Effect on Parent.
SECTION 5.13. EMPLOYEE BENEFIT PLANS.
(a) All bonus, profit sharing, thrift, compensation, stock
option, restricted stock, stock purchase, pension, retirement, savings, welfare,
deferred compensation, employment, termination, severance, incentive, or other
employee benefit plans, programs and agreements providing benefits to any
employee, former employee, director or former director of Parent or any of the
Parent Subsidiaries sponsored or maintained by or on behalf of Parent or any of
the Parent Subsidiaries or to which Parent or any of the Parent Subsidiaries
contributes or is obligated to contribute or otherwise may have liability
(collectively, the "Parent Plans") are in compliance, in all material respects
with all laws and regulations applicable to the Parent Plans.
(b) All contributions required to be made to any Parent Plan
by applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Parent Plan, for any period through the date hereof have been timely
made or paid in full or, to the extent not required to be made or paid on or
before the date hereof, have been fully reflected in the financial statements of
Parent included in the Parent SEC Reports to the extent required under Canadian
GAAP.
SECTION 5.14 ENVIRONMENTAL MATTERS. Except as would not,
individually or in the aggregate, have a Material Adverse Effect on Parent, (i)
to Parent's knowledge no Hazard-
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ous Materials (as defined below) are present at, on or under any real
property currently or, to Parent's knowledge, formerly owned, leased or
operated by Parent or any Parent Subsidiary to an extent or in a manner or
condition now requiring investigation, response, corrective action or other
action by Parent or for which Parent or any Parent Subsidiary is financially
responsible, or that would be reasonably likely to result in liability of, or
costs to, Parent or any of the Parent Subsidiaries, in each case under any
Environmental Law (as defined below), (ii) there is currently no civil,
criminal or administrative action, suit, demand, hearing, proceeding, notice
of violation, investigation, notice or demand letter, or request for
information pending or to the knowledge of Parent, threatened, under any
Environmental Law against Parent or any of the Parent Subsidiaries, (iii)
Parent and the Parent Subsidiaries have not received any written claims or
notices alleging liability under any Environmental Law currently pending, and
Parent has no knowledge of any circumstances that would reasonably be
expected to result in such claims or notices, (iv) Parent and each of the
Parent Subsidiaries are currently in compliance, and within the period of
applicable statutes of limitation have complied, with all, and have no
liability under any, applicable Environmental Laws, (v) no property or
facility currently or, to Parent's knowledge, formerly owned, leased or
operated by Parent or any of the Parent Subsidiaries or any of their
respective predecessors-in-interest, or, to Parent's knowledge, at which
Hazardous Materials have been manufactured, handled, tested, formulated,
prepared, encapsulated, packaged, bottled or stored for Parent or any of the
Parent Subsidiaries, or Hazardous Materials of Parent or any of the Parent
Subsidiaries have been stored, treated or disposed of, is listed or proposed
for listing on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or on any comparable list established
under any Environmental Law, (vi) the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
will not affect the validity of any Environmental Permits held by Parent or
any of the Parent Subsidiaries, and will not require any remediation under
any Environmental Law, (vii) no friable asbestos now requiring abatement is
present in, on, or at any property, facility or equipment of Parent or any of
the Parent Subsidiaries, (viii) to Parent's knowledge there are no past or
present events, conditions, activities, or practices, including, without
limitation, the disposal, emission or release of any Hazardous Materials,
which would reasonably be expected to prevent Parent and the Parent Subsidiar-
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ies' compliance with any Environmental Law, or which would reasonably be
expected to give rise to any liability of Parent or any of the Parent
Subsidiaries under any Environmental Law, (ix) no Lien has been asserted or
recorded, or to the knowledge of Parent and each of the Parent Subsidiaries
threatened, under any Environmental Law with respect to any assets, facility,
inventory, or property currently owned, leased or operated by Parent or any
of the Parent Subsidiaries, (x) neither Parent nor any of the Parent
Subsidiaries has received a written claim pursuant to a contract or agreement
assuming any liabilities or obligations arising under any Environmental Law
including, without limitation, any such liabilities or obligations with
respect to formerly owned, leased or operated real property or facilities, or
former divisions or subsidiaries, (xi) neither Parent nor any of the Parent
Subsidiaries has entered into or agreed to any judgment, decree or order by
any judicial or administrative tribunal or agency and neither Parent nor any
of the Parent Subsidiaries is subject to any judgment, decree order or
agreement, in each case relating to compliance with any Environmental Law or
requiring Parent or any of the Parent Subsidiaries to conduct any
investigation, response, corrective or other action under any Environmental
Law, and (xii) there are no underground storage tanks or related piping, or
impoundments, at any real property owned, operated or leased by Parent or any
of the Parent Subsidiaries, and any former such tanks, piping, or
impoundments, on any such property which have been removed or closed, have
been removed or closed in accordance with applicable Environmental Laws.
Parent has made available to the Company all records and
files, including, but not limited to, all assessments, reports, studies, audits,
analyses, tests and data in the possession, custody or control of Parent or any
Parent Subsidiary relating to the existence of Hazardous Materials at facilities
or properties currently or formerly owned, operated, leased or used by Parent or
any of the Parent Subsidiaries or concerning compliance by Parent and any Parent
Subsidiaries with, or liability of any of them under, any Environmental Law.
SECTION 5.15. YEAR 2000. Either (i) all Parent Information
Systems and Equipment (as defined below) are in all material respects Year 2000
Compliant or (ii) any reprogramming, remediation, or any other corrective
action, including the internal testing of all such Parent Information Systems
and Equipment, will be completed in all material respects by September 30, 1999.
Further, to the extent that such reprogramming/remediation and testing action is
required, the cost thereof, as well as the cost of the reasonably foreseeable
con-
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sequence of failure to become Year 2000 Compliant, to Parent and the Parent
Subsidiaries (including, without limitation, reprogramming errors and the
failure of other systems or equipment) will not result in a Material Adverse
Effect on Parent.
"Parent Information Systems and Equipment" means all material
computer hardware, firmware and software, as well as other information
processing systems, or any equipment containing embedded microchips, whether
directly owned, licensed, leased, operated or otherwise controlled by Parent or
any of the Parent Subsidiaries, including through third-party service providers,
and which, in whole or in part, are integral to, Parent's or any of the Parent
Subsidiaries' conduct of their business.
