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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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FUISZ TECHNOLOGIES LTD.
(Name of Subject Company)
FUISZ TECHNOLOGIES LTD.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
359536109
(CUSIP Number of Class of Securities)
STEPHEN H. WILLARD, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
FUISZ TECHNOLOGIES LTD.
14555 AVION PARKWAY
CHANTILLY, VA 20151
(703) 995-2400
(Name, Address and Telephone Number of Person Authorizing to Receive Notices
and Communications on Behalf of the Person Filing this Statement)
COPY TO:
RONALD O. MUELLER, ESQ.
GIBSON, DUNN & CRUTCHER LLP
1050 CONNECTICUT AVE., N.W., SUITE 900
WASHINGTON, D.C. 20036
(202) 955-8500
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject entity is Fuisz Technologies Ltd., a Delaware
corporation ("Company"), which has its principal executive offices at 14555
Avion Parkway, Chantilly, VA 20151. The class of equity securities to which this
statement relates is Company's Common Stock, par value $.01 per share (the
"Shares").
ITEM 2. TENDER OFFER OF THE BIDDER
This Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Statement") 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 up to 6,585,225 of the outstanding Shares at a price of $7.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated July 30, 1999 (the "Offer to Purchase")
and in the related Letter of Transmittal (the "Letter of Transmittal", together
with the Offer to Purchase, the "Offer"). The Offer is disclosed in the Schedule
14D-1, dated July 30, 1999 (the "Schedule 14D-1") filed with the Securities and
Exchange Commission (the "Commission") by Parent and Purchaser. This Statement
is being filed on behalf of the Company. The item numbers and responses thereto
below are in accordance with the requirements of Schedule 14D-9 of the
Securities Exchange Act of 1934, as amended. Biovail's principal executive
offices are located at 2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
and ABCI's principal executive offices are located at 2488 Dunwin Drive,
Mississauga, Ontario, Canada L5L 1J9.
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, 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 connection with the
Merger, all remaining outstanding Shares will be exchanged for shares of common
stock of Parent, at a ratio of one Share for 0.1194 shares of common stock of
Parent, subject to certain adjustments discussed below in Item 3-- Identity and
Background--The Merger Agreement.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
statement, is set forth in Item 1 of this Statement. All information contained
in this Statement or incorporated herein by reference concerning Purchaser or
Parent, or actions or events with respect to either of them, was provided by
Purchaser or Parent, respectively, and Company takes no responsibility for such
information. Information contained in this Statement with respect to Company and
its advisors has been provided by the Company.
(b) Except as described herein and in the exhibits hereto, to the knowledge
of the Company, as of the date hereof there are no material contracts,
agreements, arrangements or understandings, or any potential or actual conflicts
of interest between the Company or its affiliates and (1) the Company, its
executive officers, directors or affiliates or (2) the Purchaser, its executive
officers, directors or affiliates.
INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER
In considering the recommendations of the Board of Directors of the Company
(the "Company Board"), the stockholders should be aware that certain members of
the Company Board and certain of the Company's officers have interests in the
Merger and the Offer which are described herein and which may present them with
certain conflicts of interest. Each of the members of the Company Board were
aware of these potential conflicts and considered them along with the other
factors described in Item 4(b)(2) below.
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EMPLOYMENT AND COMPENSATION ARRANGEMENTS
The employment agreements of Mr. Myers, Mr. Willard and Mr. Cherukuri
provide for the acceleration of their compensation otherwise payable through the
term of their agreements and the vesting of all unvested stock options in the
event of a "change of control," which is defined to include the direct or
indirect beneficial ownership of 30% or more of the Shares by any person.
Pursuant to the Company's 1991 Stock Option Plan, all outstanding stock
options become exercisable in full upon a consolidation, merger or sale of all
or substantially all of the assets of the Company in which Shares are exchanged
for securities, cash or other property of another corporation.
Mr. Scrivens has executed a Consulting Agreement with the Company entitling
him to receive the compensation and benefits provided under his previous
employment agreement with the Company for the term of the Consulting Agreement,
which has been extended from its original expiration date of October 19, 2000 by
such number of whole months, rounded up, that Mr. Scrivens serves as Acting
Chief Financial Officer of the Company. This obligation shall be a binding
obligation on the successors and assigns of the Company, including any entity
which may be merged with the Company.
FUISZ DRUGSTORE.COM
On December 31, 1998, the Company entered into a stock purchase agreement
(the "Stock Purchase Agreement") to sell all of the issued and outstanding share
capital of FuiszDrugstore.com Ltd. ("FuiszDrugstore"), then a wholly-owned
subsidiary of the Company, to Privateer Ltd., ("Privateer"), a corporation owned
by Richard C. Fuisz, M.D. ("Dr. Fuisz"), Chairman of the Board of the Company.
At the closing, which took place in February 1999, the Company delivered the
shares, which were transferred to RxDrugstore.com Limited ("RxDrugstore.com")
and received consideration of $100,000 in cash and 200,000 shares of common
stock of RxDrugstore.com (which represents 5% of the issued and outstanding
shares of common stock of RxDrugstore.com). Prior to the closing, FuiszDrugstore
was engaged in sales of drugstore products over the Internet.
In connection with the Stock Purchase Agreement, in February 1999, the
Company and Privateer concluded a 20 year license agreement (the "License
Agreement"), which grants Privateer the non-exclusive right to sell Licensed
Products (as that term is defined in the License Agreement) through the
Internet. The license covers all existing products of the Company as well as
certain additional products developed by the Company over the next four years.
In consideration for the license, the Company received a non-interest bearing
promissory note for $2.4 million, payable by Privateer in four annual
installments commencing on December 31, 1999.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is filed
as an exhibit to the Schedule 14D-1 filed by Purchaser and Parent with the
Commission in connection with the Offer. The Offer is described in the Offer to
Purchase, under the caption, "THE TENDER OFFER", as referenced below. The
following summary is qualified in its entirety by reference to the Merger
Agreement.
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 below in "Certain Conditions
of the Offer"), the Purchaser will purchase such number of Shares of the Company
as will cause Parent and its affiliates to beneficially own up to 49% of the
outstanding Company Common Stock, but, except as otherwise provided in the
Merger Agreement, not less than 40% of the outstanding Company Common Stock of
the Shares validly tendered pursuant to the Offer. The Merger Agreement provides
that the Purchaser may modify and extend the terms of the Offer as described in
the Offer to Purchase. 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).
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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, 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 (including Purchaser Insiders as defined in the Merger
Agreement).
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 described below under "Conditions
to the Merger") 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 (the "Average Trading Price") is less
than $45.000, the Exchange Ratio shall equal .1556; (ii) if the Average Trading
Price 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; (iii)
if the Average Trading Price is greater than $58.625 but less than or equal to
$62.810, the Exchange Ratio shall equal .1194 and (iv) if the Average Trading
Price is greater than $62.810, the Exchange Ratio shall equal a fraction
(rounded to the nearest ten-thousandth) determined by dividing $7.50 by the
Average Trading Price (the "Merger Consideration").
The Merger Agreement provides that each share of Company Common Stock held
by Parent, the Purchaser, any direct or indirect wholly-owned subsidiary of
Parent, in the treasury of the Company or by any direct or indirect wholly-owned
subsidiary of the Company, if any, immediately prior to the Effective Time shall
be canceled and retired and shall cease to exist with no payment being made with
respect thereto.
In addition, the Merger Agreement provides that each share of common stock,
par value $0.01 per share, of Purchaser issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and become the number of
validly issued, fully paid and nonassessable shares of common stock, par value
$.01 per share, of the Surviving Corporation equal to the number of shares of
Common Stock outstanding on a fully diluted basis immediately prior to the
Effective Time.
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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) recommended
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; STOCKHOLDERS 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
Stockholders. 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 Stockholders (the "Company Stockholders 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 Stockholders reject
it. The Merger Agreement provides that in connection with the Company
Stockholders 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 Stockholders of the Company prior to the Company
Stockholders 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 Stockholders 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 Stockholders for approval and adoption at
the Special Meeting whether or not the Board of
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Directors determines at any time subsequent to the Company Board Meeting that
the Merger Agreement is no longer advisable and recommends that Stockholders
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.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE STOCKHOLDERS 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 (as defined in the Merger Agreement) 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 thereby or recommend
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(or resolve to recommend) such Acquisition Transaction with a Third Party to
Stockholders, (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 consultation with its financial advisor)
that such proposed Acquisition Transaction or tender offer is more favorable to
the Stockholders 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 thereby, or recommend (or
resolve to recommend) an Acquisition Transaction with a Third Party to the
Stockholders or enter into a definitive agreement with respect to a Superior
Proposal unless (x) the Company has given Parent five 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 Stockholders 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 thereof and pays any Termination Fee (as defined in
the Merger Agreement) required under "Termination by Company-clause (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 the preceding paragraph. 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 Stockholders 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
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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.
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 (as defined in the Merger Agreement):
(a) STOCKHOLDER APPROVAL. The Stockholders 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 (as
defined in the Merger Agreement) 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 thereby 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 (as defined in the Merger Agreement) 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 (as defined below) 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 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.
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 (as
defined in the Merger Agreement) 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 "Certain Conditions of the Offer" 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 "The Offer"), 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;
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(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;
(d) due to an occurrence or circumstance which would result in a failure to
satisfy any of the conditions set forth in "Certain Conditions of the Offer",
Purchaser shall have (i) terminated the Offer in accordance with the provisions
of "Certain Conditions of the Offer", 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 or 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 "The Offer"), only if such
breaches shall not be cured within 10 days of delivery to Parent of written
notice of such breach or breaches;
(c) (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 the first paragraph of "No
Solicitation", (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 the first paragraph of "No Solicitation" 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) (i) Purchaser fails to commence the Offer as provided in "The Offer",
(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.
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In the event of termination of the Merger Agreement and abandonment of the
Merger pursuant to the termination provisions, no party thereto (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 this Section--
"Termination by the Company" and except that nothing in the Merger Agreement
shall relieve any party from liability for any breach of the Merger Agreement.
In the event of a termination of the Merger Agreement by Parent pursuant to
"Termination by Parent", 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
"Termination; Fees-- clause (c)" based on the Company's actions or omission or
(ii) by Parent pursuant to "Termination by Parent--clauses (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.
Parent and Purchaser acknowledge that whenever a fee is payable by the
Company to Parent pursuant to the termination provisions, 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.
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 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 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;
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(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.
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 OPTION AGREEMENT
On July 13, 1999, Parent entered into an option agreement with Dr. Fuisz
(the "Option Agreement"). Under the Option Agreement, Dr. Fuisz granted to
Parent an option (the "Option") to acquire 3,209,829 Shares (the "Option
Shares") through 5:00 p.m. July 23, 1999 for an aggregate cash purchase price of
$22,468,803 (the "Purchase Price"). Contemporaneous with entering into the
Option Agreement, Dr. Fuisz made arrangements for the Option Shares to be placed
into escrow, pursuant to the Escrow
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Agreement, dated as of July 13, 1999, by and among Dr. Fuisz, Parent and the
U.S. Trust Company, National Association (the "Escrow Agreement"). On July 23,
1999, Parent and Dr. Fuisz agreed to extend the option period until 11:59 p.m.
Prior to such time, Parent placed the Purchase Price in escrow and exercised the
Option. The Purchase Price and the Option Shares will be released from escrow
upon the expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. 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 Dr. Fuisz and the Purchase Price will be
returned to Parent.
The Board of Directors of the Company, at a meeting duly called and held on
July 6, 1999 approved the Option Agreement in accordance with Section 203 of the
DGCL for the limited purpose of ensuring that the provisions of Section 203 of
the DGCL will not apply to the Option Agreement.
THE SALISBURY AND WESTBURY LETTERS
Pursuant to a letter of commitment from Salisbury Ltd. ("Salisbury"), dated
as of July 23, 1999, (the "Salisbury Letter"), Parent has committed to purchase
100,000 shares of Common Stock (the "Salisbury Shares") from Salisbury for an
aggregate cash purchase price of $700,000. Pursuant to a letter of commitment
from Westbury Ltd. ("Westbury"), dated as of July 23, 1999, (the "Westbury
Letter"), Parent has committed to purchase 900,000 shares of Common Stock (the
"Westbury Shares") from Westbury for an aggregate cash purchase price of
$6,300,000. Both the Salisbury Shares and the Westbury Shares will be purchased
by Parent following expiration or termination of the Offer. Parent has indicated
that it does not intend to consummate the Westbury and Salisbury transactions
until after the termination or the expiration of the Offer.
THE CONSULTING AGREEMENT
On July 13, 1999, Parent and Dr. Fuisz entered into an agreement providing
that a Consulting Agreement between Parent and Dr. Fuisz will become effective
if Parent, having exercised the Option, acquires more than 50% of the Company.
The Consulting Agreement provides for Dr. Fuisz to provide business, strategic,
marketing, business planning, special projects and other consulting services to
Parent. The Consulting Agreement imposes certain restrictions on the Chairman of
the Company with respect to competitive activities and Parent's employees,
customers and suppliers. If the Consulting Agreement becomes effective, Dr.
Fuisz 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 Dr. Fuisz 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.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS.
At a meeting held on July 25, 1999, the Company Board, by unanimous vote of
all directors except for Mr. Tierney, who was not available, (a) determined that
each of the Offer, the Merger, and the Merger Agreement is fair to and in the
best interests of the Stockholders of the Company, (b) approved the Offer and
the Merger, (c) approved and adopted the Merger Agreement, the execution of such
agreements and the transactions contemplated by such agreements and (d)
recommended that such Stockholders accept the Offer and tender their Shares
pursuant thereto.
THEREFORE, THE FUISZ TECHNOLOGIES, INC. BOARD RECOMMENDS THAT THE
STOCKHOLDERS TENDER ALL OF THEIR SHARES PURSUANT TO THE OFFER.
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A copy of a letter to all stockholders of the Company communicating the
recommendations of the members of the Company Board is filed as Exhibit 5 hereto
and is incorporated by reference in its entirety.
(b) BACKGROUND OF THE OFFER; REASONS FOR RECOMMENDATION.
(1) BACKGROUND
From time to time since before the Company's initial public offering, the
Company has received indications of interest or overtures from other companies
regarding a possible business combination.
One of the companies with which the Company has had discussions is Elan
Corporation, plc ("Elan"), which first expressed an interest in acquiring the
Company in July 1994. In the summer of 1995, Elan conducted a due diligence
review of the Company. Management of Elan and the Company reached a preliminary
agreement on a possible business combination subject to approval by the
companies' respective Boards of Directors. Elan's Board did not authorize a
transaction with the Company at that time.
In 1998, the Company and Elan again discussed possible strategic
relationships. In September 1998, Dr. Fuisz proposed to Mr. Geaney, the Chairman
and Chief Executive Officer of Elan, that Elan make an initial investment in the
Company's stock, as a first step in a strategic alliance. After further
discussions, the parties began to explore a transaction in which Dr. Fuisz would
offer to sell to Elan a block of his Shares that would amount to just under 20%
of the Company's outstanding stock.
On November 11, 1998, Dr. Fuisz and Mr. McVey of the Company and Messrs.
Geaney and Lynch of Elan met in New York City. At this meeting, the parties
discussed a transaction in which, among other things, Dr. Fuisz would sell
approximately 4.2 million Shares of the Company to Elan in exchange for 960,000
registered Elan shares that would be immediately transferrable. The discussions
contemplated a "gross up" provision that would provide price protection to Dr.
Fuisz in the event that Elan acquired a majority of the outstanding Shares after
purchasing Dr. Fuisz's Shares, and a provision under which Mr. Geaney would
become a Director of the Company. Following further discussions between the
parties over the next two months, in January 1999, the Company was informed that
Elan had determined not to execute an agreement documenting the transactions. In
February 1999, Dr. Fuisz and the Company filed a lawsuit against Elan as a
result of Elan's alleged failure to perform under a written agreement with the
Company and an oral agreement with Dr. Fuisz. The lawsuit was settled March 30,
1999.
Beginning in early 1999, senior executives of the Company began contacting a
number of pharmaceutical companies regarding the possibility of a strategic
business relationship. Company executives had extensive conversations with a
number of potential business partners. From these contacts, one large
pharmaceutical, health and medical product manufacturer and distributor
expressed an interest in further evaluating the possibility of a relationship
with the Company. Conversations between the Company and this company continued
during the Spring of 1999 and included an extensive due diligence review of the
Company's Chantilly, Virginia plant and offices. After further discussions, in
April 1999 the pharmaceutical company informed the Company that its preference
would be to monitor the Company's progress over the following year, but not to
pursue any transaction or relationship until that time.
In early June 1999, Dr. Fuisz and other senior executives of the Company and
the Chairman of Parent began discussions regarding a potential transaction
involving the two companies. In late June 1999, the Chairman of Parent proposed
acquiring Dr. Fuisz's shares through an option arrangement.
In mid-June, officers of the Company engaged in extensive negotiations with
Elan regarding a potential supply agreement. On account of an understanding that
Dr. Fuisz had with Elan that he would offer Elan a right of first negotiation
regarding any sale of his Shares, in late June and early July the Company
informed Elan that it was discussing a sale transaction involving the Company
and Dr. Fuisz's Shares.
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At a Company Board meeting on June 30, 1999, Dr. Fuisz briefed the Board on
the Company's discussions with various parties. After further discussion, the
Company Board determined to appoint a special committee of the Board (the
"Special Committee") to evaluate and respond to any transactions.
On July 2, 1999, representatives of the Parent and of Dr. Fuisz discussed
the terms of an option and escrow agreement covering Dr. Fuisz's Shares, but the
parties did not reach an agreement or understanding at that time.
Separately, on July 6, Parent stated that it was interested in conducting
due diligence on the Company but that it would not commence that process unless
it held an option to purchase Dr. Fuisz's Shares. In addition, Parent and
Company discussed entering into a confidentiality agreement, however, Parent
would not enter into such agreement without an exclusive ten day due diligence
period. On July 6, 1999, the Special Committee met telephonically and passed a
resolution approving Dr. Fuisz's grant to Parent of an option to purchase his
Shares, and the exercise of such an option, for the limited purpose of ensuring
that the provisions of Section 203 of the DGCL would not apply to the grant and
exercise of the option to purchase his Shares.
On July 6, 1999, Elan delivered a letter indicating that it would be
interested in acquiring all of the Shares that it did not own through a merger
for consideration of between $7.25 and $8.00 per Share and in entering into a
consulting agreement with Dr. Fuisz. Elan indicated that any such transaction
would be subject to various closing conditions, including approval by Elan's
Board, which had not as of that time been obtained; the negotiation, execution
and delivery of a definitive merger agreement; the absence of any material
adverse change in the Company's business, condition (financial and otherwise)
and prospects; and Elan's satisfactory completion of due diligence. The letter
stated that Elan would be able to complete its due diligence within
approximately two weeks, that the Company should agree not to solicit other
offers during that time, and that Elan anticipated closing the acquisition
within 50 days after completing its due diligence.
On July 8, 1999, Elan delivered another letter to the Company which
superseded its letter of July 6. The July 8 Elan letter substantially repeated
Elan's July 6, 1999 proposal, except that Elan stated that it would be able to
conclude its due diligence by July 13 and that it expected to be able to
consummate the transaction within 60 days of completing its due diligence
review. On July 8, the Special Committee met telephonically to consider Parent's
request for an exclusive period to conduct due diligence. At that meeting, the
Special Committee was informed that Elan had stated that it could complete its
due diligence and present an offer for the Company by noon on Saturday, July 10.
The Special Committee expressed concern, in light of the Company's past dealings
with Elan, as to the level of Elan's interest, and that the terms of Elan's July
8 letter represented no improvement over its July 6 letter, other than with
respect to the due diligence review period. In light of Elan's commitment to
present a proposal by July 10 at noon, the Special Committee determined to allow
Elan to continue to conduct due diligence, to enter into discussions with Parent
regarding its interest in conducting due diligence, and to decline to grant
Parent an exclusive due diligence review period. In response to that decision,
Parent indicated that it had no interest in conducting due diligence under those
circumstances.
On July 10, the Special Committee convened a telephonic meeting in
anticipation of considering a proposal from Elan. At that meeting, Elan
presented a letter indicating its interest in pursuing an acquisition of the
Company through a merger at $7.50 per Share, but indicated that it would need
until July 14 to complete its due diligence. The letter did not otherwise
significantly change the conditions to Elan's proposal, including the fact that
any transaction remained subject to approval by Elan's Board of Directors. The
Special Committee was also informed that Parent had contacted the Company to
indicate that it continued to be interested in conducting due diligence at the
Company on a limited exclusive basis. In light of the fact that Elan had not
obtained its Board's approval to pursue a transaction with the Company, the
period of time that Elan previously had been granted to conduct due diligence on
the Company, the extent of Elan's existing knowledge of and familiarity with the
Company and Elan's request
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for additional time to conduct due diligence and out of concern that continuing
discussions with Elan would prevent the Company from considering any other
proposals, the Special Committee determined to deny Elan's request for
additional time to conduct due diligence and to authorize negotiations toward a
provision allowing Parent to conduct due diligence for a limited period of time
on an exclusive basis, subject to the Special Committee's ability to satisfy its
fiduciary duties if a competing party expressed interest in a transaction.
On July 12 and 13, Gibson, Dunn & Crutcher LLP ("Gibson, Dunn & Crutcher"),
as counsel to the Special Committee, negotiated with counsel to Parent a
confidentiality agreement containing an agreement by the Company not to solicit
or respond to other proposals for a period of ten calendar days, subject to the
Company's ability to respond to an unsolicited proposal if required to satisfy
its fiduciary duties. At the same time, Parent negotiated the terms of the
Option Agreement and the proposed Consulting Agreement with the Falk Law Firm,
counsel to Dr. Fuisz. On July 13, Parent executed the Option Agreement with Dr.
Fuisz and the confidentiality agreement with the Company and immediately
commenced a due diligence examination of the Company.
On July 15, Elan delivered a letter to the Company indicating that it
continued to be interested in exploring a transaction with the Company.
On July 19, Parent indicated to the Special Committee's advisors that any
proposal that it would make to acquire the Company likely would involve
consideration in the form of both cash and Parent stock. Accordingly, legal
advisors to the Special Committee determined that it should authorize financial
and legal advisors to promptly conduct due diligence on Parent, with the
objective of being able to evaluate a cash and stock proposal from Parent, by
July 23, the date that the Stock Option expired. On July 21, 1999, the Company
retained Warburg Dillon Read LLC ("Warburg Dillon Read") to act as financial
advisor to the Special Committee in connection with the proposed transaction.
On July 22, Parent presented a draft merger agreement, which the Company
understood from discussions with Parent, contemplated a cash tender offer at
$7.00 per share for that number of shares that would result in Parent holding
49% of the Company's outstanding Shares, to be followed by a merger for stock at
an exchange ratio to be negotiated. That evening, legal and financial advisors
to the Special Committee and to Parent met to negotiate the terms of the draft
merger agreement.
On July 23, legal and financial advisors to the Company provided Parent
further comments on the draft merger agreement. On that afternoon, Dr. Fuisz
extended the term of the Stock Option until 11:59 p.m. that evening. That
afternoon, the Special Committee held a telephonic meeting to be briefed by its
legal and financial advisors regarding the terms of the draft merger agreement
and to discuss certain provisions that might be negotiated further. The Special
Committee authorized its legal and financial advisors to seek to negotiate,
among other things, an exchange ratio in the merger that would provide greater
protection against downside movement in Parent's stock price and some potential
to participate in any upside movement in Parent's stock price, and a
significantly lower break-up fee. In response to these negotiations, Parent
agreed to the exchange ratio and the break-up fee reflected in the Merger
Agreement, but refused to increase the cash purchase price for Shares in the
tender offer. The Special Committee held another telephonic meeting at which its
legal and financial advisors reported on the status of negotiations, and at
which the Special Committee authorized further negotiations. At 11:55 p.m.,
Parent exercised the Stock Option.
The parties continued to negotiate the Merger Agreement into the morning and
during the day on July 24. In the evening of July 24, the Special Committee
again met by telephone so that its legal and financial advisors could brief the
Committee on the status of negotiations. At the conclusion of that meeting, the
Special Committee recommended that the Merger Agreement be presented to the full
Board of Directors for consideration, and the Company Secretary called a meeting
of the Board of Directors for 11:00 a.m. on July 25. The Special Committee also
authorized its advisors to continue negotiating certain
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provisions of the Merger Agreement, including limiting the conditions to the
Merger and the circumstances under which the break-up fee would be payable.
During the morning of July 25, 1999, the Company's Board of Directors met
via teleconference, in which all members were present except for Mr. Tierney,
who was in Ireland and indicated that he could not be available. At the meeting,
Gibson, Dunn & Crutcher reviewed the status of negotiations that had been
occurring over the Merger Agreement. Gibson, Dunn & Crutcher also provided a
summary of the principal terms of the Merger Agreement, and reported on the due
diligence examination of Parent that it had conducted. Warburg Dillon Read then
reviewed with the Board the financial analyses it had performed in connection
with its evaluation, from a financial point of view, of the consideration
payable in the proposed transaction. Although the Board expressed its support
for the terms of the Merger Agreement, in response to further discussion, the
Board instructed its advisors to approach Parent regarding the Share conversion
formula and to seek revision or clarification of certain other terms. In
response to these discussions, Parent agreed to revise certain terms of the
Merger Agreement.
The Company's Board of Directors reconvened its meeting later that day and,
received a report from Gibson, Dunn & Crutcher with respect to the additional
modifications to the Merger Agreement and Warburg Dillon Read's opinion as to
fairness, from a financial point of view, of the consideration to be received in
the Offer and Merger, taken together, by holders of the Company's Shares (other
than Parent and its affiliates). The Board (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) recommended 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.
That evening, the Merger Agreement was executed by the parties and on July
26, 1999, a joint press release was issued prior to the opening of the U.S.
stock markets.
(2) REASONS FOR THE RECOMMENDATION OF THE BOARD; FAIRNESS OF THE OFFER.
In reaching its determination referred to in Item 4(a) above, the Company
Board considered the following factors, each of which in the view of the Company
Board, supported such determinations:
(i) The amount, timing and form of consideration to be received by the
Company's stockholders in the Offer and the Merger pursuant to the Merger
Agreement, including the fact that stockholders would receive a cash payment
with no financing condition.
(ii) The possibility that the consideration the Company's stockholders might
obtain in a future transaction or through continued ownership of Company Shares
if the Company were to remain independent would likely be less advantageous than
the consideration they would receive pursuant to the Offer and the Merger,
because of:
(a) The present financial condition and needs, and the business and
strategic objectives of the Company, as well as the risks involved in
achieving those objectives;
(b) The need for the Company to attract and retain management and skilled
scientific personnel if it were to remain independent; and
(c) The need for the Company to restructure its operations and the
current financial market conditions and historical market prices,
volatility and trading information with respect to the Shares.