ARTICLE VI
COVENANTS
SECTION 6.01. CONDUCT OF BUSINESS OF THE COMPANY. Except as
required by this Agreement or with the prior written consent of Parent, during
the period from the date of this Agreement to the Effective Time, the Company
will, and will cause each of the Subsidiaries to, conduct its operations only in
the ordinary course of business consistent with past practice and will use its
reasonable best efforts, and will cause each of the Subsidiaries to use its
reasonable best efforts, to preserve intact the business organization of the
Company and each of the Subsidiaries, to keep available the services of its and
their present officers and employees, and to preserve the good will of those
having business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise required by this Agreement or as set forth in
Section 6.01 of the Company Disclosure Statement, the Company will not, and will
not permit any of the Subsidiaries to, prior to the Effective Time, without the
prior written consent of Parent, which consent, prior to the consummation of the
Offer, shall not be unreasonably withheld:
(a) adopt any amendment to its certificate of incorporation or
by laws or comparable organizational documents;
(b) 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, reissu-
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ance or sale of (i) 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 options
plans) to acquire any convertible securities or capital stock, other
than the issuance of Common Shares pursuant to the exercise of
Options outstanding on the date hereof pursuant to the terms thereof
as in effect on the date hereof as contemplated by Section 2.09, or
(ii) any other securities in respect of, in lieu of, or in
substitution for, Shares outstanding on the date hereof;
(c) 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;
(d) 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;
(e) except for (A) increases in salary, wages and benefits of
non-executive officers or employees of the Company or the Subsidiaries
in the ordinary course of business consistent with past practice, (B)
increases in salary, wages and benefits granted to officers and
employees of the Company or the Subsidiaries in conjunction with new
hires, promotions or other changes in job status in the ordinary course
of business consistent with past practice, or (C) increases in salary,
wages and benefits to employees of the Company pursuant to collective
bargaining agreements entered into in the ordinary course of business
consistent with past practice, (i) increase the compensation or fringe
benefits payable or to become payable to its directors, officers or
employees (whether from the Company or any of the Subsidiaries), or
(ii) pay any benefit not required by any existing plan or arrangement,
or (iii) grant any severance or termination pay (except pursuant to
existing agreements, plans or policies and as required by such
agreements, plans or polices), or (iv) enter into any employment or
severance agreement with, any director, officer or other employee of
the Company or any of the Subsidiaries (including independent
contractors and consultants), or (v) establish, adopt, enter into, or
amend any collective bargaining, bonus,
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profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, savings, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or
welfare of any directors, officers or current or former employees,
except in each case to the extent required by applicable law or
regulation;
(f) acquire, sell, lease, mortgage, encumber or dispose of any
assets (other than inventory) or securities with a value, individually
or in the aggregate, in excess of $10.0 million, in the case of rolling
stock, or $1.0 million in the case of other assets or securities, or
enter into any commitment to do any of the foregoing or enter into any
material commitment or transaction outside the ordinary course of
business consistent with past practice other than transactions between
a wholly-owned Subsidiary and the Company or another wholly-owned
Subsidiary of the Company;
(g) (i) incur, assume or pre-pay any long-term debt or incur
or assume any short-term debt, except that the Company and the
Subsidiaries may incur, assume or pre-pay debt in the ordinary course
of business consistent with past practice under existing lines of
credit, (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person except in the ordinary course of
business consistent with past practice, (iii) make any loans, advances
or capital contributions to, or investments in, any other person except
in the ordinary course of business consistent with past practice and
except for loans, advances, capital contributions or investments
between any wholly-owned Subsidiary and the Company or another
wholly-owned Subsidiary or (iv) make any offer to purchase the
Convertible Debentures;
(h) modify, amend or terminate any of the Material Contracts
or waive, release or assign any rights or claims thereunder, except in
the ordinary course of business and consistent with past practice;
(i) change any of the accounting methods used by it unless
required by GAAP, make any material Tax election or change or revoke
any material Tax election already made, adopt, request or consent to
any new material Tax accounting method, change any material Tax
accounting method un-
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less required by applicable law, enter into any material closing
agreement, settle any material Tax claim or assessment or consent to
any material Tax claim or assessment or any waiver of the statute of
limitations for any such claim or assessment;
(j) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of the Subsidiaries (other
than the Merger);
(k) pay, discharge or satisfy, or fail to pay, discharge or
satisfy, any claim, liability or obligation (contingent or otherwise),
other than in the ordinary course of business and consistent with past
practice;
(l) take, or agree to commit to take, any action that would
result in any of the conditions to the Merger set forth in Article VII
or any of the conditions to the Offer not being satisfied, or would
make any representation or warranty of the Company contained herein
inaccurate in any material respect at the Effective Time, or that would
materially impair the ability of the Company to consummate the Merger
in accordance with the terms thereof or materially delay such
consummation; or
(m) except in the ordinary course of business or as otherwise
expressly contemplated hereby, grant or acquire any material licenses
to use any Intellectual Property Rights or unpatented inventions;
PROVIDED that the Company and its Subsidiaries shall not grant any
material licenses to use any material Intellectual Property Rights or
unpatented inventions without the prior written consent of Parent,
which consent shall not be unreasonably withheld;
(n) enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or to authorize, recommend,
propose or announce an intention to do any of the foregoing.
SECTION 6.02. ACCESS TO INFORMATION. (a) From the date hereof
until the Effective Time, the Company will, and will cause the Subsidiaries, and
each of its and their respective officers, directors, employees, counsel,
advisors and representatives (collectively, the "Company Representatives") to,
provide Parent, the Purchaser and any person providing or proposing to provide
financing to Parent or Purchaser ("Financing Sources") and their respective
officers, employees, counsel,
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advisors, representatives (collectively, the "Parent Representatives")
reasonable access, during normal business hours and upon reasonable notice,
to the officers and employees, offices and other facilities and to the books
and records of the Company and the Subsidiaries, as will permit Parent and
the Purchaser to make inspections of such as either of them may reasonably
require and will cause the Company Representatives and the Company's
Subsidiaries to furnish Parent, the Purchaser and the Parent Representatives
to the extent available with such other information with respect to the
business, operations and prospects of the Company and the Subsidiaries as
Parent and the Purchaser may from time to time reasonably request. Unless
otherwise required by law, Parent and the Purchaser will, and will cause the
Parent Representatives to, hold any such information in confidence until such
time as such information otherwise becomes publicly available through no
wrongful act of Parent, the Purchaser or the Parent Representatives. The
Company agrees to make reasonably available its executive officers for
presentations to any Financing Sources. In the event of termination of this
Agreement for any reason, Parent and the Purchaser will, and will cause the
Parent Representatives to, return to the Company all copies of written
information furnished by the Company or any of the Company Representatives to
Parent or the Purchaser or the Parent Representatives and destroy all
memoranda, notes and other writings prepared by Parent, the Purchaser or the
Parent Representatives based upon or including the information furnished by
the Company or any of the Company Representatives to Parent or the Purchaser
or the Parent Representatives (and Parent will certify to the Company that
such destruction has occurred).