(iii) The historical market prices and trading activity of the Shares over
the weeks preceding the date of the public announcement of the Merger Agreement
(the "Announcement"): the Offer Price of $7.00 per share represents a 113%
premium over the closing price of the Shares thirty days prior to the
17
<PAGE>
Announcement, a 67% premium over the average closing price for the thirty days
prior to the Announcement and a 38.3% premium over the closing price one week
prior to the Announcement;
(iv) The fact that, under the Merger Agreement, stockholders may receive in
the Merger the benefit of any appreciation in Parent's stock price over its
trading price immediately prior to the date the Merger Agreement was signed, up
to the level where the Parent stock to be received may be worth $7.50 per share;
(v) The fact that, under the Merger Agreement, the Company may still receive
offers from other interested bidders, if any, and may communicate with any such
bidders if required to satisfy its fiduciary obligations to the Company's
stockholders; and if the Company determines any such other bidder has made a
superior offer, it may after giving notice to Purchaser and an opportunity to
match or exceed the alternative offer, elect to terminate the Merger Agreement
and pay the break-up fee provided for in the Merger Agreement;
(vi) The likelihood of the proposed acquisition being consummated, in light
of Purchaser's prior purchase of a significant number of Shares and the limited
conditions to Purchaser's obligation to consummate the Merger once the Offer has
been consummated;
(vii) The effect of the condition in the Merger Agreement that, without the
consent of the Company, no change in the Offer may be made by Parent or
Purchaser which (i) decreases the $7.00 per Share payable in the Offer, (ii)
waive the Minimum Condition, (iii) change the form of consideration payable in
the Offer, (iv) reduces the maximum number of Shares to be purchased in the
Offer, (v) change the conditions to the Offer or (vi) impose additional
conditions to the Offer or amend any other term of the Offer in any manner
adverse to the holders of Shares; and
(viii) The written opinion of Warburg Dillon Read to the Special Committee and
the Company Board, dated July 25, 1999, to the effect that, as of the date of
such opinion and based upon and subject to certain matters stated therein, the
per Share consideration to be received by the holders of Shares (other than
Parent and its affiliates) in the Offer and the Merger, taken together, was
fair, from a financial point of view, to such holders. The full text of the
written opinion of Warburg Dillon Read, dated July 25, 1999, which sets forth
the assumptions made, matters considered and limitations on the review
undertaken, is attached as Annex A to this document and is incorporated herein
by reference. Warburg Dillon Read's opinion is directed to the Special Committee
and the Company Board, addresses only the fairness of the per Share
consideration to be received by the holders of Shares (other than Parent and its
affiliates) in the Offer and the Merger, taken together, from a financial point
of view, and does not constitute a recommendation to any stockholder as to
whether or not such stockholder should tender Shares in the Offer or as to how
such stockholder should vote with respect to the proposed Merger. HOLDERS OF
SHARES ARE URGED TO READ SUCH OPINION CAREFULLY IN ITS ENTIRETY.
CONSIDERATIONS OF THE COMPANY BOARD
The foregoing discussion of the information and factors considered by the
Company Board is not meant to be exhaustive but includes the material factors
considered by the Board in reaching its conclusions and recommendations. The
members of the Company Board evaluated the various factors listed above in light
of their knowledge of the business, financial condition and prospects of the
Company and after discussions with the Company's management and legal and
financial advisors. In light of the number and variety of factors that the
Company Board considered in connection with its evaluation of the Merger, the
Merger Agreement and the transactions contemplated thereby (including the
Offer), the Company Board did not find it practicable to assign relative weights
to the foregoing factors, and accordingly, the Company Board did not do so. In
addition, individual members of the Company Board may have given different
weights to different factors.
18
<PAGE>
The Company Board determined that the Offer was the result of a process that
was fair to the stockholders of the Company because, among other things, (a) the
Special Committee conducted numerous meetings, during which the Special
Committee evaluated and analyzed the proposed transaction, determined the
negotiating strategy and reached informed conclusions based, in part, on the
advice of independent financial and legal advisors, (b) the Special Committee
deliberated with respect both to the transactions with Parent and alternative
strategies potentially available for maximizing stockholder value and (c) the
$7.00 per Share price and the other terms and conditions of the Merger Agreement
and the Offer resulted from active arm's-length bargaining between the Company
and its representatives, on the one hand, and Parent and its representatives on
the other.
IN LIGHT OF ALL THE FACTORS SET FORTH ABOVE, THE COMPANY BOARD HAS
DETERMINED THAT THE OFFER, MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS, HAS APPROVED THE OFFER, THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company has retained Warburg Dillon Read to act as financial advisor to
the Special Committee in connection with the Offer and the Merger. Pursuant to
the terms of this engagement, the Company has agreed to pay Warburg Dillon Read
for its services upon completion of the Offer and the Merger an aggregate
financial advisory fee equal to 1% of the total consideration, including
liabilities assumed, payable in the Offer and the Merger, subject to a minimum
fee of $2,750,000. The Company also has agreed to reimburse Warburg Dillon Read
for reasonable travel and other out-of-pocket expenses, including the fees and
expenses of legal counsel, and to indemnify Warburg Dillon Read and related
parties against certain liabilities, including liabilities under the federal
securities laws, relating to or arising out of their engagement. In the ordinary
course of business, Warburg Dillon Read and its successors and affiliates may
actively trade or hold the securities of the Company and Parent for their own
accounts or for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.
The Company also retained Wasserstein Perella & Co., Inc. ("Wasserstein
Perella") to render financial advice and assistance to the Company in connection
with a possible merger, sale or other strategic combination involving the
Company and Parent. However, Wasserstein Perella was not requested to provide
the Company an opinion as to the fairness, from a financial point of view, of
the consideration payable in the Offer and the Merger, and will not receive any
compensation in connection with the Merger Agreement, the Offer or the Merger.
Neither the Company nor any person acting on its behalf has or currently
intends to employ, retain or compensate any person to make solicitations or
recommendations to the stockholders of the Company on its behalf with respect to
the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) During the past 60 days, no transactions in Shares have been effected by
Company or, to the best of Company's knowledge, by any of its executive
officers, directors, affiliates or subsidiaries, except (i) Dr. Fuisz has
exercised 105,000 options on July 13, 1999, (ii) Dr. Fuisz sold Parent 3,209,829
Shares on July 23, 1999 for an aggregate cash purchase price of $22,468,803,
(iii) Salisbury Ltd. has committed to sell 100,000 Shares to Parent for an
aggregate cash purchase price of $700,000; and (iv) Westbury Ltd. has committed
to sell 900,000 Shares to Parent for an aggregate cash purchase price of
$6,300,000.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director and affiliate of the Company presently intends to tender to Purchaser,
pursuant to the Offer, all Shares of which he is the record or beneficial owner.
19
<PAGE>
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth herein and in the portions of the Offer to Purchase
incorporated herein by reference, the Company is not engaged in any negotiation
in response to the Offer which relates to or would result in: (1) an
extraordinary transaction, such as a merger or reorganization involving the
Company or any subsidiary thereof; (2) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary thereof; (3) a tender
offer for or other acquisition of securities by or of the Company; or (4) any
material change in the present capitalization or dividend policy of the Company.
(b) Except as set forth herein and in the portions of the Offer to Purchase
incorporated therein by reference, there is no transaction, board resolution,
agreement in principle, or signed contract in response to the Offer which
relates to or would result in one or more of the matters referred to in Item
7(a)(1), (2), (3) or (4).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The information contained in all of the Exhibits referred to in Item 9 below
is incorporated herein by reference in its entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
Exhibit 1 Offer to Purchase, dated July 30, 1999 (incorporated by reference to Exhibit (a)(1) to the Schedule
14D-1.
Exhibit 2 Letter of Transmittal (incorporated by reference Exhibit (a)(2) to the Schedule 14D-1).
Exhibit 3 Employment Letter, dated October 24, 1995, between Company and Mr. Myers (incorporated by reference
to Exhibit 10.12 to Form 10-K/A, dated April 15, 1999 ("Form 10-K/A")).
Exhibit 3A Employment Letters, dated August 3, 1998 and January 13, 1999 between Company and Mr. Myers.
Exhibit 4 Employment Letters, dated September 18, 1997 and July 1, 1998 between Company and Mr. Willard.
Exhibit 5 Employment Letters, dated October 27, 1992 and August 3, 1998 between Company and Mr. Cherukuri.
Exhibit 6 Company's 1991 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.1 and 10.1A
to Form 10-K/A).
Exhibit 7 Consulting Agreement, dated as of January 28, 1999 ("January 28 Consulting Agreement"), as amended
June 25, 1999, between Company and Mr. Scrivens. Appendix A to the January 28 Consulting Agreement
is incorporated by reference to Exhibit 10.10 to Form 10-K/A.
Exhibit 8 The Stock Purchase Agreement, dated December 31, 1998, between Privateer Ltd. and the Company.
Exhibit 9 License Agreement, dated December 31, 1998, between Privateer Ltd. and the Company.
Exhibit 10 Amended & Restated Agreement and Plan of Merger, dated as of July 25, 1999, among ABCI Acquisition
Sub. Corporation, Biovail Corporation International and Fuisz Technologies, Ltd. (incorporated by
reference to Exhibit (c)(1) to the Schedule 14D-1).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11 Option Agreement, dated as of July 13, 1999, among ABCI Acquisition Sub. Corporation, Biovail
Corporation International and Dr. Richard Fuisz (incorporated by reference to Exhibit 1 to Schedule
13D, filed July 13, 1999 ("Schedule 13D")).
<S> <C>
Exhibit 12 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 Fuisz (incorporated by
reference to Exhibit 2 to Schedule 13D).
Exhibit 13 Letter of Commitment, dated as of July 23, 1999, between Salisbury Ltd. and Biovail Corporation
International (incorporated by reference to Exhibit 1 to the Amendment No. 1 to Schedule 13D, filed
July 26, 1999 ("Schedule 13D/A")).
Exhibit 14 Letter of Commitment, dated as of July 23, 1999, between Westbury Ltd. and Biovail Corporation
International (incorporated by reference to Exhibit 2 to Schedule 13D/A).
Exhibit 15 Letter of Acceptance, dated as of July 25, 1999, between Biovail Corporation International and
Salisbury Ltd. (incorporated by reference to Exhibit 3 to Schedule 13D/A).
Exhibit 16 Letter of Acceptance, dated as of July 25, 1999, between Biovail Corporation International and
Westbury Ltd. (incorporated by reference to Exhibit 4 to Schedule 13D/A).
Exhibit 17 Letter Agreement between Bioval and Dr. Fuisz, dated July 13, 1999 regarding the Consulting
Agreement (incorporated by reference to Exhibit (c)(8) of Schedule 14D-1).
Exhibit 18 Letter to Stockholders of Fuisz Technologies, Ltd., dated July 30, 1999.*
Exhibit 19 Press Release issued July 25, 1999 (incorporated by reference to Exhibit (a)(6) to the Schedule
14D-1).
ANNEX A Opinion of Warburg Dillon Read LLC.*
</TABLE>
- ------------------------
* Included in materials mailed to stockholders.
21
<PAGE>
SIGNATURE
After due inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
<TABLE>
<S> <C> <C>
Dated: July 30, 1999 FUISZ TECHNOLOGIES, LTD.
By: Fuisz Technologies, Ltd.
/s/ Dr. Richard Fuisz
By: Dr. Richard Fuisz
Its: Chairman of the Board
</TABLE>
22
<PAGE>
EXHIBIT 3A
[LOGO]
August 3, 1998
Michael Myers
Fuisz Technologies Ltd.
14556 Avion at Lakeside
Chantilly, Virginia 20151
Dear Michael:
I refer to our agreement with you regarding your employment with Fuisz
Technology Ltd. In consideration of your acceptance of your new
responsibilities as President of the Pharma Division of Fuisz Technologies
Ltd., your continued employment with us and our mutual intention of a long
and productive relationship together, we hereby agree to the following
conditions of your employment:
1. The term of your employment shall be extended until December 31, 2000
and be renewable thereafter for periods and upon terms mutually
acceptable to the parties. Annual reviews will be carried out in December
of each year with any award being implemented from the following January 1.
2. Notwithstanding any other provision of your employment with us or the
Fuisz Technologies Ltd. 1994 Stock Option Plan (the "Option Plan"), the
compensation due thereunder, and the options granted to your pursuant to
the Option Plan, shall accelerate so that you shall have the right to
such compensation and the exercise of such options which would, but for
this provision, not yet be due or exercisable, immediately prior to any
Change of Control that occurs during the term of the Employment
Agreement. For purposes hereof, a "Change of Control" shall mean any of
the following events; the direct or indirect beneficial ownership (within
the meaning of Section 13(d) of the Securities Exchange Act of 1934 and
Regulation 13D-G thereunder) of 30% or more of the common equity
securities of Fuisz is acquired or becomes held by any person or group of
persons (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934), or the sale, mortgage, leases or other transfer in
one or more transactions not in the ordinary course of the business of
Fuisz Technologies Ltd. as assets or earnings constituting more than 50%
of the assets or earning power of Fuisz Technologies Ltd. and its
subsidiaries (taken as a whole) to any such person or group of persons.
I look forward to our continued working relationship.
Sincerely,
/s/ Kenneth W. McVey
Kenneth W. McVey
President and Chief Executive Officer
<PAGE>
EXHIBIT 3A
[LOGO]
Michael Myers
Fuisz Technologies Ltd.
14556 Avion at Lakeside
Chantilly, VA 20151
January 13, 1999
Dear Michael,
Further to my letter of August 3, 1998 (copy attached), I am pleased to advise
you that, although the Compensation Committee of the Company has decided not
to change the base salary of Senior Management, I have recommended and it has
been agreed that you are awarded a further 75,000 Options at the closing
price on December 16, 1998. Of these 18,750 will vest immediately and the
remainder at 33% over each of the 1st and 3rd anniversaries of this grant.
In addition, I am pleased to advise that the Compensation Committee has also
awarded you a discretionary $75,000 bonus which however is inclusive of any
amount which may be payable under the 1998 Senior Management Incentive Plan
(SMIP). This bonus will be paid within the next few days.
Finally, I can confirm that a 1999 SMIP has been put in place, details of
which have already been provided to you.
Thank you both personally an on behalf of the Company for your excellent
work in 1998.
Kindest regards,
/s/ Ken
Kenneth W. McVey
President & CEO
<PAGE>
EXHIBIT 4
[LOGO]
September 18, 1997
Stephen H. Willard
1420 Watergate South
Washington D.C. 20036
Dear Stephen:
We are pleased to offer you the position of Secretary to the Board of Fuisz
Technologies Ltd. (herein "Company"). In this capacity, you will also be
appointed to the position of Executive Vice President and General Counsel
for Fuisz International Holdings Limited. This offer of employment is
effective as of the date of this letter and valid pending your immediate
acceptance.
If you accept this offer of employment, your employment will commence
immediately and shall continue in full force and effect for a term of two (2)
years. Your contract will be eligible for renewal annually, with a renewal
term of two (2) years.
The salary for this position is $200,000.00 (two hundred thousand) per year
to be paid twice monthly in twenty-four (24) installments throughout the
year. You will be eligible for salary review after twelve (12) months of
employment and salary increases will be predicated on individual performance
and contributions and overall performance of the Company.
In addition to this annual gross salary, you will be entitled to participate
in the Senior Executive Bonus and Option Programs operated by Fuisz
Technologies Ltd. as these programs are defined from time to time by the
Company's Board of Directors.
It will be recommended to the Board of Directors that you participate in the
Stock Option Program and you will receive an option for 50,000 shares of the
Company's common shares as a Non-statutory Option at the price of Fuisz
Technologies Ltd. stock at the close of business on September 17, 1997. These
options shall vest annually over a period of four (4) years.
You will be eligible for three (3) weeks vacation annually. Vacation duration
will be modified periodically in accordance with the Company Vacation Policy.
The current medical and life insurance carrier for the Company is Allmerica
Financial Life Insurance Company. You will be eligible to apply for inclusion
in the plan three (3) consecutive months from start date and once you have
completed and submitted all of the necessary paperwork for inclusion in the
program. The insurance coverage is a shared cost. The company will pay eighty
(80%) of the cost and you will be responsible for twenty (20%) percent of the
cost. Your portion of the cost will be handled as a payroll deduction each
month. The Company's medical insurance plan through Allmerica includes dental
benefits and a fixed fee prescription plan.
<PAGE>
Stephen H. Willard
Page 2
September 18, 1997
Your place of work will be at the Company facilities in Chantilly, Virginia.
The Company's normal hours of business are 8:30 a.m. to 5:00 p.m. Your
position may require domestic and/or international travel.
Your employment at the Company is conditioned on your signing our standard
Employee Confidentially Agreement which is enclosed herewith, and receipt of
such signed Agreement by the Company.
Stephen, we are looking forward to having you join us as a member of the
Fuisz Technologies team if this offer is acceptable.
Please confirm your acceptance of the terms and conditions of this offer
letter by signing and dating one of the enclosed sets of originals and
returning it to Annie Frimm, Director of Human Resources.
Sincerely,
/s/ Kenneth W. McVey
Kenneth W. McVey
President and CEO
Agreed and Accepted:
/s/ Stephen H. Willard
- ----------------------
Stephen H. Willard
September 18, 1997
- ------------------
Date
<PAGE>
EXHIBIT 4
[LOGO]
July 1, 1998
Stephen H. Willard
Fuisz Technologies Ltd.
14555 Avion at Lakeside
Chantilly, Virginia 20151
Dear Stephen:
I refer to our employment agreement with you dated September 18, 1997 (the
"Employment Agreement"). In consideration of your acceptance of your new
responsibilities as General Counsel of Fuisz Technologies Ltd. and your
continued employment with us, we hereby agree to the following modifications
of the Employment Agreement between us:
1. The term of your employment under the Employment Agreement shall be
extended until December 31, 2000.
2. Notwithstanding any other provision of the Employment Agreement or the
Fuisz Technologies Ltd. 1994 Stock Option Plan (the "Option Plan"), the
compensation due thereunder, and the options granted to you pursuant to
the Option Plan, shall accelerate so that you shall have the right to
such compensation and the exercise of such options which would, but for
this provision, not yet be due or exercisable, immediately prior to any
Change of Control that occurs during the term of the Employment
Agreement. For purposes hereof, a "Change of Control" shall mean any of
the following events: the direct or indirect beneficial ownership
(within the meaning of Section 13(d) of the Securities Exchange Act of
1934 and Regulation 13D-G thereunder) of 30% or more of the common
equity securities of Fuisz is acquired or becomes held by any person or
group of persons (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934), or the sale, mortgage, lease or other
transfer in one or more transactions not in the ordinary course of the
business of Fuisz Technologies Ltd. of assets or earnings constituting
more than 50% of the assets or earning power of Fuisz Technologies Ltd.
and its subsidiaries (taken as a whole) to any such person or group of
persons.
I look forward to our continued working relationship.
Sincerely,
/s/ Kenneth W. McVey
Kenneth McVey
President and Chief Executive Officer
<PAGE>
EXHIBIT 5
FUISZ
TECHNOLOGIES LTD.
PERSONAL AND CONFIDENTIAL
October 27, 1992
Mr. S. Rao Cherukuri
10 Jean Drive
Towaco, NJ 07082
Dear Rao:
We are pleased to offer you the position of Senior Director, Technology
Development with Fuisz Technologies Ltd., this offer of employment being
effective as of the date of this letter and valid, pending your acceptance,
through November 23, 1992. Your effective date of employment with the Company
will, as agreed, be November 30, 1992.
The salary for the position is $125,000 per year to be paid at month end in
twelve (12) equal installments throughout the year. You will be eligible for
salary review after twelve (12) months of employment and salary increases
will be predicated on individual performance and contributions and, overall
Company performance.
Additionally, you will be eligible to participate in the Company's Executive
Bonus Plan. This plan will be approved and implemented on an annual basis by
the Compensation Committee of the Board of Directors and, it is our
expectation that the Plan will be implemented when the Company has achieved
profitability on an operating basis.
You will also participate in the Company's Stock Option Program and will
receive an option for 20,000 shares of the Company's common shares as a
Non-statutory Option with an exercise price of $8.80 per share. Your option
program will be of four (4) years duration and the options will be vested
annually after each year of your employment with the Company.
You will be eligible for four (4) weeks vacation on an annual basis and
vacation duration will be modified periodically in accordance with the
Company Vacation Policy.
You will have an automobile allowance of $450.00 per month available to you
during your employment with the Company. This allowance may applied to a
purchased or leased vehicle, and any purchase or lease agreement involved
should be in your name.
3810 CONCORDE PARKWAY - SUITE 100 - CHANTILLY, VIRGINIA
TELEPHONE (703) 803-3280 - FACSIMILE (703) 803-6400
<PAGE>
Page 2
October 27, 1992
S. Rao Cherukuri
The Company will reimburse you for typical and customary relocation expenses
with respect to your relocation from New Jersey to Virginia.
In some cases, with respect to specific expenses, the Company will advance
funds required if appropriate documentation is available. Additionally, a
relocation allowance of $800.00 per month will be available to you for up to
six months during your relocation process.
The current medical insurance carrier for the Company is The Principle Group.
You will be eligible for inclusion in the plan ninety (90) days after the
15th of the month in which you begin work and have completed and submitted
all of the necessary paperwork for inclusion in the program.
The Company's general insurance plan is a co-pay program in which the Company
will contribute eighty percent (80%) of the cost and you will be responsible
for twenty percent (20%) of the cost, your contribution will be handled as a
payroll deduction on a monthly basis. The Company insurance plan through The
Principle Group also includes dental benefits, a fixed fee prescription plan
and life insurance coverage in an amount equal to your annual salary.
If you are currently eligible for COBRA or are included in a medical
insurance plan where the option exists to continue coverage, you should do
so. During the period after your date of employement and until Principle
Group coverage begins, the Company will reimburse eighty percent (80%) of
your interim insurance coverage cost.
Your place of work will be at the Company headquarters at 3810 Concorde
Parkway, Suite 100, Chantilly, Virginia. Your position will require domestic
and international travel.
Your acceptance of this offer of employment is additionally predicated on
your agreement to the terms and conditions of the standard Fuisz Employee
Agreement, two originals of which are enclosed for your review and execution.
FUISZ
TECHNOLOGIES LTD.
<PAGE>
Page 3
October 27, 1992
S. Rao Cherukuri
Rao, we are looking forward to having you join us as key member of the Fuisz
Technologies team, let me know if you have any questions. If this offer is
acceptable, please evidence your agreement to the terms and conditions of
this letter as indicated below and, return an executed copy to my attention
with an executed copy of the FTL Employee Agreement.
With sincere regards,
/s/ H. Kirk Merritt
H. Kirk Merritt
President and
Chief Operating Officer
AGREED TO AND ACCEPTED:
/s/ S. Rao Cherukuri 11-7-92
------------------------------------
S. Rao Cherukuri Date
FUISZ
TECHNOLOGIES LTD.
<PAGE>
[LOGO]
August 3, 1998
Rao Cherukuri
Fuisz Technologies Ltd.
14555 Avion at Lakeside
Chantilly, Virginia 20151
Dear Rao,
I refer to our agreement with you regarding your employment with Fuisz
Technology Ltd. In consideration of your acceptance of your new
responsibilities as President of the Consumer Health Division of Fuisz
Technologies Ltd., your continued employment with us and our mutual intention
of a long and productive relationship together, we hereby agree to the
following conditions of your employment:
1. The term of your employment shall be extended until December 31, 2000
and be renewable thereafter for periods and upon terms mutually
acceptable to the parties. Annual reviews will be carried out in December
of each year with any award being implemented from the following January 1.
2. Notwithstanding any other provision of your employment with us or the
Fuisz Technologies Ltd. 1994 Stock Option Plan (the "Option Plan"), the
compensation due thereunder, and the options granted to you pursuant to
the Option Plan, shall accelerate so that you shall have the right to
such compensation and the exercise of such options which would, but for
this provision, not yet be due or exercisable, immediately prior to any
Change of Control that occurs during the term of the Employment
Agreement. For purposes hereof, a "Change of Control" shall mean any of
the following events: the direct or indirect beneficial ownership (within
the meaning of Section 13(d) of the Securities Exchange Act of 1934 and
Regulation 13D-G thereunder) of 30% or more of the common equity
securities of Fuisz is acquired or becomes held by any person or group of
persons (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934), or the sale, mortgage, lease or other transfer in
one or more transactions not in the ordinary course of the business of
Fuisz Technologies Ltd. as assets or earnings constituting more than 50%
of the assets or earning power of Fuisz Technologies Ltd. and its
subsidiaries (taken as a whole) to any such person or group of persons.
I look forward to our continued working relationship.
Sincerely,
/s/ Kenneth W. McVey
Kenneth W. McVey
President and Chief Executive Officer
<PAGE>
EXHIBIT 7
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is made as of this 28th day
of January, 1999 by Fuisz Technologies, Ltd. a Delaware corporation with its
principal place of business at 14555 Avion at Lakeside, Chantilly, Virginia,
20151 (the "Company"), and Patrick D. Scrivens, at P.O. Box 341785, Bethesda,
Maryland 20827 (the "Consultant").
WHEREAS, the Consultant resigned as an employee of the Company effective
June 30, 1999;
WHEREAS, the Company desires to retain Consultant to provide additional
services to the Company; and,
WHEREAS, the Consultant desires to provide the Company with consulting
services.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Parties hereto, the
Parties agree as follows:
1. TERM. Company shall retain Consultant for the period beginning July 1,
1999 and terminating on October 19, 2000 unless otherwise extended by mutual
agreement between the Parties.
2. COMPETITION AND BENEFITS. During the term of this Agreement, the
Company shall provide Consultant with all of the compensation and benefits
specified and defined in Section 5.3 of the Consultant's Employment Agreement
with the Company ("Employment Agreement") which is incorporated herein and
which is attached hereto as Exhibit A. Said compensation and benefits shall
include, among other things, salary, bonuses, life, disability, accident and
health insurance, all fringe benefits awarded by the Company and
reimbursement of all expenses incurred in connection with this Agreement.
3. DISPUTE RESOLUTION. Any dispute, controversy, claim or disagreement
arising out of or relating to this Agreement in any way shall be conclusively
settled by arbitration to be held in the State of Virginia in accordance with
the procedural rules of the American Arbitration Association. Judgement upon
the decision and award of the arbitrator(s) may be entered in any court
having jurisdiction thereof. In addition, the parties agree that the
arbitrator(s) shall have the exclusive power to consider and issue requests
for injunctive relief to prevent any breach of this Agreement or to enforce
specifically the terms and provisions of this Agreement. The costs,
attorney's fees and expenses of such arbitration that are incurred by the
prevailing party shall be awarded by the arbitrator to the prevailing party.
<PAGE>
4. NON-EXCLUSIVE SERVICES. The Parties agree that the Consultant shall be
entitled to pursue other business activities during the term of this
Agreement and that this is a non-exclusive Agreement.
5. NON-COMPETE. Notwithstanding the one year non-compete provisions
specified in Exhibit A, the Parties hereby acknowledge and agree that said
provisions shall not apply to any business activities undertaken by
Consultant relating to or involving the Fuisz Drugstore or any other internet
business.
6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of both Parties and their respective successors and assigns,
including any corporation or business entity with which or into which the
Company may be merged or which may succeed to its assets or business.
7. NOTICES. All notices required or necessary under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or
confirmed facsimile delivery to the respective Parties as follows:
If to the Company: Fuisz Technologies Ltd.
14555 Avion at Lakeside
Chantilly, Virginia, 20151
(703) 803-3260
If to Consultant: Patrick D. Scrivens
P.O. Box 341785
Bethesda, Maryland 20827
(301) 742-4736
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the day and year set forth above.
/s/ Patrick D. Scrivens /s/ Kenneth McVey
- ----------------------- ------------------------
Patrick D. Scrivens Kenneth McVey
Consultant President
Fuisz Technologies, Ltd.
/s/ Richard Fuisz
------------------------
Richard Fuisz
Chairman
Fuisz Technologies, Ltd.
<PAGE>
EXHIBIT 7
June 25, 1999
Richard C. Fuisz, M.D.
Chief Executive Officer
Fuisz Technologies Ltd.
14555 Avion at Lakeside
Suite 250
Chantilly, Virginia 20151
RE: CONSULTING AGREEMENT
Dear Richard:
This letter, upon your execution and return, will confirm our agreement
regarding my role as consultant to Fuisz Technologies Ltd. (the "Company").
The understandings set forth herein supplement and modify the consulting
agreement, effective July 1, 1999, between the Company and myself (the
"Consulting Agreement").