(b) From the date hereof until the Effective Time, Parent
will, and will cause its subsidiaries, and each of the Parent Representatives
to, provide the Company and any Company Representatives reasonable access,
during normal business hours and upon reasonable notice, to the officers and
employees, offices and other facilities and to the books and records of Parent
and its Subsidiaries, as will permit the Company to make inspections of such as
it may reasonably require and will cause the Parent Representatives and its
subsidiaries to furnish the Company and the Company Representatives to the
extent available with such other information with respect to the business,
operations and prospects of the Parent and its subsidiaries as the Company may
from time to time reasonably request. Unless otherwise required by law, the
Company will, and will cause the Company Representatives to, hold any such
information in confidence until such time as such information otherwise becomes
publicly available through no wrongful act of the Company or
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the Company Representatives. In the event of termination of this Agreement
for any reason, The Company will, and will cause the Company Representatives
to, return to Parent all copies of written information furnished by Parent or
any of the Parent Representatives to the Company or the Company
Representatives and destroy all memoranda, notes and other writings prepared
by the Company or the Company Representatives based upon or including the
information furnished by Parent or any of the Parent Representatives to the
Company or the Company Representatives (and the Company will certify to
Parent that such destruction has occurred).
(c) The Company will assist Parent in securing access to Merck
in order to pursue business opportunities.
SECTION 6.03. REASONABLE BEST EFFORTS. (a) Subject to the
terms and conditions herein provided and to applicable legal requirements, each
of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, and to assist and
cooperate with the other parties hereto in doing, as promptly as practicable,
all things necessary, proper or advisable under applicable laws and regulations
to ensure that the conditions set forth in Annex I and Article VII are satisfied
and to consummate and make effective the transactions contemplated by the Offer
and this Agreement, including, without limitation, (i) the filing of
Notification and Report Forms under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") and using all commercially reasonable efforts to
respond as promptly as practicable to any inquiries received from the FTC or the
Antitrust Division for additional information or documentation, (ii) the
obtaining of all necessary consents, approvals or waivers and (iii) the lifting
of any legal bar to the Merger. Parent shall cause Purchaser to perform all of
its obligations under this Agreement and shall not knowingly take any action
that would cause the Company to fail to perform its obligations hereunder. The
Company shall not knowingly take any action that would cause either Parent or
Purchaser to fail to perform its obligations hereunder.
(b) The Company shall prepare and file with the SEC as soon as
is reasonably practicable after the date hereof the Company Proxy Statement and
Parent shall file the Registration Statement in which the Company Proxy
Statement shall be included. Parent and the Company shall use all commercially
reasonable efforts to have the Registration Statement declared effective by the
SEC and the Company Proxy Statement cleared by
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the staff of the SEC as promptly as practicable. Parent shall take any action
required to be taken under applicable state blue sky or securities laws in
connection with the Parent Common Stock to be issued as Closing
Consideration. Parent and the Company shall promptly furnish to each other
all information, and take such other actions (including, without limitation,
using all commercially reasonable efforts to provide any required consents of
their respective independent accountants or auditors, as the case may be), as
may reasonably be requested in connection with any action by any of them in
connection with the preceding sentences of this Section 6.03(b).
(c) In addition, if at any time prior to the Effective Time
any event or circumstance relating to either the Company or Parent or the
Purchaser or any of their respective subsidiaries, should be discovered by the
Company or Parent, as the case may be, and which should be set forth in an
amendment to the Offer Documents, Schedule 14D-9, Company Proxy Statement or the
Registration Statement, the discovering party will promptly inform the other
party of such event or circumstance. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
SECTION 6.04. PUBLIC ANNOUNCEMENTS. (a) So long as this
Agreement is in effect, Parent, the Purchaser and the Company agree to use
reasonable efforts to consult with each other before issuing any press release
or otherwise making any public statement with respect to (i) the transactions
contemplated by this Agreement and (ii) the Company's second quarter earnings.
(b) So long as this Agreement is in effect, the Company agrees
to provide Parent with notice and copies of any press release or any public
statement at least 24 hours prior to issuance; PROVIDED, that this provision
shall not prevent the Company from issuing a press release if the Company in
good faith determines that it must do so and makes reasonable attempts to so
notify Parent. Parent shall designate a single person with whom the Company
should communicate for purposes of this Section 6.04(b). The Company shall use
its reasonable efforts to accommodate any comments provided by Parent on a press
release before the end of such 24 hour period, but the Company shall maintain
final editorial control over any press releases. The 24 hour period shall
commence at 8:00 a.m. New York time on the next business day following the day
notice was received if such day was not a business day.
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SECTION 6.05. INDEMNIFICATION.
(a) Parent agrees that all rights to indemnification now
existing in favor of any director or officer of the Company as provided in the
Company's Amended and Restated Certificate of Incorporation or by laws, in an
agreement between any such person and the Company, or otherwise in effect on the
date hereof shall survive the Merger and shall continue in full force and effect
after the Effective Time. Parent agrees that all rights to indemnification now
existing in favor of any director or officer of the Subsidiaries as provided in
the certificate of incorporation or by laws or similar organizational document,
in an agreement between any such person and such Subsidiary, or otherwise in
effect on the date hereof shall survive the Merger and shall continue in full
force and effect after the Effective Time. After the Effective Time, Parent also
agrees to and to cause any successors to indemnify all directors and officers of
the Company or of any of the Subsidiaries ("Indemnified Parties") to the fullest
extent permitted by applicable law with respect to all acts and omissions
arising out of such individuals' services as officers or directors of the
Company or any of the Subsidiaries or as trustees or fiduciaries of any plan for
the benefit of employees occurring at or prior to the Effective Time. Without
limitation of the foregoing, in the event that after the Effective Time any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including, without
limitation, the transactions contemplated by this Agreement, occurring prior to,
and including, the Effective Time, Parent will pay, subject to applicable law,
as incurred such Indemnified Party's reasonable legal and other expenses of
counsel selected by the Indemnified Party and reasonably acceptable to Parent
(including the cost of any investigation and preparation) incurred in connection
therewith; PROVIDED, HOWEVER, that Parent shall not, in connection with any one
such action or proceeding or separate but substantially similar actions or
proceedings arising out of the same general allegations be liable for fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) at any time for all Indemnified Parties. Parent shall be entitled to
participate in the defense of any such action or proceeding and counsel selected
by the Indemnified Party shall, to the extent consistent with their professional
responsibilities, cooperate with Parent and any counsel designated by Parent.
Parent shall, subject to applicable law, pay all reasonable expenses, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 6.05.
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(b) Parent agrees that the Company and, from and after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
for not less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; PROVIDED
that the Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions which are no less advantageous to
any Indemnified Party and provided that such substitution shall not result in
any gaps or lapses in coverage with respect to matters occurring at or prior to
the Effective Time; and PROVIDED, FURTHER, that the Surviving Corporation shall
not be required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date hereof and if the Surviving
Corporation is unable to obtain the insurance required by this Section 6.05(b)
it shall obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount.
(c) The covenants in this Section 6.05 are intended for the
benefit of and shall be enforceable by each of the Indemnified Parties and their
respective heirs and legal representatives. The indemnification provided for
herein shall not be deemed exclusive of any other rights to which an Indemnified
Party is entitled, whether pursuant to law, contract or otherwise.
(d) In the event that the Surviving Corporation or Parent or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, to the extent necessary to effectuate the purposes of this Section
6.05, proper provision shall be made so that the successors and assigns of the
Surviving Corporation or Parent shall succeed to the obligations set forth in
this Section 6.05.
(e) OPERATIONS OF PURCHASER. Purchaser has been formed solely
for the purpose of engaging in the transactions contemplated hereby and prior to
the Effective Time will have engaged in no other business activities and will
have incurred no liabilities or obligations other than as contemplated herein.
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SECTION 6.06. NO SOLICITATION.
(a) The Company represents and warrants to, and covenants and
agrees with, Parent and the Purchaser that neither the Company nor any of the
Subsidiaries has any agreement, arrangement or understanding regarding an
Acquisition Transaction (as hereinafter defined) 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 this 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 clause (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
hereby. Notwithstanding anything to the contrary in the foregoing, the Company
may, prior to the 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 recommen-
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dation of this 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 l4d-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
consultation with Warburg Dillon Read LLC) that such proposed Acquisition
Transaction or tender offer is more favorable to the Shareholders from a
financial point of view than the transaction contemplated hereby (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 this 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 this
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 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-
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proposal, that the Third Party Acquisition Transaction proposal is still a
Superior Proposal, and (z) the Company concurrently terminates this Agreement
in accordance with the terms hereof and pays any Termination Fee (as defined)
required under Section 8.03(c).
(b) 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). 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 this
Agreement or the transactions contemplated hereby, (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.
SECTION 6.07. NOTIFICATION OF CERTAIN MATTERS. Parent and the
Company shall promptly notify each other of (a) the occurrence or non-occurrence
of any fact or event which would (i) cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Effective Time or (ii) cause any
covenant, condition or agreement hereunder not
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to be complied with or satisfied in all material respects and (b) any failure
of the Company or Parent, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder in any material respect; PROVIDED, HOWEVER, that no such
notification shall affect the representations or warranties of any party or
the conditions to the obligations of any party hereunder.
SECTION 6.08. STATE TAKEOVER LAWS. The Company shall, upon the
request of the Purchaser, take all reasonable steps to assist in any challenge
by the Purchaser to the validity or applicability to the transactions
contemplated by this Agreement, including the Offer and the Merger, and the
Stock Option Agreement of any state takeover law. The Board of Directors of the
Company shall not amend, modify or rescind the approval of any purchase of
Shares in the Offer or under the Stock Option Agreement for purposes of Section
203 of the GCL. The Company will use its reasonable best efforts to ensure that
the provisions of any applicable or alleged or asserted to be applicable state
takeover law will not be applicable to the Offer, the Merger or any of the other
transactions contemplated by this Agreement.
SECTION 6.09. ENVIRONMENTAL APPROVALS. The Company shall
obtain all approvals, consents and authorizations and make all filings required
under and pursuant to any Environmental Law required for the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby.
SECTION 6.10. STOCK EXCHANGE LISTINGS. Parent shall use all
commercially reasonable efforts to list on the NYSE and the Toronto Stock
Exchange, upon official notice of issuance, the Parent Common Stock to be issued
in connection with the Merger.
SECTION 6.11 AFFILIATES. The Company shall advise Parent in
writing of any person who, to the Company's knowledge, becomes an Affiliate
after the date hereof and prior to the Effective Time and shall use all
commercially reasonable efforts to cause each such person to deliver to Parent,
no later than the date such person becomes an Affiliate, a written agreement
substantially in the form of Annex III hereto. Parent shall use all commercially
reasonable efforts to satisfy for two years after the Effective Time the
requirements of Rule 144(c) under the Securities Act.
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SECTION 6.12. RESIGNATION OF DIRECTORS; CERTAIN AGREEMENTS.
(a) Prior to the Effective Time, the Company shall use its reasonable best
efforts to deliver to Parent at no cost the resignations of such directors of
its Subsidiaries as Parent shall specify, effective at the Effective Time. In
connection with any such resignation, the directors shall simultaneously
reconvey their directors' qualifying shares, if any, to the applicable
Subsidiary or such other persons as Parent shall specify at no additional
expense to Parent, Purchaser or such Subsidiary other than customary expenses
directly relating to the transfer and issuance of directors' qualifying shares,
if any.