1. In addition to the services to be performed by me under the
Consulting Agreement, I hereby agree to act as Acting Chief Financial
Officer of the Company from and after July 1, 1999, until such time
as I am notified in writing by the Chief Executive Officer of the
Company that my services as Acting Chief Financial Officer are no
longer needed.
2. Except as provided in the next paragraph, the termination of my
services as Acting Chief Financial Officer of the Company (as provided
in the previous paragraph) shall have no effect upon the terms and
conditions of the Consulting Agreement, which shall continue in full
force and effect and unaffected thereby.
3. In consideration of my agreeing to act as Acting Chief Financial
Officer of the Company, upon termination of such role as provided
above, the term of the Consulting Agreement shall be extended by such
number of whole months, rounded up, that I will have served as Acting
Chief Financial Officer of the Company. In addition, I will be paid
once monthly in advance instead of twice per month as originally
stipulated in the Consulting Agreement.
If the foregoing accurately reflects our understanding, please so
indicate by signing, dating and returning the enclosed copy of this letter to
me.
Very truly yours,
/s/ Patrick D. Scrivens
-----------------------
Patrick D. Scrivens
Accepted and Agreed to
this ____ day of June 1999
FUISZ TECHNOLOGIES LTD.
By: /s/ Richard C. Fuisz
-----------------------
Richard C. Fuisz, M.D.
Chief Executive Officer
<PAGE>
EXHIBIT 8
Sale of FuiszDrugstore Ltd.
December 31, 1998
Page 1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made and dated as of
December 31, 1998 by and among Fuisz Technologies Ltd., a corporation formed
under the laws of the State of Delaware ("Seller"), Privateer Ltd. a
corporation organized under the laws of the State of Delaware and doing
business at 8000 Tower Crescent Drive, Suite 1350, Vienna, Virginia 22182
("Purchaser") and Dr. Richard C. Fuisz, an individual residing at 1287
Ballantrae Farm Drive, McLean, Virginia 22101 ("Guarantor").
RECITALS
WHEREAS, Seller owns beneficially and of record all of the issued and
outstanding capital stock of FuiszDrugstore.com Ltd., a Delaware corporation
("drugstore");
WHEREAS, Drugstore owns all of the assets set out in Schedule 1;
WHEREAS, Purchaser wishes to acquire all of the issued and outstanding
equity of the Drugstore (the "Shares") and Seller wishes to sell the Shares
to Purchaser, all upon the terms and subject to the conditions set forth in
this Agreement; and
WHEREAS, in consideration of the sale of the shares, Guarantor agrees to
guarantee the obligations of Purchaser hereunder.
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants, representations, warranties and agreements hereinafter set
forth, and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
Article 1
Definitions
When used in this Agreement, the following terms shall have the meanings
specified below
"Affiliate" shall have the meaning prescribed by Rule 12b-2 of the
regulations promulgated pursuant to the Exchange Act.
"Agreement" shall have the meaning set forth in the Preamble hereto.
"Closing" shall have the meaning set forth in Section 2.03 hereof.
"Closing Date" shall have the meaning set forth in Section 2.03 hereof
<PAGE>
Sale of FuiszDrugstore Ltd.
December 31, 1998
Page 2
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
"Governmental Authority" shall mean any laws, agency, department,
ministry, commission, board or other administrative or governmental body of
the United States or any state or jurisdiction thereof
"Indemnified Party" shall mean a Purchaser Indemnified Party or a Seller
Indemnified Party, as the case may be.
"Laws" shall mean, collectively, any statute, law, rule, regulation,
ordinance, order, decree, action, restriction, requirement or policy of the
United States or any state or jurisdiction thereof.
"Material Adverse Change" shall mean any material adverse change in the
results of operations, condition (financial or otherwise), assets, liabilities
(whether absolute, accrued, contingent or otherwise), or business of
Drugstore.
"Material Adverse Effect" shall mean any material adverse effect upon
the condition (financial or otherwise), assets, properties, or business of
Drugstore.
"Purchase Price" shall have the meaning set forth in Section 2.02 hereof
"Purchaser Indemnified Party" shall have the meaning set forth in
Section 7.02
"Seller Indemnified Party" shall have the meaning set forth in Section
7.01
"Seller" shall have the meaning set forth in the Preamble hereto.
"Shares" shall have the meaning set forth in the Recitals hereto.
"Subsidiary" shall mean any company, corporation, partnership, joint
venture, limited liability company or other entity in which Drugstore
directly or indirectly, owns or control, or pursuant to any agreement or
agreements in the future may have the right to acquire by any means, any
equity or profit interest equal to or greater than fifty percent (50%) of the
equity or profit interests thereof.
"Tax Returns" shall mean all reports, returns, statements, forms or
other documents or information required to be filed with a taxing authority
with respect to the Taxes of Drugstore.
<PAGE>
Sale of FuiszDrugstore Ltd.
December 31, 1998
Page 3
"Taxes" shall mean all federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, productions, sales, use,
license, excise, franchise, employment, withholding, alternative minimum or
add-on minimum or similar taxes imposed on the income, properties or
operations of Drugstore, together with any interest, additions or penalties
with respect thereto and any interest in respect of such additions or
penalties.
"Third Party Claim" shall have the meaning set forth in Section 7.02
hereof
"Transactions" shall have the meaning set forth in Section 2.03(a)
hereof
Article II
SALE OF STOCK AND TERMS OF PAYMENT
Section 2.01 THE SALE.
On the terms and subject to the conditions set forth herein, at the
Closing the Seller shall sell, transfer, convey, assign and deliver to
Purchaser and Purchaser shall purchase, acquire and accept from Seller the
Shares.
Sections 2.02 THE PURCHASE PRICE.
(a) In consideration of the aforesaid sale, transfer, conveyance,
assignment and delivery of the Shares, Purchaser hereby agrees on the
terms and subject to the conditions set forth herein, to pay to the
Seller, in payment therefor, the sum of One Hundred Thousand Dollars
($100,000) in immediately available funds and two hundred thousand
shares of Common Stock of RxDrugstore.com Limited (the "Purchase Price").
(b) Payment of the cash portion of the Purchase Price shall be made by
wire transfer of immediately available funds to the account designated
by Seller, at the time or by such other means as may be designated by
the Seller.
Section 2.03 THE CLOSING.
(a) On the terms and subject to satisfaction of the conditions set forth
herein, the closing of the transactions contemplated hereby (the
"Transactions") will take place at the offices of the Seller, at 14555
Avion at Lakeside, Chantilly, Virginia 20151 at 10:00 a.m. on February
22, 1999, or at such other place or time as the parties may agree (the
"Closing"). The date and time at which the Closing actually occurs is
hereinafter referred to as the "Closing Date". All events occuring at
the Closing will, unless otherwise specified, be deemed to have occurred
simultaneously.
(b) At the Closing,
<PAGE>
Sale of FuiszDrugstore Ltd.
December 31, 1998
Page 4
(i) Seller will deliver to Purchaser certificates evidencing the
Shares, duly endorsed for transfer and with all transfer stamps
attached. All stock transfer and other Taxes and changes, if any, that
are required to be paid or withheld in connection with the sale and
transfer of the Shares to Purchaser shall be borne equally between the
parties.
(ii) Purchaser will deliver to Seller certificates registered in
the name of Seller representing two hundred thousand shares of common
stock of RxDrugstore.com Limited as well as documentation reasonably
satisfactory to Seller reflecting the simultaneous contribution of the
Shares to RxDrugstore.com Limited, a Delaware corporation.
Article III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller represents and warrants to Purchaser as follows:
Section 3.01 STOCK OWNERSHIP: CAPACITY TO SELL
(a) Seller is the beneficial and record owner of the Shares, free and
clear of all liens or other encumbrances (other than liens created by
this Agreement) and the Shares are not subject to any preemptive rights
or restriction on their transferability (other than restrictions on
transfer under applicable federal and state securities laws). At the
Closing, Purchaser will acquire good and marketable title to the Shares
free and clear of all liens or other encumbrances.
(b) Seller has full power and authority to execute and deliver this
Agreement and to consummate the Transactions. The execution and delivery
of this Agreement and the consummation of the Transactions has been duly
and validly authorized and no other proceedings on the part of Seller is
necessary to authorize the execution and delivery of the Agreement or
the consummation of the Transactions. This Agreement constitutes a valid
and binding agreement of the Seller, enforceable against the Seller in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforceability of creditors' rights generally, and except
that the remedy of specific performance or similar equitable relief may
be subject to equitable defenses and to the discretion of the court
before which enforcement is sought.
Section 3.02 ORGANIZATION: QUALIFICATION
(a) Drugstore is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
<PAGE>
Sale of FuiszDrugstore Ltd.
December 31, 1998
Page 5
(b) The certificate of incorporation and the by-laws and all amendments
thereto, and the minute books, stock ledgers and stock transfer records
of Drugstore furnished to Purchaser for review are accurate and complete
in all material respects. Such stock ledgers and stock transfer records
reflect all issuances, registrations of transfer and cancellations of
all shares of capital stock of Drugstore. All meetings of the
shareholders and board of directors (and committees thereof) of
Drugstore were duly called and held and a quorum was present and acting
throughout each such meeting, except in each case where any such failure
does not impair the current business activities, operations, and/or
status of Drugstore in any material respect.
Section 3.03 CAPITALIZATION OF DRUGSTORE
(a) The authorized capital stock of Drugstore consists solely of One
Hundred (100) shares, par value $0.01, of which One Hundred (100) are
designated common stock, of which One Hundred are issued and outstanding.
(b) There is no subscription, option, warrant, call right, agreement or
commitment relating to the issuance, sale, holding, voting, delivery or
transfer (including any right of conversion or exchange under any
outstanding security, instrument or other agreement) of any capital
stock of Drugstore.
(c) No dividend has ever been declared and/or paid on common stock.
Section 3.04 NO OTHER LIABILITIES
Seller represents and warrants to Purchaser that Drugstore has no
assets or liabilities of any kind whatsoever, including but not limited to
those for taxes or employee benefits or any related to Pangea Ltd., other
than as set out in Schedule 1 hereto. There are no, nor have there ever been,
any employees of Drugstore.
Section 3.05 CONSENTS AND APPROVALS; NO VIOLATIONS
Seller represents and warrants that the execution and delivery of
this Agreement does not, and the performance by it of its obligations
hereunder and the consummation of the Transactions, will not, directly or
indirectly:
(a) Conflict with or violate any provisions of the certificate of
incorporation or by-laws (or other similar governing documents) of Seder.
(b) Require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority to be made or
obtained by Seller as a result of or in connection with this Agreement
or the Transactions.
(c) Result in a material default, termination, cancellation or
acceleration (or give rise to any material right of termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture, license,
lease, agreement or other material instrument or obligation to
<PAGE>
Sale of FuiszDrugstore Ltd.
December 31, 1998
Page 6
which Seller or Drugstore is a party or by which any of them or any of
their respective material assets may be bound
Section 3.06 FINANCIAL STATEMENTS
(a) Seller has provided or made available to Purchaser the consolidated
balance sheet as of December 31, 1998 (the "Balance Sheet").
(b) The Balance Sheet present fairly in accordance with GAAP
consistently applied the financial condition of Drugstore at such date.
Section 3.07 LIABILITIES
Except as reflected in the Financial Statements, there is no
material liability, obligation or indebtedness, secured or unsecured (whether
absolute, accrued, contingent or otherwise, and whether due or to become due)
that is required by GAAP to be set forth on a balance sheet.
Section 3.08 TRADEMARKS, TRADE NAMES
Schedule 2 hereto lists all trademarks, trade names and registered
copyrights owned and currently used by Drugstore and all material licenses
and other material agreements related thereto.
Section 3.09 LITIGATION
There is no action, suit, claim, inquiry, proceeding or
investigation at law or in equity, by or before any court, arbitrator or
Governmental Authority, or to Seller's knowledge, is one threatened, against
or involving Seller or any of its Affiliates which questions or challenges
the validity of this Agreement or any action to be taken by Purchaser, any of
its Affiliates or Seller or any of its Affiliates pursuant to this Agreement
or in connection with the Transactions.
Section 3.10 FINDERS; SUCCESS FEE
Neither Seller nor any of its Affiliates has employed any
investment banker, broker, finder or other intermediary in connection with
the Transactions who is or might be entitled to a fee or commission in
connection with the proposed purchase of the Shares. Neither Seller nor any
of its Affiliates is a party to any agreement pursuant to which any person is
entitled to any success of other fee contingent upon the execution of this
Agreement or consummation of the Transactions.
Article IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Seller as follows:
<PAGE>
Sale of FuiszDrugstore Ltd.
December 31, 1998
Page 7
Section 4.01 AUTHORITY
Purchaser has full power and authority to execute and deliver this
Agreement and to consummate the Transactions. This Agreement has been duly
and validly executed and delivered by Purchaser and constitutes a valid
and binding agreement of Purchaser, enforceable against Purchaser in
accordance with its terms, except as the same may be lifted by bankruptcy,
insolvency, reorganization, or other laws relating to or affecting the
enforceability of creditors' rights generally, and except that the remedy of
specific performance or similar equitable relief may be subject to equitable
defenses and to the discretion of the court before which enforcement is
sought.
Section 4.02 CONSENTS AND APPROVALS NO VIOLATIONS
The execution and delivery of this Agreement by Purchaser does not,
and the performance by it of its obligations hereunder and the consummation
of the Transactions, will not, directly or indirectly, require any consent,
approval, authorization or permit of; or filing with or notification to, any
Governmental Authority or other party
Section 4.03 ACQUISITION OF STOCK FOR INVESTMENT
Purchaser is acquiring the Shares for investment and not with a
view toward, or for sale in connection with, any distribution thereof, nor
with any present intention of distributing or selling the Shares. Purchaser
agrees that the Shares may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of without registration under the
Securities Act of 1933, except pursuant to an exemption from the registration
available under such Act.