(b) The Company will (i) promptly give notice to Paul Kennedy
that its engagement of him as financial advisor pursuant to a letter agreement
dated June 24, 1999 shall terminate on the earliest possible date pursuant to
such agreement, (ii) will not consent to the disclosure of non-public
information by him to a third party and (iii) will request that he cease all
activities under such agreement.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Closing (as defined in Section
9.01) of each of the following conditions:
(a) SHAREHOLDER APPROVAL. The Shareholders shall have duly
approved and adopted this Agreement and the transactions contemplated
by this 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
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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.
SECTION 7.02. CONDITIONS TO THE OBLIGATIONS OF PARENT AND
PURCHASER. 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 this 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
hereof, unless Purchaser's failure to accept for payment and pay for Shares
results from Purchaser's breach of any provision of the Agreement.
SECTION 7.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company under this 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 this 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 hereby or have a Material Adverse Effect on Parent.
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(b) PURCHASE OF SHARES. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the terms
hereof, unless Purchaser's failure to accept for payment and pay for Shares
results from the Company's breach of any provision of the Agreement.
ARTICLE VIII
TERMINATION AND ABANDONMENT
SECTION 8.01. TERMINATION. This Agreement may be terminated
and the Merger may be abandoned 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.
SECTION 8.02. TERMINATION BY PARENT. This 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 this Agreement which
would have a Material Adverse
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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 this Agreement such that the Offer
condition set forth in clause (b)(i) of Annex I 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)), 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 this 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 this 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
(d) due to an occurrence or circumstance which would result in
a failure to satisfy any of the conditions set forth in Annex I, Purchaser shall
have (i) terminated the Offer in accordance with the provisions of Annex I, 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 this Agreement.
SECTION 8.03. TERMINATION BY THE COMPANY. This 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 this Agreement which
would have a Material Adverse Effect on Parent or materially adversely affect
(or materially delay) the
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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 this 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)), 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), (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) 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, (ii) Purchaser fails to pay for Shares pursuant to the Offer
within 120 days following the date hereof, 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 this Agreement or (iii) Purchaser terminates the Offer
in accordance with the provisions of Annex I.
SECTION 8.04. PROCEDURE FOR TERMINATION. In the event of
termination and abandonment of the Merger by Parent or
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the Company pursuant to this Article VIII, written notice thereof shall
forthwith be given to the other.
SECTION 8.05. EFFECT OF TERMINATION AND ABANDONMENT. (a) In
the event of termination of this Agreement and abandonment of the Merger
pursuant to this Article VIII, no party hereto (or any of its directors or
officers) shall have any liability or further obligation to any other party to
this Agreement, except as provided in this Section 8.05 and except that nothing
herein shall relieve any party from liability for any breach of this Agreement.
(b) In the event of a termination of this Agreement by Parent
pursuant to Section 8.02(c) 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.
(c) In the event of a termination of this Agreement (i)
pursuant to Section 8.01(c) based on the Company's actions or omissions or (d)
or (ii) by Parent pursuant to Section 8.02(a) or (b), 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.
(d) The Company acknowledges that Parent would suffer direct
and substantial damages, which damages cannot be determined with reasonable
certainty in the event that this Agreement shall be terminated under
circumstances referred to in Section 8.03(c) and paragraphs (b) and (c) of
Section 8.05. The parties acknowledge that the agreements contained in this
Article VIII (including this Section 8.05) are an integral part of the
transactions contemplated by this Agreement and that, without these agreements,
the parties would not enter into this Agreement. Parent and Purchaser
acknowledge that whenever a fee is payable by the Company to Parent pursuant
this Article VIII, 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 this Agreement.
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SECTION 8.06. EXTENSION; WAIVER. Subject to Section 1.03(b),
at any time prior to the Effective Time, the parties hereto may (i) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other party or in any document, certificate or writing
delivered pursuant hereto by any other party or (iii) waive compliance with any
of the agreements of any other party or with any conditions to its own
obligations. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
CLOSING
SECTION 9.01. TIME AND PLACE. Subject to the provisions of
Articles VII and VIII, the closing of the Merger (the "Closing") shall take
place at the offices of Cahill Gordon & Reindel, as soon as practicable but in
no event later than 9:30 A.M., local time, on the first business day after the
date on which each of the conditions set forth in Articles VII and VIII have
been satisfied or waived by the party or parties entitled to the benefit of such
conditions; or at such other place, at such other time, or on such other date as
Parent, Purchaser and the Company may mutually agree. The date on which the
Closing actually occurs is herein referred to as the "Closing Date."
SECTION 9.02. FILINGS AT THE CLOSING. Subject to the
provisions of Articles VII and VIII, the Company, Parent and Purchaser shall
cause to be executed and filed at the Closing the Certificate of Merger and
shall cause the Certificate of Merger to be recorded in accordance with the
applicable provisions of the Delaware Act and shall take any and all other
lawful actions and do any and all other lawful things necessary to cause the
Merger to become effective.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made in this Agreement shall not survive
beyond the Effective Time.
SECTION 10.02. ENTIRE AGREEMENT; ASSIGNMENT.
(a) This Agreement (including the documents and the
instruments referred to herein) the Confidentiality Agreement executed by Parent
dated July 13, 1999 and the Confidentiality Agreement executed by the Company
dated July 18, 1999 constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
SECTION 10.03. VALIDITY. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, each of which shall remain in full
force and effect.
SECTION 10.04. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered in person, by overnight courier or facsimile
(with receipt confirmed) to the respective parties as follows:
If to Parent or the Purchaser:
Biovail Corporation International
2488 Dunwin Drive
Mississauga, Ontario
Canada, L5L 1J9
Attention: General Counsel
Fax: (416) 285-6499
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with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Roger Andrus, Esq.
Fax: 212-269-5420
If to the Company:
Fuisz Technologies Ltd.
14555 Avion at Lakeside
Chantilly, Virginia 20150
Attention: General Counsel
Fax: (703) 995-2445
with a copy to:
Gibson Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attention: Ronald Mueller, Esq.
Fax: (202) 530-9569
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 10.05. GOVERNING LAW; JURISDICTION. (a) This Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
(b) In addition, each of the parties hereto agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a federal or state court sitting in
the State of Delaware.
SECTION 10.06. DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
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SECTION 10.07. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
SECTION 10.08. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and, except
with respect to Sections 2.09, 3.01 and 6.05, nothing in this Agreement, express
or implied, is intended to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.
SECTION 10.09. CERTAIN DEFINITIONS. As used in this Agreement:
(a) the term "affiliate", as applied to any person, shall mean
any other person directly or indirectly controlling, controlled by, or
under common control with, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as
applied to any person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting
securities, by contract or otherwise;
(b) the term "knowledge" shall mean the actual knowledge of,
with respect to the Company, the Company's executive officers and, with
respect to Parent or Purchaser, Parent's executive officers;
(c) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall
include a "group" as such term it defined in Section 13(d)(3) of the
Exchange Act);
(d) the term "subsidiary" or "subsidiaries", means, with
respect to Parent, the Company, or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the
Company or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or
indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the
board of directors or other governing body of such corporation or other
legal entity;
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(e) The term "TAX" or "TAXES" means (i) all federal, state,
local or foreign taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, alternative
minimum, gross receipts, capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes,
customs duties, fees, assessments and charges of any kind whatsoever,
(ii) all interest, penalties, fines, additions to tax or other
additional amounts imposed by any taxing authority in connection with
any item described in clause (i) and (iii) all transferee, successor,
joint and several or contractual liability (including, without
limitation, liability pursuant to Treas. Reg. Section 1.1502-6 (or any
similar state, local or foreign provision)) in respect of any items
described in clause (i) or (ii);
(f) The term "Tax Return" means all returns, declarations,
reports, estimates, information returns and statements required to be
filed in respect of any Taxes; and
(g) the term "Termination Fee" means a fee payable by the
Company to Parent pursuant to Section 8.05(b), (c) or (d) of this
Agreement.
SECTION 10.10. REMEDIES. Except as set forth below, the
parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, and, accordingly, it is agreed that
the parties shall be entitled to an injunction or injunctions to prevent such
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity. In the event of a termination of this Agreement pursuant to which a
Termination Fee is paid pursuant to Section 8.05 hereof, the receipt of such
Termination Fee shall serve as payment of liquidated damages with respect to any
breach of this Agreement by the party paying such Termination Fee giving rise to
such termination, and receipt of such Termination Fee shall be the sole and
exclusive remedy (at law or in equity) with respect to any such breach.
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IN WITNESS WHEREOF, each of the parties has caused this
Amended and Restated Agreement to be executed on its behalf by its respective
officer thereunto duly authorized, all as of the day and year first above
written.
BIOVAIL CORPORATION INTERNATIONAL
By: /s/ Eugene Melnyk
------------------------------
Name: Eugene Melnyk
Title: Chairman
ABCI ACQUISITION SUB. CORPORATION
By: /s/ Eugene Melnyk
------------------------------
Name: Eugene Melnyk
Title: Chairman
FUISZ TECHNOLOGIES LTD.
By: /s/ Steven H. Willard
------------------------------
Name: Steven H. Willard
Title: Executive Vice President
and General Counsel
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ANNEX I
CONDITIONS TO 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 SEC, 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") that number of Common Shares which, together with Shares
beneficially owned by Parent or its affiliates, represent at least 40% of the
outstanding Common Shares on the date of purchase (the "Minimum Condition")
PROVIDED; that Purchaser shall only be required to accept for payment and to
purchase that number of Common Shares which, together with Shares beneficially
owned by Parent or its affiliates, represents not more than 49% of the
outstanding Common Shares on the date of purchase, (ii) any applicable waiting
periods under the HSR Act or any applicable foreign antitrust 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 this 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;
<PAGE>
(b) (i) the representations and warranties of the Company
contained in this 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 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 this 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, this 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) this 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
-2-
<PAGE>
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.
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.
The capitalized terms used in this Annex I shall have the
meanings set forth in the Agreement to which it is annexed, except that the term
"Merger Agreement" shall be deemed to refer to the Agreement to which this Annex
I is appended.
-3-
<PAGE>
ANNEX II
MERGER CONSIDERATION
Each Share issued and outstanding immediately prior to the
Effective Time, (other than shares to be canceled pursuant to Section 2.07)
shall be converted into the right to receive a number of shares of Parent Common
Stock equal to the Exchange Ratio (as such term is defined below) as the "Merger
Consideration."
The "Exchange Ratio" shall be determined as follows:
(i) if the Average Trading Price of a share of Parent Common
Stock is less than $45.000, the Exchange Ratio shall equal .1556; (ii) if the
Average Trading Price of a share of Parent Common Stock is greater than or equal
to $45.000, 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 of a share of Parent Common Stock; (iii) if the
Average Trading Price of a share of Parent Common Stock 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 of a share of Parent Common Stock. The
Exchange Ratio shall be subject to appropriate adjustment in the event of a
stock split, stock dividend or recapitalization after the date of this Agreement
applicable to shares of the Parent Common Stock.
"Average Trading Price" shall be equal to 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.
<PAGE>
ANNEX III
FORM OF COMPANY AFFILIATE LETTER
Biovail Corporation International
2488 Dunwin Drive
Mississauga, Ontario
Canada, L5L 1J9
Gentlemen:
The undersigned, a holder of shares of common stock, par value
$.01 per share ("Company Common Stock"), of Fuisz Technologies Ltd., a Delaware
corporation (the "Company"), is entitled to receive, in connection with the
merger (the "Merger") between the Company and a direct wholly owned subsidiary
of Biovail Corporation International ("Parent"), shares of the common stock of
Parent ("Shares"). The undersigned acknowledges that the undersigned may be
deemed an "affiliate" of the Company within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Act"), although
nothing contained herein should be construed as an admission of such fact.
If, in fact, the undersigned is an affiliate under the Act,
the undersigned's ability to sell, assign or transfer the Shares received by the
undersigned upon conversion of any shares of Company Common Stock pursuant to
the Merger may be restricted unless such transaction is registered under the Act
or an exemption from such registration is available. The undersigned understands
that such exemptions are limited and the undersigned has obtained advice and
counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such securities of
Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with Parent
that the undersigned will not sell, assign or transfer any of the Shares
received by the undersigned upon conversion of shares of Company Common Stock
pursuant to the Merger except (i) pursuant to an effective registration
statement under the Act, (ii) in conformity with the limitations specified by
Rules 144 and 145(d), (iii) in a transaction which, in the opinion of counsel
reasonably satisfactory to
<PAGE>
Parent is not required to be registered under the Act or (iv) in a
transaction that, as described in a "no-action" or interpretive letter from
the Staff of the Securities and Exchange Commission (the "SEC"), is not
required to be registered under the Act.