Section 4.04 ACKNOWLEDGEMENT OF POSITION AS EXECUTIVE OFFICER OF SELLER AND
KNOWLEDGE OF DRUGSTORE
Purchaser hereby acknowledges to Seller that he is an executive
officer of Seller, with full participation, direction and knowledge of the
development and operations of Drugstore and Pangea. Resultingly, Purchaser
acquires the Shares with full knowledge of the status, potential prospects
and difficulties of both Drugstore and Pangea.
Section 4.05 LITIGATION
There is no action, suit, claim, inquiry, proceeding or
investigation at law or in equity, by or before any court, arbitrator or
Governmental Authority, or to Purchaser's knowledge, is one threatened,
against or involving Purchaser or any of its Affiliates which questions or
challenges the validity of this Agreement or any action to be taken by
Purchaser, any of its affiliates or Seller pursuant to this Agreement or in
connection with the Transactions.
Section 4.06 FINDERS; SUCCESS FEE
<PAGE>
Sale of FuiszDrugstore Ltd.
December 31, 1998
Page 8
Neither Purchaser nor any of its Affiliates has employed any
investment banker, broker, finder or other intermediary in connection with
the Transactions who is or might be entitled to a fee or commission in
connection with the proposed purchase of the Shares. Neither Purchaser nor
any of its Affiliates is a party to any agreement pursuant to which any
person is entitled to any success of other fee contingent upon the execution
of this Agreement or consummation of the Transactions.
Article V
COVENANTS
Purchaser and Seller hereby agree as follows:
Section 5.01 COVENANT TO NEGOTIATE TO PROVIDE PRODUCT
Purchaser shall negotiate with Seller from time to time in good
faith to provide to it for sale over the Internet (including telephonic
orders generated by the Drugstore over its Webstar) such products as Seller
produces and distributes to third parties. Products currently supplied to the
Drugstore by Seller shall continue to be furnished to Drugstore on the same
terms and conditions are provided on the date hereof. For the avoidance of
doubt, nothing in the foregoing shall require Seller to breach any obligation
of exclusivity or other covenants to any other party with respect to any
product now or hereinafter manufactured, licensed or sold by Seller.
Section 5.02 MOST FAVORED NATION TREATMENT
Consistent with its responsibilities to third parties, Seller shall
sell to Purchaser such products as may be provided to Purchaser pursuant to
Section 5.01 above on terms no less favorable than it grants to other
purchasers of such products on equivalent terms and conditions. Purchaser
agrees to list for sale of its Internet drugstore such products as Seller may
reasonably request after the date hereof at prices advantageous to Seller.
Section 5.03 TRANSITIONAL ASSISTANCE
For a period of up to nine months, Seller will provide to Purchaser
reasonable assistance in the maintenance of the web site transferred to
Seller pursuant to this Agreement and warehouse and order fulfillment
services as currently provided to the Drugstore and its Affiliates and such
other services as the parties may mutually agree. Seller will promptly
reimburse Purchaser for the costs of such services as such are incurred by
Seller, provided that the amount of such reimbursement shall not exceed
$20,000 per month.
Section 5.04 AGREEMENT ON USE OF NAMES
The parties hereto agree that neither shall, after a period of one
year following the Closing Date, use the name Fuisz in connection with the
name "Drugstore" or words of like meaning or import. Purchaser further agrees
not to take any action, after a period of one
<PAGE>
Sale of FuiszDrusgtore Ltd.
December 31, 1998
Page 9
year following the Closing Date, to identify the Drugstore with the Purchaser
or any Affiliate thereof. Purchaser agrees that it is his intent during such
paled not to use the Fuisz name as the primary means of identification of the
Drusgtore or its operations. Purchaser agrees not to establish any competing
Internet drugstore for a period of ten years.
Section 5.05 LINK.
Seller agrees to provide a link to Purchaser on Seller's corporate website
(which shall be the only link for drug and drugstore-related product sales).
ARTICLE VI
CLOSING CONDITIONS
Section 6.01 CONDITIONS TO THE OBLIGATION OF SELLERS TO EFFECT THE
TRANSACTION.
The obligations of the Seller to effect the Transactions shall be subject to
the fulfillment on or before the Closing Date of the following conditions,
any one or more of which may be waived by the Seller:
(a) Each of the obligations of Purchaser to be performed by it on or
before the Closing Date pursuant to the terms of this Agreement shall
have been duly performed on or before the Closing Date in all material
respects.
(b) All actions required to be taken by, or on the part of, Purchaser to
authorize the execution, delivery and performance of this Agreement, and
the consummation of the Transactions shall have been duly and validly
taken.
Section 6.02 CONDITIONS TO THE OBLIGATION OF PURCHASER TO EFFECT THE
TRANSACTION.
(a) Each of the obligations of Seller to be performed by it on or before
the Closing Date pursuant to the terms of this Agreement shall have been
duly performed on or before the Closing Date in all material respects.
(b) All actions required to be taken by, or on the part of, Seller to
authorize the execution, delivery and performance of this Agreement, and
the consummation of the Transactions shall have been duly and validly
taken.
<PAGE>
Sale of FuiszDrugstore Ltd.
December 31, 1998
Page 10
ARTICLE VII
INDEMNIFICATION
Section 7.01 INDEMNIFICATION BY SELLER.
Seller indemnifies and holds harmless Purchaser and its officers,
Affiliates, successors and assigns (the "purchaser Indemnified Parties") in
respect of any and all claims, losses, damages, liabilities and expenses
(including, without limitation, settlement costs and any legal or other
expenses for investigating or defending any actions or threatened actions),
together with interest thereon at the rate of eight percent (8%) per annum,
compounded annually, from the date incurred until paid, reasonably incurred
by the Purchaser Indemnified Parties in connection why, arising from or as a
result of (i) any breach on the part of the Seller of any representation or
warranty of Seller contained in this Agreement or any document delivered in
connection herewith; (ii) any breach on the part of the Seller of any
covenant of Seller contained in this Agreement or any document delivered in
connection herewith; (iii) any claim in respect of tax liability for
Drugstore resulting from actions taken or omitted prior to the Closing Date;
(iv) any claim against or relating to Pangea Ltd.; or (v) any other claim
against Drugstore by any third party made or resulting from any action or
omission made on or prior to the Closing Date. All indemnification payments
shall be paid by Seller in immediately available funds upon presentation by
the Purchaser indemnified Party of invoices representing indemnifiable
claims, and which invoices may be paid as accrued.
Section 7.02 INDEMNIFICATION BY PURCHASER.
Purchaser indemnifies and holds harmless Seller and its officers,
Affiliates, successors and assigns (the "Seller Indemnified Parties") in
respect of any and all claims, losses, damages, liabilities and expenses
(including, without limitation, settlement costs and any legal or other
expenses for investigating or defending any actions or threatened actions),
together with interest thereon at the rate of eight percent (8%) per annum,
compounded annually, from the date incurred until paid, reasonably incurred
by the Seller Indemnified Parties in connection with, arising from or as a
result of (i) any breach on the part of the Purchaser of any representation or
warranty of Purchaser contained in this Agreement or any document delivered
in connection herewith or (ii) any breach on the part of the Seller of any
covenant of Seller contained in this Agreement or any document delivered in
connection herewith. All indemnification payments shall be paid by Seller in
immediately available funds upon presentation by the Purchaser Indemnified
Party of invoices representing indemnifiable claims, and which invoices may
be paid as accrued.
Section 7.03 CLAIMS FOR INDEMNIFICATION: DEFENSE OF CLAIMS.
(a) In order for an Indemnified Party to be entitled to indemnification
provided for under this Agreement in respect of, arising out of or involving
a claim made by any person against the Indemnified Party (a "Third Party
Claim"), the Indemnified Party must notify Seller (in the event of an
indemnification under Section 7.01 hereof) or the Purchaser (in the event of
indemnification arising under Section 7.02 hereof) in writing of the Third
Party Claim within a reasonable time after receipt of such Third Party Claim,
provided, however,
<PAGE>
Sale of FuiszDrugstore Ltd.
December 31, 1998
Page 11
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the indemnifying parties shall have
been actually prejudiced as a result of such failure. Thereafter, the
Indemnified Party shall give to Seller or Purchaser, as the case may be,
within a reasonable time after the Indemnified Party's receipt thereof,
copies of all notices and documents (including court papers) received by the
Indemnified Party relating to Third Party Claims.
(b) In connection with any Third Party Claim which may give rise to a claim
for indemnification pursuant to Section 7.01 or 7.02, the Indemnified Party
shall consult with the indemnifying party with respect to the defense or
settlement of such claim; provided, however, that such consultation shall
not limit or otherwise affect the Indemnified Party's conduct of the
defense of settlement of such claim.
Section 7.04 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations, warranties, covenants and agreements contained in
this Agreement and in any document delivered in connection herewith shall
survive the Closing and shall remain in full force and effect for a period of
nine months from the Closing Date, regardless of any investigation made by or
on behalf of any party hereto.
ARTICLE VIII
GUARANTY
Section 8.01 GUARANTY.
The Guarantor hereby unconditionally and irrevocably guarantees (the
undertaking being the "Guaranty"), the punctual payment when due, of the
Note. The liability of the Guarantor under this Guaranty is absolute and
unconditional, irrespective of any lack of validity or enforceability of the
Note or any other document, and change in the time manner or place of
payment, any bankruptcy, insolvency or reorganization of the Purchaser or the
Guarantor. The Guarantor hereby waives presentment, demand, promptness,
diligence, notice of acceptance and any other notice with respect to the Note
or this Agrement and any requirement that the Seller protect, secure, perfect
or insure any right of Purchaser.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01 AMENDMENT AND MODIFICATION.
Subject to applicable law, this Agreement may be amended, modified or
supplemented only by written agreement of the parties hereto.
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Section 9.02 WAIVER OF COMPLIANCE: CONSENTS.
Except as otherwise provided in this Agreement, any failure of any of
the parties to comply with any obligation, covenant, agreement or condition
herein may be waived by the party entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a wavier of, or estoppel with
respect to, any subsequent or other failure.
Section 9.03 NOTICES.
(a) All notices and other communications hereunder (the "Notices") shall
be in writing and shall be deemed given if delivered personally or by
overnight delivery service or facsimile transmission, or mailed by
registered or certified mail (return receipt requested), postage prepaid,
to the parties at the addresses set forth at subsection 8.03(b) below (or
at such other address for a party as shall be specified by like Notice);
provided, however, that notices of a change of address shall be effective
only upon receipt thereof. Unless a Notice delivered by facsimile
transmission is transmitted on other than a business day, in which case it
shall be conclusively deemed to be delivered on the next business day
thereafter, and Notices delivered by facsimile transmission shall be
conclusively deemed to be delivered and receded on the date on which such
facsimile is transmitted. Notices delivered by overnight delivery service
shall be conclusively deemed to be delivered and received on the next
business day after such Notice is timely deposited with such overnight
delivery service.
(b) Subject to the foregoing subsection 8.03(a), all Notices shall be
given to the parties at the following addresses:
(i) If to Purchaser, to
Privateer Ltd.
Attn: Dr. Richard C. Fuisz
1287 Ballantrae Farm Drive
McLean, Virginia 22101
(ii) If to Guarantor, to
Dr. Richard C. Fuisz
1287 Ballantrae Farm Drive
McLean Virginia 22101
(iii) If to Seller, to
Kenneth W. McVey
President and Chief Executive Officer
Fuisz Technologies Ltd.
14555 Avion at Lakeside
Chantilly, Virginia 20151
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Section 9.04 ASSIGNMENT
This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, nor is this Agreement
intended to confer upon any other person except the parties hereto any rights
or remedies hereunder.
Section 9.05 GOVERNING LAW
This Agreement shall be governed by the laws of the State of New
York as to all matters, including, without limitation, matters of validity,
construction, effect, performance and remedies.
Section 9.06 SEVERABILITY
If any term or provision specified herein is held by a Court of
competent jurisdiction to be in violation of any applicable local state or
federal ordinance, statute, law, administrative or indicial decision, or
public policy, and if such court should declare such term or provision to be
illegal, invalid, unlawful, void, avoidable or unenforceable as writer, than
such provision shall be given full force and effect to the fullest possible
extent that is legal, valid and enforceable, and the remainder of the terms
and provisions herein shall be construed as if such illegal, invalid,
unlawful, void, avoidable or unenforceable term or provision was not
contained herein, but only to the extent that giving effect to such provision
and the remainder of the terms and provisions hereof shall be in accordance
with the intent of the parties.
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Section 9.07 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
Section 9.08 ENTIRE AGREEMENT
This Agreement, including the schedules referred to herein, embody
the entire agreement and understanding between the parties hereto in respect
of the Transactions. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth
or referred to herein or therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the
Transactions.
Section 9.09 EXPENSES
Each party hereto will pay all costs and expenses incurred by it or
any of its Affiliates in connection with this Agreement and the Transactions,
including but not limited to costs and expenses of counsel and other
consultants.
Section 9.10 PUBLIC ANNOUNCEMENTS
The parties shall consult with regard to public announcements of
this Agreements and the Transactions.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
FUISZ TECHNOLOGIES LTD.
/s/ KENNETH W. MCVEY
By: Kenneth W. McVey
Title: President and Chief Executive Officer
PRIVATEER LTD.
/s/ RICHARD C. FUISZ
By: Dr. Richard C. Fuisz
Title: Chief Executive Officer
RICHARD C. FUISZ, as Guarantor
/s/ RICHARD C. FUISZ
By: Dr. Richard C. Fuisz
<PAGE>
EXHIBIT 9
LICENSE AGREEMENT
THIS AGREEMENT (the "Agreement") is effective as of December 31, 1998 by
and between Privateer Ltd., a corporation organized under the laws of the
State of Delaware and doing business at 8000 Tower Crescent Drive, Suite
1350, Vienna, Virginia 22182 ("Licensor"), Fuisz Technologies Ltd., a
corporation organized under the laws of the State of Delaware ("Fuisz",
including its subsidiaries) and Richard C. Fuisz, in his individual capacity,
as Garantor (the "Guarantor").