In the event of a sale or other disposition by the undersigned
of Shares pursuant to Rule 145(d)(1), the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex A hereto. The undersigned understands that Parent may instruct its
transfer agent to withhold the transfer of any Shares disposed of by the
undersigned, but that upon receipt of such evidence of compliance the transfer
agent shall effectuate the transfer of the Shares sold as indicated in the
letter.
The undersigned acknowledges and agrees that appropriate
legends will be placed on certificates representing Shares received by the
undersigned in the Merger or held by a transferee thereof, which legends will be
removed by delivery of substitute certificates upon receipt of an opinion in
form and substance reasonably satisfactory to Parent from independent counsel
reasonably satisfactory to Parent to the effect that such legends are no longer
required for the purposes of the Act or the third paragraph of this letter.
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other disposition
of Shares and (ii) the receipt by Parent of this letter is an inducement and a
condition to Parent's obligations to consummate the Merger.
Very truly yours,
2
<PAGE>
ANNEX A
TO ANNEX III
[Name] [Date]
On _____________ the undersigned sold _____________ Shares
(the "Shares"), of Biovail Corporation International (the "Parent"). The Shares
were received by the undersigned in connection with the merger of a direct
wholly owned subsidiary of Parent with and into Fuisz Technologies Ltd.
Based upon the most recent report or statement filed by the
Parent with the Securities and Exchange Commission, the Shares sold by the
undersigned were within the prescribed limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the Shares were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Act or in
transactions directly with a "market maker" as that term is defined in Section
3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned
further represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Shares, and that the undersigned has not made
any payment in connection with the offer or sale of the Shares to any person
other than to the broker who executed the order in respect of such sale.
Very truly yours,
<PAGE>
Biovail Corporation International
2488 Dunwin Drive
Mississauga
Ontario L5L, IJ9 Canada
July 13, 1999
Dr. Richard C. Fuisz
c/o Fuisz Technologies Ltd.
14555 Avion Parkway, Suite 250
Chantilly, VA 20151
Dear Dr. Fuisz,
This letter will confirm that, for good and valuable considerations, the
sufficiency of which is hereby acknowledged, including the execution of the
Option Agreement between us of even date herewith, we agree to execute with you
a Consulting Agreement in the form attached as Exhibit A on the occurrence of a
Triggering Event. A "Triggering Event" shall be the exercise of the option
contained in the Option Agreement and acquisition, by tender offer, merger or
otherwise, of more than 50%, in one or a series of transactions, of the equity
securities, assets or business of Fuisz Technologies Ltd. (the "Company") by
Biovail or any of its subsidiaries or affiliates ("Biovail"). This agreement
shall be governed by Delaware law. The term of this agreement shall be one year
from the date hereof (the "Term").
If the foregoing accurately reflects our understanding, please so indicate
below and return a copy to me.
Sincerely,
BIOVAIL CORPORATION INTERNATIONAL
By: /s/ Eugene Melnyk
--------------------------------
Name: Eugene Melnyk
Title: Chairman
Accepted and Agreed:
/s/ Richard C. Fuisz, M. D.
- ---------------------------
Richard C. Fuisz, M. D.
<PAGE>
BIOVAIL CORPORATION INTERNATIONAL
2488 DUNWIN DRIVE
MISSISSAUGA
ONTARIO L5L, IJ9 CANADA
As of _____, 19__
Dr. Richard C. Fuisz
c/o Fuisz Technologies Limited
14555 Avion Parkway, Suite 250
Chantilly, Virginia 20151
Re: Consulting Agreement
Dear Dr. Fuisz:
We refer to the Option Agreement dated July 13, 1999 among Richard C. Fuisz,
M.D., an individual resident in the State of Virginia (the "Consultant"),
Biovail Corporation International, an Ontario Corporation ("Biovail"), and
[Escrow Agent]
The parties agree as follows:
1. The Consultant shall provide non-exclusive consulting services to
Biovail and/or its subsidiaries or affiliates (collectively the
"Company") from time to time during the Term (as defined below), at
such times and in such manner that shall be agreed to by each of the
parties; provided, that the Consultant shall not be obligated to
provide any specified services or minimum number of days or hours of
service hereunder or provide services with respect to any particular
assignment or task. Prior to the Consultant becoming engaged in
providing any services hereunder, the Consultant and the Company shall
meet and confer as to the nature and extent of such services. Such
services may include, without limitation, business, strategic and
marketing advice to the Company's senior executive officers, strategic
business planning, special projects and other special advice.
2. (a) The Company shall pay to the Consultant an amount equal to
$2,000,000 on the first anniversary of this Agreement; provided that
if the Company and/or affiliate of the Company has acquired an
interest of 80% or more, in one or a series of transactions, of the
equity securities, assets or business of Fuisz Technologies Ltd. on or
prior to July 13, 2010, the Company shall pay the Consultant an amount
equal to $500,000 on the last business day of each succeeding March,
June,
<PAGE>
Consulting Agreement
July 13, 1999
Page 2
September and December, prorated for partial quarters, for the period
from the date of acquisition of such 80 percent interest until a total
of $6,000,000 has been paid under this Section. Such amounts shall be
paid by check to the Consultant. The Consultant, and not the Company,
shall be individually responsible for paying any withholding taxes and
other deductions. In addition, such amounts shall be paid
irrespective of the disability or death of the Consultant during
the Term (in the event of such death, such amounts shall be paid to
the Consultant's estate or designated beneficiaries). The amounts
described above shall be in full consideration of any and all
consulting services provided by the Consultant during the Term. The
Company shall have the right to terminate this letter agreement at any
time, upon five days' prior notice to the Consultant; provided, that
in the event of such termination, the Company shall continue to be
liable for the payments described above to the Consultant at the time
and in the amounts set forth above.
(b) In the event that the Company requests that the Consultant provide
consulting services with respect to any particular matter or
engagement and the Consultant provides such services, the Company
shall reimburse to the Consultant the Consultant's reasonable and
actual out-of-pocket costs and expenses in connection therewith upon
furnishing of proper documentation; provided, that the Consultant
shall not incur any such cost or expense in excess of $1,000 without
the prior consent of the Company.