WHEREAS, Fuisz has invented and will invent products and formulations
which it offers or will offer for retail sale generally; and
WHEREAS, Fuisz now wishes to license said products for the sale over the
Internet; and
WHEREAS, Fusiz is willing to grant, and Licensor is willing to receive a
license to sell the products currently developed, and which it may develop,
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE the parties agree as follows:
ARTICLE 1 -- DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth in this Article:
1.1 "LICENSED PRODUCT" shall mean any Product the offer for sale or sale
of which, but for the license granted hereunder, would infringe a right of
Fuisz to sell, and to prohibit such sale of such Product by others, over the
Internet.
"PRODUCT" shall mean any and all pharmaceutical or nutraceutical
products employing Fuisz proprietary technology (including acquired
proprietary technology).
1.2 "TERRITORY" shall mean the Internet.
1.3 "EFFECTIVE DATE" shall mean December 31, 1998.
ARTICLE 2 -- LICENSE GRANT
2.1 LICENSE TO GRANT TO LICENSOR. Subject to the terms and conditions of
this Agreement, Fuisz grants to Licensor a license to offer to sell, sell and
have sold Licensed Products throughout the Territory, including existing
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Fuisz I Privateer
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Page 2
Licensed Products as well as future Licensed Products retained for the
benefit of Licensee in accordance with Section 2.6.
2.2 EXCLUSIVITY OF LICENSE. Licensor's grant under Article 2.1 shall be
exclusive and shall operate against all third parties and Fuisz within the
Territory for the period of this License Agreement, subject to Articles 2.3
and 3.1(c) below.
2.3 RETENTION OF RIGHTS BY FUISZ. During the term of this Agreement, Fuisz
shall retain all rights to all its Licensed Products for its use in sales or
any other activity, including but not limited to manufacturing, licensing or
offering for sale, except within the Territory.
2.4 PAYMENT OF FEES. The licenses granted hereunder shall be subject to and
contingent upon the timely payment by Licensor of the applicable fees as
provided under Articles 3 and 4 of this Agreement and to Licensor's
compliance with the terms and conditions of this Agreement. Failure to make
timely payment as provided herein shall in any event be deemed a material
breach of this Agreement subject to the provisions of Section 7.2.
2.5 SUPPLY AGREEMENT. At any time during the term of this Agreement,
Licensor shall have the right, with the reasonable approval of Fuisz and upon
forty-five (45) days prior written notice thereto, to enter into a supply
agreement with Fuisz to provide Licensor with such Licensed Product as are
manufactured by Fuisz in quantities to be determined by Licensor, such
quantities and products to meet the reasonable approval of Fuisz. Upon
notification by Licensor, the parties agree to negotiate in good faith the
terms and conditions of any such supply agreement, with the proviso that the
price to be paid by shall be negotiated in good faith between the parties and
shall be no less favorable than offered to other customers under similar
terms and conditions (without consideration to quantity supplied).
2.6 ADDITIONAL LICENSED PRODUCTS. For four years from the date hereof, Fuisz
agrees to: (a) retain Fuisz-developed Products as Licensed Products for the
benefit of Licensor; (b) use best efforts to retain all future Products
(other than Fuisz-developed Products) as Licensed Products for the benefit of
Licensee; (c) prevent other Fuisz-developed Product licensees from directly
or indirectly offering to sell or selling such Fuisz-developed Products within
the Territory; and (d) use best efforts to prevent Product licensees (other
than with respect to Fuisz-developed Products) from directly or indirectly
offering to sell or selling such Products within the Territory. The parties
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Fuisz I Privateer
December 31, 1998
Page 3
agree that Fuisz' "best efforts" undertakings contained in clauses (b) and
(d) of the immediately preceding sentence shall not prevent Fuisz from
entering into agreements with third parties where internet rights cannot
reasonably be extracted by Fuisz from such agreements. Fuisz further agrees
to use good faith efforts to promote the use of Licensor's website by third
parties.
ARTICLE 3 -- LICENSE FEE
3.1 LICENSE FEE. In consideration of the license granted herein, Licensor
shall pay to Fuisz in payment therefor, the sum of Two Million, Four
Hundred Thousand Dollars ($2,400,000) with payment terms as follows;
Six Hundred Seventy Five Thousand Dollars ($675,000) on December 31,
1999; Five Hundred Seventy Five Thousand Dollars ($575,000) on December
31, 2000; Five Hundred Seventy Five Thousand Dollars ($575,000) on
December 31, 2001; and Five Hundred Seventy Five Thousand Dollars
$575,000) on December 31, 2002.
Licensor agrees to deliver to Fuisz a note (in form and substance
reasonably satisfactory to Fuisz) reflecting its payment obligations pursuant
to Section 3.1 (the "Note"
3.2 GUARANTY.
The Guarantor hereby unconditionally guarantees the punctual payment,
when due, of the Licensor's payment obligations under Section 3.1 hereof (such
undertaking, the "Guaranty"). The liability of the Guarantor under this
Guaranty is absolute and unconditional irrespective of any lack of validity
of this Agreement or the Note, change in the time, manner or place of
payment, or any bankruptcy, insolvency or reorganization of the Licensor or
Guarantor. The Guarantor hereby waives presentment, demand, promptness,
diligence, notice of acceptance and any other notice with respect to this
Agreement of the Note and any requirement that Fusiz protect, secure,
prefect or insure any right of Licensor.
ARTICLE 4 -- PAYMENTS AND REPORTS
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Fuisz I Privateer
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Page 4
4.1 MODE OF PAYMENT -- Licensor shall pay all payments required under this
Agreement in the United States in United States Dollars.
ARTICLE 5 -- CONFIDENTIALITY
5.1 CONFIDENTIALITY; EXCEPTIONS -- Except to the extent expressly authorized
by this Agreement, and except as provided in Section 5.2, or otherwise agreed
in writing, the parties shall, for the term of this Agreement and for fifteen
(15) years thereafter, keep confidential and shall not publish or otherwise
disclose, or use for any purpose, any information furnished to one party by
the other party pursuant to this Agreement, except to the extent that it can
be established by competent evidence that such information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure by the other party;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission
of the receiving party in breach of this Agreement;
(d) was disclosed to the receiving party, other than under an obligation
of confidentiality, by a third party who had no obligation to the disclosing
party not to disclose such information to others; or
(e) is independently developed by or on behalf of the receiving party by
individuals not having access to such information.
Each party may disclose the other's confidential information to the
extent such disclosure is reasonably necessary in filing or prosecuting
patent applications, prosecuting or defending litigation, or is necessary to
be disclosed in connection with the marketing or sale of a Licensed Product or
is necessary to be disclosed to comply with applicable governmental
regulations, provided that if a party is required to make any such disclosure
of the other party's confidential information it shall, except where
impracticable for necessary disclosures, for example to health authorities,
give reasonable advance notice to the other party of such disclosure
requirement and,
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Fuisz 1 Privateer
December 31, 1998
Page 5
except to the extent inappropriate in the case of patent applications, shall
use reasonable efforts to secure confidential treatment of such information
required to be disclosed.
5.2 It is understood that trade secrets provided to a party under this
Agreement may be a significant factor in producing Licensed Products and in
the lead time for Licensed Products to be introduced into the market place.
All such trade secrets, as defined under the Uniform Trade Secrets Act of the
United States, or the trade secret laws of applicable national countries as
applicable, which are provided by one party to the other party hereunder and
identified in writing as trade secrets, shall be maintained in confidence,
without limitation of time, and will be used only for purposes of work under
the commercialization of products under the provisions of this Agreement.
5.3 In the event of any conflict between this Agreement and any other
agreement between the parties, with respect to confidential information,
know-how and trade secrets disclosed on or after the Effective Date by
one party to the other party under the terms and conditions of this
Agreement, the terms and conditions of this Agreement shall govern and
prevail.
5.4 Each party may also disclose the other's confidential information to
an Affiliate, agent or consultant who has a need to know such confidential
information and who is under a written obligation of confidentiality and
non-use at least substantially equivalent to the obligations of this
Article 5.
ARTICLE 6 - INDEMNIFICATION
6.1 (a) Licensor shall defend, indemnify and hold Fuisz, its directors,
officers and employees, harmless from and against any and all claims, suits
or demands for liability, damages, losses, costs and expenses (including the
costs and expenses of attorneys and other professional(s) arising out of
third party claims or suits or demands resulting thru the activities of
Licensor).
(b) Each party (the "Indemnifying Party") shall defend, indemnify
and hold the other party and its directors, officers and employees, harmless
from and against any and all claims, suits, and demands for liability,
damages, losses, costs and expenses (including the costs and expenses of
attorneys and other professionals) arising out of or resulting from the
inaccuracy of any representation or the breach by
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Fuisz 1 Privateer
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Page 6
the Indemnifying Party of any warranty, covenant or agreement contained in
this Agreement.
6.2 NOTICE - In the event that either party seeks indemnification under
this Article 6, such party shall: i) promptly inform the Indemnifying Party
of any claim, suit or demand threatened or filed, ii) permit the indemnifying
Party to assume direction and control of the defense of such claims, suit or
demand resulting therefrom (including the right to obtain a settlement
thereof at the sole discretion of the Indemnifying Party), and iii,)
cooperate as requested (at the expense of the indemnifying Party) in the
defense of such claims, suit or demand.
6.3 LIMITATIONS. An indemnifying Party's obligations under this Article 6
shall not extend to any claims, suits or demands for liability, damages,
losses, costs or expenses arising from the indemnified party's failure to
comply with the terms and conditions of this Agreement, to the extent arising
from the negligence or willful misconduct of the indemnified party, its
agents or employees.
ARTICLE 7 - TERM; TERMINATION
7.1 TERM. This Agreement shall commence as of the Effective Date of this
Agreement and, unless sooner terminated as provided hereunder, shall expire
at midnight on the twentieth anniversary of the Effective Date of this
Agreement.
7.2 BREACH. Failure by either party to comply with any material
obligation contained in this Agreement, including any payment obligation,
shall entitle the other party to give to the party in default notice
specifying the nature of the default and requiring it to cure such default.
If such default is not cured within thirty (30) days after the receipt of
such notice, the notifying party shall be entitled, without prejudice to any
of its other rights conferred by this Agreement, and in addition to any other
remedies available to it by law or in equity, to terminate this Agreement by
giving written notice to take effect immediately upon receipt of such notice.
The right of either party to terminate this Agreement, as herein above
provided, shall not be affected in any way by its waiver or failure to take
action with respect to any previous default.
7.3 INSOLVENCY OR BANKRUPTCY. a) Either party may, in addition to any
other remedies available to it by law or in equity, terminate this Agreement
by written notice to the other party in the event the other party shall have
become insolvent or bankrupt, or shall have made an assignment for the
benefit of its creditors, or there shall have
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Fuisz 1 Privateer
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Page 7
been appointed a trustee or receiver of the other party or for all or a
substantial part of its property, or any case or proceeding shall have been
commenced or other action taken by or against the other party in bankruptcy
or seeking reorganization, liquidation, dissolution, winding-up arrangement,
composition or readjustment of its debts or any other relief under any
bankruptcy, insolvency, reorganization or other similar act or law of any
jurisdiction now or hereafter in effect, or there shall have been issued a
warrant of attachment, execution, distrait or similar process against any
substantial part of the property of the other party, and any such event shall
have continued for sixty (60) days undismissed, unbonded and undischarged; or
b) all rights and licenses granted under or pursuant to this Agreement by
Fuisz to Licensor are, and shall otherwise be deemed to be, for the purposes
of Article 365(n) of title 11, U.S. Code ("Bankruptcy Code") license rights
to "intellectual property" as defined under Article 101(60) of the Bankruptcy
Code. Licensor, as a licensee of such right under this Agreement, shall
retain and may fully exercise all of its rights and election under the
Bankruptcy Code.
7.4 EFFECT OF TERMINATION. Upon the termination of this Agreement each
party hereto shall promptly return to the other all relevant records,
materials or confidential information provided, however, that one copy of
such returned information shall be retained by the returning party's legal
department solely for reference as to its obligations hereunder.
7.5 SURVIVING RIGHTS. Termination of this Agreement shall not terminate
Fuisz' right to receive, and Licensor's obligation to pay, all amounts which
shall have accrued hereunder, it being understood that no license fees shall
accrue while Fuisz is in material breach. The parties' rights and obligations
under Articles 4, 5, and 6 and Sections 3.1 and 7.5 and Fuisz' obligations
and Licensors' rights under Article 2 with respect to all Licensed products
thru the termination date shall, in particular, survive termination.
7.6 ACCRUED RIGHTS, SURVIVING OBLIGATIONS. Termination, relinquishment
or expiration of this Agreement for any reason shall be without prejudice to
any rights which shall have accrued to the benefit of either party prior to
such termination, relinquishment or expiration (it being understood that no
license fees shall accrue while Fuisz is in material breach). Such
termination, relinquishment or expiration shall not relieve either party from
obligations which are expressly indicated to survive termination or
expiration of this Agreement.
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Page 8
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES
8.1 ORGANIZATION. Fuisz hereby represents and warrants to Licensor, and
Licensor separately represents and warrants to Fuisz, that it is a
corporation duly organized, validly existing and in good standing under the
law of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as presently conducted, to enter into this
Agreement and to carry out the transactions contemplated hereby.
8.2 NO VIOLATION. Fuisz hereby represents and warrants to Licensor, and
Licensor separately represents and warrants to Fuisz, that this Agreement
constitutes a legal, valid and binding obligations of such party, enforceable
in accordance with its terms, except as enforcement thereof may be limited
by laws affecting enforcement of creditors' rights and subject to general
principals of equity. Neither the execution and delivery of this Agreement,
nor the grant of the license provided herein shall violate or conflict with
any law, ordinance, rule, regulation, order, judgement or decree to which the
party making such representation is bound.
ARTICLE 9 - MISCELLANEOUS PROVISIONS
9.1 STATUS OF PARTIES. The parties are independent contractors and
nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee or joint venture relationship between
the parties. Neither party shall incur any debts or make any commitments for
the other, except to the extent, if at all, specifically provided herein.
9.2 ASSIGNMENT. This Agreement is unassignable by either Licensor or Fuisz
except with the prior written consent of the other, except that it may be
assigned without consent to a corporate successor of Licensor or Fuisz or to
a person or corporation acquiring all or substantially all of the business
and assets of Licensor or Fuisz to which this Agreement relates.
9.3 FURTHER ACTIONS. Each party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of
this Agreement, including but not limited to, compliance with all applicable
laws.
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Page 9
9.4 FORCE MAJEURE. Neither party shall be liable to the other for any
loss or damages or shall have any right to terminate this Agreement for any
default or delay attributable to any act of God, flood, fire, explosion,
strike, lockout, labor dispute, shortage of raw materials, casualty or
accident, war (declared or undeclared), revolution, civil commotion, act of
public enemies, blockage or embargo, injunction, law, order, proclamation,
regulation, ordinance, demand or requirement of any government or
subdivision, authority or representative or any such government, or any other
cause beyond the reasonable control of such party, if the party affected
shall give prompt notice thereof to the other party. The party giving such
notice shall thereupon be excused form such of its obligations hereunder as
it is thereby disabled form performing for so long as it is so disabled and
for thirty (30) days thereafter.
9.5 TRADEMARKS AND MARKING REQUIREMENTS. Except as otherwise provided
herein, neither party shall have any right, express or implied, to use in any
manner the name or other designation of the other party or any other trade
name or trademark of the other party in connection with this Agreement.
Licensor shall place and appropriate legend on packaging material associated
with Licensed Product indicating that component(s) of such Licensed Product
was produced under license granted by Fuisz Technologies Ltd.
9.6 PUBLIC ANNOUNCEMENTS. Neither party shall make any public
announcement concerning this Agreement or the subject matter hereof without
the prior written consent of the other except that either party may make
such announcements as required by law or is legally required in connection
with private or public offerings to raise capital or as required for
documents to be filed with the Securities and Exchange Commission (a
"Permitted Public Announcement"): provided, however, that in any event, each
party shall have the right to refer, in such announcement required by law or
in any private or public offering documents, to the status of this Agreement,
together with a generalized description of the nature of this Agreement. All
such announcements shall be made available by the announcing party to the
other party at least two (2) business days in advance of the announcement for
review and comment by the other party.
9.7 NOTICES. All notices and other communications required or permitted
to be given under or in connection with this Agreement shall be in writing,
and shall be deemed given if delivered personally or by facsimile
transmission (receipt verified), express courier service (signature
required), telexed, or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following
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Fuisz I Privateer
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Page 10
addresses (or at such other address for a party as shall be specified by like
notice: provided, that notices of a change or address shall be effective only
upon receipt thereof).
Notice to Fuisz: Notice to Privateer:
Fuisz Technologies Ltd. Privateer Limited
C/o Fuisz Technologies Ltd. 8000 Tower Crescent Drive
ATTN: Kenneth W. McVey Suite 1350
14555 Avion at Lakeside, Attention: Vienna, Virginia 22182
Chantilly, VA 20151 Attention: Richard Fuisz
WITH A COPY TO:
Fuisz Technologies Ltd.
ATTN: Stephen H. Willard
14555 Avion at Lakeside
Chantilly, VA 20151
9.8 AMENDMENT. No amendment, modification or supplement of any provision
of this Agreement shall be valid or effective unless made in writing and
signed by a duly authorized officer of each party.
9.9 WAIVER. No provision of this Agreement shall be waived by any act,
commission or knowledge or a party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by the
waiving party.
9.10 COUNTERPARTS. This Agreement shall be executed simultaneously in two
counterparts, either one of which need not contain the signature of more than
one party, but both such counterparts taken together shall constitute one and
the same agreement.
9.11 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are
for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.
9.12 GOVERNING LAW. This agreement shall be deemed to be made and
performed in, and shall be governed by and interpreted in accordance with,
the laws of the State of New York.
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Page 11
9.13 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable regulations or law, such provision
will be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of this Agreement. In the event of such
prohibition or invalidity, the parties hereto shall negotiate in good faith
to modify this Agreement, but only to the extent necessary to render the
terms and conditions of this Agreement valid and enforceable, giving full
regard to all applicable regulations or laws and the intent and purposes of
the parties in entering into this Agreement.
9.14 COMPLIANCE WITH LAW. Nothing in this Agreement shall be deemed to
permit a party to export, reexport or otherwise transfer any Licensed Product
or other right hereunder without compliance with applicable laws, both
domestic and foreign. Fuisz agrees to cooperate with Licensor at the
Licensor's reasonable request as respects the obtaining of any governmental
licenses or permits.
9.15 ENTIRE AGREEMENT OF THE PARTIES. This Agreement constitutes and
contains the entire understanding and agreement of the parties and cancels
and supersedes any and all prior negotiations, correspondence, understandings
and agreements, whether oral or written, between the parties, respecting the
subject matter hereof.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed by its duly authorized officer as of the Effective Date.
PRIVATEER LTD. FUISZ TECHNOLOGIES LTD.
/s/ [illegible] /s/ KENNETH W. MCVEY
- ------------------------------ ------------------------------
By: [illegible] By: Kenneth W. McVey
Title: [illegible] Title: President and CEO
RICHARD C. FUISZ, as Guarantor
/s/ Richard C. Fuisz
- ------------------------------
By: Richard C. Fuisz, M.D.
<PAGE>
[LOGO]
July 30, 1999
To Our Stockholders:
On behalf of the Board of Directors (the "Board") of Fuisz Technologies
Ltd., a Delaware corporation (the "Company"), we are pleased to inform you that
on July 25, 1999, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Biovail Corporation International, an Ontario, Canada
corporation ("Parent"), and its wholly-owned subsidiary, ABCI Acquisition Sub.
Corporation, a newly organized Delaware corporation (the "Purchaser"), pursuant
to which Purchaser today has commenced a cash tender offer (the "Offer") to
purchase at a price of $7.00 per Share, net to the seller in cash, without
interest, up to 6,585,225 of the outstanding shares of the Company's common
stock, par value $0.01 per share (the "Shares"). The Offer is currently
scheduled to expire at Midnight, New York City time, on Thursday, August 26,
1999, unless the Offer is extended.
Following the purchase of Shares pursuant to the Offer, all remaining
outstanding Shares will be exchanged for shares of common stock of Parent, at a
ratio of one Share for 0.1194 shares of common stock of Parent, subject to
certain adjustments, and 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 BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER, THE
MERGER AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED THEREBY, ARE FAIR TO AND IN
THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS, HAS APPROVED THE OFFER, THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT
THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
THERETO.
In arriving at its recommendation, the Board gave careful consideration to
the factors described in the attached Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") that is being filed today with the
Securities and Exchange Commission. The Board has received a written opinion,
dated July 25, 1999, of Warburg Dillon Read LLC to the effect that, as of such
date and based upon and subject to certain matters stated therein, the per Share
consideration to be received in the Offer and the Merger, taken together, by the
holders of Shares (other than Parent and its affiliates) was fair, from a
financial point of view, to such holders.
In addition to the attached Schedule 14D-9, enclosed also is the Offer to
Purchase dated July 30, 1999, together with related materials, including a
Letter of Transmittal, to be used for tendering your Shares in the Offer. These
documents state the terms and conditions of the Offer and provide instructions
as to how to tender your Shares. WE URGE YOU TO READ THESE DOCUMENTS CAREFULLY
IN MAKING YOUR DECISION WITH RESPECT TO TENDERING YOUR SHARES PURSUANT TO THE
OFFER.
On behalf of the Board of Directors
[SIGNATURE]
DR. RICHARD FUISZ
Chairman of the Board
23
<PAGE>
ANNEX A
[LETTERHEAD OF WARBURG DILLON READ LLC]
July 25, 1999
The Board of Directors and
Special Committee of the Board of Directors
Fuisz Technologies Ltd.
14555 Avion at Lakeside
Chantilly, Virginia 22021
Dear Members of the Board of Directors and Special Committee:
We understand that Fuisz Technologies Ltd. ("Fuisz") is considering a
transaction whereby (i) Biovail Corporation International ("Biovail") will cause
ABCI Acquisition Sub. Corporation, an indirect wholly owned subsidiary of
Biovail ("Sub"), to commence a tender offer to purchase such number of shares of
the common stock, par value $0.01 per share, of Fuisz ("Fuisz Common Stock" and,
such tender offer, the "Tender Offer") as will cause Biovail and its affiliates
to beneficially own up to 49%, but not less than 40%, of the outstanding shares
of Fuisz Common Stock, at a purchase price of $7.00 per share, net to the seller
in cash (the "Cash Consideration") and (ii) subsequent to the Tender Offer, Sub
will be merged with and into Fuisz (the "Merger" and, together with the Tender
Offer, the "Transaction") pursuant to which each outstanding share of Fuisz
Common Stock not previously tendered and not owned directly or indirectly by
Biovail or Fuisz will be converted into the right to receive that number of
shares (the resulting number, the "Exchange Ratio" and, together with the Cash
Consideration, the "Consideration") of the common stock, no par value, of
Biovail ("Biovail Common Stock") to be determined as follows: (a) if the average
of the daily closing prices per share of Biovail Common Stock on the New York
Stock Exchange ("NYSE") Composite Transactions Reporting System for the 15
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 $45.000, then the Exchange Ratio will equal 0.1556;
(b) if the Average Trading Price is greater than or equal to $45.000, but less
than or equal to $58.625, then the Exchange Ratio will equal a fraction
determined by dividing $7.00 by the Average Trading Price; (c) if the Average
Trading Price is greater than $58.625 but less than or equal to $62.810, then
the Exchange Ratio will equal 0.1194; and (d) if the Average Trading Price is
greater than $62.810, then Exchange Ratio will equal a fraction determined by
dividing $7.50 by the Average Trading Price. The terms and conditions of the
Transaction are more fully set forth in the Agreement and Plan of Merger, dated
as of July 25, 1999, among Biovail, Sub and Fuisz (the "Merger Agreement").
You have requested our opinion as to the fairness, from a financial point of
view, of the Consideration to be received in the Transaction by holders of Fuisz
Common Stock (other than Biovail and its affiliates).
Warburg Dillon Read LLC ("WDR") has acted as financial advisor to the
Special Committee in connection with the Transaction and will receive a fee for
its services, a significant portion of which is contingent upon the consummation
of the Transaction and a portion of which is payable upon the delivery of this
opinion. In the ordinary course of business, WDR, its successors and affiliates
may trade securities of Fuisz and Biovail for their own accounts and,
accordingly, may at any time hold a long or short position in such securities.
Our opinion does not address Fuisz's underlying business decision to effect
the Transaction or constitute a recommendation to any stockholder of Fuisz as to
whether or not such stockholder should tender shares of Fuisz Common Stock in
the Tender Offer or how such stockholder should vote with respect to the Merger.
At your direction, we have not been asked to, nor do we, offer any opinion as to
the material terms of the Merger Agreement and the obligations thereunder, or
the form of the Transaction.
<PAGE>
The Board of Directors and
Special Committee of the Board of Directors
Fuisz Technologies Ltd.
July 25, 1999
Page 2
We express no opinion as to what the value of Biovail Common Stock will be when
issued pursuant to the Merger or the price at which Biovail Common Stock will
trade or otherwise be transferable subsequent to the Merger. In rendering this
opinion, we have assumed, with your consent, that each of Fuisz, Biovail and Sub
will comply with all material terms of the Merger Agreement, as applicable, and
that the Transaction will be validly consummated in accordance with its terms.
In connection with our engagement, at your direction, we were not requested to,
and we did not, solicit third party indications of interest with respect to the
acquisition of all or a part of Fuisz. We have been advised by representatives
of Fuisz that, prior to our engagement, Fuisz received an indication of interest
in the purchase of the outstanding shares of Fuisz Common Stock from another
third party which reflected a higher per share purchase price than the
Consideration to be received in the Transaction and which the Special Committee
and the Board of Directors determined not to pursue as a result of various
conditions and other factors. The Special Committee and the Board of Directors
have therefore instructed us not to consider such indication of interest in
arriving at our opinion.
In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and historical financial information
relating to Fuisz and Biovail; (ii) reviewed certain internal financial
information and other data relating to the businesses and financial prospects of
Fuisz and Biovail, including estimates and financial forecasts prepared by the
management of Fuisz and estimates and financial forecasts prepared by the
management of Biovail as adjusted by Fuisz, that were provided to us by Fuisz
and Biovail and not publicly available; (iii) conducted discussions with members
of the senior managements of Fuisz and Biovail; (iv) reviewed publicly available
financial and stock market data with respect to certain other companies in lines
of business we believe to be generally comparable to those of Fuisz and Biovail;
(v) compared the financial terms of the Transaction with the publicly available
financial terms of certain other transactions which we believe to be generally
relevant; (vi) reviewed the Merger Agreement; and (vii) conducted such other
financial studies, analyses, and investigations, and considered such other
information as we deemed necessary or appropriate.
In connection with our review, with your consent, we have not assumed any
responsibility for independent verification of any of the information provided
to or reviewed by us for the purpose of this opinion and have, with your
consent, relied on its being complete and accurate in all material respects. In
addition, at your direction, we have not made any independent evaluation or
appraisal of any of the assets or liabilities (contingent or otherwise) of Fuisz
or Biovail, nor have we been furnished with any such evaluation or appraisal.
With respect to the financial forecasts and estimates referred to above, we have
assumed, at your direction, that they have been reasonably prepared on a basis
reflecting the best currently available estimates and judgments of the
managements of Fuisz and Biovail as to the future performance of Fuisz and
Biovail. Our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us, as
of the date of this letter.
Based upon and subject to the foregoing, it is our opinion that, as the date
hereof, the Consideration to be received in the Transaction by the holders of
Fuisz Common Stock (other than Biovail and its affiliates) is fair, from a
financial point of view, to such holders.
Very truly yours,
WARBURG DILLON READ LLC