(c) For the avoidance of doubt, the parties agree that the Company
shall not be required to provide health, medical or other insurance or
any other pension, payment or other benefits to the Consultant or his
family.
3. Each of the parties agrees to keep and maintain this letter agreement
and the transactions contemplated hereby in strict confidence and not
to disclose this letter agreement, the contents or substance hereof or
the parties hereto, in each case, without the prior written consent
of the other party; provided, that the foregoing restrictions on
disclosure shall not apply to the extent (but solely to the extent)
required by applicable law or administration or judicial process. The
parties acknowledge that this letter agreement may be disclosed if the
Company acquires an interest in Fuisz Technologies Ltd.
4. NON-COMPETITION and NON-SOLICITATION.
<PAGE>
Consulting Agreement
July 13, 1999
Page 3
(a) The Consultant agrees that, during the Term, the Consultant shall
not engage in any business which actively competes with the business
of the Company to the extent that Consultant is actually rendering
services involving such business pursuant to the Consulting Agreement.
The parties acknowledge that Dr. Fuisz is a party to an existing
consulting agreement with a company which may be viewed as a
competitor and which does not obligate Dr. Fuisz to accept any
specific assignment.
(b) The Consultant shall not, directly or indirectly, during the
Term or for one year thereafter, request or cause any suppliers or
customers with whom the Company has a business relationship to
cancel or terminate any such business relationship with the
Company.
(c) The Consultant shall not, during the Term or for one year
thereafter, (i) directly or indirectly, solicit, encourage or
induce in any manner, any current employee of the Company to
terminate, for any reason, his or her employment with the company
or (ii) directly or indirectly, hire or offer to hire any former
employees of the Company or its subsidiaries unless any such
former employee (A) approaches the Consultant without encouragement
by the Consultant and (B) such former employee has not been
employed by the Company for at lease six months at the time of such
former employee approaching the Consultant.
(d) If any portion of the restrictions set forth in this [Section 4]
should, for any reason whatsoever, be declared invalid by a court of
competent jurisdiction, the validity or enforceability of the
remainder of such restrictions shall not thereby be adversely
affected.
5. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) The Consultant shall not, while this Agreement is in effect or at
any time following termination of this Agreement, disclose or permit
to be known (other than as is required in the regular course of his
duties or required by law (in which case the Consultant shall give the
company prior written notice of such required disclosure), any
information acquired by him in the course of his activities on behalf
of the Company hereunder and known to him to be confidential. This
confidentiality obligation shall not apply to any information which
(I) thereafter becomes publicly available other than pursuant to a
breach of this [Section 5], directly or indirectly, by the Consultant,
(ii) was in the
<PAGE>
Consulting Agreement
July 13, 1999
Page 4
public domain prior to disclosure to the Consultant, or (iii) is
disclosed to the Consultant by a third party not in violation of any
obligations of confidentiality to the Company.
(b) All confidential information and documents relating to the
Company shall be the exclusive property of the Company. Upon
termination of this Agreement, all documents, records, reports,
writings and other similar documents containing confidential
information, including copies thereof, then in the Consultant's
possession or control shall be returned to the Company.
6. INVENTIONS AND DISCOVERIES.
(a) The Consultant shall promptly and fully disclose to the Company,
with all necessary detail for a complete understanding of the same,
all developments, know-how, discoveries, inventions, improvements,
concepts, ideas, writings, formulae, processes and methods (whether
copyrightable, patentable or otherwise) made, received, conceived,
acquired or written, by the consultant, solely or jointly with others
in the course of rendering the services to be provided hereunder on
behalf of the Company hereunder (collectively the "Subject Matter").
(b) The Consultant hereby agrees to assign and transfer to the
company all his rights, title and interest in and to the Subject
Matter, to deliver to the Company any and all drawings, notes,
specifications and data relating to the Subject Matter, and to
execute, acknowledge and deliver all such further papers, including
applications for copyrights or patents, as may be necessary to
obtain copyrights and patents for any thereof in any and all countries
and to vest title thereto to the Company.
7. In the event that the Company requests that the Consultant provide
services hereunder to the Company or its subsidiaries or affiliates,
and the Consultant provides such services, the parties agree that the
Company will indemnify and hold harmless the Consultant from and
against any and all loss, cost or expense incurred by the Consultant
in connection with the providing of such services; provided, that the
Company will not indemnify the Consultant from and against such losses
and expenses arising out of the gross negligence or willful misconduct
on the part of the Consultant.
8. Nothing therein shall create a partnership or agency relationship
<PAGE>
Consulting Agreement
July 13, 1999
Page 5
between the parties hereto, and nothing herein shall authorize the
Consultant to bind or commit the Company in any respect. The
Consultant shall conduct himself at all times during in the Term in a
manner consistent with the foregoing.
9. (a) This letter agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, without
regard to principles of conflicts of laws. Each party consents to the
exclusive jurisdiction of any federal or state court sitting in the
County, City and State of Delaware over any dispute arising or
referred herein and agrees to waive any defense such jurisdiction as a
result of an inconvenient forum or similar matter. This letter
agreement (i) shall be binding upon and inure to the benefit of the
parties' respective successors and assigns; (ii) may be executed in
counterparts and delivered by facsimile transmission; (iii)
constitutes the entire agreement between the parties relating to the
subject matter hereof and supersedes any and all prior agreements,
arrangements or understandings between the parties; and (iv) does not
conflict with any other agreement, arrangement or understanding to
which the Consultant is a party.
(b) The Company has full corporate and other power and authority to
execute and deliver this letter agreement and to consummate the
transactions contemplated hereby, and such execution, delivery and
performance have been duly authorized by all requisite corporate
actions.
(c) The Company shall have the right to assign all of its right,
title and interest, herein to an affiliate corporation or to a
non-affiliate corporation, Intelligent Polymers, Ltd. Consultant
shall be notified of any such assignment ten (10) days in advance
thereof. Notwithstanding such assignment, the Company agrees to
remain responsible for all financial obligations hereunder.
Please indicate your agreement to the foregoing by signing a copy of this letter
agreement where indicated below.
<PAGE>
Consulting Agreement
July 13, 1999
page 6
Very truly yours,
BIOVAIL CORPORATION INTERNATIONAL
By:
------------------------------
Name:
Title:
