<PAGE>
As filed with the Securities and Exchange Commission on October 21, 1999
Registration No. 333-88835
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
Amendment No. 1 to
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MEDIMMUNE, INC.
(Exact name of registrant as specified in its charter)
----------------
Delaware 2836 52-1555759
-------- ---- ----------
(State or other (Primary Standard (I.R.S. Employer
jurisdiction Industrial Identification No.)
of incorporation or Classification Code
organization) Number)
35 West Watkins Mill Road
Gaithersburg, Maryland 20878
Telephone: (301) 417-0770
(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)
----------------
Wayne T. Hockmeyer, Ph.D.
Chairman and Chief Executive Officer
35 West Watkins Mill Road
Gaithersburg, Maryland 20878
Telephone: (301) 417-0770
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Frederick W. Kanner Margaret L. Wolff
Richard D. Pritz Skadden, Arps, Slate, Meagher & Flom LLP
Dewey Ballantine LLP 919 Third Avenue
1301 Avenue of the Americas New York, NY 10022-3897
New York, NY 10019 (215) 735-3000
(212) 259-8000
Approximate date of commencement of proposed sale to the public: Upon
consummation of the merger referred to herein.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
U.S. BIOSCIENCE, INC.
One Tower Bridge
100 Front Street
West Conshohocken, PA 19428
October 21, 1999
Dear Stockholder:
We are pleased to inform you that U.S. Bioscience has signed a merger
agreement with MedImmune, Inc. As a result of the proposed merger, each of your
U.S. Bioscience shares will be converted into 0.1500 MedImmune shares, subject
to adjustment based on MedImmune's trading price, and U.S. Bioscience will
become a wholly owned subsidiary of MedImmune. The adjustment mechanism is
explained in detail on page 1 of the attached proxy statement/prospectus.
MedImmune common stock is listed on the Nasdaq Stock Market under the symbol
"MEDI" and its closing price was $106 1/2 per share on October 20, 1999.
U.S. Bioscience has scheduled a special meeting of its stockholders to be
held on November 23, 1999 to consider and vote on the merger agreement. We
cannot complete the merger without the approval of the holders of a majority of
the outstanding shares of U.S. Bioscience common stock.
After careful consideration, your board of directors has unanimously
approved the merger agreement and determined that the merger is fair to and in
the best interest of U.S. Bioscience and its stockholders. The board of
directors unanimously recommends that you vote "FOR" the merger agreement.
In arriving at its determination and recommendation, the board of directors
took into account the factors described in the attached proxy
statement/prospectus, including the opinion of Morgan Stanley & Co.
Incorporated to the effect that the merger consideration is fair from a
financial point of view to U.S. Bioscience stockholders.
Your vote is very important. Please promptly complete, date, sign and return
the enclosed proxy card in the prepaid envelope enclosed to ensure that your
shares will be represented at the special meeting. If you do not vote at all,
it will, in effect, count as a vote against the merger. You should consider the
matters discussed under "Risk Factors Relating to the Merger" on page 13 of the
attached proxy statement/prospectus before voting. Please review carefully the
entire proxy statement/prospectus.
We look forward to the successful combination of U.S. Bioscience and
MedImmune and to your continued support as a stockholder of MedImmune.
On behalf of the board of directors of U.S. Bioscience, we urge you to vote
"FOR" approval of the merger and the related merger agreement.
Sincerely,
[signature of C. Boyd Clarke appears
here]
C. Boyd Clarke
President and Chief Executive
Officer
----------------
Your vote is important.
Please complete, sign, date and return your proxy.
----------------
Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved the merger described in this proxy
statement/prospectus or the MedImmune common stock to be issued in connection
with the merger, or determined if the proxy statement/prospectus is accurate
or adequate. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated October 21, 1999, and is first
being mailed to stockholders on or about October 25, 1999.
<PAGE>
U.S. BIOSCIENCE, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 23, 1999
To the Stockholders of U.S. Bioscience, Inc.:
We will hold a special meeting of the stockholders of U.S. Bioscience, Inc.
on November 23, 1999, at 10:00 a.m., local time, at the Philadelphia Marriott
West, 111 Crawford Avenue, West Conshohocken, PA 19428, for the following
purpose:
To consider and vote upon a proposal to adopt the merger agreement dated as
of September 21, 1999 among MedImmune, a wholly-owned subsidiary of
MedImmune and U.S. Bioscience. In the merger, U.S. Bioscience will become a
wholly-owned subsidiary of MedImmune, and all outstanding shares of U.S.
Bioscience common stock will be converted into the right to receive shares
of MedImmune common stock.
We will transact no other business at the special meeting except such
business as may properly be brought before the special meeting or any
adjournment of it by the U.S. Bioscience board of directors.
Only stockholders who owned shares of U.S. Bioscience common stock at the
close of business on October 22, 1999, the record date for the special meeting,
are entitled to notice of, and to vote at, the special meeting and any
adjournments or postponements of it.
We cannot complete the merger unless the merger agreement is adopted by the
affirmative vote of holders of a majority of our outstanding shares of common
stock. U.S. Bioscience stockholders have no appraisal rights under Delaware law
in connection with the merger.
For more information about the merger, please review the accompanying proxy
statement/prospectus and the merger agreement attached as Annex 1.
The enclosed proxy is solicited by the Board of Directors of U.S.
Bioscience.
A complete list of the stockholders entitled to vote at the special meeting
will be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the special meeting, at the offices of U.S. Bioscience, One Tower
Bridge, 100 Front Street, West Conshohocken, Pennsylvania 19428.
Whether or not you plan to attend the special meeting, please complete, sign
and date the enclosed proxy and return it promptly in the enclosed postage-paid
envelope.
Please do not send any stock certificates at this time.
By Order of the Board of Directors,
Martha E. Manning
Secretary
West Conshohocken, Pennsylvania
October 21, 1999
<PAGE>
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about MedImmune and U.S. Bioscience from documents that
are not included in or delivered with this proxy statement/prospectus. This
information is available to you without charge upon your written or oral
request. You can obtain documents incorporated by reference in this proxy
statement/prospectus by requesting them in writing or by telephone from the
appropriate company at the following addresses and telephone numbers:
MedImmune, Inc. U.S. Bioscience, Inc.
35 West Watkins Mill Road One Tower Bridge
Gaithersburg, Maryland 20878 100 Front Street
Attention: Investor Relations West Conshohocken, PA 19428
Telephone: (301) 417-0770 Attention: Martha E. Manning
Telephone: (610) 832-0570
If you would like to request documents, please do so by November 16, 1999 in
order to receive them before the special meeting.
See "Where You Can Find More Information" on page 53.
i
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER.................................... iii
SUMMARY................................................................... 1
The Companies............................................................ 1
General.................................................................. 1
The Merger Agreement and Stock Option Agreement.......................... 5
The Special Meeting...................................................... 6
Market Prices and Dividend Information................................... 8
Comparative Per Share Information........................................ 9
SELECTED HISTORICAL FINANCIAL INFORMATION OF MEDIMMUNE.................... 10
SELECTED HISTORICAL FINANCIAL INFORMATION OF U.S. BIOSCIENCE.............. 11
UNAUDITED SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION............... 12
RISK FACTORS RELATING TO THE MERGER....................................... 13
THE MERGER................................................................ 14
Background of the Merger................................................. 14
Reasons for the Merger and the U.S. Bioscience Board of Directors
Recommendation.......................................................... 15
Opinion of Morgan Stanley & Co. Incorporated............................. 18
MedImmune Earnings....................................................... 23
Interests of U.S. Bioscience Directors and Management in the Merger...... 23
Material United States Federal Income Tax Consequences of the Merger..... 25
Accounting Treatment..................................................... 26
Conversion of Shares; Procedures for Exchange of Certificates; Fractional
Shares.................................................................. 27
Regulatory Matters....................................................... 27
Appraisal Rights......................................................... 28
Resale of MedImmune Common Stock......................................... 28
THE MERGER AGREEMENT AND STOCK OPTION AGREEMENT........................... 29
The Merger Agreement..................................................... 29
The Stock Option Agreement............................................... 36
UNAUDITED PRO FORM COMBINED FINANCIAL STATEMENTS.......................... 38
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF MEDIMMUNE AND U.S.
BIOSCIENCE............................................................... 47
THE SPECIAL MEETING....................................................... 50
Date, Time and Place..................................................... 50
Purpose of Special Meeting............................................... 50
Record Date; Shares Entitled to Vote; Quorum............................. 50
Votes Required........................................................... 50
Voting By U.S. Bioscience Directors and Executive Officers............... 50
Voting of Proxies........................................................ 50
Revocability of Proxies.................................................. 51
Solicitation of Proxies.................................................. 51
LEGAL MATTERS............................................................. 52
EXPERTS................................................................... 52
FUTURE STOCKHOLDER PROPOSALS.............................................. 52
WHERE YOU CAN FIND MORE INFORMATION....................................... 53
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS......................... 55
</TABLE>
ANNEXES
Annex 1--Agreement and Plan of Merger
Annex 2--Stock Option Agreement
Annex 3--Opinion of Morgan Stanley & Co. Incorporated
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q:Why is U.S. Bioscience recommending the merger?
A: We anticipate that the merger will create greater value for our
stockholders and more growth and business expansion opportunities than
would be available as an independent company.
Q: What do I need to do now?
A: After carefully reading and considering the information contained in
this proxy statement/prospectus, please complete, sign and date your
proxy and return it in the enclosed return envelope as soon as possible,
so that your shares may be represented at the special meeting. If you
sign and send in your proxy and do not indicate how you want to vote, we
will count your proxy as a vote in favor of adoption of the merger
agreement. If you abstain from voting or do not vote, it will have the
same effect as a vote against the merger agreement.
The special meeting will take place on November 23, 1999, at 10:00 a.m.,
local time, at the Philadelphia Marriott West, 111 Crawford Avenue, West
Conshohocken, PA 19428. You may attend the special meeting and vote your
shares in person, rather than completing, signing, dating and returning
your proxy.
Q: Can I change my vote after I have sent my proxy card?
A: Yes. You can change your vote at any time before your proxy is voted at
the special meeting. You can do this in one of three ways. First, you
can send a written notice stating that you would like to revoke your
proxy. Second, you can complete and submit a new proxy. If you choose
either of these two methods, you must submit your notice of revocation
or your new proxy to the Secretary of U.S. Bioscience at One Tower
Bridge, 100 Front Street, West Conshohocken, PA 19428, Attention: Martha
E. Manning. Third, you can attend the special meeting and vote in
person. Simply attending the meeting, however, will not revoke your
proxy.
Q: If my U.S. Bioscience shares are held in "street name" by my broker,
will my broker vote my shares for me?
A: No. Your broker will vote your shares only if you provide instructions
on how to vote. You should follow the directions provided by your broker
regarding how to instruct your broker to vote your shares. Without
instructions, your shares will not be voted, which will have the same
effect as a vote against the merger.
Q: Should I send in my stock certificates now?
A: No. After the merger is completed, you will receive written instructions
for exchanging your stock certificates. Please do not send in your stock
certificates with your proxy.
Q: When do you expect the merger to be completed?
A: We are working to complete the merger as quickly as possible. We expect
to complete the merger shortly after the U.S. Bioscience stockholder
meeting.
Q: Who can help answer my questions?
A: If you have any questions about the merger or if you need additional
copies of this proxy statement/prospectus or the enclosed proxy, you
should contact:
Corporate Investor Communications, Inc.
111 Commerce Road
Carlstadt, NJ 07072-2586
Toll Free Telephone: (877) 393-4953
iii
<PAGE>
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all the information that is important
to you. To understand the merger fully and for a more complete description of
some of the topics presented, you should carefully read this entire proxy
statement/prospectus and the other documents to which we have referred you. See
"Where You Can Find More Information" on page 53. In most cases, we have
included page references parenthetically to direct you to a more complete
description of the topics presented in this summary.
The Companies
MedImmune, Inc.
35 West Watkins Mill Road
Gaithersburg, Maryland 20878
(301) 417-0770
MedImmune, Inc., located in Gaithersburg, Maryland, is a biotechnology
company focused on developing and marketing products that address medical needs
in areas such as infectious disease, transplantation medicine, autoimmune
disorders and cancer. MedImmune markets three products through its hospital-
based sales force and has five new product candidates in clinical trials.
U.S. Bioscience, Inc.
One Tower Bridge
100 Front Street
West Conshohocken, Pennsylvania 19428
(610) 832-0570
U.S. Bioscience, Inc., based in West Conshohocken, Pennsylvania, is a
pharmaceutical company specializing in the development and commercialization of
products for patients with cancer and AIDS. The company has three products on
the market. In addition to its headquarters, U.S. Bioscience has a
manufacturing facility located in Nijmegen, The Netherlands, an analytical
laboratory in Exton, PA., and a subsidiary near London to coordinate clinical
trials in Europe.
General
What U.S. Bioscience Stockholders Will Receive in the Merger (Page 29)
In the merger, holders of U.S. Bioscience common stock will receive a
fraction of a share of MedImmune common stock equal to the exchange ratio for
each share of U.S. Bioscience common stock that they own. The exchange ratio
will be calculated as follows:
If the average per share closing price of MedImmune common stock as reported
in The Wall Street Journal during a valuation period of the 20 consecutive
trading days ending on the third trading day before the special meeting
(excluding the last five trading days of 1999 and the first two trading days of
2000) is:
. greater than $140, the exchange ratio will be $19.10 divided by the
average per share closing price of MedImmune's common stock;
. $140 or lower but more than $132, the exchange ratio will be 0.1364;
. $132 or lower but more than $120, the exchange ratio will be $18.00
divided by the average per share closing price of MedImmune's common
stock;
1
<PAGE>
. $120 or lower but more than $100, the exchange ratio will be 0.1500;
. $100 or lower but more than $88, the exchange ratio will be $15 divided
by the average per share closing price of MedImmune's common stock;
. $88 or lower, the exchange ratio will be 0.1705; and
. less than $80, U.S. Bioscience may terminate the merger agreement unless
MedImmune notifies U.S. Bioscience that it is increasing the exchange
ratio to $13.64 divided by the average per share closing price of
MedImmune's common stock.
U.S. Bioscience stockholders will receive cash for any fractional shares of
MedImmune common stock they would otherwise receive in the merger. This amount
will be calculated by multiplying the fractional share interest to which they
would otherwise be entitled by the closing price of MedImmune common stock on
the closing date.
This is a table showing a range of prices of MedImmune common stock, along
with the corresponding exchange ratios and corresponding value of the fraction
of a share of MedImmune common stock to be received by U.S. Bioscience
stockholders for each share of U.S. Bioscience common stock they hold.
<TABLE>
<CAPTION>
Value of MedImmune
Average Closing Price of Common Stock Received in
MedImmune Common Stock Exchange Ratio the Merger
------------------------ -------------- ------------------------
<S> <C> <C>
$80(1).......................... 0.1705 $13.64
82............................. 0.1705 13.98
84............................. 0.1705 14.32
86............................. 0.1705 14.66
88............................. 0.1705 15.00
90............................. 0.1667 15.00
92............................. 0.1630 15.00
94............................. 0.1596 15.00
96............................. 0.1563 15.00
98............................. 0.1531 15.00
100............................. 0.1500 15.00
102............................. 0.1500 15.30
104............................. 0.1500 15.60
106............................. 0.1500 15.90
108............................. 0.1500 16.20
110............................. 0.1500 16.50
112............................. 0.1500 16.80
114............................. 0.1500 17.10
116............................. 0.1500 17.40
118............................. 0.1500 17.70
120............................. 0.1500 18.00
122............................. 0.1475 18.00
124............................. 0.1452 18.00
126............................. 0.1429 18.00
128............................. 0.1406 18.00
130............................. 0.1385 18.00
132............................. 0.1364 18.00
134............................. 0.1364 18.28
136............................. 0.1364 18.55
138............................. 0.1364 18.82
140............................. 0.1364 19.10
142............................. 0.1345 19.10
144............................. 0.1326 19.10
146............................. 0.1308 19.10
</TABLE>
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(1) If the average closing price of MedImmune common stock is less than $80,
U.S. Bioscience may terminate the merger agreement unless MedImmune
notifies it that the exchange ratio will be $13.64 divided by the average
closing price. If U.S. Bioscience does not exercise its right to terminate,
the exchange ratio will be 0.1705 MedImmune shares for each U.S. Bioscience
share, which will result in a value of less than $13.64 per U.S. Bioscience
share.
2
<PAGE>
All valuations in this section assume that the value of a MedImmune share is
equal to the average closing price during the valuation period. The market
value of MedImmune common stock on the day the merger is completed may vary
from the average closing price of MedImmune common stock used to calculate the
exchange ratio. As a result, the market value of the shares of MedImmune common
stock you receive in the merger may be more or less than the value attributed
to your shares of U.S. Bioscience common stock in calculating the exchange
ratio. See "Risk Factors Relating to the Merger" on page 13.
We will issue a press release before the special meeting disclosing the
exchange ratio once it has been calculated. In addition, you may obtain the
exchange ratio by calling Corporate Investor Communications, Inc. at (201) 896-
1900 beginning on the trading day before the special meeting.
U.S. Bioscience Board Of Directors Recommendation To Stockholders (Page 17)
The U.S. Bioscience board of directors believes that the terms of the merger
and the merger agreement are fair to and in the best interests of U.S.
Bioscience and its stockholders and unanimously recommends that the
stockholders vote "FOR" the adoption of the merger agreement. To review the
background and reasons for the merger, as well as certain risks related to the
merger, see pages 14, 15, 16 and 17.
Opinion of Financial Advisor to U.S. Bioscience (Page 18)
In deciding to approve the merger, the U.S. Bioscience board considered the
opinion of Morgan Stanley & Co. Incorporated, its financial advisor, that, as
of September 21, 1999, and based upon and subject to the various considerations
in its letter, the consideration to be received by the holders of U.S.
Bioscience common stock pursuant to the merger agreement is fair from a
financial point of view to such holders. The opinion was provided for the
information and assistance of the U.S. Bioscience board in connection with the
merger and is not a recommendation as to how any holder of U.S. Bioscience
common stock should vote with respect to the merger. The full text of the
written opinion of Morgan Stanley, which sets forth assumptions made, matters
considered and limitations on the review undertaken in connection with the
opinion, is attached as Annex 3. You are urged to read the opinion carefully
and in its entirety.
Material United States Federal Income Tax Consequences of the Merger (Page 25)
The merger is intended to qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986. It is a condition to U.S.
Bioscience's obligation to complete the merger that U.S. Bioscience receive an
opinion from Skadden, Arps, Slate, Meagher & Flom LLP to the effect that the
merger so qualifies. The condition relating to the tax opinion cannot be waived
without the express written consent of Medimmune and will not be waived after
receipt of stockholder approval unless further stockholder approval is obtained
with appropriate disclosure. Assuming the merger qualifies as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, holders of
U.S. Bioscience common stock will not recognize gain or loss for United States
federal income tax purposes as a result of the exchange of their U.S.
Bioscience common stock for Medimmune common stock in the merger (except for
gain or loss recognized because of cash received instead of fractional shares
of Medimmune common stock).
3
<PAGE>
Tax matters are very complicated and holders of U.S. Bioscience common
stock are strongly urged to consult their tax advisors as to the specific tax
consequences to them of the merger, including the applicability and effect of
federal, state, local, foreign and other applicable tax laws in their
particular circumstances.
Accounting Treatment (Page 26)
MedImmune and U.S. Bioscience expect the merger to qualify as a pooling of
interests transaction, which means that MedImmune and U.S. Bioscience will be
treated as if they had always been combined for accounting and financial
reporting purposes.
Ownership of MedImmune Following the Merger
Based on the number of outstanding shares of U.S. Bioscience common stock
on the record date and an exchange ratio of 0.1500 MedImmune shares per U.S.
Bioscience share, U.S. Bioscience stockholders would receive approximately
4,137,150 shares of MedImmune common stock in the merger. Based on that number
and on the number of outstanding shares of MedImmune common stock on the
record date, U.S. Bioscience stockholders would own approximately 6% of the
outstanding shares of MedImmune common stock following the merger.
Interests of U.S. Bioscience Directors and Management in the Merger (Page 23)
In addition to their interests as stockholders, the directors and officers
of U.S. Bioscience have interests in the merger that are different from, or in
addition to, your interests. These interests exist because of rights they have
pursuant to the terms of benefit and compensation plans maintained by U.S.
Bioscience and pursuant to the terms of each officer's severance agreement
with U.S. Bioscience.
Some of these benefit and compensation plans provide for acceleration of
vesting or lapse of restrictions on the stock-based rights of directors and
executive officers in connection with the merger. Each executive officer's
severance agreement also provides the executive officer with severance
benefits if his or her employment is terminated under specified circumstances
following the merger.
In addition, MedImmune will indemnify the directors and executive officers
of U.S. Bioscience for a period of six years following the merger for events
occurring before the merger.
The members of the U.S. Bioscience board of directors knew about these
additional interests and considered them when approving the merger.
Appraisal Rights
Under Delaware law, U.S. Bioscience stockholders have no appraisal rights
in connection with the merger.
Regulatory Matters (Page 27)
The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 applicable to the merger has been terminated.
Both MedImmune and U.S. Bioscience conduct operations in a number of
foreign countries where regulatory filings, notifications or approvals with
applicable commissions and other authorities may be required in connection
with consummation of the merger. The parties do not anticipate that any such
foreign filings will materially affect the consummation of the merger.
4
<PAGE>
The Merger Agreement and Stock Option Agreement (Page 29)
The merger agreement is attached as Annex 1 to this proxy
statement/prospectus. The stock option agreement is attached as Annex 2 to this
proxy statement/prospectus. U.S. Bioscience encourages you to read these
agreements carefully.
Conditions to the Completion of the Merger (Page 30)
The obligation of MedImmune and U.S. Bioscience to effect the merger is
subject to a number of conditions, including the following:
. adoption of the merger agreement by U.S. Bioscience stockholders
. the receipt of regulatory approvals and the absence of legal restraints
or governmental litigation
. MedImmune and U.S. Bioscience each having received letters from their
accountants concurring with their managements' conclusions that no
conditions exist that would preclude accounting for the merger as a
pooling of interests
. the accuracy of the representations made by the other party in the
merger agreement and the performance of the covenants made by the other
party in the merger agreement
. the absence of a material adverse change in the other party
U.S. Bioscience's obligation to complete the merger is also contingent upon
receipt of an opinion of counsel to the effect that the merger will qualify as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986.
Termination of the Merger Agreement (Page 32)
1. MedImmune and U.S. Bioscience can jointly agree to terminate the merger
agreement.
2. MedImmune or U.S. Bioscience can terminate the merger agreement if:
. the merger has not been completed by March 31, 2000
. a law or court order prohibiting the merger becomes final and
nonappealable
. U.S. Bioscience stockholders do not adopt the merger agreement at the
special meeting
. the other party breaches any of its representations, warranties,
covenants or agreements under the merger agreement that results in a
failure of specified conditions to the merger and has not cured the
breach within 15 days after receipt of notice of such breach
3. MedImmune can terminate the merger agreement if the U.S. Bioscience board
of directors:
. withdraws, modifies or changes its approval or recommendation of the
merger in a manner adverse to MedImmune
. approves or recommends a third party takeover proposal
4. U.S. Bioscience can terminate the merger agreement:
. in response to an unsolicited proposal to acquire more than 50% of the
U.S. Bioscience common stock or all or substantially all of its assets
on terms that the U.S. Bioscience board of directors determines to be
more favorable to U.S. Bioscience than the merger, but only if it has
given
5
<PAGE>
MedImmune five days' notice of the terms of the other proposal and has
paid the required termination fee
. if the average share price of MedImmune common stock in the 20
consecutive trading days ending three trading days before the special
meeting falls below $80, unless MedImmune notifies U.S. Bioscience that
it is increasing the exchange ratio to $13.64 divided by the average per
share closing price
Termination Fees (Page 33)
U.S. Bioscience must pay MedImmune a termination fee of $15 million plus up
to $2 million of documented expenses relating to the merger if:
. (a) a third party makes a takeover proposal, (b) the merger agreement is
terminated because the stockholders of U.S. Bioscience do not approve
the merger or due to a willful and material breach by U.S. Bioscience
and (c) within 12 months of the termination, U.S. Bioscience enters into
an acquisition agreement or consummates a takeover proposal
. U.S. Bioscience terminates the merger agreement in response to an
unsolicited superior proposal, as described in paragraph 4 above
. MedImmune terminates the merger agreement due to a change in U.S.
Bioscience's recommendation of the merger or because U.S. Bioscience
recommends another transaction, as described in paragraph 3 above
The Stock Option Agreement (Page 36)
U.S. Bioscience has granted an option to MedImmune to purchase a number of
newly issued shares of U.S. Bioscience common stock equal to 19.9% of U.S.
Bioscience's outstanding common stock at an option price of $16.50 per share
if any of the events occur that entitle MedImmune to receive the termination
fee under the merger agreement. The stock option agreement limits MedImmune's
total profit under the stock option to $17 million less any termination fee
and documented expenses it actually receives under the merger agreement.
The Special Meeting (Page 50)
The special meeting of U.S. Bioscience stockholders will be held at the
Philadelphia Marriott West, 111 Crawford Avenue, West Conshohocken, PA 19428,
at 10:00 a.m., local time, on November 23, 1999. At the special meeting, we
will ask U.S. Bioscience stockholders to adopt the merger agreement.
Record Date; Voting Power
U.S. Bioscience stockholders are entitled to vote at the special meeting if
they were holders of record of shares of U.S. Bioscience common stock as of
the close of business on October 22, 1999, the record date.
On the record date, there were 27,581,005 shares of U.S. Bioscience common
stock outstanding and entitled to vote at the special meeting. Stockholders
will have one vote at the special meeting for each share of U.S. Bioscience
common stock that they owned on the record date.
Votes Required
The affirmative vote of the holders of a majority of the outstanding U.S.
Bioscience common stock is required to adopt the merger agreement.
6
<PAGE>
Voting By U.S. Bioscience Directors and Executive Officers
At the close of business on the record date, directors and executive
officers of U.S. Bioscience owned and were entitled to vote 55,883 shares of
U.S. Bioscience common stock, which represented approximately 0.2% of the
shares of U.S. Bioscience common stock outstanding on that date. The directors
and executive officers of U.S. Bioscience have indicated that they intend to
vote the U.S. Bioscience stock owned by them "FOR" the adoption of the merger
agreement.
7
<PAGE>
Market Prices and Dividend Information
MedImmune common stock is traded on the Nasdaq Stock Market under the symbol
"MEDI" and U.S. Bioscience common stock is listed on The American Stock
Exchange under the symbol "UBS." The following table sets forth, for the
periods indicated, the high and low sales prices per share of MedImmune common
stock and of U.S. Bioscience common stock as reported in published financial
sources. MedImmune's per share data has been restated to account for
MedImmune's two-for-one stock split effective on December 31, 1998. Neither
MedImmune nor U.S. Bioscience has ever declared or paid any cash dividends on
its common stock and neither anticipates paying any cash dividends in the
foreseeable future.
<TABLE>
<CAPTION>
MedImmune U.S. Bioscience
-------------- ---------------
High Low High Low
----- ----- ------ -------
<S> <C> <C> <C> <C>
1997:
First quarter................... $8 3/4 $ 6 11/16 $ 17 3/8 $ 11 3/8
Second quarter.................. 9 7/8 5 11/16 11 3/4 8 11/16
Third quarter................... 18 5/8 8 1/4 12 1/16 9 1/4
Fourth quarter.................. 21 7/8 15 1/2 13 1/2 8 3/8
1998:
First quarter................... 29 1/8 19 3/8 12 1/4 7 13/16
Second quarter.................. 32 15/16 22 11/16 11 13/16 8 1/16
Third quarter................... 34 7/8 21 8 5/8 4 7/8
Fourth quarter.................. 50 11/16 25 5/8 9 1/4 4 1/2
1999:
First quarter................... 66 43 13 1/8 6 3/4
Second quarter.................. 74 1/8 45 1/16 12 3/8 7 1/16
Third quarter................... 120 5/8 68 7/8 14 5/8 7 7/8
Fourth quarter (through October
20)............................ 125 1/4 89 16 1/8 13 1/4
</TABLE>
Stockholders are urged to obtain current market quotations prior to making any
decision with respect to the merger.
The following table presents closing prices for MedImmune and U.S.
Bioscience common shares on September 21, 1999, the last full trading day prior
to the public announcement of the proposed merger, and on October 20, 1999, the
last practicable trading day prior to the date of this proxy
statement/prospectus. The table also presents the pro forma value of the
fraction of a share of MedImmune common stock that would be received by U.S.
Bioscience stockholders for each share of U.S. Bioscience stock they hold if
the price of MedImmune common stock shown were the average trading price of
MedImmune common stock during the valuation period. We cannot assure you what
the market prices of the MedImmune common stock will be at the merger date or
during the period when the exchange ratio is calculated.
<TABLE>
<CAPTION>
Pro Forma Value of
MedImmune U.S. Bioscience MedImmune Common Stock
Date Common Stock Common Stock Received in the Merger
---- ------------ --------------- ----------------------
<S> <C> <C> <C>
September 21, 1999 $102 1/16 $11 1/2 $15.30
October 20, 1999 $106 1/2 $15 5/16 $15.98
</TABLE>
8
<PAGE>
Comparative Per Share Information
The following table shows historical per share data of MedImmune and U.S.
Bioscience and also shows similar information reflecting the combination of the
two companies, which is referred to as "pro forma" information. In presenting
the comparative pro forma information, it is assumed that the companies have
been combined for accounting and financial reporting purposes for all periods
presented, as required by "pooling of interests" accounting.
The comparative per share data is derived from, and should be read with, the
historical financial statements of MedImmune and U.S. Bioscience that are
included in the documents described under "Where You Can Find More Information"
on page 53.
The U.S. Bioscience "equivalent pro forma" data was calculated by
multiplying the corresponding pro forma combined data by an exchange ratio of
0.1500. This information shows how each share of U.S. Bioscience common stock
would have participated in net income and book value of MedImmune if the
companies had always been combined for accounting and financial reporting
purposes for all periods presented. These amounts, however, are not intended to
reflect future per share levels of net income or book value of MedImmune. For
each of the periods presented, neither party declared or paid any cash
dividends.
<TABLE>
<CAPTION>
Six months ended Year ended December
June 30, 31,
--------------------- ----------------------
1999 1998 1998 1997 1996
-------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net income (loss) per basic
share
MedImmune historical.......... $ 0.33 $ (0.10) $ 1.06 $(0.80) $(0.70)
U.S. Bioscience historical.... $ (0.19) $ (0.13) $(0.37) $(0.33) $(0.43)
Pro forma combined............ $ 0.94 (1) $ (0.15) $ 0.83 $(0.90) $(0.86)
Equivalent pro forma per U.S.
Bioscience share............. $ 0.14 $ (0.02) $ 0.12 $(0.13) $(0.13)
Net income (loss) per diluted
share
MedImmune historical.......... $ 0.29 $ (0.10) $ 0.91 $(0.80) $(0.70)
U.S. Bioscience historical.... $ (0.19) $ (0.13) $(0.37) $(0.33) $(0.43)
Pro forma combined............ $ 0.81 (1) $ (0.15) $ 0.72 $(0.90) $(0.86)
Equivalent pro forma per U.S.
Bioscience share............. $ 0.12 $ (0.02) $ 0.11 $(0.13) $(0.13)
Book value per share (at end of
period)
MedImmune historical.......... $ 4.81
U.S. Bioscience historical.... $ 1.99
Pro forma combined............ $ 5.93
Equivalent pro forma per U.S.
Bioscience share............. $ 0.89
</TABLE>
- --------
(1) Includes the pro forma impact of an adjustment to deferred taxes of $0.71
per basic share and $0.61 per diluted share.
9
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF MEDIMMUNE
The following table sets forth, for the periods and at the dates indicated,
MedImmune's summary consolidated historical financial information. The
information as of and for the five years ended December 31, 1998 is from
MedImmune's audited historical financial statements and notes. The information
as of and for the six months ended June 30, 1998 and 1999 is from MedImmune's
unaudited financial statements. Stockholders should read this information
together with the audited and unaudited financial statements, including the
notes to those financial statements, included in MedImmune's annual report for
the year ended December 31, 1998 and quarterly report for the quarter ended
June 30, 1999. See "Where You Can Find More Information" on page 53.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
------------------- ------------------------------------------------------
1999 1998 1998 1997(1) 1996(1) 1995(1) 1994(1)
--------- --------- --------- -------- --------- --------- ---------
(Unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Data:
Revenues
Product sales.......... $ 135,196 $ 51,043 $ 163,440 $ 65,271 $ 35,782 $ 16,173 $ 12,054
Other.................. 3,764 32,886 37,268 15,693 5,317 11,263 6,804
--------- --------- --------- -------- --------- --------- ---------
Total Revenues....... $ 138,960 $ 83,929 $ 200,708 $ 80,964 $ 41,099 $ 27,436 $ 18,858
Research and development
expenses............... 17,635 12,995 25,775 40,669 32,192 26,417 21,939
Net earnings (loss)..... 18,474 (5,363) 56,240(2) (36,895) (29,544) (22,671) (18,828)
Earnings (loss) per
common share (1)
Basic.................. $ 0.33 $ (0.10) $ 1.06 $ (0.80) $ (0.70) $ (0.71) $ (0.64)
Diluted................ $ 0.29 $ (0.10) $ 0.91 $ (0.80) $ (0.70) $ (0.71) $ (0.64)
Balance Sheet Data (at
end of period):
Cash and marketable
securities............. $ 184,232 $ 130,967 $ 134,882 $ 50,326 $ 114,765 $ 38,039 $ 22,527
Total assets............ 395,836 234,598 353,120 170,336 163,971 57,332 44,724
Long-term debt.......... 80,236 84,769 83,195 85,363 70,874 1,984 2,090
Shareholders' equity.... $ 272,621 $ 109,790 $ 209,833 $ 40,536 $ 72,865 $ 43,779 $ 34,194
</TABLE>
- --------
(1) Earnings (loss) per share data have been restated to give effect for the
two-for-one stock split on December 31, 1998.
(2) Includes deferred income tax benefit of $47,428.
On October 20, 1999, MedImmune issued a press release announcing results for
the three months ended September 30, 1999, including total revenues of $48.9
million, product sales of $32.2 million, net earnings of $5.1 million and
earnings per share (basic and diluted) of $0.08. The full text of the press
release was included as an exhibit to MedImmune's Form 8-K filed October 21,
1999. See "Where You Can Find More Information."
10
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF U.S. BIOSCIENCE
The following table sets forth, for the periods and at the dates indicated,
U.S. Bioscience's summary consolidated historical financial information. The
information as of and for the five years ended December 31, 1998 is from U.S.
Bioscience's audited consolidated historical financial statements and notes.
The information as of and for the six months ended June 30, 1998 and 1999 is
from U.S. Bioscience's unaudited financial statements. Stockholders should read
this information together with the audited and unaudited consolidated financial
statements, including the notes to those financial statements, included in U.S.
Bioscience's Annual Report for the year ended December 31, 1998 and quarterly
report for the quarter ended June 30, 1999. See "Where You Can Find More
Information" on page 53.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
-------------------- -----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
(Unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Da-
ta:
Revenues
Net sales................ $ 11,590 $ 8,422 $ 20,730 $ 12,986 $ 10,785 $ 8,724 $ 7,210
Net investment income.... 1,383 1,447 2,736 2,824 2,335 1,223 1,234
Licensing, royalty and
other income............ 3,533 5,584 6,005 11,914 7,344 21,398 102
--------- --------- --------- --------- --------- --------- ---------
Total Revenues.......... $ 16,506 $ 15,453 $ 29,471 $ 27,724 $ 20,464 $ 31,345 $ 8,546
Expenses
Cost of sales............ 2,560 2,582 5,788 4,158 2,956 2,559 1,694
Selling, general and
administrative costs.... 7,146 7,030 13,546 14,387 12,275 16,583 13,233
Research and development
costs................... 11,687 9,032 19,042 16,905 14,383 12,186 17,608
Interest expense......... 54 82 149 183 537 255 52
--------- --------- --------- --------- --------- --------- ---------
Total Expenses.......... 21,447 18,726 38,525 35,633 30,151 31,583 32,587
--------- --------- --------- --------- --------- --------- ---------
Net loss................... $ (4,941) $ (3,273) $ (9,054) $ (7,909) $ (9,687) $ (238) $ (24,041)
Basic and diluted net loss
per common share.......... $ (0.19) $ (0.13) $ (0.37) $ (0.33) $ (0.43) $ (0.01) $ (1.19)
Weighted average number of
common shares outstanding.. 26,672 24,267 24,307 23,872 22,396 20,436 20,127
Balance Sheet Data (at end
of period):
Cash, cash equivalents and
marketable securities..... $ 56,898 $ 47,803 $ 41,949 $ 50,651 $ 36,677 $ 45,596 $ 24,428
Working capital............ 22,261 41,717 18,680 32,835 34,126 42,577 21,536
Total assets............... 69,374 59,457 52,722 62,381 49,111 61,880 34,464
Long-term debt............. 406 760 523 1,135 1,845 19,088 997
Provision for litigation... -- -- -- -- -- -- 2,301
Other long-term
liabilities............... 1,878 1,883 1,922 1,832 1,462 1,036 788
Accumulated deficit........ (136,522) (125,799) (131,580) (122,526) (114,617) (104,930) (104,692)
Stockholders' equity....... $ 54,485 $ 44,088 $ 38,733 $ 47,024 $ 36,894 $ 28,788 $ 23,939
</TABLE>
On October 21, 1999, U.S. Bioscience issued a press release announcing
results for the three months ended September 30, 1999, including net sales of
$6.5 million, net loss of $3.6 million, and loss per share (basic and diluted)
of $0.13. The full text of the press release was included as an exhibit to U.S.
Bioscience's Form 8-K filed October 21, 1999. See "Where You Can Find More
Information."
11
<PAGE>
UNAUDITED SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION
The unaudited pro forma combined financial information is presented to
reflect the estimated impact of the merger on the historical consolidated
financial statements of MedImmune and U. S. Bioscience using the "pooling of
interests" method of accounting. The unaudited pro forma combined financial
information is qualified in its entirety by reference to, and should be read in
conjunction with, the unaudited pro forma combined financial statements and
notes thereto, included elsewhere herein, and the historical consolidated
financial statements and notes thereto of MedImmune and U.S. Bioscience which
are incorporated by reference in this proxy statement/prospectus. See
"Unaudited Pro Forma Combined Financial Statements." The unaudited pro forma
combined financial data give effect to the merger as if it had been
consummated, with respect to statement of operations information, at the
beginning of the periods presented or, with respect to balance sheet data, as
of the date presented. The unaudited pro forma combined financial data have
been included for illustrative purposes only, and are not necessarily
indicative of the results of operations or financial position that would have
occurred had the merger been consummated at the dates indicated, nor are they
necessarily indicative of future results of operations or financial position of
the merged companies.
<TABLE>
<CAPTION>
Six months ended
June 30, Year ended December 31,
------------------- --------------------------------
1999 1998 1998 1997 1996
-------- ------- --------- -------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Pro forma combined
statement of operations
data:
Total revenues........ $154,083 $97,935 $ 227,443 $105,864 $ 59,228
Net earnings (loss)... $ 55,993(1) $(8,636) $ 47,186(1) $(44,804) $ (39,231)
Basic earnings (loss)
per share at 0.15
exchange ratio....... $ 0.94 $ (0.15) $ 0.83 $ (0.90) $ (0.86)
Shares used in
calculation of basic
earnings (loss) per
share at 0.15
exchange ratio....... 59,571 56,109 56,776 49,845 45,398
Diluted earnings
(loss) per share at
0.15 exchange ratio.. $ 0.81 $ (0.15) $ 0.72 $ (0.90) $ (0.86)
Shares used in
calculation of
diluted earnings
(loss) per share at
0.15 exchange ratio.. 69,784 56,109 67,110 49,845 45,398
<CAPTION>
June 30,
1999
--------
<S> <C>
Pro forma combined
balance sheet data:
Cash and marketable
securities........... $241,157
Working capital....... 202,004
Total assets.......... 518,111
Long term debt, net of
current portion...... 80,642
Shareholders' equity.. 360,007
Book value per share
at 0.15 exchange
ratio................ $ 5.93
</TABLE>
- --------
(1) Includes deferred income tax benefit of $42.5 million and $47.4 million for
the six months ended June 30, 1999 and the twelve months ended December 31,
1998, respectively.
12
<PAGE>
RISK FACTORS RELATING TO THE MERGER
In addition to the other information included and incorporated by reference
in this proxy statement/prospectus, U.S. Bioscience stockholders should
consider carefully the matters described below in determining whether to adopt
the merger agreement.
Although the exchange ratio for MedImmune common stock to be received in the
merger will be adjusted in the event of any change in the price of MedImmune
common stock before the special meeting, it will not be adjusted for changes
occurring after the special meeting.
Under the merger agreement, each share of U.S. Bioscience common stock will
be converted into the right to receive a fraction of a share of MedImmune
common stock based on an exchange ratio to be calculated shortly before the
special meeting of stockholders. Once the exchange ratio is determined, it will
be a fixed number that will not be adjusted for any increase or decrease in the
market price of MedImmune common stock and the value of the MedImmune common
stock to be received by U.S. Bioscience stockholders in the merger will
fluctuate with changes in the MedImmune common stock price. The market value of
MedImmune common stock on the day the merger is completed may vary from the
average closing price of MedImmune common stock used to calculate the exchange
ratio. These prices may vary because of changes in the business, operations or
prospects of MedImmune or U.S. Bioscience, market assessments of the likelihood
that the merger will be completed, the timing of the completion of the merger,
the prospects of post-merger operations, regulatory considerations, general
market and economic conditions and other factors. As a result, the market value
of the shares of MedImmune common stock you receive in the merger may be more
or less than the value attributed to your shares of U.S. Bioscience common
stock in calculating the exchange ratio.
The price of MedImmune common stock may be affected by factors different from
those affecting the price of U.S. Bioscience common stock.
Upon completion of the merger, holders of U.S. Bioscience common stock will
become holders of MedImmune common stock. MedImmune's business differs from
that of U.S. Bioscience and MedImmune's results of operations, as well as the
price of MedImmune common stock, may be affected by factors different from
those affecting U.S. Bioscience's results of operations and the price of U.S.
Bioscience common stock. For a discussion of MedImmune's and U.S. Bioscience's
businesses and certain factors to consider in connection with such businesses,
see MedImmune's Annual Report on Form 10-K for the fiscal year ended December
31, 1998, U.S. Bioscience's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, and the Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K which are incorporated by reference in this proxy
statement/prospectus. See "Where You Can Find More Information."
Integration of U.S. Bioscience into MedImmune may be difficult and expensive to
achieve.
The merger involves the integration of companies that have previously
operated independently. No assurance can be given that MedImmune will integrate
the operations of MedImmune and U.S. Bioscience without encountering
difficulties, including possible unanticipated costs, failure to retain key
U.S. Bioscience employees or the diversion of management attention. In
addition, following the merger, the combined company may not realize the
increased revenues and cost savings that MedImmune expects to achieve or that
would justify the investment made.
13
<PAGE>
THE MERGER
Background of the Merger
Following internal strategic discussions at MedImmune with Dr. Wayne T.
Hockmeyer, Chairman and Chief Executive Officer, Mr. Melvin D. Booth, President
and Chief Operating Officer, Mr. David M. Mott, Vice Chairman and Chief
Financial Officer, and other MedImmune senior officers, on August 16, 1999,
Mr. Mott called Mr. C. Boyd Clarke, President and Chief Executive Officer of
U.S. Bioscience, and expressed MedImmune's interest in discussing possible
business development opportunities.
On August 24, 1999, Dr. Hockmeyer and Mr. Booth met with Mr. Mott to
evaluate pursuing a possible business relationship with U.S. Bioscience.
Following these discussions, U.S. Bioscience and MedImmune entered into a
confidentiality agreement to facilitate the discussion of a possible business
relationship.
On August 26, 1999, representatives of the two companies, including Dr.
Hockmeyer and Mr. Clarke, met at MedImmune's executive offices in Gaithersburg,
Maryland for a preliminary discussion of each company's product development
programs and capabilities.
On August 30, 1999, Dr. Hockmeyer, Mr. Booth and Mr. Mott met and agreed
that Mr. Mott would call Mr. Clarke and express interest in pursuing a possible
merger of the two companies. Following this discussion, Mr. Clarke reported to
the Executive Committee of the U.S. Bioscience board the substance of his
discussions with Mr. Mott and MedImmune's potential interest in a transaction
with U.S. Bioscience. Following Mr. Clarke's report, the Executive Committee
authorized Mr. Clarke to pursue further discussions with MedImmune.
On September 7, 1999, MedImmune and U.S. Bioscience entered into an expanded
confidentiality agreement. On September 7 and 8, 1999, Mr. Booth, Mr. Mott and
other key representatives of MedImmune and its financial and legal advisors met
with representatives of U.S. Bioscience and its financial advisor at U.S.
Bioscience's offices to conduct due diligence on U.S. Bioscience. On September
13, 1999, Dr. Hockmeyer, Mr. Booth and other representatives of MedImmune met
at MedImmune's offices in Gaithersburg, Maryland with Mr. Clarke and other
representatives of U.S. Bioscience to facilitate scientific due diligence on
U.S. Bioscience.
Following internal MedImmune senior management discussion, on September 14,
1999, Mr. Mott called Mr. Clarke to express the continued interest of
MedImmune's senior management in considering a possible merger transaction.
Messrs. Mott and Clarke discussed the importance of structuring the transaction
as a stock-for-stock merger that would be tax-free to U.S. Bioscience
stockholders and that would be accounted for as a pooling-of-interests. Mr.
Clarke also raised with Mr. Mott the necessity of incorporating downside price
protection for U.S. Bioscience stockholders.
On September 15, 1999, the U.S. Bioscience board held a special meeting so
that management and U.S. Bioscience's financial and legal advisors could update
the board on the status of the discussions with MedImmune. At that meeting,
representatives of Morgan Stanley reviewed with the board preliminary financial
information relating to U.S. Bioscience, MedImmune and the terms of a possible
transaction with MedImmune. Following discussions with management and its
financial and legal advisors, the U.S. Bioscience board authorized management
to proceed with the negotiation of a merger with MedImmune along the lines
discussed with the board.
Also on September 15, 1999, Dr. Hockmeyer convened a meeting of MedImmune's
board of directors to consider the possible acquisition of U.S. Bioscience. A
presentation was made regarding U.S. Bioscience and contacts with U.S.
Bioscience regarding the possible transaction. The board authorized management
to pursue discussions.
14
<PAGE>
On September 16, 1999, MedImmune's legal advisors distributed drafts of the
merger agreement and the stock option agreement to representatives of U.S.
Bioscience.
On September 17, 1999, representatives of U.S. Bioscience conducted
additional legal and regulatory due diligence at MedImmune's offices in
Gaithersburg, Maryland. Following these meetings, Dr. Hockmeyer met with Mr.
Clarke to discuss the proposed transaction, including such subjects as
structure, pricing, personnel retention and business plans.
From September 18, 1999 to September 21, 1999, representatives of MedImmune
and U.S. Bioscience and their respective financial and legal advisors
negotiated the terms of a merger agreement.
In the morning on September 21, 1999, the U.S. Bioscience board held its
regularly scheduled board meeting. At that meeting, among other things,
management reviewed the status of negotiations with MedImmune, representatives
of Morgan Stanley made a financial presentation to the board relating to the
proposed transaction, and U.S. Bioscience's legal advisors described in detail
the status of negotiations on the merger agreement. At that meeting the board
authorized management and its financial and legal advisors to finalize the
documentation for the merger as directed by the board.
During the course of the day on September 21, 1999, representatives of
MedImmune and U.S. Bioscience completed their negotiations of the terms of the
merger agreement and stock option agreement.
On September 21, 1999, MedImmune held a special Board meeting. Management,
together with MedImmune's legal and financial advisors, reviewed the proposed
transaction, including the terms of the merger agreement. Following
discussions, the MedImmune Board determined that the transactions contemplated
by the merger agreement were in the best interests of MedImmune and its
stockholders and unanimously approved the merger agreement.
In the evening on September 21, 1999, U.S. Bioscience held a special board
meeting. Management together with U.S. Bioscience's legal and financial
advisors reviewed the terms of the merger agreement that were revised since the
meeting earlier in the day. Morgan Stanley rendered its oral opinion that as of
September 21, 1999, and subject to and based upon the various considerations in
its opinion, the consideration to be received by the U.S. Bioscience
stockholders in the merger was fair to the U.S. Bioscience stockholders from a
financial point of view. Following discussions, the U.S. Bioscience board
determined, among other things, that the terms of the proposed merger were fair
to and in the best interests of U.S. Bioscience and its stockholders and
unanimously approved the merger agreement and the stock option agreement.
Thereafter the definitive merger agreement and stock option were executed.
On September 22, 1999, prior to the commencement of trading, MedImmune and U.S.
Bioscience issued a joint press release announcing the merger.
Reasons for the Merger and the U.S. Bioscience Board of Directors
Recommendation
In reaching its decision to approve the merger agreement and the merger and
to recommend adoption of the merger agreement by U.S. Bioscience's
stockholders, the U.S. Bioscience board consulted with its management team and
advisors and considered the proposed merger agreement and the stock option
agreement and the transactions contemplated by the merger agreement and the
stock option agreement. The following discussion of the factors considered by
the U.S. Bioscience board in making its decision is not intended to be
exhaustive but includes all material factors considered by the U.S. Bioscience
board.
The U.S. Bioscience board considered the following factors as reasons that
the merger will be beneficial to U.S. Bioscience and its stockholders:
. the complementary nature of the following aspects of the respective
businesses of MedImmune and U.S. Bioscience which should have
substantial positive impact on the ability to realize more fully the
value of U.S. Bioscience products:
15
<PAGE>
-- the timing of their profitability and anticipated financial growth
-- their product focus on cancer and infectious disease
-- their technical capabilities and research programs
-- their commercial focus, including niche marketing and overlap in
the identity of key partners
. their business organizations
. the pipeline of products that MedImmune has under development
. MedImmune's rapid growth, strong income statement and balance sheet and
an equity security that is significantly more liquid than the U.S.
Bioscience common stock
. the U.S. Bioscience stockholders will receive shares of MedImmune common
stock in the merger which will enable them to participate in the future
of the combined company
. the U.S. Bioscience organization is likely to be retained in large part
which will play a significant role in ensuring that the anticipated
future values will be generated for stockholders
. the terms and conditions of the merger agreement and the belief of the
U.S. Bioscience board that the parties will be able to satisfy the
closing conditions and promptly complete the acquisition
. information regarding historical market prices and other information
with respect to U.S. Bioscience common stock and MedImmune common stock
. the consideration to be received by U.S. Bioscience stockholders in the
merger and the fact that the implied value of the MedImmune common stock
to be received by U.S. Bioscience stockholders in the merger represents
a substantial premium over the 52-week historical per share price of
U.S. Bioscience
. the expectation that the merger will be treated as a tax-free
reorganization for U.S. federal income tax purposes
. the analysis and presentation of the opinion of Morgan Stanley that, as
of September 21, 1999, and based upon and subject to the various
considerations in its opinion, the consideration to be received in the
merger by the holders of U.S. Bioscience common stock was fair from a
financial point of view to such holders
In the course of deliberations, the U.S. Bioscience board also considered a
number of additional factors relevant to the merger, including:
. rapid consolidation in the biotech industry
. the need for greater relative size in order to fund adequately research
and development and generate growth so as to compete effectively in the
biotech industry
. the need to have the appropriate equity market capitalization in order
to meet the thresholds for coverage by the equity analyst community
. the importance of having a highly liquid equity security to interest the
investment community
. the fact that over the course of the last two years U.S. Bioscience had
had discussions with potential strategic partners that did not result in
any potential transaction that would satisfy the foregoing needs
. the fact that each of the other strategic alternatives for U.S.
Bioscience, including product acquisitions, acquisitions of smaller
companies and a merger-of-equals type transaction, if in fact
achievable, suffered from inherent risks and that none were likely to
produce the immediate short-term and long-term benefits that could be
attainable from the MedImmune transaction
. MedImmune's requirement, as a condition to proceeding on the terms set
forth in the merger agreement, that it receive the protections afforded
by the stock option agreement and the termination
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<PAGE>
fee and no solicitation provisions contained in the merger agreement
and, with respect to those provisions, the U.S. Bioscience board weighed
a number of factors including the following factors:
-- the attractiveness of the exchange ratio and the benefits of the
merger
-- the mechanics of the termination fee and the stock option and the
possibility that the stock option would be exercised, which would
preclude the use of pooling-of-interests accounting treatment by any
other third party interested in acquiring U.S. Bioscience
-- the U.S. Bioscience board was advised and believed that the
preclusion of pooling-of-interests accounting treatment, in the event
the termination fee were paid and the stock option were exercised, was
not likely to prevent the most logical potential third-party acquirors
from making an offer to acquire U.S. Bioscience
-- the U.S. Bioscience board was advised and believed that the
amount of the termination fee was within the range of termination fees
agreed to in comparable transactions and that it was not likely to
preclude third party intervention
-- that under the merger agreement, prior to stockholder approval of
the merger, U.S. Bioscience would be able to provide information to,
and discuss and negotiate with, any third party making a proposal with
respect to an unsolicited financially superior alternative transaction,
subject to the terms and conditions of the merger agreement
. information relating to the business, assets, management, competitive
position, operating performance, share trading performance and prospects
of each of U.S. Bioscience and MedImmune, including the prospects of
U.S. Bioscience if it were to continue as an independent company
. current industry, market and economic conditions
The U.S. Bioscience board also identified and considered a number of
potentially negative factors in its deliberations concerning the merger,
including:
. the recognition that MedImmune common stock has traded at a high
valuation, and the risk that such valuation might not be sustained, or
may decline, in the future
. the risk that, despite the efforts of U.S. Bioscience and MedImmune,
after the merger key personnel might leave
. the risk that the potential benefits of the merger might not be fully
realized
The U.S. Bioscience board believed that certain of these risks were unlikely
to occur, that U.S. Bioscience or MedImmune could avoid or mitigate others, and
that, overall, these risks were outweighed by the potential benefits of the
merger.
In view of the variety of factors considered in connection with its
evaluation of the merger agreement and the merger and the stock option
agreement, the U.S. Bioscience board did not find it practicable to and did not
quantify or otherwise assign relative weight to the specific factors considered
in reaching its determination. In addition, individual members of the U.S.
Bioscience board may have given different weight to different factors.
Recommendation of the U.S. Bioscience Board of Directors
After careful consideration, the U.S. Bioscience board has unanimously
determined that the terms of the merger agreement and the merger are fair to,
and in the best interests of, U.S. Bioscience and its shareholders and has
approved the merger agreement and the stock option agreement. The U.S.
Bioscience board unanimously recommends that the stockholders of U.S.
Bioscience vote "FOR" the adoption of the merger agreement.
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Opinion of Morgan Stanley & Co. Incorporated
Pursuant to a letter agreement dated as of September 7, 1999, Morgan Stanley
was engaged to provide financial advisory services and a financial fairness
opinion in connection with the merger. Morgan Stanley was selected by U.S.
Bioscience to act as U.S. Bioscience's financial advisor based on Morgan
Stanley's qualifications, expertise, reputation and its knowledge of the
business and affairs of U.S. Bioscience. At the meeting of the board of
directors of U.S. Bioscience on September 21, 1999, Morgan Stanley rendered its
oral opinion to the U.S. Bioscience board of directors, subsequently confirmed
in writing, that as of that date, and based upon and subject to the
considerations set forth in the written opinion, the consideration to be
received by the holders of U.S. Bioscience common stock pursuant to the merger
agreement was fair from a financial point of view to those holders.
The full text of the written opinion of Morgan Stanley dated September 21,
1999, which sets forth, among other things, the assumptions made, procedures
followed, matters considered and limitations on the scope of the review
undertaken by Morgan Stanley in rendering its opinion, is attached as Annex 3
to this proxy statement/prospectus. Stockholders are urged to, and should, read
the opinion carefully and in its entirety. Morgan Stanley's opinion is directed
to the U.S. Bioscience board of directors and addresses only the fairness of
the consideration to be received by the holders of U.S. Bioscience common stock
pursuant to the merger agreement from a financial point of view to such holders
as of the date of the opinion. Morgan Stanley's opinion does not address any
other aspect of the merger and does not constitute a recommendation to any
holder of U.S. Bioscience common stock as to how to vote at the special
meeting. The summary of the opinion of Morgan Stanley set forth in this proxy
statement/prospectus is qualified in its entirety by reference to the full text
of such opinion.
In arriving at its opinion, Morgan Stanley, among other things:
. reviewed certain publicly available financial statements and other
information of U.S. Bioscience and MedImmune
. reviewed certain internal financial statements and other financial and
operating data concerning U.S. Bioscience prepared by the management of
U.S. Bioscience
. reviewed certain financial projections prepared by the management of
U.S. Bioscience
. discussed the past and current operations and financial condition and
the prospects of U.S. Bioscience with senior executives from U.S.
Bioscience
. reviewed the pro forma impact of the merger on MedImmune earnings per
share
. reviewed the reported prices and trading activity for U.S. Bioscience
common stock and MedImmune common stock
. reviewed the financial performance of U.S. Bioscience and MedImmune and
the prices and trading activity of U.S. Bioscience common stock and
MedImmune common stock with that of certain other comparable publicly
traded companies and their securities
. reviewed certain internal financial statements and other financial and
operating data concerning MedImmune prepared by the management of
MedImmune;
. discussed the past and current operations and financial condition and
the prospects of MedImmune with senior executives of MedImmune
. reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions
. participated in discussions and negotiations among representatives of
U.S. Bioscience and MedImmune and their financial and legal advisors
. reviewed the signed merger agreement and certain related documents; and
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<PAGE>
. performed such other analyses and considered such other factors as
Morgan Stanley deemed appropriate
In rendering its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed by it for the purposes of its opinion. With respect to the financial
projections of U.S. Bioscience, including information relating to certain
strategic, financial and operational benefits anticipated from the merger,
Morgan Stanley assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the future
financial performance of U.S. Bioscience and MedImmune. In addition, Morgan
Stanley has assumed that the merger will be consummated in accordance with the
terms set forth in the merger agreement, including, among other things, that
the merger will be accounted for as a "pooling-of-interests" business
combination in accordance with U.S. Generally Accepted Accounting Principles
and the merger will be treated as a tax-free reorganization and/or exchange,
each pursuant to the Internal Revenue Code of 1986. Morgan Stanley has not made
any independent valuation or appraisal of the assets or liabilities of U.S.
Bioscience, nor has it been furnished with any such appraisal. The Morgan
Stanley opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to it as of
September 21, 1999. In arriving at its opinion, Morgan Stanley was not
authorized to solicit, and did not solicit, interest from any party with
respect to the acquisition of U.S. Bioscience or any of its assets nor did it
negotiate with any parties, other than MedImmune, in the possible acquisition
of U.S. Bioscience or certain of its constituent businesses.
The following is a summary of the material analyses performed by Morgan
Stanley in connection with its opinion. Morgan Stanley presented certain
analyses at a meeting of the U.S. Bioscience board of directors on September
21, 1999 based on closing prices as of the dates specified in each analysis.
These summaries of financial analyses include information presented in
tabular format. In order to fully understand the financial analyses used by
Morgan Stanley, the tables must be read together with the text of each summary.
The tables alone do not constitute a complete description of the financial
analyses.
Historical and Comparative Stock Price Performance. Morgan Stanley's
analyses of U.S. Bioscience common stock and MedImmune common stock performance
consisted of a historical analysis of closing prices and trading volumes over
periods from September 16, 1994 to September 20, 1999 and September 17, 1998 to
September 20, 1999 respectively. In addition, Morgan Stanley reviewed the
recent stock price performance of U.S. Bioscience and MedImmune and compared
such performance with that of comparable stock indexes for the period of
September 17, 1998 to September 17, 1999. Morgan Stanley's analysis of U.S.
Bioscience consisted of a comparison of U.S. Bioscience's historical common
stock price performance with that of:
. the Russell 2000
. an index of selected comparable biotechnology companies consisting of
Amgen Inc., Biogen, Inc., Genzyme, Chiron Corporation, Genentech,
Biochem Pharma Inc., and Immunex Corporation, which we refer to as the
"biotechnology index"
. an index of selected pharmaceutical companies consisting of Johnson &
Johnson, Merck & Co., Inc., Pfizer Inc., Bristol-Myers Squibb Company,
Eli Lilly and Company, Schering-Plough Corporation, American Home
Products, Abbott Laboratories, Warner-Lambert Company and Pharmacia &
Upjohn, Inc. which we refer to as the "pharmaceutical index"
Morgan Stanley observed that U.S. Bioscience for the period of September 17,
1998 to September 17, 1999, outperformed the Russell 2000 and the
pharmaceutical index and underperformed the biotechnology index.
Morgan Stanley's analysis of MedImmune consisted of a comparison of
MedImmune's historical common stock price performance with that of:
. the Russell 2000
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<PAGE>
. the biotechnology index
. the pharmaceutical index
Morgan Stanley observed that MedImmune for the period of September 17, 1998
to September 17, 1999, outperformed the Russell 2000, the biotechnology index
and the pharmaceutical index.
Morgan Stanley also observed that the implied offer price of $16.35 per
share represented the following premiums to U.S. Bioscience's historical stock
price:
<TABLE>
<CAPTION>
Price Premium Implied
------ ---------------
<S> <C> <C>
1 Day Prior....................................... $11.50 42.1%
1 Week Prior...................................... $11.88 37.6%
Last Twelve Month High............................ $13.13 24.5%
1 Year Prior...................................... $ 7.44 219.8%
</TABLE>
Peer Group Comparison. As part of its analysis, Morgan Stanley compared
certain publicly available financial information of U.S. Bioscience with
certain publicly available financial information of certain comparable
biotechnology companies, as well as compared certain publicly available
financial information of MedImmune with certain publicly available financial
information of certain comparable biotechnology companies. The following are
the companies included in the respective analyses:
Amgen Inc.
Biogen, Inc.
Genzyme General
MedImmune, Inc.
Chiron Corporation
Biochem Pharma Inc.
IDEC Pharmaceuticals Corporation
Centocor Inc.
Genentech
Gilead Sciences
Immunex Corp.
For this analysis Morgan Stanley examined a range of estimates based on
consensus securities research analysts. The following table presents, as of
September 17, 1999, the mean and median multiples of the comparable
biotechnology companies referred to above and the trading multiples of U.S.
Bioscience and MedImmune:
<TABLE>
<CAPTION>
Price/Earnings 2000E P/E/Projected Net
----------------- Income Five-Year
2000E 2001E CAGR
------- ------- -----------------------
<S> <C> <C> <C>
Comparable Biotechnology Mean...... 46.9x 36.9x 1.6x
Comparable Biotechnology Median.... 48.0 40.0 1.3
U.S. Bioscience.................... 49.7 17.8 0.8
MedImmune.......................... 59.6 42.2 1.1
</TABLE>
No company utilized as a comparison in the peer group comparison analysis is
identical to U.S. Bioscience or MedImmune. In evaluating the peer groups,
Morgan Stanley made judgments and assumptions with regard to industry
performance, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of U.S. Bioscience or
MedImmune, such as the impact of competition on the business of U.S.
Bioscience, MedImmune or the industry generally, industry growth and the
absence of any adverse material change in the financial condition and
prospectus of U.S. Bioscience, MedImmune or the industry or in the financial
markets in general. Mathematical analysis, such as determining the mean or
median, is not in itself a meaningful method of using peer group data.
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<PAGE>
Review of Premiums Paid in Precedent Transactions. Using publicly available
information, Morgan Stanley reviewed the premiums paid and/or payable in the
following announced, pending and completed comparable pharmaceutical and
biotechnology acquisition transactions:
<TABLE>
<S> <C>
July, 1999..................................... Johnson & Johnson/Centocor
June, 1999..................................... Abbott/ Alza
June, 1999..................................... PNU/ Sugen
June, 1999..................................... Celltech/Chiroscience
March, 1999.................................... Gilead/NeXstar
January, 1999.................................. Warner-Lambert/Agouron
October, 1998.................................. Watson/TheraTech
October, 1998.................................. Alza/Sequus
April, 1998.................................... Elan/Neurex
February, 1998................................. Baxter/Somatogen
November, 1997................................. Sequana/Arris
March, 1996.................................... Elan/Athena
August, 1995................................... Univax/NABI
July, 1995..................................... Sandoz/GTI
April, 1995.................................... Viagene/Chiron
February, 1995................................. Ligand/Glycomed
January, 1995.................................. Glaxo/Affymax
November, 1994................................. Chiron/Ciba
November, 1994................................. Synergen/Amgen
October, 1994.................................. Vestar/NeXagen
March, 1994.................................... Eli Lilly/Sphinx
June, 1993..................................... AIS/RPR
May, 1992...................................... Nova/Scios
December, 1991................................. SyStemix/Sandoz
September, 1991................................ GENIZ/AHP
July, 1991..................................... Cetus/Chiron
</TABLE>
Morgan Stanley believed that the precedent transactions were not identical
to the merger and made judgements and assumptions with regard to industry
performance, general business, economic, market and financial conditions and
other matters, as qualified below, in applying the following representative
premiums to the relevant share prices for U.S. Bioscience common stock as of
September 20, 1999.
<TABLE>
<S> <C> <C>
Premium to LTM high:....................................... -20% +20%
Price Implied.............................................. $10.50 $15.75
Premium to Unaffected:..................................... 15% 60%
Price Implied.............................................. $13.29 $18.49
</TABLE>
No transaction utilized as a comparison in the precedent transactions review
is identical to the merger. In reviewing premiums in the transactions listed
above, Morgan Stanley made judgments and assumptions with regard to industry
performance, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of U.S. Bioscience or
MedImmune, such as the impact of competition on U.S. Bioscience, MedImmune or
the industry generally, industry growth and the absence of any adverse material
change in the financial conditions and prospects of U.S. Bioscience, or the
industry or in the financial markets in general. Mathematical analysis, such as
determining the mean or median, is not in itself a meaningful method of using
comparable transaction data.
Discounted Cash Flow Equity Value. Morgan Stanley performed discounted cash
flow analysis of U.S. Bioscience to determine a range of present values for
U.S. Bioscience based on financial projections prepared by the management of
U.S. Bioscience. Unlevered free cash flow was calculated as the after-tax
operating
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earnings of U.S. Bioscience, excluding any interest income and interest
expense, plus depreciation and amortization, plus deferred taxes, plus (or
minus) net changes in non-cash working capital, minus capital expenditures.
Morgan Stanley calculated terminal values by applying a range of multiples to
net income in fiscal year 2004 from 12.0x to 15.0x. The unlevered free cash
flows and terminal values were then discounted to present values as of August
31, 1999 using discount rates of 14% to 16%. Based on this analysis and the
assumptions set forth above, Morgan Stanley calculated per share equity value
estimates ranging from approximately $10.57 to approximately $13.70, excluding
any potential operational benefits to be realized from the merger. Morgan
Stanley noted that U.S. Bioscience common stock closed at $11.56 on September
20, 1999 which fell within the U.S. Bioscience discounted cash flow equity
value range per share. In addition, Morgan Stanley noted that the implied offer
price of $16.35 per share of U.S. Bioscience common stock fell beyond the high
end of the U.S. Bioscience discounted cash flow equity value range per share.
Exchange Ratio Analysis. Morgan Stanley analyzed the ratios of the closing
prices of U.S. Bioscience common stock divided by the corresponding prices of
MedImmune's common stock over various periods during the one year period ending
September 20, 1999. The following table presents the range of implied exchange
ratios over the periods covered:
<TABLE>
<CAPTION>
Period Ending September 20, 1999 Implied Exchange Ratio
<S> <C>
As of September 20, 1999........................... 0.11x
One Month Average.................................. 0.11x
Three Month Average................................ 0.11x
Six Month Average.................................. 0.14x
One Year Average................................... 0.17x
</TABLE>
Pro Forma Merger Analysis. Morgan Stanley analyzed the pro forma impact of
the merger on MedImmune's pro forma projected earnings per share for the
calendar years 1999, 2000 and 2001. Such analysis was based on consensus
earnings projections by securities research analysts for MedImmune as of
September 20, 1999 and financial projections prepared by management of U.S.
Bioscience. Based on this analysis, Morgan Stanley observed that, assuming that
the merger was accounted for as a pooling of interests business combination,
the merger would result in earnings per share accretion, for MedImmune's
shareholders of 1.1%, 4.0% and 2.3% for calendar years 2000, 2001, and 2002,
respectively, before taking into account any synergies or one-time charges.
In connection with the review of the merger by the U.S. Bioscience board of
directors, Morgan Stanley performed a variety of financial and comparative
analyses for purposes of its fairness opinion. The summary set forth above does
not purport to be a complete description of the analyses performed by Morgan
Stanley in connection with the merger. The preparation of a fairness opinion is
a complex process and is not necessarily susceptible to partial analysis or
summary description. In arriving at its opinion, Morgan Stanley considered the
results of all of its analyses as a whole and did not attribute any particular
weight to any analysis or factor. Furthermore, Morgan Stanley believes that
selecting any portion of its analyses, without considering all analyses, would
create an incomplete view of the process underlying its opinion. In addition,
Morgan Stanley may have given various analyses and factors more or less weight
than other analyses and factors and may have deemed various assumptions more or
less probable than other assumptions, so that the ranges of valuations
resulting from any particular analysis described above should not be taken to
be Morgan Stanley's view of the actual value of U.S. Bioscience or MedImmune.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of U.S. Bioscience or
MedImmune. Any estimates contained in Morgan Stanley's analysis are not
necessarily indicative of future results or actual values, which may be
significantly more or less favorable than those suggested by such estimates.
The analyses performed were prepared solely as part of Morgan Stanley's
analysis of the fairness of the consideration to be received by the holders of
shares of U.S. Bioscience's common stock pursuant to the merger agreement from
a financial point of view to such holders and were
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<PAGE>
conducted in connection with the delivery of the Morgan Stanley opinion to the
board of directors of U.S. Bioscience. The analyses do not purport to be
appraisals or to reflect the prices at which U.S. Bioscience common stock or
MedImmune common stock might actually trade.
The consideration to be received by the holders of shares of U.S.
Bioscience's common stock pursuant to the merger agreement and other terms of
the merger agreement were determined through arm's length negotiations between
U.S. Bioscience and MedImmune and were approved by the U.S. Bioscience board of
directors. Morgan Stanley provided advice to U.S. Bioscience during such
negotiations; however, Morgan Stanley did not recommend any specific
consideration to U.S. Bioscience or that any specific consideration constituted
the only appropriate consideration for the merger. In addition, as described
above, Morgan Stanley's opinion and presentation to the U.S. Bioscience board
of directors was one of many factors taken into consideration by the U.S.
Bioscience board of directors in making its decision to approve the merger.
Consequently, the Morgan Stanley analyses as described above should not be
viewed as determinative of the opinion of the U.S. Bioscience board of
directors with respect to the value of U.S. Bioscience or of whether the U.S.
Bioscience board of directors would have been willing to agree to a different
consideration.
Morgan Stanley is an internationally recognized investment banking and
advisory firm. Morgan Stanley, as part of its investment banking and financial
advisory business, is continuously engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. In the ordinary course of Morgan Stanley's trading and brokerage
activities, Morgan Stanley or its affiliates may at any time hold long or short
positions, trade or otherwise effect transactions, for its own account or for
the account of customers, in the equity or debt securities or senior loans of
U.S. Bioscience or MedImmune.
Pursuant to an engagement letter dated September 7, 1999, Morgan Stanley
provided financial advisory services and a financial opinion in connection with
the merger, and U.S. Bioscience agreed to pay Morgan Stanley, upon consummation
of the merger, a fee equal to approximately $5.6 million to $6.3 million,
assuming a range of share prices for U.S. Bioscience at closing greater than or
equal to $15.00 and less than $17.00, respectively, subject to adjustment
should the share price be outside of that range at closing. U.S. Bioscience has
also agreed to reimburse Morgan Stanley for its expenses incurred in performing
its services. In addition, U.S. Bioscience has agreed to indemnify Morgan
Stanley and its affiliates, their respective directors, officers, agents and
employees and each person, if any, controlling Morgan Stanley or any of its
affiliates against certain liabilities and expenses, including certain
liabilities under the federal securities laws, related to or arising out of
Morgan Stanley's engagement and any related transactions. In the past, Morgan
Stanley and its affiliates have provided financial advisory services for U.S.
Bioscience and MedImmune and have received customary fees for the rendering of
these services.
MedImmune Earnings
MedImmune expects the merger to be neutral to earnings in year 2000 and
accretive thereafter. There can be no assurances that such expectations will be
realized. See "Risk Factors Relating to the Merger" and "Special Note Regarding
Forward Looking Statements."
Interests of U.S. Bioscience Directors and Management in the Merger
The officers of U.S. Bioscience and the members of the U.S. Bioscience board
of directors may have interests in the merger that are different from, or in
addition to, the interests of stockholders generally. Several officers of U.S.
Bioscience, including those who are also directors, have severance agreements
and they, as well as the non-employee directors are, or may become, entitled to
specific benefits under U.S. Bioscience's benefit plans as a result of the
merger. All such additional interests are described below, to the extent
material, and except as described below these persons have, to the knowledge of
MedImmune and U.S. Bioscience, no material interest in the merger apart from
stockholders generally.
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<PAGE>
Severance Agreements. U.S. Bioscience has entered into severance agreements
with twelve officers, including its President and Chief Executive Officer, each
Executive Vice President and specified Vice Presidents, pursuant to which U.S.
Bioscience has agreed to provide specified severance benefits.
Each of the severance agreements provides that if the officer's employment
with U.S. Bioscience is terminated:
. by U.S. Bioscience for any reason other than the officer's death,
disability or "for cause" (as defined in the agreements to cover
specified serious misconduct), or
. if the officer resigns for "good reason" (as defined in the agreements
to cover a downgrading of the officer by U.S. Bioscience or non-
fulfillment by U.S. Bioscience of certain contractual commitments to the
officer),
within three years (or one year for three Vice Presidents) following a change
in control of U.S. Bioscience (as defined in the agreements, which definition
includes the merger), the officer will be entitled to a lump sum severance
payment. That lump sum payment will be equal to the product determined by
multiplying the highest annual compensation paid or payable by U.S. Bioscience
to the officer with respect to each of the three calendar years ending with the
year in which the date of termination occurs, by the number of years (including
any fraction of a year) remaining in the three-year period (or one-year period
for three Vice Presidents) commencing with the date of the change in control of
U.S. Bioscience. The compensation base upon which such payment is calculated
includes bonuses and deferred compensation as well as salary. In addition,
instead of any fringe benefits to be paid to the officer with respect to the
remainder of the three-year period (or one-year period for three Vice
Presidents), the officer will receive an additional lump-sum equal to the
product of multiplying $20,000 (or, in the case of the President and Chief
Executive Officer, $30,000) by the number of years (including any fraction of a
year) remaining in the three-year period (or one-year period for three Vice
Presidents), and a further payment designed to compensate the officer for lost
pension benefits by reason of his or her termination of employment earlier than
three years (or one year for three Vice Presidents) following a change in
control of U.S. Bioscience. The severance agreements provide that payments
required to be made to an officer are to be reduced to the extent they would
not be deductible for federal income tax purposes due to the provisions of
Section 280G of the Internal Revenue Code, as determined by independent tax
counsel.
If the employment of U.S. Bioscience's four most highly compensated
executive officers were terminated upon the merger in 1999, under circumstances
entitling them to benefits under their severance agreements and assuming a U.S.
Bioscience common stock price of $16.00 per share, the approximate total amount
of lump sum severance payment for those executive officers would be as follows:
Mr. Clarke, $482,627, Mr. Kriebel, $429,051, Ms. Manning, $338,202, and Dr.
Oster, $891,846. The approximate aggregate total amount of lump severance
payment for the other eight officers who have severance agreements under such
circumstances would be $2,677,610.
Incentive Compensation and Stock Ownership Plans. Under the merger
agreement, all awards of stock options and restricted stock on the date of the
merger under any equity based incentive award plans maintained by U.S.
Bioscience will be converted into similar awards with respect to MedImmune
common stock. In accordance with the terms of the applicable plans, all
restrictions and conditions applicable to the outstanding awards of stock
options or restricted stock will be deemed to have been satisfied as of the
date of the completion of the merger and all such awards shall become fully
vested and exercisable as of such date.
Based upon awards outstanding as of September 21, 1999, the vesting of
35,729 restricted shares of U.S. Bioscience common stock would be accelerated
upon consummation of the merger. The holders and numbers of U.S. Bioscience
shares awarded as restricted stock that will vest as a result of stockholder
approval of the merger are: Mr. Clarke, 8,073, Mr. Kriebel, 5,350, Ms. Manning,
5,104, Dr. Oster, 5,926, and all other executive officers, 11,276.
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Based upon awards outstanding as of September 21, 1999, the vesting and
exercisability of stock options to purchase 2,758,186 shares of U.S. Bioscience
common stock would be accelerated upon stockholder approval of the merger. The
holders and numbers of U.S. Bioscience shares underlying unvested options that
will become exercisable upon completion of the merger are: Mr. Clarke, 339,500,
Mr. Kriebel, 194,000, Ms. Manning, 163,000, Dr. Oster, 163,000 and all other
executive officers, 703,615. The number of U.S. Bioscience shares underlying
unvested options that will become exercisable by non-employee directors of
U.S. Bioscience upon completion of the merger is 105,080.
Pension Restoration Plan. The U.S. Bioscience Pension Restoration Plan is a
non-qualified defined contribution plan that provides benefits in excess of
limitations imposed by the Internal Revenue Code upon benefits payable under
U.S. Bioscience's tax-qualified plans. The terms of the Pension Restoration
Plan provide that, upon a change in control of U.S. Bioscience (as defined in
the Pension Restoration Plan, which completion of the merger), all accrued
rights of a participant will be fully vested in the event the participant's
employment is terminated following the change in control.
Indemnification; Directors and Officers Insurance. MedImmune has agreed that
all rights to indemnification for acts or omissions occurring at or prior to
the completion of the merger currently existing in favor of U.S. Bioscience's
current or former directors or employees or officers as provided in U.S.
Bioscience's certificate of incorporation, by-laws or any existing
indemnification agreements shall continue following the merger. For six years
after the completion of the merger, MedImmune will maintain U.S. Bioscience's
liability insurance in respect of acts or omissions occurring at or prior to
the completion of the merger, covering each person covered by U.S. Bioscience's
officers' and directors' liability insurance policy in effect on September 21,
1999. However, MedImmune may substitute its own policies containing terms which
are no less favorable to U.S. Bioscience's covered persons, but will not be
obligated to pay premiums in excess of 200% of the yearly amount paid by U.S.
Bioscience in its last fiscal year, and if MedImmune cannot obtain the same
coverage for the 200% amount, MedImmune will nevertheless be obligated to
provide whatever coverage may be obtained for the 200% amount.
Material United States Federal Income Tax Consequences of the Merger
The following general discussion summarizes the anticipated material United
States federal income tax consequences of the merger to holders of U.S.
Bioscience common stock who exchange such stock solely for MedImmune common
stock in the merger. This discussion addresses only such stockholders who hold
their U.S. Bioscience common stock as a capital asset, and does not address all
of the United States federal income tax consequences that may be relevant to
particular stockholders in light of their individual circumstances or to
stockholders who are subject to special rules, such as:
. financial institutions,
. tax-exempt organizations,
. insurance companies,
. dealers in securities or foreign currencies,
. traders in securities who elect to apply a mark-to-market method of
accounting,
. foreign holders,
. persons who hold such shares as a hedge against currency risk or as part
of a straddle, constructive sale or conversion transaction, or
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. holders who acquired their shares upon the exercise of employee stock
options or otherwise as compensation.
The following discussion is not binding on the Internal Revenue Service. It
is based upon the Internal Revenue Code, applicable Treasury regulations,
Internal Revenue Service rulings and judicial decisions in effect as of the
date of this proxy statement and prospectus, all of which are subject to
change, possibly with retroactive effect. Tax consequences under state, local,
foreign and other applicable laws are not addressed.
Holders of U.S. Bioscience common stock are strongly urged to consult their
tax advisors as to the specific tax consequences to them of the merger,
including tax return reporting requirements and the applicability and effect of
federal, state, local, foreign and other applicable tax laws in their
particular circumstances.
It is a condition to the consummation of the merger that U.S. Bioscience
receive an opinion from Skadden, Arps, Slate, Meagher & Flom LLP, special tax
counsel to U.S. Bioscience, to the effect that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. The condition relating to the tax opinion cannot be waived without the
express written consent of MedImmune and will not be waived after receipt of
the U.S. Bioscience stockholder approval unless further stockholder approval is
obtained with appropriate disclosure. The opinion will be based on customary
assumptions and representations made by, among others, U.S. Bioscience and
MedImmune. An opinion of counsel represents counsel's best legal judgment and
is not binding on the Internal Revenue Service or any court. No ruling has
been, or will be, sought from the Internal Revenue Service as to the United
States federal income tax consequences of the merger.
Assuming the merger qualifies as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, holders of U.S. Bioscience common
stock who exchange their U.S. Bioscience common stock solely for MedImmune
common stock in the merger will not recognize gain or loss for United States
federal income tax purposes, except with respect to cash, if any, they receive
in lieu of a fractional share of MedImmune common stock. Each holder's
aggregate tax basis in the MedImmune common stock received in the merger will
be the same as his or her aggregate tax basis in the U.S. Bioscience common
stock surrendered in the merger, decreased by the amount of any tax basis
allocable to any fractional share interest for which cash is received. The
holding period of the MedImmune common stock received in the merger by a holder
of U.S. Bioscience common stock will include the holding period of U.S.
Bioscience common stock that he or she surrendered in the merger.
A holder of U.S. Bioscience common stock who receives cash in lieu of a
fractional share of MedImmune common stock generally should recognize gain or
loss equal to the difference between the amount of cash received and his or her
tax basis in the MedImmune common stock that is allocable to the fractional
share. That gain or loss generally will constitute capital gain or loss. In the
case of an individual stockholder, any such capital gain generally will be
subject to a maximum United States federal income tax rate of 20% if the
individual has held his or her U.S. Bioscience common stock for more than 12
months at the effective time of the merger. The deductibility of capital losses
is subject to limitations for both individuals and corporations.
Accounting Treatment
The merger is expected to qualify as a pooling of interests transaction.
Under this accounting treatment, upon completion of the merger, the assets and
liabilities of U.S. Bioscience would be added to those of MedImmune at their
recorded book values and the stockholders' equity accounts of MedImmune and
U.S. Bioscience would be combined on MedImmune's consolidated balance sheet. On
a pooling of interests accounting basis, MedImmune will retroactively restate
its financial statements issued after completion of the merger to reflect the
consolidated combined financial position and results of operations of MedImmune
and U.S. Bioscience as if the merger had taken place as of the earliest period
covered by such financial statements. See "Unaudited Selected Pro Forma
Combined Financial Information" and "Unaudited Pro Forma Combined Financial
Statements." Completion of the merger is conditioned upon the receipt by
MedImmune and U.S. Bioscience of letters from PricewaterhouseCoopers LLP and
Ernst & Young LLP regarding those firms'
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concurrence with MedImmune management's and U.S. Bioscience management's
conclusions that, as of the date the merger is completed, the merger qualifies
for pooling of interests treatment for financial reporting purposes under
Accounting Principles Board Opinion No. 16 and its related interpretations and
applicable Securities and Exchange Commission rules and regulations, if the
merger is completed in accordance with the merger agreement. See "The Merger
Agreement and Stock Option Agreement--The Merger Agreement--Conditions to the
Completion of the Merger."
Conversion of Shares; Procedures for Exchange of Certificates; Fractional
Shares
The conversion of U.S. Bioscience common stock into the right to receive
MedImmune common stock will occur automatically at the effective time of the
merger. As soon as reasonably practicable after the completion of the merger,
American Stock Transfer and Trust Company of New York, the exchange agent, will
send a transmittal letter to each former U.S. Bioscience stockholder. The
transmittal letter will contain instructions for obtaining shares of MedImmune
common stock in exchange for shares of U.S. Bioscience common stock. U.S.
Bioscience stockholders should not return stock certificates with the enclosed
proxy.
After the effective time of the merger, each certificate that previously
represented shares of U.S. Bioscience common stock will no longer be
outstanding, will automatically be canceled, will cease to exist and will
represent only the right to receive the MedImmune common stock into which such
shares were converted in the merger and the right to receive cash for any
fractional shares of MedImmune common stock as described in the Summary of this
proxy statement/prospectus.
Until holders of certificates previously representing U.S. Bioscience common
stock have surrendered those certificates to the exchange agent for exchange,
holders will not receive dividends or distributions on the MedImmune common
stock into which such shares have been converted with a record date after the
effective time of the merger, and will not receive cash for any fractional
shares of MedImmune common stock. When holders surrender such certificates,
they will receive any unpaid dividends and any cash for fractional shares of
MedImmune common stock, in each case without interest. In the event of a
transfer of ownership of U.S. Bioscience common stock which is not registered
in the records of U.S. Bioscience's transfer agent, a certificate representing
the proper number of shares of MedImmune common stock may be issued to a person
other than the person in whose name the certificate so surrendered is
registered if:
. such certificate is properly endorsed or otherwise is in proper form for
transfer and
. the person requesting such issuance will (1) pay any transfer or other
taxes resulting from the issuance of shares of MedImmune common stock to
a person other than the registered holder of that certificate or (2)
establish to the reasonable satisfaction of MedImmune that such tax has
been paid or is not applicable.
All shares of MedImmune common stock issued upon surrender of shares of U.S.
Bioscience common stock, including any cash paid instead of any fractional
shares of MedImmune common stock, will be issued in full satisfaction of all
rights relating to such shares of U.S. Bioscience common stock.
No fractional shares of MedImmune common stock will be issued to any U.S.
Bioscience stockholder upon surrender of certificates previously representing
U.S. Bioscience common stock. Each U.S. Bioscience stockholder who would
otherwise have been entitled to receive a fraction of a share of MedImmune
common stock will receive cash in an amount equal to the product obtained by
multiplying (1) the fractional share interest to which such holder would
otherwise be entitled by (2) the closing price for a share of MedImmune common
stock on the closing date as reported in The Wall Street Journal.
A transmittal form with instructions for the surrender of U.S. Bioscience
common stock certificates will be mailed to U.S. Bioscience stockholders
shortly after completion of the merger. Stockholders should not transmit their
stock certificates at this time.
Regulatory Matters
United States Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and related rules, certain transactions, including the merger, may
not be completed unless information has been furnished
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to the Antitrust Division of the Department of Justice and the Federal Trade
Commission and waiting period requirements have been satisfied. On October 5,
1999, MedImmune and U.S. Bioscience each filed a Notification and Report Form
with the Antitrust Division of the Department of Justice and the Federal Trade
Commission. On October 19, 1999, the waiting period was terminated. At any time
before or after the effective time of the merger, the Antitrust Division, the
Federal Trade Commission or others could take action under the antitrust laws,
including seeking to prevent the merger, to rescind the merger or to
conditionally approve the merger upon the divestiture of substantial assets of
MedImmune or U.S. Bioscience. There can be no assurance that a challenge to the
merger on antitrust grounds will not be made or, if such a challenge is made,
that it would not be successful.
Foreign Antitrust. Both MedImmune and U.S. Bioscience conduct operations in
a number of other foreign countries where regulatory filings, notifications or
approvals with applicable commissions and other authorities may be required in
connection with consummation of the merger. The parties do not anticipate that
any such foreign filings will materially affect the consummation of the merger.
General. It is possible that any of the governmental entities with which
filings are made may seek, as conditions for granting approval of the merger,
various regulatory concessions. There can be no assurance that:
. MedImmune or U.S. Bioscience will be able to satisfy or comply with such
conditions
. compliance or noncompliance will not have adverse consequences for
MedImmune after completion of the merger
See "The Merger Agreement and Stock Option Agreement--The Merger Agreement--
Conditions to the Completion of the Merger."
Appraisal Rights
Under Delaware law, holders of U.S. Bioscience common stock are not entitled
to appraisal rights in connection with the merger.
Resale of MedImmune Common Stock
MedImmune common stock issued in the merger will not be subject to any
restrictions on transfer arising under the Securities Act of 1933, except for
shares issued to any U.S. Bioscience stockholder who may be deemed to be an
"affiliate" of U.S. Bioscience for purposes of Rule 145 under the Securities
Act or for purposes of qualifying the merger for pooling of interests
accounting treatment. Affiliates of U.S. Bioscience for these purposes are
expected to include the directors and executive officers of U.S. Bioscience and
holders of 10% of U.S. Bioscience common stock. It is a condition to the
completion of the merger that each such affiliate agree not to transfer any
MedImmune common stock received in the merger except in compliance with the
resale provisions of Rule 144 or 145 under the Securities Act or as otherwise
permitted under the Securities Act. In addition, it is a condition to the
completion of the merger that each such affiliate agree not to make any such
disposition within 30 days prior to the completion of the merger and until
after such time as financial results covering at least 30 days of combined
operations of MedImmune and U.S. Bioscience after the merger have been
published. This proxy statement/prospectus does not cover resales of MedImmune
common stock received by any person upon completion of the merger, and no
person is authorized to make any use of this proxy statement/prospectus in
connection with any such resale.
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THE MERGER AGREEMENT AND STOCK OPTION AGREEMENT
The following description summarizes the material provisions of the merger
agreement and the stock option agreement. Stockholders should read carefully
the merger agreement and the stock option agreement, which are attached as
Annexes 1 and 2 to this proxy statement/prospectus.
The Merger Agreement
What U.S. Bioscience Stockholders Will Receive in the Merger. In the merger,
holders of U.S. Bioscience common stock will receive a fraction of a share of
MedImmune common stock based on an exchange ratio for each share of U.S.
Bioscience common stock that they own. The exchange ratio will be calculated as
follows:
If the average per share closing price of MedImmune common stock as reported
in The Wall Street Journal during a valuation period of the 20 trading days
ending with the third trading day before the special meeting (excluding the
last five trading days of 1999 and the first two trading days of 2000) is:
. greater than $140, the exchange ratio will be $19.10 divided by the
average per share closing price of MedImmune's common stock;
. $140 or lower but more than $132, the exchange ratio will be 0.1364;
. $132 or lower but more than $120, the exchange ratio will be $18.00
divided by the average per share closing price of MedImmune's common
stock;
. $120 or lower but more than $100, the exchange ratio will be 0.1500;
. $100 or lower but more than $88, the exchange ratio will be $15 divided
by the average per share closing price of MedImmune's common stock; and
. $88 or lower, the exchange ratio will be 0.1705.
If the average per share closing price of MedImmune common stock is less
than $80, on the second trading day prior to the special meeting U.S.
Bioscience may notify MedImmune that it is terminating the merger agreement
unless MedImmune notifies U.S. Bioscience on the trading day prior to the date
of the special meeting that it is increasing the exchange ratio to $13.64
divided by the average per share closing price of MedImmune common stock.
U.S. Bioscience stockholders will receive cash for any fractional shares of
MedImmune common stock they would otherwise receive in the merger. This amount
will be calculated by multiplying the fractional share interest to which they
are entitled by the closing price of MedImmune common stock on the closing date
as reported in The Wall Street Journal.
The actual value of the MedImmune common stock on the day the merger is
completed may vary from the value of such stock based on the average closing
price. As a result, the market value of the shares of MedImmune common stock
you receive in the merger may be more or less than the value attributed to your
shares of U.S. Bioscience common stock in calculating the exchange ratio.
Form of the Merger. Subject to the terms and conditions of the merger
agreement and in accordance with Delaware law, at the effective time of the
merger, Marlin Merger Sub Inc., a wholly-owned subsidiary of MedImmune and a
party to the merger agreement, will merge with and into U.S. Bioscience. U.S.
Bioscience will survive the merger as a wholly-owned Delaware subsidiary of
MedImmune, and will continue under the name "U.S. Bioscience, Inc."
Effective Time of the Merger. The merger will become effective upon the
filing of a certificate of merger with the Secretary of State of the State of
Delaware or such later time as is agreed upon by MedImmune and
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U.S. Bioscience and specified in the certificate of merger. The filing of the
certificate of merger will occur as soon as practicable, but no later than the
second business day after satisfaction or waiver of the conditions to the
completion of the merger described in the merger agreement unless another date
is agreed to by MedImmune and U.S. Bioscience.
Conditions to the Completion of the Merger. Each party's obligation to
effect the merger is subject to the following:
. adoption of the merger agreement by the U.S. Bioscience stockholders
. approval for listing on the Nasdaq Stock Market of the MedImmune common
stock to be issued to U.S. Bioscience stockholders in the merger
. expiration or termination of the Hart-Scott-Rodino Act waiting period
applicable to the merger
. the absence of a restraining order, injunction or other court order or
statute, law, rule, legal restraint or prohibition preventing the
completion of the merger
. the absence of a stop order or proceedings seeking a stop order for the
registration statement on Form S-4 of which this proxy
statement/prospectus forms a part
. MedImmune and U.S. Bioscience each having received letters from their
accountants concurring with their managements' conclusions that no
conditions exist that would preclude accounting for the merger as a
pooling of interests transaction
. the absence of governmental litigation relating to the merger,
MedImmune's ability to own U.S. Bioscience or specified similar matters
. the accuracy of the other party's representations and the other party
having performed its covenants under the merger agreement
. the absence of a material adverse effect on the other party
In addition, MedImmune's obligation to effect the merger is subject to the
following additional conditions:
. MedImmune having received letters from affiliates of U.S. Bioscience
restricting their ability to sell the shares of MedImmune common stock
they will receive in the merger
. the receipt of all material consents and all consents and authorizations
required under applicable environmental laws required to operate U.S.
Bioscience's business
Finally, U.S. Bioscience's obligation to effect the merger is subject to
U.S. Bioscience having received from Skadden, Arps, Slate, Meagher & Flom LLP,
its special tax counsel, an opinion stating that the merger will qualify for
United States federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code.
No Solicitation. The merger agreement provides that U.S. Bioscience and its
subsidiaries will not, nor will they authorize or permit any of their
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by them to, directly or
indirectly through another person:
. solicit, initiate or encourage (including by way of furnishing
information) or take any other action designed or reasonably likely to
facilitate the making of any takeover proposal, or any proposal which
may be reasonably expected to lead to a takeover proposal, as described
below
. participate in any discussions or negotiations regarding any takeover
proposal
provided, however, that if, at any time before stockholders approve the
merger, the U.S. Bioscience board of directors determines in good faith, based
on advice of outside counsel, that failure to do so would be
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reasonably likely to result in a breach of its fiduciary duties under
applicable law, U.S. Bioscience may, in response to a superior proposal, as
described below, that was not solicited by it, subject to providing prior
written notice to MedImmune:
. furnish under a customary and reasonable confidentiality agreement
information about U.S. Bioscience and its subsidiaries to any person
making a superior proposal
. participate in discussions or negotiations regarding such superior
proposal
As used in the merger agreement, the term "takeover proposal" means any bona
fide inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of a business or assets that constitutes:
. 15% or more of the net revenues, net income or assets of U.S. Bioscience
or its subsidiaries, taken as a whole;
. 15% or more of any class of equity securities of U.S. Bioscience or any
of its subsidiaries;
. any tender offer or exchange offer that if completed would result in any
person beneficially owning 15% or more of any class of equity securities
of U.S. Bioscience or any of its subsidiaries; or
. any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving U.S.
Bioscience or any of its subsidiaries
The term "superior proposal" means any bona fide proposal made by a third
party
. to acquire, directly or indirectly, more than 50% of U.S. Bioscience's
common stock or all or substantially all the assets of U.S. Bioscience;
. that is on terms which the U.S. Bioscience board of directors, in its
good faith judgment, based on the advice of a financial advisor of
nationally recognized reputation, determines to be more favorable to
U.S. Bioscience and its stockholders than the merger, after taking into
account the terms of the merger agreement as it may be proposed to be
amended by MedImmune;
. that is reasonably capable of being promptly consummated;
. that has financing (to the extent required) then committed or which, in
the good faith judgment of the U.S. Bioscience board of directors, is
reasonably capable of being obtained; and
. that does not require regulatory approvals, including antitrust
approvals, that could not reasonably be expected to be promptly
obtained.
None of U.S. Bioscience, its board of directors or any committee of the
board will withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to MedImmune, the approval or recommendation by the U.S.
Bioscience board of directors or such committee of the merger or the merger
agreement.
None of U.S. Bioscience, its board of directors or any committee of the
board will:
. cause U.S. Bioscience to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to
any takeover proposal;
. approve or recommend, or propose publicly to approve or recommend, any
takeover proposal;
. amend, waive or make any determination under its rights agreement dated
as of May 19, 1995 between U.S. Bioscience and American Stock Transfer
and Trust Company of New York, or redeem the rights;
. waive or fail to enforce the terms of a confidentiality or standstill
agreement;
in each case to permit or facilitate a takeover proposal.
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Notwithstanding the foregoing, at any time before stockholder approval of
the merger, in response to a superior proposal that was not solicited by U.S.
Bioscience and that did not otherwise result from a breach of the provisions
of the merger agreement described above, the U.S. Bioscience board of
directors may terminate the merger agreement and concurrently cause U.S.
Bioscience to enter into a definitive agreement regarding a superior proposal,
but only at a time that is after the fifth day following MedImmune's receipt
of written notice advising MedImmune that the U.S. Bioscience board of
directors is prepared to accept a superior proposal specifying the material
terms and conditions of such proposal, including a copy of any proposed
agreement, and identifying the person making such superior proposal. U.S.
Bioscience must pay a fee in the amount of $15 million (plus documented
expenses of MedImmune of up to $2 million) to MedImmune prior to such
termination. See "-- Termination of the Merger Agreement" and "-- Termination
Fees."
U.S. Bioscience is required to advise MedImmune promptly of any inquiries
relating to a possible takeover proposal.
Termination of the Merger Agreement
1. MedImmune and U.S. Bioscience can jointly agree to terminate the merger
agreement at any time.
2. MedImmune or U.S. Bioscience can terminate the merger agreement if:
. the merger has not been completed by March 31, 2000, provided that
this right to terminate will not be available to any party whose
action or failure to act has been a principal cause of or resulted in
the failure of the merger to be completed by that date,
. a law, court order or other legal action that prohibits the
completion of the merger becomes final and cannot be appealed,
provided that the party seeking to exercise this right to terminate
shall have used reasonable best efforts to prevent the entry of, and
remove, such restraint,
. the holders of U.S. Bioscience common stock do not adopt the merger
agreement at the special meeting, or
. the other party breaches any of its representations, warranties,
covenants or agreements under the merger agreement that results in a
failure of specified conditions to the merger and has not cured the
breach within 15 days after receipt of notice of such breach.
3. MedImmune can terminate the merger agreement if U.S. Bioscience
directors:
. withdraw, modify or change the approval or recommendation of the
merger in a manner adverse to MedImmune,
. approve or recommend a takeover proposal,
. approve or recommend that U.S. Bioscience stockholders tender their
shares into any tender offer or exchange offer that is a takeover
proposal or is related thereto, or
. indicate any intention to do any of the foregoing.
4. U.S. Bioscience can terminate the merger agreement:
. to accept an unsolicited superior proposal, as described under "No
Solicitation," above, or
. if the average share price of MedImmune common stock in the 20
trading days ending three trading days before the special meeting
falls below $80, unless MedImmune notifies U.S. Bioscience that it is
increasing the exchange ratio to $13.64 divided by the average per
share closing price. See "What U.S. Bioscience Stockholders Will
Receive in the Merger."
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Termination Fees
U.S. Bioscience must pay MedImmune a $15 million termination fee plus up to
$2 million of documented expenses of MedImmune if:
1. All of the following events occur:
. it is publicly announced that any person has made, or any person has
announced an intention to make, a takeover proposal;
. the merger agreement is terminated by U.S. Bioscience or MedImmune
because the stockholders of U.S. Bioscience do not approve the
merger or by MedImmune due to a willful and material breach of the
merger agreement by U.S. Bioscience; and
. within 12 months of the termination of the merger agreement, U.S.
Bioscience enters into an acquisition agreement with respect to a
takeover proposal or consummates a takeover proposal.
2. Either of the following occur:
. U.S. Bioscience terminates the merger agreement to accept an
unsolicited superior proposal; or
. MedImmune terminates the merger agreement because U.S. Bioscience
directors:
-- withdraw, modify or change their approval or recommendation of
the merger in a manner adverse to MedImmune;
-- approve or recommend a takeover proposal;
-- approve or recommend that U.S. Bioscience stockholders tender
their shares into any tender offer or exchange offer that is a
takeover proposal or is related thereto; or
-- indicate any intention to do any of the foregoing.
Conduct of the Business of U.S. Bioscience Pending the Merger. Under the
merger agreement, U.S. Bioscience has agreed that, prior to the effective time
of the merger, it will carry on its business in the ordinary course consistent
with past practice and in compliance with applicable laws and regulations and
will use reasonable best efforts to preserve intact its current business
organizations, to keep available the services of its current officers and
employees and preserve its relationships with those persons having business
dealings with it. In addition, U.S. Bioscience has agreed that, among other
things and subject to certain exceptions, neither it nor any of its
subsidiaries may:
. declare, set aside or pay any dividends, split, combine or reclassify
any of its capital stock or buy back or redeem any of its securities;
. issue or encumber any securities other than pursuant to exercise of
stock options and warrants currently outstanding;
. amend its certificate of incorporation or by-laws
. acquire or merge with any other person, or acquire more than $500,000 of
assets, except for purchases of raw materials or supplies in the
ordinary course of business consistent with past practice
. sell, lease or encumber its properties or assets, except for inventory
sold in the ordinary course of business consistent with past practice
and sales of up to $500,000 of goods and services
. borrow money or guarantee debts, except for short-term borrowings
incurred in the ordinary course of business consistent with past
practice
. loan money or invest in any other person (other than its subsidiaries)
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. make any new capital expenditures or enter into any agreement providing
for payments in excess of $100,000 individually or $500,000 in the
aggregate
. pay or settle any liabilities except in the ordinary course of business
consistent with past practice
. change or terminate any of its material contracts
. enter into contracts relating to the distribution, sale, license,
marketing or manufacturing of products
. except as otherwise contemplated by the merger agreement or as required
to comply with applicable law:
-- adopt, change or terminate any collective bargaining agreement or
employee, director or consultant plan
-- increase the compensation of any employee (other than pursuant to
normal reviews)
--pay any benefit not required under any benefit plan
--increase the severance pay of any director, officer or employee
--adopt or change any employment agreement
--grant any awards under any bonus, incentive, performance or
benefit plan
--amend or modify any stock option
--fund or secure payment of compensation or benefits under any
employee plan, agreement, contract or arrangement or benefit plan
--accelerate the vesting of payment of any compensation or benefit
under any benefit plan
. enter into any material contracts
. change accounting methods
. breach any representation or warranty or take any action resulting in a
failure of a condition to the merger
. change, transfer or license any intellectual property rights
. authorize or commit or agree to take, any of the foregoing actions
Conduct of the Business of MedImmune Pending the Merger. Under the merger
agreement, MedImmune has agreed that, prior to the effective time of the
merger, it will carry on its business in all material respects in the ordinary
course, and neither it nor any of its subsidiaries may:
. declare, set aside or pay any dividends or split, combine or reclassify
any of its capital stock
. amend its certificate of incorporation or by-laws
. take any action to prevent, impair or delay the merger
. breach any representation or warranty or take any action resulting in a
failure of a condition to the merger
. authorize any of, or commit or agree to take any of, the foregoing
actions
The merger agreement permits MedImmune to take any of the foregoing actions
in connection with: capital expenditures, sales and marketing activities,
technology transfers (in or out), financing activities and merger and
acquisition activities
U.S. Bioscience Stock Options. The merger agreement provides that at the
effective time of the merger, each U.S. Bioscience stock option outstanding
immediately prior to the effective time of the merger, regardless
34
<PAGE>
of whether or not vested, will be deemed to constitute an option to acquire, on
the same terms and conditions as were applicable under the U.S. Bioscience
stock option, a number of MedImmune common shares determined by multiplying the
number of shares of U.S. Bioscience common stock subject to such option by the
exchange ratio, rounded to the nearest whole share. The option exercise price
per MedImmune share, rounded up to the nearest whole cent, will equal:
. the aggregate exercise price for the shares of U.S. Bioscience common
stock otherwise purchasable pursuant to the U.S. Bioscience option
divided by
. the aggregate number of MedImmune common shares deemed purchasable
pursuant to the U.S. Bioscience option.
At the effective time, MedImmune will assume the U.S. Bioscience stock plans
and all obligations of U.S. Bioscience under the U.S. Bioscience stock plans,
including obligations with respect to stock options outstanding at the
effective time. MedImmune has agreed, at or prior to the effective time of the
merger, to reserve for issuance the number of MedImmune common shares that will
become subject to these substitute options. As soon as practicable after the
effective time of the merger, MedImmune will file a registration statement,
with respect to the MedImmune common shares subject to these substitute options
(except to the extent the shares have already been registered), and will
maintain the effectiveness of the registration statement for so long as such
options remain outstanding.
Employee Benefits. The merger agreement provides that MedImmune will treat
all service under all compensation and benefit plans and procedures by
employees of U.S. Bioscience before the effective time of the merger as service
with MedImmune for all purposes (other than for purposes of benefit accrual
under any defined benefit pension plan). MedImmune will waive any pre-existing
condition and waiting period under any welfare or employee benefit plan for the
benefit of U.S. Bioscience employees to the extent any pre-existing condition
or waiting period did not apply to an employee immediately prior to the
effective time, and MedImmune will provide credit for any co-payments or
deductibles paid prior to the effective time during the calendar year in
satisfying applicable deductible or out-of-pocket requirements under any
welfare plans or other employee benefit plans.
Expenses. Whether or not the merger is completed, all fees and expenses
incurred in connection with the merger, the merger agreement and the stock
option agreement will be paid by the party incurring such fees or expenses,
except as otherwise provided in the merger agreement and the stock option
agreement and except that MedImmune and U.S. Bioscience will share equally the
expenses incurred in connection with filing, printing and mailing this proxy
statement/prospectus and the registration statement of which it is a part and
the filing fees for the premerger notification and report forms under the Hart-
Scott-Rodino Act and any similar foreign antitrust laws.
Representations and Warranties. The merger agreement contains customary
representations and warranties.
Amendment; Extension and Waiver. Subject to applicable law:
. the merger agreement may be amended by the parties in writing at any
time, except that after the merger agreement has been adopted by the
stockholders of U.S. Bioscience, no amendment may be entered into which
requires further approval by U.S. Bioscience stockholders unless such
further approval is obtained
. at any time prior to the effective time of the merger, a party may, by
written instrument signed on behalf of such party, extend the time for
performance of the obligations of any other party to the merger
agreement, waive inaccuracies in representations and warranties of any
other party contained
35
<PAGE>
in the merger agreement or in any related document and except as
provided in the merger agreement, waive compliance by any other party
with any agreements or conditions in the merger agreement
The Stock Option Agreement
General. Simultaneously with entering into the merger agreement, MedImmune
and U.S. Bioscience entered into a stock option agreement under which U.S.
Bioscience granted MedImmune an option to purchase a number of shares of
common stock equal to 19.9% of the outstanding common stock of U.S. Bioscience
at a price per share of $16.50.
Exercise of the Option. Except as described below, the option is
exercisable in whole at any time after the occurrence of any event entitling
MedImmune to receive the termination fee under the merger agreement. See "The
Merger Agreement--Termination Fees" for a description of the events entitling
MedImmune to receive the termination fee. The right to purchase shares under
the stock option agreement will expire upon the earliest to occur of:
. the completion of the merger
. 180 days after U.S. Bioscience pays the $15 million termination fee and
up to $2 million of documented expenses of MedImmune contemplated by the
merger agreement.
. termination of the merger agreement so long as no event has occurred
which would cause U.S. Bioscience to have to pay the termination fee and
expenses, or
. 13 months after termination of the merger agreement, under circumstances
which could result in U.S. Bioscience having to pay the termination fee
and expenses unless during such 13 month period such an event shall
occur
Cash Payment for the Option. MedImmune may, at any time the option is
exercisable, cause U.S. Bioscience to pay to MedImmune cash in exchange for
cancellation of the option or for the repurchase of shares of U.S. Bioscience
common stock acquired through the exercise of the option, in an amount equal
to the number of shares of U.S. Bioscience common stock subject to the option
multiplied by the higher of the following, less $16.50 if the option has not
been exercised:
. the highest price per share paid or proposed to be paid by any person
pursuant to a takeover proposal; or
. the average closing price on The American Stock Exchange of shares of
U.S. Bioscience common stock for the five trading days immediately
preceding the date upon which MedImmune requested cash payment for the
option or for its shares of U.S. Bioscience common stock acquired
through the option
Profit Limitation. The stock option agreement provides that in no event
will MedImmune's total profit from the option exceed $17 million minus the sum
of any termination fee paid plus documented expenses actually received by
MedImmune.
Total profit is calculated as the sum of
. the amount received by MedImmune pursuant to the cash payment provision
described above; and
. the net consideration, if any, received by MedImmune pursuant to the
sale of option shares to any unaffiliated party, less the $16.50 per
share exercise price and any cash paid by MedImmune to U.S. Bioscience,
as described below.
If MedImmune's total profit from the option would otherwise exceed such
amount, MedImmune is required to:
. reduce the number of shares of U.S. Bioscience common stock subject to
the option;
36
<PAGE>
. pay cash to U.S. Bioscience ;
. waive its rights under the stock option agreement; or
. any combination of the foregoing.
In addition, the stock option agreement provides that the option may not be
exercised for a number of shares as would, as of the date of the exercise,
result in a "notional total profit" of more than $17 million minus the sum of
any termination fee paid plus documented expenses actually received by
MedImmune and, if exercise of the option otherwise would exceed such amount,
MedImmune would take the actions described in the preceding paragraph. Notional
total profit means the amount of profit MedImmune would receive if it sold all
shares for which it is exercising the option at the closing market price for
the shares as of the close of business on the preceding trading day.
Registration Rights and Listing. MedImmune has certain rights to require
registration by U.S. Bioscience of any shares purchased under the option under
the securities laws if necessary for MedImmune to be able to sell such shares
and to require the listing of such shares on The Nasdaq Stock Market or other
national securities exchange.
Effect of Stock Option Agreement. The stock option agreement is intended to
increase the likelihood that the merger will be completed on the terms set
forth in the merger agreement. Consequently, certain aspects of the stock
option agreement may discourage persons who might now or prior to the effective
time of the merger be interested in acquiring all of or a significant interest
in U.S. Bioscience from considering or proposing such an acquisition, even if
such persons were prepared to offer higher consideration per share for U.S.
Bioscience common stock than that implicit in the exchange ratio contemplated
by the merger agreement or a higher price per share for U.S. Bioscience common
stock than the market price. If the stock option were exercised, it would
preclude the use of pooling-of-interests for accounting purposes by any
interested third parties.
37
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined balance sheet as of June 30, 1999
and unaudited pro forma combined statements of operations for the six months
ended June 30, 1999 and for the three years ended December 31, 1998 are
presented to reflect the estimated impact of the merger on the historical
consolidated financial statements of MedImmune and U.S. Bioscience using the
pooling of interests method of accounting. For a description of the pooling of
interests accounting with respect to the merger and certain other accounting
matters, see "The Merger--Anticipated Accounting Treatment." The unaudited pro
forma combined financial statements have been prepared from, should be read
with and are qualified in their entirety by reference to, the historical
consolidated financial statements and notes thereto of MedImmune and U.S.
Bioscience which are incorporated by reference in this proxy
statement/prospectus.
The unaudited pro forma combined balance sheet as of June 30, 1999 combines
MedImmune's and U.S. Bioscience's historical consolidated balance sheets as of
June 30, 1999, giving effect to the merger as if it had occurred as of that
date. The unaudited pro forma combined statements of operations for the six
months ended June 30, 1999 and for the three years ended December 31, 1998
combine MedImmune's and U.S. Bioscience's historical consolidated statements of
operations for the six months ended June 30, 1999 and for the three years ended
December 31, 1998 giving effect to the merger as if it had occurred at the
beginning of each period presented.
The unaudited pro forma combined financial statements have been included for
illustrative purposes only and are not necessarily indicative of the results of
operations or financial position that would have occurred had the merger been
consummated at the dates indicated, nor are they necessarily indicative of
future results of operations or financial position of the merged companies.
38
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical Pro Forma Pro
Historical U.S. Adjustments Forma
MedImmune Bioscience (See Notes) Combined
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Revenues
Product sales................ $135,196 $11,590 $146,786
Other revenue................ 3,764 3,533 7,297
-------- ------- -------- --------
Total revenues............. 138,960 15,123 0 154,083
-------- ------- -------- --------
Costs and Expenses
Cost of sales................ 35,821 2,560 38,381
Research and development..... 17,635 11,687 29,322
Selling, administrative and
general..................... 46,915 7,146 54,061
Other operating expenses..... 11,884 -- 11,884
-------- ------- -------- --------
Total expenses............. 112,255 21,393 0 133,648
-------- ------- -------- --------
Operating income (loss)........ 26,705 (6,270) 0 20,435
Interest income................ 4,763 1,383 6,146
Interest expense............... (1,833) (54) (1,887)
-------- ------- -------- --------
Income (loss) before income
taxes......................... 29,635 (4,941) 0 24,694
Deferred income tax provision
(benefit)..................... 11,161 -- (42,460)(4) (31,299)
-------- ------- -------- --------
Net earnings (loss)............ $ 18,474 $(4,941) $ 42,460 $ 55,993
======== ======= ======== ========
Per share exchange ratio of
0.1364
Net earnings (loss) per share
Basic........................ $ 0.33 $ (0.19) $ 0.95
Diluted...................... $ 0.29 $ (0.19) $ 0.82
Shares used in calculation of
net earnings (loss) per share
Basic........................ 55,570 26,672 (23,034)(2) 59,208
Diluted...................... 65,682 26,672 (22,942)(2) 69,412
Per share exchange ratio of
0.15
Net earnings (loss) per share
Basic........................ $ 0.33 $ (0.19) $ 0.94
Diluted...................... $ 0.29 $ (0.19) $ 0.81
Shares used in calculation of
net earnings (loss) per share
Basic........................ 55,570 26,672 (22,671)(2) 59,571
Diluted...................... 65,682 26,672 (22,570)(2) 69,784
Per share exchange ratio of
0.1705
Net earnings (loss) per share
Basic........................ $ 0.33 $ (0.19) $ 0.93
Diluted...................... $ 0.29 $ (0.19) $ 0.81
Shares used in calculation of
net earnings (loss) per share
Basic........................ 55,570 26,672 (22,124)(2) 60,118
Diluted...................... 65,682 26,672 (22,009)(2) 70,345
</TABLE>
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical Pro Forma Pro
Historical U.S. Adjustments Forma
MedImmune Bioscience (See Notes) Combined
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Revenues
Product sales.................. $ 51,043 $ 8,422 $ 59,465
Other revenue.................. 32,886 5,584 38,470
--------- -------- -------- --------
Total revenues................ 83,929 14,006 0 97,935
--------- -------- -------- --------
Costs and Expenses
Cost of sales.................. 36,758 2,582 39,340
Research and development....... 12,995 9,032 22,027
Selling, administrative and
general....................... 16,144 7,030 23,174
Other operating expenses....... 24,938 -- 24,938
--------- -------- -------- --------
Total expenses................ 90,835 18,644 0 109,479
--------- -------- -------- --------
Operating loss................... (6,906) (4,638) 0 (11,544)
Interest income.................. 3,561 1,447 5,008
Interest expense................. (2,018) (82) (2,100)
--------- -------- -------- --------
Loss before income taxes......... (5,363) (3,273) 0 (8,636)
Deferred income tax provision
(benefit)....................... -- -- -- --
--------- -------- -------- --------
Net loss......................... $ (5,363) $ (3,273) $ 0 $ (8,636)
========= ======== ======== ========
Per share exchange ratio of
0.1364
Net loss per share
Basic.......................... $ (0.10) $ (0.13) $ (0.15)
Diluted........................ $ (0.10) $ (0.13) $ (0.15)
Shares used in calculation of net
loss per share
Basic.......................... 52,469 24,267 (20,957)(2) 55,779
Diluted........................ 52,469 24,267 (20,957)(2) 55,779
Per share exchange ratio of 0.15
Net loss per share
Basic.......................... $ (0.10) $ (0.13) $ (0.15)
Diluted........................ $ (0.10) $ (0.13) $ (0.15)
Shares used in calculation of net
loss per share
Basic.......................... 52,469 24,267 (20,627)(2) 56,109
Diluted........................ 52,469 24,267 (20,627)(2) 56,109
Per share exchange ratio of
0.1705
Net loss per share
Basic.......................... $ (0.10) $ (0.13) $ (0.15)
Diluted........................ $ (0.10) $ (0.13) $ (0.15)
Shares used in calculation of net
loss per share
Basic.......................... 52,469 24,267 (20,130)(2) 56,606
Diluted........................ 52,469 24,267 (20,130)(2) 56,606
</TABLE>
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical Pro Forma
Historical U.S. Adjustments Pro Forma
MedImmune Bioscience (See Notes) Combined
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues
Product sales........... $163,440 $ 20,730 $184,170
Other revenue........... 37,268 6,005 43,273
-------- -------- ------- --------
Total revenues........ 200,708 26,735 0 227,443
-------- -------- ------- --------
Costs and Expenses
Cost of sales........... 70,236 5,788 76,024
Research and
development............ 25,775 19,042 44,817
Selling, administrative
and general............ 62,008 13,546 75,554
Other operating
expenses............... 36,495 -- 36,495
-------- -------- ------- --------
Total expenses........ 194,514 38,376 0 232,890
-------- -------- ------- --------
Operating income (loss)... 6,194 (11,641) 0 (5,447)
Interest income........... 6,659 2,736 9,395
Interest expense.......... (4,041) (149) (4,190)
-------- -------- ------- --------
Income (loss) before
income taxes............. 8,812 (9,054) 0 (242)
Deferred income tax
provision (benefit)...... (47,428) -- 0 (47,428)
-------- -------- ------- --------
Net earnings (loss)....... $ 56,240 $ (9,054) $ 0 $ 47,186
======== ======== ======= ========
Per share exchange ratio
of 0.1364
Net earnings (loss) per
share
Basic................... $ 1.06 $ (0.37) $ 0.84
Diluted................. $ 0.91 $ (0.37) $ 0.73
Shares used in calculation
of net earnings (loss)
per share
Basic................... 53,130 24,307 (20,991) (2) 56,446
Diluted................. 63,401 24,307 (20,934) (2) 66,774
Per share exchange ratio
of 0.15
Net earnings (loss) per
share
Basic................... $ 1.06 $ (0.37) $ 0.83
Diluted................. $ 0.91 $ (0.37) $ 0.72
Shares used in calculation
of net earnings (loss)
per share
Basic................... 53,130 24,307 (20,661) (2) 56,776
Diluted................. 63,401 24,307 (20,598) (2) 67,110
Per share exchange ratio
of 0.1705
Net earnings (loss) per
share
Basic................... $ 1.06 $ (0.37) $ 0.82
Diluted................. $ 0.91 $ (0.37) $ 0.72
Shares used in calculation
of net earnings (loss)
per share
Basic................... 53,130 24,307 (20,162) (2) 57,275
Diluted................. 63,401 24,307 (20,091) (2) 67,617
</TABLE>
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical Pro Forma Pro
Historical U.S. Adjustments Forma
MedImmune Bioscience (See Notes) Combined
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Revenues
Product sales................. $ 65,271 $12,986 $ 78,257
Other revenue................. 15,693 11,914 27,607
-------- ------- --------- --------
Total revenues.............. 80,964 24,900 0 105,864
-------- ------- --------- --------
Costs and Expenses
Cost of sales................. 34,433 4,158 38,591
Research and development...... 40,669 16,905 57,574
Selling, administrative and
general...................... 31,735 14,387 46,122
Other operating expenses...... 11,543 -- 11,543
-------- ------- --------- --------
Total expenses.............. 118,380 35,450 0 153,830
-------- ------- --------- --------
Operating loss.................. (37,416) (10,550) 0 (47,966)
Interest income................. 4,004 2,824 6,828
Interest expense................ (3,483) (183) (3,666)
-------- ------- --------- --------
Loss before income taxes........ (36,895) (7,909) 0 (44,804)
Deferred income tax provision
(benefit)...................... -- -- -- --
-------- ------- --------- --------
Net loss........................ $(36,895) $(7,909) $ 0 $(44,804)
======== ======= ========= ========
Per share exchange ratio of
0.1364
Net loss per share
Basic......................... $ (0.80) $ (0.33) $ (0.90)
Diluted....................... $ (0.80) $ (0.33) $ (0.90)
Shares used in calculation of
net loss per share
Basic......................... 46,264 23,872 (20,616)(2) 49,520
Diluted....................... 46,264 23,872 (20,616)(2) 49,520
Per share exchange ratio of 0.15
Net loss per share
Basic......................... $ (0.80) $ (0.33) $ (0.90)
Diluted....................... $ (0.80) $ (0.33) $ (0.90)
Shares used in calculation of
net loss per share
Basic......................... 46,264 23,872 (20,291)(2) 49,845
Diluted....................... 46,264 23,872 (20,291)(2) 49,845
Per share exchange ratio of
0.1705
Net loss per share
Basic......................... $ (0.80) $ (0.33) $ (0.89)
Diluted....................... $ (0.80) $ (0.33) $ (0.89)
Shares used in calculation of
net loss per share
Basic......................... 46,264 23,872 (19,802)(2) 50,334
Diluted....................... 46,264 23,872 (19,802)(2) 50,334
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical Pro Forma Pro
Historical U.S. Adjustments Forma
MedImmune Bioscience (See Notes) Combined
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Revenues
Product sales............. $ 35,782 $10,785 $ 46,567
Other revenue............. 5,317 7,344 12,661
-------- ------- -------- --------
Total revenues.......... 41,099 18,129 0 59,228
-------- ------- -------- --------
Costs and Expenses
Cost of sales............. 19,678 2,956 22,634
Research and development.. 32,192 14,383 46,575
Selling, administrative
and general.............. 22,165 12,275 34,440
Other operating expenses.. -- -- --
-------- ------- -------- --------
Total expenses.......... 74,035 29,614 0 103,649
-------- ------- -------- --------
Operating loss.............. (32,936) (11,485) 0 (44,421)
Interest income............. 5,655 2,335 7,990
Interest expense............ (2,263) (537) (2,800)
-------- ------- -------- --------
Loss before income taxes.... (29,544) (9,687) 0 (39,231)
Deferred income tax
provision (benefit)........ -- -- -- --
-------- ------- -------- --------
Net loss.................... $(29,544) $(9,687) $ 0 $(39,231)
======== ======= ======== ========
Per share exchange ratio of
0.1364
Net loss per share
Basic..................... $ (0.70) $ (0.43) $ (0.87)
Diluted................... $ (0.70) $ (0.43) $ (0.87)
Shares used in calculation
of net loss per share
Basic..................... 42,038 22,396 (19,341)(2) 45,093
Diluted................... 42,038 22,396 (19,341)(2) 45,093
Per share exchange ratio of
0.15
Net loss per share
Basic..................... $ (0.70) $ (0.43) $ (0.86)
Diluted................... $ (0.70) $ (0.43) $ (0.86)
Shares used in calculation
of net loss per share
Basic..................... 42,038 22,396 (19,036)(2) 45,398
Diluted................... 42,038 22,396 (19,036)(2) 45,398
Per share exchange ratio of
0.1705
Net loss per share
Basic..................... $ (0.70) $ (0.43) $ (0.86)
Diluted................... $ (0.70) $ (0.43) $ (0.86)
Shares used in calculation
of net loss per share
Basic..................... 42,038 22,396 (18,577)(2) 45,857
Diluted................... 42,038 22,396 (18,577)(2) 45,857
</TABLE>
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
PRO FORMA COMBINED BALANCE SHEET AS OF JUNE 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
Historical U.S. Adjustments Pro Forma
MedImmune Bioscience (See Notes) Combined
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents..... $ 6,347 $ 14,740 $ 21,087
Marketable securities......... 177,885 31,679 209,564
Trade receivables, net........ -- 3,829 3,829
Contract receivables, net..... 2,274 -- 2,274
Inventory, net................ 15,887 2,681 18,568
Deferred tax assets........... 12,183 -- 12,183
Other current assets.......... 7,054 898 7,952
-------- --------- ------- ---------
Total Current Assets........ 221,630 53,827 0 275,457
Property and equipment, net... 77,265 5,041 82,306
Inventory, noncurrent......... 5,096 -- 5,096
Deferred tax assets, net...... 83,618 -- 52,901(4) 136,519
Marketable securities......... -- 10,506 10,506
Other assets.................. 8,227 -- 8,227
-------- --------- ------- ---------
Total Assets................ $395,836 $ 69,374 $52,901 $ 518,111
======== ========= ======= =========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Accounts payable, trade....... $ 2,072 $ 2,483 $ 4,555
Accrued expenses.............. 20,954 9,040 20,000(3) 49,994
Accrued interest.............. 2,559 -- 2,559
Product royalties payable..... 12,249 -- 12,249
Other current liabilities..... 3,014 1,082 4,096
-------- --------- ------- ---------
Total Current Liabilities... 40,848 12,605 20,000 73,453
Long-term debt................ 80,236 406 80,642
Other liabilities............. 2,131 1,878 4,009
-------- --------- ------- ---------
Total Liabilities........... 123,215 14,889 20,000 158,104
-------- --------- ------- ---------
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Preferred Stock............... -- -- --
Common Stock.................. 566 274 (233)(5) 607
Paid-in capital............... 333,613 192,289 10,674(4)(5) 536,576
Deferred compensation......... -- (354) (354)
Accumulated deficit........... (61,558) (136,522) 22,460(3)(4) (175,620)
Accumulated other
comprehensive loss........... -- (954) (954)
Cost of treasury stock........ -- (248) (248)
-------- --------- ------- ---------
Total Shareholders' Equity.. 272,621 54,485 32,901 360,007
-------- --------- ------- ---------
Total Liabilities and
Shareholders' Equity....... $395,836 $ 69,374 $52,901 $ 518,111
======== ========= ======= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Note 1. General
There were no transactions between MedImmune and U.S. Bioscience during any
period presented.
There are no material differences between the accounting policies of
MedImmune and U.S. Bioscience. Certain amounts in the historical financial
statements of MedImmune and U.S. Bioscience have been reclassified for
presentation of the unaudited pro forma combined financial statements.
Note 2. Pro forma combined earnings (loss) per share
Under the merger agreement, U.S. Bioscience stockholders will receive
between 0.1364 and 0.1705, subject to certain adjustments, of a share of
MedImmune stock for each outstanding share of U.S. Bioscience common stock. The
exchange ratios used in computing share and per share amounts in the
accompanying unaudited pro forma combined financial statements were 0.1364,
0.1500, and 0.1705, which represent examples of the potential range in the
fraction of a share of MedImmune common stock that each U.S. Bioscience
stockholder may receive for each share of U.S. Bioscience common stock owned.
The pro forma combined statement of operations for the six months ended June
30, 1999 and for the year ended December 31, 1998 include an adjustment to
reflect the impact, using the treasury stock method, of potential common shares
of U.S. Bioscience which have a dilutive impact with respect to fully diluted
pro forma earnings per share.
The following is a reconciliation of the numerator and denominator of the
diluted pro forma EPS computation, based on an exchange ratio of 0.15:
<TABLE>
<CAPTION>
Six months ending Twelve months ending
June 30, 1999 December 31, 1998
----------------- --------------------
<S> <C> <C>
Numerator:
Pro forma net earnings................ $55,993 $47,186
Interest on 7% convertible notes, net
of amounts capitalized
and related taxes--MedImmune......... 720 1,468
------- -------
Numerator for pro forma diluted EPS... $56,713 $48,654
======= =======
Denominator:
Pro forma weighted average shares
outstanding-basic.................... 59,571 56,776
Effect of dilutive securities:
Stock options--MedImmune.............. 4,014 4,173
7% convertible notes--MedImmune....... 6,098 6,098
Stock options--U.S. Bioscience........ 101 63
------- -------
Denominator for pro forma diluted
EPS.................................. 69,784 67,110
======= =======
</TABLE>
The following table shows the number of shares and warrants and related
price ranges of those shares that were excluded from the pro forma diluted EPS
computations from above .
These options to purchase common stock and warrants were excluded as the
exercise prices of the options and warrants were in excess of the average stock
price during the periods reported, and thus would have been anti-dilutive.
45
<PAGE>
<TABLE>
<CAPTION>
Six months ending Twelve months ending
June 30, 1999 December 31, 1998
----------------- --------------------
<S> <C> <C>
MedImmune:
Price range of stock options: $58.88
to $71.25............................ 118,700
Price range of stock options: $29.75
to $48.50............................ 830,600
U.S. Bioscience--converted at .15
exchange ratio:
Price range of stock options: $10.00
to $30.20............................ 391,237
Price range of stock options: $8.75 to
$30.20............................... 418,822
Warrants: $11.17...................... 80,602
</TABLE>
No reconciliation of the numerators and denominators is necessary for the
six months ended June 30, 1998, or the twelve months ended December 31, 1997
and 1996, as losses were reported and inclusion of potential common shares
would be anti-dilutive.
Note 3. Merger costs
MedImmune and U.S. Bioscience expect to incur approximately $20 million of
non-recurring expenses related to the merger. These expenses include, but are
not limited to, professional fees, regulatory filing costs, severance payments,
fees of financial advisors and other unusual and non-recurring items. Although
MedImmune believes this estimate of non-recurring expenses is accurate, certain
material additional costs may be incurred in connection with the merger. Merger
related expenses will be recorded primarily in the period in which the merger
is consummated, which is currently estimated to occur in the fourth quarter of
1999; some merger related expenses were incurred and will be recorded in the
third quarter of 1999. Because the foregoing charges are non-recurring in
nature, they have not been reflected in the pro forma combined statements of
operations.
Note 4. Income taxes
The pro forma combined balance sheet as of June 30, 1999 reflects an
adjustment to the deferred tax valuation allowance of U.S. Bioscience in the
amount of $52.9 million, which includes $10.4 million of tax benefits related
to the exercise of stock options, which is credited directly to additional
paid-in capital. The pro forma combined statement of operations for the six
months ended June 30, 1999 includes $42.5 million, which primarily reflects the
realization of the federal net operating loss carryforwards of U.S. Bioscience.
Changes in the federal income tax regulations which occurred in June 1999 will
allow certain federal net operating losses of U.S. Bioscience arising prior to
the merger to be utilized to offset future anticipated taxable income of
MedImmune and U.S. Bioscience.
Note 5. Common stock
The pro forma combined balance sheet as of June 30, 1999 reflects an
adjustment to common stock and paid-in capital for the conversion of U.S.
Bioscience shares, based on an exchange ratio of 0.1500, to MedImmune shares
for shares outstanding as of the balance sheet date, assuming the merger was
consummated on June 30, 1999.
46
<PAGE>
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS
OF MEDIMMUNE AND U.S. BIOSCIENCE
The rights of U.S. Bioscience stockholders are currently governed by the
certificate of incorporation and the by-laws of U.S. Bioscience. The rights of
MedImmune stockholders are currently governed by the restated certificate of
incorporation and the amended by-laws of MedImmune. Both U.S. Bioscience and
MedImmune are incorporated under the laws of the State of Delaware and,
accordingly, the rights of the shareholders of each are currently, and will
continue to be, governed by the Delaware General Corporation Law.
As a result of the merger, current stockholders of U.S. Bioscience will
become stockholders of MedImmune and their rights will be governed by the
restated certificate of incorporation and the by-laws of MedImmune.
The following is a summary of the principal differences between the current
rights of U.S. Bioscience stockholders and the rights of MedImmune
stockholders. This summary is not intended to be complete and is qualified in
its entirety by reference to the relevant provisions of the restated
certificate of incorporation and by-laws of MedImmune, the certificate of
incorporation and by-laws of U.S. Bioscience and Delaware law.
<TABLE>
<CAPTION>
U.S. Bioscience Stockholders' MedImmune/Combined Company
Rights Stockholders' Rights
--------------------------------- ----------------------------
Board of Directors
<C> <S> <C>
Size of The U.S. Bioscience board of MedImmune's board of
Board directors is currently fixed by a directors currently consists
resolution of the board of of nine directors, but the
directors at eight. The bylaws bylaws authorize the whole
require that the number be not board to change this number
less than three and no more than from time to time. The
twelve. "whole board" refers to the
number of directors from
time to time authorized to
be on the board regardless
of the number of directors
then in office.
Removal of The U.S. Bioscience bylaws MedImmune directors or the
Directors provide that the entire board of entire board may be removed
directors or any individual with or without cause, at
director may be removed from any time by the vote of the
office with or without cause by a holders of two-thirds of the
majority of holders of the shares then entitled to vote
outstanding shares entitled to or by written consent of the
vote. stockholders.
Vacancies The U.S. Bioscience bylaws The vacancies on MedImmune's
provide that any vacancies on the board may be filled by vote
U.S. Bioscience board and newly of stockholders or by their
created directorships resulting written consent or by vote
from any increase in the of the board of directors or
authorized number of directors by the directors' written
elected by all of the consent. If the number of
stockholders having the right to directors then in office is
vote as a single class may be less than a quorum, the
filled by a majority of the vacancies may be filled by a
directors then in office, vote of a majority of the
although less than a quorum, or directors then in office.
by a sole remaining director.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
U.S. Bioscience Stockholders' MedImmune/Combined Company
Rights Stockholders' Rights
----------------------------- --------------------------
Stockholder Meetings
<S> <C> <C>
Quorum The U.S. Bioscience bylaws MedImmune's bylaws require
require that, unless the that at each meeting of
certificate of incorporation stockholders, except where
provides otherwise (which it does otherwise provided by the
not), the presence, in person or by restated certificate of
proxy, of the holders of a incorporation or the bylaws,
majority of the outstanding the holders of a majority of
shares entitled to vote shall the issued and outstanding
constitute a quorum but in no shares of stock of the
event shall a quorum consists of corporation entitled to vote
less than one-third of the shares at such meeting, present in
entitled to vote at a meeting. person or represented by
proxy, will constitute a
quorum for the transaction
of business.
Special The U.S. Bioscience charter The MedImmune bylaws permit
Meetings of permits the board of directors, the board of directors, the
Stockholders the chief executive officer, and chairman, if any, the
the holders of record of not less president, or the secretary
than a majority of all the shares or the record holders of at
outstanding and entitled to vote least a majority of the
to call special meetings. shares of common stock of
MedImmune issued and
outstanding, to call special
meetings.
Amendments to Organizational Documents
Amendments U.S. Bioscience by-laws may be MedImmune's bylaws may be
to Bylaws adopted, amended or repealed by adopted, amended or repealed
the stockholders entitled to vote by the vote of the holders
thereon at any regular or special of a majority of the shares
meeting or, if the certificate of then entitled to vote at an
incorporation so provides, by the election of directors or by
board of directors. consent of the stockholders
or by the vote of the Board
or by the directors' written
consent.
Authorized Capital Stock
The U.S. Bioscience certificate The MedImmune restated
of incorporation authorizes the certificate of incorporation
issuance of up to 50,000,000 authorizes the issuance of
shares of common stock, par value up to 120,000,000 shares of
$0.01 per share and 5,000,000 common stock, par value
shares of preferred stock, par $0.01 per share and
value $0.005. As of the record 5,524,525 shares of
date for the special meeting, preferred stock, par value
27,581,005 shares of common stock $0.01 per share. As of
and no shares of preferred stock September 30, 1999,
will be issued and outstanding. 63,277,737 shares of common
stock and no shares of
preferred stock were issued
and outstanding.
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
U.S. Bioscience Stockholders' MedImmune/Combined Company
Rights Stockholders' Rights
----------------------------- --------------------------
Indemnification of Directors and Officers
<S> <C> <C>
Charter and The U.S. Bioscience certificate The MedImmune bylaws provide
Bylaw and bylaws provide for for indemnification of
Provisions indemnification of directors, officers and directors of
officers, employees or agents to MedImmune to the fullest
the fullest extent authorized by extent authorized by
the Delaware law, except that the Delaware law.
certificate also provides that,
if a director, officer, employee
or agent initiates a proceeding,
the corporation will indemnify
such person only if the board had
authorized the proceeding.
</TABLE>
49
<PAGE>
THE SPECIAL MEETING
We are furnishing this proxy statement/prospectus to stockholders of U.S.
Bioscience as of the record date as part of the solicitation of proxies by the
U.S. Bioscience board of directors for use at the special meeting.
Date, Time and Place
We will hold the special meeting at the Philadelphia Marriott West, 111
Crawford Avenue, West Conshohocken, PA 19428, at 10:00 a.m., local time, on
November 23, 1999.
Purpose of Special Meeting
At the special meeting, we will ask U.S. Bioscience stockholders to adopt
the merger agreement. The U.S. Bioscience board of directors believes that the
terms of the merger and the merger agreement are fair to and in the best
interests of U.S. Bioscience and its stockholders and unanimously recommends
that the stockholders vote "FOR" the adoption of the merger agreement.
Record Date; Shares Entitled to Vote; Quorum
Only holders of record of U.S. Bioscience common stock at the close of
business on October 22, 1999, the record date, are entitled to notice of and to
vote at the special meeting. On the record date, 27,581,005 shares of U.S.
Bioscience common stock will be outstanding and entitled to vote and held by
approximately 4,020 holders of record. A quorum is present at the special
meeting if a majority of the shares of U.S. Bioscience common stock outstanding
and entitled to vote on the record date are represented at the special meeting
in person or by proxy. In the event that a quorum is not present at the special
meeting, it is expected that the meeting will be adjourned or postponed to
solicit additional proxies. Holders of record of U.S. Bioscience common stock
on the record date are entitled to one vote per share at the special meeting on
the proposal to adopt the merger agreement.
Votes Required
The adoption of the merger agreement requires the affirmative vote of a
majority of the outstanding shares of U.S. Bioscience common stock.
Voting By U.S. Bioscience Directors and Executive Officers
At the close of business on the record date, directors and executive
officers of U.S. Bioscience owned and were entitled to vote 55,883 shares of
U.S. Bioscience common stock, which represented approximately 0.2% of the
shares of U.S. Bioscience common stock outstanding on that date. The directors
and executive officers of U.S. Bioscience have indicated that they intend to
vote the U.S. Bioscience stock owned by them "FOR" the adoption of the merger
agreement.
Voting of Proxies
All shares represented by properly executed proxies received in time for the
special meeting will be voted at the special meeting in the manner specified by
the holders. Properly executed proxies that do not contain voting instructions
will be voted "FOR" adoption of the merger agreement.
Shares of U.S. Bioscience common stock represented at the special meeting
but not voting, including shares of U.S. Bioscience common stock for which
proxies have been received but for which holders of shares have abstained and
shares held in street name by brokers who have not received voting instructions
from their beneficial owners, will be treated as present at the special meeting
for purposes of determining the presence or absence of a quorum for the
transaction of all business.
50
<PAGE>
Only shares affirmatively voted for adoption of the merger agreement,
including properly executed proxies that do not contain voting instructions,
will be counted as votes in favor of the merger. If a U.S. Bioscience
stockholder abstains from voting or does not vote, either in person or by
proxy, it will have the same effect as a vote against the merger. Brokers who
hold shares of U.S. Bioscience common stock in street name for customers who
are the beneficial owners of such shares may not give a proxy to vote those
customers' shares in the absence of specific instructions from those customers.
These non-voted shares are referred to as broker non-votes and will have the
same effect as votes against the merger.
The persons named as proxies by a stockholder may propose and vote for one
or more adjournments of the special meeting, including adjournments to permit
further solicitations of proxies. No proxy voted against the proposal to adopt
the merger agreement will be voted in favor of any such adjournment or
postponement.
U.S. Bioscience does not expect that any matter other than the proposal to
adopt the merger agreement will be brought before the special meeting. If,
however, the U.S. Bioscience board of directors properly presents other
matters, the persons named as proxies will vote in accordance with their
judgment.
Revocability of Proxies
The grant of a proxy on the enclosed form of proxy does not preclude a
stockholder from voting in person at the special meeting. A stockholder may
revoke a proxy at any time prior to its exercise by filing with the Secretary
of U.S. Bioscience a properly executed revocation of proxy, by submitting a
properly executed proxy to the Secretary of U.S. Bioscience bearing a later
date or by appearing at the special meeting and voting in person. Attendance at
the special meeting will not itself constitute revocation of a proxy.
Solicitation of Proxies
U.S. Bioscience will bear the cost of the solicitation of proxies from its
stockholders. In addition to solicitation by mail, the directors, officers and
employees of U.S. Bioscience and its subsidiaries may solicit proxies from
stockholders by telephone or other electronic means or in person. U.S.
Bioscience will cause brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of stock
held of record by such persons. U.S. Bioscience will reimburse such custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses in doing
so.
Corporate Investor Communications, Inc. will assist in the solicitation of
proxies by U.S. Bioscience. U.S. Bioscience will pay Corporate Investor
Communications, Inc. a fee of approximately $12,000, plus reimbursement of
certain out-of-pocket expenses, and will indemnify Corporate Investor
Communications, Inc. against any losses arising out of its proxy soliciting
services on behalf of U.S. Bioscience.
Stockholders Should Not Send Stock Certificates with Their Proxies. A
transmittal form with instructions for the surrender of U.S. Bioscience common
stock certificates will be mailed to U.S. Bioscience stockholders shortly after
completion of the merger.
51
<PAGE>
LEGAL MATTERS
The legality of MedImmune common stock offered by this proxy
statement/prospectus will be passed upon for MedImmune by Dewey Ballantine LLP,
New York, New York.
Certain United States federal income tax consequences of the merger will be
passed upon for U.S. Bioscience by Skadden, Arps, Slate, Meagher & Flom LLP,
New York, New York.
EXPERTS
The financial statements of MedImmune incorporated in this proxy
statement/prospectus by reference to the MedImmune Annual Report on Form 10-K
for the year ended December 31, 1998, have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of U.S. Bioscience, Inc. at December
31, 1998 and 1997, and for each of the three years in the period ended December
31, 1998 appearing in U.S. Bioscience, Inc.'s Annual Report (Form 10-K) for the
year ended December 31, 1998, have been audited by Ernst & Young, LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
FUTURE STOCKHOLDER PROPOSALS
Due to the contemplated consummation of the merger, U.S. Bioscience does not
currently expect to hold a 2000 annual meeting of stockholders because U.S.
Bioscience will be a wholly-owned subsidiary of MedImmune. In the event the
merger is not consummated, U.S. Bioscience must receive any proposal which a
stockholder wishes to submit to the 2000 annual meeting of stockholders at its
headquarters no later than November 18, 1999, if the proposal is to be
considered by the U.S. Bioscience board for inclusion in the proxy material for
that meeting. A stockholder of U.S. Bioscience may wish to have a proposal
presented at the 2000 Annual Meeting of Stockholders, but not to have such
proposal included in U.S. Bioscience's proxy statement and form of proxy
relating to that meeting. If notice of any such proposal, directed to the
attention of Martha E. Manning, Secretary of U.S. Bioscience, is not received
by February 3, 2000, then such proposal shall be deemed "untimely" for purposes
of Rule 14a-4(c) promulgated under the Securities Exchange Act of 1934 and,
therefore, U.S. Bioscience will have the right to exercise discretionary voting
authority with respect to such proposal. Stockholder proposals should be
directed to Martha E. Manning, Secretary, at the address of U.S. Bioscience set
forth in this proxy statement/prospectus.
52
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
MedImmune and U.S. Bioscience file annual, quarterly and special reports,
proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
that MedImmune and U.S. Bioscience file with the Securities and Exchange
Commission at the Securities and Exchange Commission's public reference rooms
at the following locations:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the public reference rooms. These Securities and
Exchange Commission filings are also available to the public from commercial
document retrieval services and at the Internet world wide web site maintained
by the Securities and Exchange Commission at "http://www.sec.gov." Reports,
proxy statements and other information concerning MedImmune may also be
inspected at the offices of The Nasdaq Stock Market, which is located at 1735 K
Street, N.W., Washington, D.C. 20006. Reports, proxy statements and other
information pertaining to U.S. Bioscience may also be inspected at the offices
of the American Stock Exchange at 86 Trinity Place, New York, New York 10006-
1881.
MedImmune has filed a registration statement on Form S-4 to register with
the Securities and Exchange Commission the MedImmune common stock to be issued
to U.S. Bioscience stockholders in the merger. This proxy statement/prospectus
is a part of that registration statement and constitutes a prospectus of
MedImmune in addition to being a proxy statement of U.S. Bioscience. As allowed
by Securities and Exchange Commission rules, this proxy statement/prospectus
does not contain all the information you can find in MedImmune's registration
statement or the exhibits to the registration statement.
The Securities and Exchange Commission allows MedImmune and U.S. Bioscience
to "incorporate by reference" information into this proxy statement/prospectus,
which means that the companies can disclose important information to you by
referring you to other documents filed separately with the Securities and
Exchange Commission. The information incorporated by reference is considered
part of this proxy statement/prospectus, except for any information superseded
by information contained directly in this proxy statement/prospectus or in
later filed documents incorporated by reference in this proxy statement
prospectus.
This proxy statement/prospectus incorporates by reference the documents set
forth below that MedImmune and U.S. Bioscience have previously filed with the
Securities and Exchange Commission. These documents contain important business
and financial information about MedImmune and U.S. Bioscience that is not
included in or delivered with this proxy statement/prospectus.
<TABLE>
<CAPTION>
MedImmune Filings Period
----------------- ------
<C> <S>
Annual Report on Form 10-K....... Fiscal Year ended December 31, 1998
Quarterly Reports on Form 10-Q... Quarters ended March 31, 1999 and June 30,
1999
Current Reports on Form 8-K...... Reports filed October 21, 1999, September
22, 1999, September 17, 1999, September 2,
1999, August 18, 1999, August 17, 1999,
July 23, 1999, July 13, 1999, July 7, 1999,
June 24, 1999, May 25, 1999 (three
reports), May 21, 1999 (three reports),
February 26, 1999 and February 1, 1999
Description of Common Stock and Incorporated by reference to MedImmune's
Amended and Restated Rights Registration Statements on Form 8-A dated
Agreement....................... April 4, 1991 and December 1, 1998
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
U.S. Bioscience Filings Period
- ----------------------- ------
<S> <C>
Annual Report on Form 10-
K......................... Fiscal Year ended December 31, 1998
Quarterly Reports on Form
10-Q...................... Quarters ended March 31, 1999 and June 30, 1999
Current Reports on Form 8- Reports filed October 21, 1999, September 24, 1999
K......................... and February 3, 1999
</TABLE>
MedImmune and U.S. Bioscience also incorporate by reference additional
documents that may be filed with the Securities and Exchange Commission under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this
proxy statement/prospectus and the date of the special meeting. These include
periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
MedImmune has supplied all information contained or incorporated by
reference in this proxy statement/prospectus relating to MedImmune and U.S.
Bioscience has supplied all such information relating to U.S. Bioscience.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through the
companies, the Securities and Exchange Commission or the Securities and
Exchange Commission's Internet web site as described above. Documents
incorporated by reference are available from the companies without charge,
excluding all exhibits, except that if the companies have specifically
incorporated by reference an exhibit in this proxy statement/prospectus, the
exhibit will also be provided without charge. Stockholders may obtain documents
incorporated by reference in this proxy statement/prospectus by requesting them
in writing or by telephone from the appropriate company at the following
addresses:
MedImmune, Inc. U.S. Bioscience, Inc.
35 West Watkins Mill Road One Tower Bridge
Gaithersburg, Maryland 20878 100 Front Street
Attention: Investor Relations West Conshohocken, Pennsylvania
Telephone: (301) 417-0770 19428
Attention: Martha E. Manning
Telephone: (800) 898-4404
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus. We have not authorized anyone to
provide you with information that is different from what is contained in this
proxy statement/prospectus. This proxy statement/prospectus is dated October
21, 1999. You should not assume that the information contained in this proxy
statement prospectus is accurate as of any date other than that date. Neither
the mailing of this proxy statement/prospectus to stockholders nor the issuance
of MedImmune common stock in the merger creates any implication to the
contrary.
54
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Statements in this proxy statement/prospectus that are not historical facts are
hereby identified as "forward-looking statements" for the purpose of the safe
harbor provided by Section 21E of the Exchange Act and Section 27A of the
Securities Act. Such forward-looking statements, including, without limitation,
those relating to the future business prospects, revenues and income, in each
case relating to MedImmune and U.S. Bioscience, wherever they occur in this
proxy statement/prospectus, are necessarily estimates reflecting and involve a
number of risks and uncertainties that could cause actual results to differ
materially from those suggested by the forward-looking statements. Such
forward-looking statements should, therefore, be considered in light of various
important factors, including those set forth in this proxy
statement/prospectus. Important factors that could cause actual results to
differ materially from estimates or projections contained in the forward-
looking statements include without limitation:
. the failure of the merger to be consummated
. the ability of the companies to successfully integrate
. challenges inherent in new product development and marketing
. governmental laws and regulations, including possible healthcare reform
. the availability of favorable tax and accounting treatment for the
merger
. competitive factors, including technological advances achieved and
patents attained by competitors and generic competition as patents on
MedImmune's and U.S. Bioscience's products expire
. government laws and regulations affecting domestic and foreign
operations, including those relating to trade, monetary and fiscal
policies, taxes, price controls, regulatory approval of new products and
licensing
. those factors listed in the companies' reports and filings with the U.S.
Securities and Exchange Commission.
Words such as "estimate," "project," "plan," "intend," "expect," "believe"
and similar expressions are intended to identify forward-looking statements.
These forward-looking statements are found at various places throughout this
proxy statement/prospectus and the other documents incorporated by reference,
including, but not limited to, the Annual Report on Form 10-K for the year
ended December 31, 1998 of MedImmune, including any amendments, and the Annual
Report on Form 10-K for the year ended December 31, 1998 of U.S. Bioscience,
including any amendments. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this proxy
statement prospectus. Neither MedImmune nor U.S. Bioscience undertakes any
obligation to publicly update or release any revisions to these forward-looking
statements to reflect events or circumstances after the date of this proxy
statement/prospectus or to reflect the occurrence of unanticipated events.
The foregoing list sets forth some, but not all, of the factors that could
impact upon MedImmune's and U.S. Bioscience's ability to achieve results
described in any forward-looking statements. Investors are cautioned not to
place undue reliance on such statements that speak only as of the date made.
Investors also should understand that it is not possible to predict or identify
all such factors and that this list should not be considered a complete
statement of all potential risks and uncertainties. Investors should also
realize that if underlying assumptions prove inaccurate or unknown risks or
uncertainties materialize, actual results could vary materially from
MedImmune's and U.S. Bioscience's projections. MedImmune and U.S. Bioscience
undertake no obligation to update any forward-looking statements as a result of
future events or developments.
55
<PAGE>
Annex 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agreement and Plan of Merger
Dated as of September 21, 1999
among
MedImmune, Inc.
Marlin Merger Sub Inc.
and
U.S. Bioscience, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I THE MERGER...................................................... 4
Section 1.1. The Merger................................................. 4
Section 1.2. Closing.................................................... 4
Section 1.3. Effective Time............................................. 4
Section 1.4. Certificate of Incorporation and Bylaws.................... 5
Section 1.5. Directors and Officers..................................... 5
Section 1.6. Effects of the Merger...................................... 5
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES................ 5
Section 2.1. Effect on Capital Stock.................................... 5
Section 2.2. Exchange of Certificates................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES................................ 8
Section 3.1. Representations and Warranties of the Company.............. 8
Section 3.2. Representations and Warranties of Parent and Sub........... 19
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS...................... 23
Section 4.1. Conduct of Business........................................ 23
Section 4.2. No Solicitation............................................ 27
ARTICLE V ADDITIONAL AGREEMENTS........................................... 28
Section 5.1. Preparation of the Form S-4 and the Proxy Statement;
Stockholders Meeting................................................... 28
Section 5.2. Letters of the Company's Accountants....................... 29
Section 5.3. Letters of Parent's Accountants............................ 29
Section 5.4. Access to Information; Confidentiality..................... 29
Section 5.5. Reasonable Best Efforts.................................... 30
Section 5.6. Stock Options.............................................. 30
Section 5.7. Indemnification, Exculpation and Insurance................. 31
Section 5.8. Fees and Expenses.......................................... 32
Section 5.9. Public Announcements....................................... 32
Section 5.10. Affiliates................................................ 32
Section 5.11. Stock Exchange Listing.................................... 33
Section 5.12. Pooling of Interests...................................... 33
Section 5.13. Tax Treatment............................................. 33
Section 5.14. Stockholder Litigation.................................... 33
Section 5.15. Rights Agreement.......................................... 33
Section 5.16. Conveyance Taxes.......................................... 33
ARTICLE VI CONDITIONS PRECEDENT........................................... 34
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger................................................................. 34
Section 6.2. Conditions to Obligations of Parent and Sub................ 34
Section 6.3. Conditions to Obligation of the Company.................... 35
Section 6.4. Frustration of Closing Conditions.......................... 35
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................. 36
Section 7.1. Termination................................................ 36
Section 7.2. Effect of Termination...................................... 36
</TABLE>
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<TABLE>
<S> <C>
Section 7.3. Amendment.................................................... 37
Section 7.4. Extension; Waiver............................................ 37
ARTICLE VIII GENERAL PROVISIONS............................................. 37
Section 8.1. Nonsurvival of Representations and Warranties................ 37
Section 8.2. Notices...................................................... 37
Section 8.3. Definitions.................................................. 39
Section 8.4. Interpretation............................................... 39
Section 8.5. Counterparts................................................. 39
Section 8.6. Entire Agreement; No Third-Party Beneficiaries............... 39
Section 8.7. Governing Law................................................ 39
Section 8.8. Assignment................................................... 39
Section 8.9. Enforcement.................................................. 39
Section 8.10. Severability................................................ 40
</TABLE>
Exhibit A Form of Company Affiliate Letter
Exhibit B Form of Parent Affiliate Letter
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of September 21,
1999, among MedImmune, Inc., a Delaware corporation ("Parent"), Marlin Merger
Sub Inc., a Delaware corporation and a newly formed, direct, wholly owned
subsidiary of Parent ("Sub"), and U.S. Bioscience, Inc., a Delaware corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved and declared advisable this Agreement and the merger of Sub with
and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $0.01 per share, of the Company ("Company
Common Stock"), other than Company Common Stock owned by Parent, Sub or the
Company, will be converted into the right to receive common stock, par value
$0.01 per share, of Parent ("Parent Common Stock") as set forth herein;
WHEREAS, in order to induce Parent to execute and deliver this Agreement,
Parent and the Company are entering into a stock option agreement (the "Option
Agreement"), pursuant to which the Company is granting Parent the option to
purchase shares of Company Common Stock, upon the terms and subject to the
conditions set forth therein;
WHEREAS, for U.S. Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall be, and is hereby, adopted as a plan of reorganization for
purposes of Section 368 of the Code; and
WHEREAS, for financial accounting purposes, it is intended that the Merger
will be accounted for as a pooling of interests transaction under generally
accepted accounting principles ("GAAP").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into the Company at
the Effective Time. Following the Effective Time, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the DGCL.
Section 1.2. Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties (the "Closing
Date"), which shall be no later than the second Business Day after satisfaction
or waiver of the conditions set forth in ARTICLE VI (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of those conditions), at the offices of Dewey
Ballantine LLP, 1301 Avenue of the Americas, New York, New York 10019, unless
another date or place is agreed to by the parties hereto.
Section 1.3. Effective Time. Subject to the provisions of this Agreement, as
soon as practicable on the Closing Date, the parties shall file a certificate
of merger (the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware, or at such other time as Parent and the Company shall agree and
specify in the Certificate of Merger (the time the Merger becomes effective
being the "Effective Time").
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Section 1.4. Certificate of Incorporation and Bylaws.
(a) The Certificate of Incorporation of Sub, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided therein or by
applicable law, provided that the name of the Surviving Corporation shall be
changed to the name of the Company.
(b) The Bylaws of Sub, as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation until thereafter amended as
provided therein or by applicable law.
Section 1.5. Directors and Officers.
(a) The directors of Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected
and qualified, as the case may be.
(b) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected
and qualified, as the case may be.
Section 1.6. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.1. Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital stock
of Sub shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock that is owned by the Company, Parent or Sub shall
automatically be canceled and retired and shall cease to exist, and no Parent
Common Stock or other consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 2.2(e), each
issued and outstanding share of Company Common Stock (other than shares to be
canceled in accordance with Section 2.1(b)) shall be converted into the right
to receive a number of validly issued, fully paid and nonassessable shares of
Parent Common Stock equal to the Exchange Ratio (the "Merger Consideration").
As of the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate which immediately prior to the
Effective Time represented any such shares of Company Common Stock shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration and any cash in lieu of fractional shares of Parent Common Stock
to be issued or paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.2, without interest. Notwithstanding
the foregoing, if between the date of this Agreement and the Effective Time the
outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class, by reason of the occurrence or
record date of any stock dividend,
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subdivision, reclassification, recapitalization, split, combination, exchange
of shares or similar transaction, the Merger Consideration shall be
appropriately adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange or similar
transaction.
(d) The "Exchange Ratio" shall be 0.1500, provided that, if the Parent Share
Price shall be (i) greater than $140, the Exchange Ratio shall be $19.10
divided by the Parent Share Price, (ii) $140 or lower but more than $132, the
Exchange Ratio shall be 0.1364, (iii) $132 or lower but more than $120, the
Exchange Ratio shall be $18 divided by the Parent Share Price, (iv) $100 or
lower but more than $88, the Exchange Ratio shall be $15 divided by the Parent
Share Price, (v) $88 or lower, the Exchange Ratio shall be 0.1705 (except as
provided in paragraph (e) below). The Exchange Ratio shall be rounded to the
nearest 1/10,000th of a share. "Parent Share Price" shall be the average of the
closing prices of the shares of Parent Common Stock on the Nasdaq National
Market for the 20 consecutive trading days ending on the third trading day
prior to the date of the Stockholders Meeting, as reported by The Wall Street
Journal (or, if not reported thereby, any other authoritative source),
provided, that the last five trading days of 1999 and the first two trading
days of 2000 shall not be considered trading days for purposes of this
sentence.
(e) If the Parent Share Price shall be less than $80, the Company may, no
later than 12:00 noon New York City time, on the second trading day prior to
the date of the Stockholders Meeting, deliver a notice to Parent to the effect
that the Company is terminating this Agreement pursuant to Section 2.1(e). Such
termination shall be effective at 10:00 a.m. New York City time on the trading
day following Parent's receipt of such notice, unless Parent shall, prior to
such time, deliver a notice (the "Top-Up Notice") to the effect that the
Exchange Ratio shall be $13.64 divided by the Parent Share Price.
Section 2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit with
American Stock Transfer and Trust Company of New York or such other bank or
trust company as may be designated by Parent (the "Exchange Agent") and which
shall be reasonably acceptable to the Company, for the benefit of the holders
of shares of Company Common Stock, for exchange in accordance with this ARTICLE
II, through the Exchange Agent, certificates representing the shares of Parent
Common Stock (such shares of Parent Common Stock, together with any dividends
or distributions with respect thereto with a record date after the Effective
Time and any cash payments in lieu of any fractional shares of Parent Common
Stock, being hereinafter referred to as the "Exchange Fund") issuable pursuant
to Section 2.1 in exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (the
"Certificates") whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 2.1(c), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in surrendering
the Certificates in exchange for certificates representing the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of Parent Common Stock
which such holder has the right to receive pursuant to the provisions of this
ARTICLE II after taking into account all the shares of Company Common Stock
then held by such holder under all such Certificates so surrendered, (y) cash
in lieu of fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 2.2(e), and (z) any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(c) (in
each case, after giving effect to any required withholding taxes), and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, a certificate representing the proper number
of shares of Parent Common Stock may be issued to a Person other than the
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Person in whose name the Certificate so surrendered is registered, if, upon
presentation to the Exchange Agent, such Certificate shall be properly endorsed
or otherwise be in proper form for transfer and the Person requesting such
issuance shall pay any transfer or other taxes required by reason of the
issuance of shares of Parent Common Stock to a Person other than the registered
holder of such Certificate or establish to the reasonable satisfaction of
Parent that such tax has been paid or is not applicable. Notwithstanding
anything to the contrary contained herein, no certificate representing Parent
Common Stock or cash in lieu of a fractional share interest shall be delivered
to a person who is a "affiliate" (as contemplated by Section 5.10(a) hereof) of
the Company unless such affiliate has theretofore executed and delivered to
Parent the agreement referred to in Section 5.10(a). Until surrendered as
contemplated by this Section 2.2(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration, cash in lieu of any fractional shares of
Parent Common Stock as contemplated by Section 2.2(e) and any dividends or
other distributions to which such holder is entitled pursuant to Section
2.2(c). No interest will be paid or will accrue on any cash payable to holders
of Certificates pursuant to Section 2.1(c) or Section 2.2(e).
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby, and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(e) until the holder of record of such Certificate shall
surrender such Certificate in accordance with this ARTICLE II. Subject to the
effect of applicable escheat or similar laws, following surrender of any such
Certificate, there shall be paid to the record holder of the certificate
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore
paid with respect to such whole shares of Parent Common Stock, less the amount
of any withholding taxes which may be required thereon, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such whole shares of
Parent Common Stock, less the amount of any withholding taxes which may be
required thereon.
(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this ARTICLE II (including any cash paid pursuant
to Section 2.2(c) or Section 2.2(e)) shall be deemed to have been issued (and
paid) in full satisfaction of all rights pertaining to the shares of Company
Common Stock previously represented by such Certificates, subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by the Company on such shares of Company Common Stock in
accordance with the terms of this Agreement or prior to the date of this
Agreement and which remain unpaid at the Effective Time, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this
ARTICLE II.
(e) No Fractional Shares.
(i) No certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution of Parent shall relate to such
fractional share interests and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of
Parent.
(ii) Notwithstanding any other provision of this Agreement, each holder
of shares of Company Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a
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fraction of a share of Parent Common Stock (after taking into account all
Certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount, less the amount of any withholding taxes
which may be required thereon, equal to such fractional part of a share of
Parent Common Stock multiplied by the per share closing price of Parent
Common Stock on the Nasdaq National Market on the Closing Date, as such
price is reported by The Wall Street Journal (or, if not reported thereby,
any other authoritative source).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to Parent, upon demand, and any holders
of the Certificates who have not theretofore complied with this ARTICLE II
shall thereafter look only to Parent for, and Parent shall remain liable for,
payment of their claim for Merger Consideration, any cash in lieu of fractional
shares of Parent Common Stock and any dividends or distributions with respect
to Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company or the Exchange Agent
shall be liable to any Person in respect of any shares of Parent Common Stock
(or dividends or distributions with respect thereto) or cash in lieu of
fractional shares of Parent Common Stock or cash from the Exchange Fund, in
each case delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(i) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration and any cash in lieu of fractional shares, and unpaid
dividends and distributions on shares of Parent Common Stock deliverable in
respect thereof, in each case pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company. Except as set
forth on the disclosure schedule delivered by the Company to Parent prior to
the execution of this Agreement, which disclosure schedule specifies the
section or subsection of this Agreement to which the exception relates (the
"Company Disclosure Schedule"), the Company represents and warrants to Parent
and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company and its
operating Subsidiaries listed in Section 3.1(a) of the Company Disclosure
Schedule (the "Operating Subsidiaries") is a corporation duly organized,
validly existing and, to the extent applicable, in good standing under the laws
of the jurisdiction in which it is organized and has all requisite corporate
power and authority to carry on its business as now being conducted. Each of
the Company and its Operating Subsidiaries is duly qualified or licensed to do
business and, to the extent applicable, is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed individually or in the aggregate would not have a Material Adverse
Effect on the Company. The Company has made available to Parent prior to the
execution of this Agreement complete and correct copies of its Restated
Certificate of Incorporation, as amended (the "Company Certificate of
Incorporation") and Bylaws (the "Bylaws"), and the comparable organizational
documents of each of its Operating Subsidiaries, in each case as amended to the
date hereof.
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(b) Subsidiaries. Exhibit 22 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 lists all the Subsidiaries of the
Company. All the outstanding shares of capital stock of, or other equity
interests in, each such Subsidiary have been validly issued and are fully paid
and nonassessable and are owned directly or indirectly by the Company free and
clear of all Liens, and free of any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests. Other
than such Subsidiaries of the Company, neither the Company nor any Subsidiary
owns any equity interest in any person.
(c) Capital Structure. The authorized capital stock of the Company consists
of 50,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $.005 per share ("Preferred Stock"). At the close of business
on September 17, 1999, (i) 27,516,867 shares of Company Common Stock were
issued and outstanding, (ii) 23,906 shares of Company Common Stock were held by
the Company in its treasury, (iii) 5,116,277 shares of Company Common Stock
were issuable pursuant to outstanding Company Stock Options, (iv) no shares of
Preferred Stock were issued or outstanding, (v) 500,000 shares of Series A
Preferred Stock were reserved for issuance in connection with the Rights issued
pursuant to the Rights Agreement and (vi) 537,346 shares of Company Common
Stock were issuable under the Warrants for the purchase of 472,293, 53,735 and
11,318 shares, respectively, of the Company's common stock, granted to Domain
Partners IV, L.P., Proquest Investments L.P. and DP IV Associates, L.P.,
respectively, on February 2, 1999. Except as set forth above in this Section
3.1(c) at the close of business on September 17, 1999, no shares of capital
stock or other voting securities of the Company were issued, issuable, reserved
for issuance or outstanding. Except as set forth above in this Section 3.1(c)
and pursuant to the Option Agreement, there are no outstanding stock
appreciation rights or rights to receive shares of Company Common Stock on a
deferred basis granted under the Company Stock Plans or otherwise. All
outstanding shares of capital stock of the Company are, and all shares which
may be issued pursuant to the Company Stock Plans will be, when issued in
accordance with the terms thereof, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. Except as set forth
above in this Section 3.1(c), there are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote. Section 3.1(c) of the Company Disclosure
Schedule lists each outstanding Stock Option and the holder thereof, the number
of shares issuable thereunder and the grant date, exercise price and expiration
date thereof. Except as set forth above in this Section 3.1(c) or resulting
from the issuance of shares of Company Common Stock pursuant to Stock Options
outstanding as of the close of business on September 17, 1999 or the Option
Agreement, (x) there are not issued, issuable, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities of the
Company, (B) any securities of the Company convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of the Company,
(C) any warrants, calls, options or other rights to acquire from the Company or
any Company Subsidiary, and no obligation of the Company or any Company
Subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of the Company and (y) there are not any outstanding obligations of
the Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any such securities or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities. Neither the Company nor any
Subsidiary is a party to any voting agreement with respect to the voting of any
such securities. Except as set forth in this Section 3.1(c), there are no
issued, issuable, reserved for issuance or outstanding (A) securities of the
Company or any Company Subsidiary convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities or ownership
interests in any Company Subsidiary, (B) warrants, calls, options or other
rights to acquire from the Company or any Company Subsidiary, and no obligation
of the Company or any Company Subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any Company Subsidiary or (C) obligations of the
Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any such outstanding securities of Company Subsidiaries or to issue, deliver or
sell, or cause to be issued, delivered or sold, any such securities. Except as
set forth above in this Section 3.1(c), neither the Company nor any Subsidiary
is a party to or bound by any agreement regarding any securities of the Company
or any Subsidiary.
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(d) Authority; Noncontravention. The Company has the requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The Company has all requisite
corporate power and authority to enter into the Option Agreement and to
consummate the transactions contemplated thereby. The execution and delivery of
this Agreement and the Option Agreement by the Company and the consummation by
the Company of the transactions contemplated by this Agreement and the Option
Agreement have been duly authorized by all necessary corporate action on the
part of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or the Option Agreement or to
consummate the transactions contemplated hereby and thereby, subject, in the
case of the Merger, to receipt of the Stockholder Approval and the filing of
the Certificate of Merger. The Board of Directors of the Company has
unanimously approved this Agreement, determined that this Agreement and the
transactions contemplated hereby are fair to and in the best interests of the
Company and its stockholders and declared that the Merger is advisable. This
Agreement and the Option Agreement have been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by each of
the other parties thereto, constitute legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their terms
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or by principles governing availability of
equitable remedies).
The execution and delivery of this Agreement and the Option Agreement do
not, and the consummation of the Merger and the other transactions contemplated
by this Agreement and the Option Agreement and compliance with the provisions
of this Agreement and the Option Agreement will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under, or result in the
creation of any pledge, claim, lien, charge, encumbrance or security interest
of any kind or nature whatsoever (collectively, "Liens") in or upon any of the
properties or assets of the Company or any Subsidiary under, (i) the Company
Certificate of Incorporation or Bylaws or the comparable organizational
documents of any of its Subsidiaries, (ii) any loan or credit agreement, bond,
note, mortgage, indenture, lease or other contract, agreement, obligation,
commitment, arrangement, understanding, instrument, permit or license
applicable to the Company or any of its Subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following paragraph, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree, in each case
applicable to the Company or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights or Liens that individually or in
the aggregate would not have a Material Adverse Effect on the Company.
No consent, approval, order or authorization of, action by or in respect of,
or registration, declaration or filing with, any Federal, state, local or
foreign government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental self-regulatory agency,
commission or authority (each, a "Governmental Entity") is required by or with
respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the Option Agreement by the Company
or the consummation by the Company of the Merger or the other transactions
contemplated by this Agreement or the Option Agreement, except for (1) the
filing of a premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and any applicable filings and approvals under similar foreign antitrust
laws and regulations, (2) the filing with the Securities and Exchange
Commission (the "SEC") of (A) a proxy statement relating to the adoption by the
Company's stockholders of this Agreement (as amended or supplemented from time
to time, the "Proxy Statement") and (B) such reports under Section 13(a),
13(d), 15(d) or 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act"), as may be required in connection with this Agreement, the Option
Agreement and the transactions contemplated by this Agreement or the Option
Agreement, (3) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, (4) such filings with and approvals of the
American Stock Exchange ("AMEX") to permit the shares of Company Common Stock
that are to be issued pursuant to the Option Agreement to be traded on AMEX and
(5) such other consents, approvals, orders,
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authorizations, registrations, declarations and filings the failure of which to
be obtained or made individually or in the aggregate would not have a Material
Adverse Effect on the Company.
(e) SEC Documents. The Company has timely filed all reports, schedules,
forms, statements and other documents (including exhibits and other information
incorporated therein) with the SEC required to be filed by the Company since
January 1, 1998 (the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933 (the "Securities Act"), or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any SEC Document
has been revised or superseded by a later-filed Filed SEC Document, none of the
SEC Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Company included in
the SEC Documents comply in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP, applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments not material
in amount). Except (i) as set forth in the Filed SEC Documents or (ii) for
liabilities set forth in this Agreement or the Option Agreement, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) which, individually
or in the aggregate, would have a Material Adverse Effect on the Company. For
purposes of this Agreement, a "Filed SEC Document" shall mean an SEC Document
filed by the Company and publicly available prior to the date of this
Agreement.
(f) Information Supplied. None of the information to be supplied by the
Company specifically for inclusion or incorporation by reference in the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock in the Merger (the "Form S-
4") will, at the time the Form S-4 becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading and the
Proxy Statement will not, on the date it is first mailed to the Company's
stockholders and at the time of the Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The Proxy
Statement will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub specifically for inclusion or incorporation by reference in the
Proxy Statement.
(g) Absence of Certain Changes or Events. Except as set forth in the Filed
SEC Documents filed after December 31, 1998 and for liabilities set forth in
this Agreement, since December 31, 1998, (i) the Company and its Subsidiaries
have conducted their businesses in the ordinary course consistent with past
practice and (ii) there has not been any Material Adverse Change. Except as set
forth in the Filed SEC Documents and for actions in the ordinary course of
business, consistent with past practice, since June 30, 1999, neither the
Company nor any Subsidiary has taken any action, or failed to take any action,
which if such action or failure occurred during the period from the date of
this Agreement to the Effective Time would constitute a material violation of
Sections 4.1(a) (i), (iii), (iv), (v) (other than with respect to licensing),
(vi), (vii) or (viii), and neither the Company nor any Subsidiary has
authorized, or commited or agreed, to take any of such actions.
(h) Litigation. There is no suit, action or proceeding pending or, to the
Knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any of their respective properties that
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individually or in the aggregate would have a Material Adverse Effect, nor is
there any judgment, decree, injunction, rule, order, action, demand, or
requirement of any Governmental Entity or arbitrator outstanding against, or,
to the Knowledge of the Company, any investigation by any Governmental Entity
involving, the Company or any of its Subsidiaries that individually or in the
aggregate would have a Material Adverse Effect.
(i) Contracts. As of the date of this Agreement, neither the Company nor any
Subsidiary is a party to, and none of their respective properties or assets are
bound by, any material contracts, including contracts relating to distribution,
sale, licensing, marketing, manufacturing, third party suppliers of active
ingredients, bulk product and finished product to the Company, other than
contracts filed as exhibits to the SEC Documents. The Company has not received
any notice from any other party to any such material contract, and otherwise
has no Knowledge that such third party intends to terminate, or not renew, any
such material contract. As of the date hereof, the Company has made available
to Parent true and correct copies of all such contracts. Neither the Company
nor any of its Subsidiaries, and, to the Knowledge of the Company, no other
party thereto, is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any loan or credit agreement, bond,
note, mortgage, indenture, lease or other contract, agreement, obligation,
commitment, arrangement, understanding, instrument, permit or license to which
it is a party or by which it or any of its properties or assets is bound,
except for violations or defaults that individually or in the aggregate are not
reasonably likely to have a Material Adverse Effect. Neither the Company nor
any of its Subsidiaries is a party to or otherwise bound by any agreement or
covenant not to compete or by any agreement or covenant restricting in any
material respect the development, marketing or distribution of the Company's or
its Subsidiaries' products or services or the conduct of their businesses
(j) Compliance with Laws.
(i) Each of the Company and its Subsidiaries is in compliance with all
statutes, laws, ordinances, rules, regulations, judgments, orders and
decrees of any Governmental Entity (other than Environmental Laws)
(collectively, "Legal Provisions") applicable to its business or
operations, except for instances of possible noncompliance that
individually or in the aggregate would not have a Material Adverse Effect
on the Company. Each of the Company and its Subsidiaries has in effect all
approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights of or with all Governmental Entities, including
all authorizations under Environmental Laws ("Permits"), necessary for it
to own, lease or operate its properties and assets and to carry on its
business and operations as now conducted, except for the failure to have
such Permits that individually or in the aggregate would not have a
Material Adverse Effect on the Company. There has occurred no default
under, or violation of, any such Permit, except for defaults under, or
violations of, Permits that individually or in the aggregate would not have
a Material Adverse Effect on the Company. The Merger, in and of itself,
would not cause the revocation or cancellation of any such Permit that
individually or in the aggregate is reasonably likely to have a Material
Adverse Effect on the Company.
(ii) Except for those matters that individually or in the aggregate are
not reasonably likely to have a Material Adverse Effect on the Company: (A)
each of the Company and its Subsidiaries is, and has been, in compliance
with all applicable Environmental Laws; (B) during the period of ownership
or operation by the Company or its Subsidiaries of any of its currently or
previously owned, leased or operated properties, no Hazardous Material has
been treated or disposed of, and there have been no Releases or threatened
Releases of Hazardous Material at, in, on, under or affecting such
properties or any contiguous site; (C) prior to the period of ownership or
operation by the Company or its Subsidiaries of any of its currently or
previously owned, leased or operated properties, to the Knowledge of the
Company, no Hazardous Material was treated, stored, or disposed of, and
there were no Releases of Hazardous Material at, in, on, under or affecting
any such property or any contiguous site; and (D) neither the Company nor
its Subsidiaries have received any written notice of, or entered into or
assumed by contract, judicial or administrative settlement, or operation of
law any indemnification obligation, order, settlement or decree
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relating to: (1) any violation of any Environmental Laws or the institution
or pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any alleged
violation of Environmental Laws or any Release of Hazardous Materials, (2)
the response to or remediation of Hazardous Material at or arising from any
of the Company's or its Subsidiaries' activities or properties or any other
properties or (3) payment for any response action relating to or
remediation of Hazardous Material at or arising from any of the Company's
or its Subsidiaries' properties, activities, or any other properties. The
term "Environmental Laws" means all applicable U.S., U.K., and Dutch laws,
statutes, treaties, rules, codes, ordinances, regulations, certificates,
orders, directives, interpretations, licenses, permits, and other
authorizations of any Governmental Entity and judgments, decrees,
injunctions, writs, orders or like action of any court, arbitrator or other
administrative, judicial or quasi-judicial tribunal or agency of competent
jurisdiction, including any thereof of the European Community or the
European Union having the force of law in The Netherlands and being
applicable to the Company, dealing with the protection of health, welfare
or the environment, including, without limitation, flood, pollution or
disaster laws and health and environmental protection laws and regulations,
and all other rules and regulations promulgated thereunder and any
provincial, municipal, waterboard or other local statute, law, rule,
regulation or ordinance relating to public or employee health, safety or
environment; including all laws relating to Releases to air, water, land or
groundwater, relating to the withdrawal or use of groundwater, and relating
to the use, handling, transportation, manufacturing, introduction into the
stream of commerce, or disposal of Hazardous Materials.
The term "Hazardous Materials" means any chemical, material, liquid, gas,
substance, or waste, whether naturally occurring or man-made, that is
prohibited, limited, or regulated by or pursuant to an Environmental Law.
The term "Release" means spilling, leaking, discharging, injecting,
emitting, and or disposing and placement of a Hazardous Material in any
location that poses a threat thereof.
(k) Absence of Changes in Benefit Plans. There has not been any adoption or
amendment in any material respect by the Company or any of its Subsidiaries of
any collective bargaining agreement or any Benefit Plan (defined below), or any
material change in any actuarial or other assumption used to calculate funding
obligations with respect to any Pension Plans (defined below), or any change in
the manner in which contributions to any Pension Plans are made or the basis on
which such contributions are determined. As of the date of this Agreement,
there exist no currently binding employment, consulting, severance, termination
or indemnification agreements, arrangements or understandings between the
Company or its Subsidiaries and any current or former officer, director or
employee of the Company or its Subsidiaries which provide for payments in
excess of $50,000 and which are not terminable on 60 days or less notice
without penalty. There are no collective bargaining or other labor union
agreements to which the Company or its Subsidiaries is a party or by which it
is bound.
(l) ERISA Compliance.
(i) Section 3.1(l)(i) of the Company Disclosure Schedule contains a
list, and in the case of Subsidiaries, a description of each pension,
retirement, savings, profit sharing, medical, dental, health, disability,
life, death benefit, group insurance, deferred compensation, stock option,
stock purchase, restricted stock, bonus or incentive, severance pay,
employment or termination, and other employee benefit or compensation plan,
trust arrangement, contract, agreement (including pursuant to any
collective bargaining agreement), policy, practice or commitment, whether
formal or informal, written or oral, in each case that are binding
commitments of the Company and its Subsidiaries, under which (1) current or
former employees, directors or independent contractors of the Company or
any of its Subsidiaries participate or are entitled to participate by
reason of their relationship with the Company or any of its Subsidiaries,
(2) to which the Company or any of its Subsidiaries is a party or a sponsor
or a fiduciary thereof or by which the Company or any of its Subsidiaries
(or any of their rights, properties or assets) is currently bound or (3)
with respect to which the Company or any of its Subsidiaries has any
obligation to
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make payments or contributions, including, without limitation, any employee
benefit plan that is subject to or governed by the laws of any jurisdiction
other than the laws of the United States (a "Foreign Plan"), all "employee
pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Pension Plans"), "employee welfare benefit plans"
(as defined in Section 3(1) of ERISA) (sometimes referred to herein as
"Welfare Plans") (all of the foregoing referred to collectively herein as
"Benefit Plans"), and all other Benefit Plans maintained, or contributed
to, by the Company, its Subsidiaries or any Person or entity that, together
with the Company, is treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code (a "Commonly Controlled Entity") for the
benefit of any current or former officers, directors or employees of the
Company and its Subsidiaries (including any such plans maintained for
current or former foreign employees). The Company has made available to
Parent true, complete and correct copies of (1) each Benefit Plan (or, in
the case of any unwritten Benefit Plans, descriptions thereof), (2) the
most recent annual report on Form 5500 required to be filed with the
Internal Revenue Service (the "IRS") with respect to each Benefit Plan, (3)
the most recent summary plan description for each Benefit Plan for which
such summary plan description is required and (4) each trust agreement and
group annuity contract relating to any Benefit Plan. Each Benefit Plan
maintained or contributed to by the Company or any of its Subsidiaries has
been administered in all material respects in accordance with its terms.
The Company, its Subsidiaries and all the Benefit Plans maintained or
contributed to by the Company or any of its Subsidiaries are all in
compliance in all material respects with the applicable provisions of
ERISA, the Code and all other applicable laws, including laws of foreign
jurisdictions.
(ii) All Pension Plans maintained or contributed to by the Company or
any of its Subsidiaries intended to be tax-qualified have been the subject
of determination letters from the IRS to the effect that such Pension Plans
are qualified and exempt from United States Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor has any event occurred since the
date of its most recent determination letter or application therefor that
would adversely affect its qualification or materially increase its costs.
All Pension Plans maintained or contributed to by the Company or any of its
Subsidiaries required to have been approved by any foreign Governmental
Entity have been so approved and no such approval has been revoked nor has
any event occurred since the date of its most recent approval or
application therefor that would adversely affect its approval or materially
increase its costs.
(iii) Neither the Company nor any Commonly Controlled Entity has (1) at
any time in the six years prior to the Closing Date maintained or
contributed to any Benefit Plan that is subject to Title IV of ERISA or
Section 412 of the Code or (2) has any unsatisfied liability under Title IV
of ERISA or Section 412 of the Code. None of the Company, its Subsidiaries,
or any Commonly Controlled Entity contributes to a "multiemployer plan" as
defined in Section 3(37) of ERISA.
(iv) With respect to any Welfare Plan maintained or contributed to by
the Company or any of its Subsidiaries, there are no understandings,
agreements or undertakings, written or oral, that would prevent any such
plan (including any such plan covering retirees or other former employees)
from being amended or terminated without material liability to the Company
on or at any time after the Effective Time.
(v) No pending or, to the knowledge of the Company, threatened disputes,
lawsuits, claims (other than routine claims for benefits), investigations,
audits or complaints to, or by, any person or governmental authority have
been filed or are pending with respect to any Benefit Plans or the Company
or any of its Subsidiaries in connection with any Benefit Plan or the
fiduciaries or administrators thereof. With respect to each Benefit Plan,
there has not occurred, and no person or entity is contractually bound to
enter into, any nonexempt "prohibited transaction" within the meaning of
Section 4975 of the Code or Section 406 of ERISA, nor any transaction that
would result in a civil penalty being imposed under Section 409 or 502(i)
of ERISA.
(vi) There are no unfunded liabilities with respect to any Foreign Plan
other than would not individually or in the aggregate have a Material
Adverse Effect on the Company.
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(vii) All contributions to and payments with respect to or under the
Benefit Plans that are required to be made with respect to periods ending
on or before the Effective Time have been made or accrued before the
Effective Time by the Company in accordance with the appropriate plan
documents, financial statements, actuarial report, collective bargaining
agreements or insurance contracts or arrangements.
(viii) No Welfare Plan providing medical or death benefits (whether or
not insured) with respect to current or former employees of the Company or
any Subsidiary continues such coverage or provides such benefits beyond
their date of retirement or other termination of service (other than
coverage the cost of which is fully paid by the former employee or his or
her dependents).
(ix) Except as set forth in Section 3.1(l)(ix) of the Company Disclosure
Schedule, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any plan, policy, arrangement or agreement (including under any
collective bargaining agreement) or any trust or loan that will or would
reasonably be expected to result in any payment (whether of severance pay
or otherwise), acceleration of, forgiveness of indebtedness owing from,
vesting of, distribution of, or increase in or obligation to fund, any
benefits with respect to any current or former employee, director or
consultant of the Company.
(m) Labor Relations. (a) As of the date hereof, there is no pending or, to
the Knowledge of the Company, threatened union organizational campaign effort,
collective bargaining negotiations, bargaining impasse, implementation of final
offer, labor dispute, grievance or arbitration matter, economic or unfair labor
practice strike, boycott, work stoppage, slowdown, work-to-rule or intermittent
strike against the Company or any of its Subsidiaries, (b) no lockout is in
effect and (c) no permanent or temporary strike replacements are currently
employed at any Company facility. Neither the Company nor any of its
Subsidiaries, nor their respective representatives or employees, has committed
any unfair labor practices in connection with the operation of the respective
businesses of the Company or any of its Subsidiaries, and there is no pending
or, to the Knowledge of the Company, threatened charge, complaint, decision,
order, notice-posting requirement, settlement agreement or injunctive action or
order against the Company or any of its Subsidiaries by the National Labor
Relations Board or any similar governmental or adjudicatory agency or court,
except in each case as would not have a Material Adverse Effect on the Company.
The Company and its Subsidiaries have in the past been and are in compliance in
all respects with all applicable collective bargaining agreements and laws
respecting employment, employment practices, employee classification, labor
relations, safety and health, wages, hours and terms and conditions of
employment, except where the failure to be in compliance would not have a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries has experienced within the past 12 months a "plant closing" or
"mass layoff" within the meaning of the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. (S)(S) 2101 et seq. Section 3.1(m) of the Company
Disclosure Schedule also sets forth the aggregate number of employees who work
for the Company and its Subsidiaries, specifying the number of such employees
who belong to a union or are otherwise covered by an employment agreement or a
collective bargaining agreement.
(n) Taxes. Each of the Company and its Subsidiaries has timely filed all Tax
Returns required to be filed by it, or requests for extensions to file such Tax
Returns have been timely filed and granted and have not expired, and all such
filed Tax Returns are complete and accurate in all respects, except to the
extent that failures to (i) file, (ii) have extensions granted that remain in
effect or (iii) be complete and accurate in all respects, as applicable,
individually or in the aggregate, would not have a Material Adverse Effect. The
Company and each of its Subsidiaries has paid (or the Company has paid on its
behalf) all Taxes shown as due on such Tax Returns, except to the extent that a
failure to pay all Taxes shown as due on such Tax Returns, individually or in
the aggregate, would not have a Material Adverse Effect. The most recent
financial statements contained in the Filed SEC Documents reflect an adequate
reserve for all Taxes payable by the Company and its Subsidiaries for all
taxable periods and portions thereof accrued through the date of such financial
statements, except to the extent that any failures to reflect such reserves,
individually or in the aggregate, would not have a Material Adverse Effect. No
deficiencies for any Taxes have been proposed, asserted or assessed against the
Company or any of its Subsidiaries that are not adequately reserved for on the
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Company's financial statements in accordance with GAAP except to the extent
that such Taxes, individually or in the aggregate, would not have a Material
Adverse Effect. No requests for waivers of the time to assess any Taxes against
the Company or any of its Subsidiaries have been granted or are pending, except
for requests with respect to such Taxes that have been adequately reserved for
in the most recent financial statements contained in the Filed SEC Documents,
or, to the extent not adequately reserved, the assessment of which would,
individually or in the aggregate, not have a Material Adverse Effect. Neither
the Company nor any of its Affiliates has taken or agreed to take any action or
knows of any fact or circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code. Neither the Company nor any of its Subsidiaries has distributed
the stock of any corporation in a transaction satisfying the requirements of
Section 355 of the Code since April 16, 1997. Neither the stock of the Company
nor the stock of any of its Subsidiaries has been distributed in a transaction
satisfying the requirements of Section 355 of the Code since April 16, 1997. As
used in this Agreement, "Taxes" shall include all U.S. Federal, state and
local, domestic and foreign, income, franchise, property, sales, use, excise
and other taxes, tariffs or governmental charges of any nature whatsoever,
including any obligations for withholding taxes from payments due or made to
any other person and any interest, penalties or additions to tax and "Tax
Returns" shall include any return, report or similar statement (including
attached schedules) required to be filed with respect to any Tax, including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
(o) No Excess Parachute Payments; No Section 162(m) Payments. There will be
no payments or benefits to any "disqualified individual" (within the meaning of
Section 280G of the Code) that would constitute or result in an "excess
parachute payment" under Section 280G of the Code as a direct or indirect
consequence of the transactions contemplated by this Agreement, including,
without limitation, as a result of the acceleration of vesting or
exercisability of any options to purchase Company Common Stock held by
"disqualified individuals" as a direct or indirect consequence of the
transactions contemplated by this Agreement. No such Person is entitled to
receive any additional payment from the Company, the Surviving Corporation or
any other Person (a "Parachute Gross Up Payment") in the event that the excise
tax of Section 4999(a) of the Code is imposed on such Person. The Benefit Plans
and other Company employee compensation arrangements in effect as of the date
of this Agreement have been designed so that the disallowance of a deduction
under Section 162(m) of the Code for employee remuneration will not apply to
any material amounts paid or payable by the Company or any of its Subsidiaries
under any such plan or arrangement and, to the Knowledge of the Company, no
fact or circumstance exists that is reasonably likely to cause such
disallowance to apply to any such amounts.
(p) Title to Properties.
(i) Each of the Company and its Subsidiaries has good and marketable
title to, or valid leasehold interests in, all its material properties and
assets except for such as are no longer used or useful in the conduct of
its businesses or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive covenants
and similar encumbrances that individually or in the aggregate would not
materially interfere with its ability to conduct its business as currently
conducted. All such material assets and properties, other than assets and
properties in which the Company or any of its Subsidiaries has a leasehold
interest, are free and clear of all Liens, except for Liens that
individually or in the aggregate would not materially interfere with the
ability of the Company and its Subsidiaries to conduct their respective
businesses as currently conducted.
(ii) Each of the Company and its Subsidiaries has complied in all
material respects with the terms of all material leases to which it is a
party and under which it is in occupancy, and all such leases are in full
force and effect, except for such noncompliance or failure to be in full
force and effect that individually or in the aggregate is not reasonably
likely to have a Material Adverse Effect. Each of the Company and its
Subsidiaries enjoys peaceful and undisturbed possession under all such
material leases, except for failures to do so that individually or in the
aggregate are not reasonably likely to have a Material Adverse Effect.
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(q) Intellectual Property. Each of the Company and its Subsidiaries owns, or
is validly licensed or otherwise has the right to use all patents, patent
applications, trademarks, trademark rights, trade names, trade name rights,
service marks, service mark rights, copyrights and other proprietary
intellectual property rights and computer programs (collectively, "Intellectual
Property Rights") which if the Company or its Subsidiaries did not own or
validly license or otherwise have the right to use would have a Material
Adverse Effect on the Company. Section 3.1(q) of the Company Disclosure
Schedule sets forth, as of the date hereof, a list of all granted patents,
pending patent applications, trademarks and applications therefor owned by or
licensed to the Company or any of its Subsidiaries. No claims are pending or,
to the Knowledge of the Company, threatened that the Company or any of its
Subsidiaries is infringing the rights of any Person with regard to any
Intellectual Property Right which have or would have a Material Adverse Effect
on the Company. To the Knowledge of the Company, no Person is infringing the
rights of the Company or any of its Subsidiaries with respect to any
Intellectual Property Right which would have a Material Adverse Effect on the
Company. As of the date hereof, the Company has no Knowledge that the business
of the Company and its Subsidiaries as presently conducted or as presently
contemplated does or will infringe (i) any granted patent or existing trademark
or (ii) any patent granted from a pending patent application. No claims are
pending or, to the Knowledge of the Company, are threatened challenging the
ownership of or license to the Intellectual Property Rights owned by or
licensed to the Company and its Subsidiaries which have or would have a
Material Adverse Effect on the Company.
(r) Voting Requirements. The affirmative vote of a majority of the
outstanding shares of Company Common Stock to adopt this Agreement (the
"Stockholder Approval") is the only vote of the holders of any class or series
of the Company's capital stock necessary to adopt this Agreement and approve
the transactions contemplated hereby.
(s) State Takeover Statutes. The Board of Directors of the Company has
approved the terms of this Agreement and the Option Agreement and the
consummation of the Merger and the other transactions contemplated by this
Agreement and the Option Agreement, and such approval represents all the action
necessary to render inapplicable to this Agreement, the Option Agreement, the
Merger and the other transactions contemplated by this Agreement and the Option
Agreement, the provisions of Section 203 of the DGCL. No other state takeover
statute or similar statute or regulation applies to or purports to apply to
this Agreement, the Option Agreement, the Merger or the other transactions
contemplated by this Agreement or the Option Agreement.
(t) Brokers. No broker, investment banker, financial advisor or other
Person, other than Morgan Stanley & Co. Incorporated, the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement and the Option Agreement based upon
arrangements made by or on behalf of the Company. The Company has delivered to
Parent true and complete copies of all agreements under which any such fees or
expenses are payable and all indemnification and other agreements related to
the engagement of the Persons to whom such fees are payable.
(u) Opinion of Financial Advisor. The Company has received the opinion of
Morgan Stanley & Co. Incorporated, dated the date hereof, to the effect that,
as of such date, the Merger Consideration is fair from a financial point of
view to the holders of shares of Company Common Stock, a signed copy of which
opinion has been delivered to Parent.
(v) Accounting Matters. Neither the Company nor any of its Affiliates has
taken or agreed to take any action or knows of any fact or circumstance that is
reasonably likely to prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling of interests. The
Company's management has consulted with and has made representations to its
advisors regarding the Company's management's conclusion that the Merger will
qualify as a pooling of interests business combination. Based upon the
Company's management's consultations with its advisors, nothing has come to the
Company's management's attention that would preclude the Merger from qualifying
as a pooling of interests business combination, subject to the
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occurrence of any events between (i) the initiation and the consummation of the
Merger and (ii) for a period of two years subsequent to the consummation of the
Merger that would preclude the Parent from accounting for the Merger as a
pooling of interests business combination.
(w) Supply Relationships. The Company and its Subsidiaries have in place
supply agreements or arrangements sufficient to meet the needs of the business
of the Company as it is currently being conducted, and to the knowledge of the
Company, no material adverse change in those agreements or arrangements is
reasonably anticipated.
(x) Rights Agreement. The Company has taken all actions necessary to cause
the Rights Agreement, dated as of May 19, 1995, between the Company and
American Stock Transfer and Trust Company of New York, as rights agent (the
"Rights Agreement") to be amended to (i) render the Rights Agreement
inapplicable to this Agreement, the Option Agreement, the Merger and the other
transactions contemplated by this Agreement and the Option Agreement, (ii)
ensure that (y) none of Parent, Sub or any other Subsidiary of Parent is an
Acquiring Person (as defined in the Rights Agreement) pursuant to the Rights
Agreement by virtue of the execution of this Agreement and the Option Agreement
or the consummation of the Merger or the other transactions contemplated by
this Agreement and the Option Agreement and (z) a Distribution Date or a Stock
Acquisition Date (as such terms are defined in the Rights Agreement) does not
occur by reason of the execution of this Agreement and the Option Agreement,
the consummation of the Merger or the consummation of the other transactions
contemplated by this Agreement and the Option Agreement and (iii) provide that
the Expiration Date (as defined in the Rights Agreement) shall occur
immediately prior to the Effective Time. A correct and complete copy of the
Rights Agreement, as amended to date, has been furnished to Parent.
(y) Regulatory Compliance.
(i) As to each product subject to the jurisdiction of the U.S. Food and
Drug Administration ("FDA") under the Federal Food, Drug and Cosmetic Act
and the regulations thereunder ("FDCA") (each such product, a
"Pharmaceutical Product") that is manufactured, tested, distributed and/or
marketed by the Company or any of its Subsidiaries, such Pharmaceutical
Product is being manufactured, tested, distributed and/or marketed in
substantial compliance with all applicable requirements under FDCA and
similar Legal Provisions, including those relating to investigational use,
premarket approval, good manufacturing practices, labeling, advertising,
record keeping, filing of reports and security, except where the failure to
be in compliance is not reasonably likely to have a Material Adverse Effect
on the Company. Neither the Company nor its Subsidiaries has received any
notice or other communication from the FDA or any other Governmental Entity
(A) contesting the premarket approval of, the uses of or the labeling and
promotion of any of the Company's or its Subsidiaries' products or (B)
otherwise alleging any violation of any Legal Provision by the Company or
its Subsidiaries which, in either case, would have a Material Adverse
Effect.
(ii) No Pharmaceutical Products have been recalled, withdrawn, suspended
or discontinued by the Company or any of its Subsidiaries in the United
States or outside the United States (whether voluntarily or otherwise)
since January 1, 1998. No proceedings in the United States and outside of
the United States of which the Company has Knowledge (whether completed or
pending) seeking the recall, withdrawal, suspension or seizure of any
Pharmaceutical Product are pending against the Company or any of its
Subsidiaries, nor have any such proceedings been pending at any time since
January 1, 1998 which would reasonably be expected to have a Material
Adverse Effect.
(iii) As to each biological or drug of the Company or its Subsidiaries
for which a biological license application, new drug application,
investigational new drug application or similar state or foreign regulatory
application has been approved, the Company and its Subsidiaries are in
substantial compliance with 21 U.S.C. sec. 355 or 21 C.F.R. Parts 312 or
314 et seq., respectively, and similar Legal Provisions and all terms and
conditions of such applications, except where the failure to be in
compliance is not reasonably likely to have a Material Adverse Effect on
the Company. As to each such drug, the Company and any relevant Subsidiary
of the Company, and the officers, employees or agents of the Company or
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such Subsidiary have included in the application for such drug, where
required, the certification described in 21 U.S.C. sec. 335a(k)(1) or any
similar Legal Provision and the list described in 21 U.S.C. sec. 335a(k)(2)
or any similar Legal Provision, and such certification and such list was in
each case true and accurate when made and remained true and accurate
thereafter, except in the case where the failure of such application to be
true and accurate would not reasonably be expected to have a Material
Adverse Effect. In addition, the Company and its Subsidiaries are in
substantial compliance with all applicable registration and listing
requirements set forth in 21 U.S.C. sec. 360 and 21 C.F.R. Part 207 and all
similar Legal Provisions.
(iv) Each article of any drug manufactured and/or distributed by the
Company or any of its Subsidiaries is not adulterated within the meaning of
21 U.S.C. sec. 351 (or similar Legal Provisions) or misbranded within the
meaning of 21 U.S.C. sec. 352 (or similar Legal Provisions), and is not a
product that is in violation of 21 U.S.C. sec. 355 (or similar Legal
Provisions), except where such failure in compliance with the foregoing
would not reasonably be expected to have a Material Adverse Effect on the
Company.
(v) Neither the Company, nor any Subsidiary of the Company, nor any
officer, employee or agent of either the Company or any Subsidiary of the
Company has made an untrue statement of a material fact or fraudulent
statement to the FDA or other Governmental Entity, failed to disclose a
material fact required to be disclosed to the FDA or any other Governmental
Entity, or committed an act, made a statement, or failed to make a
statement that, at the time such disclosure was made, could reasonably be
expected to provide a basis for the FDA or any other Governmental Entity to
invoke its policy respecting "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities", set forth in 56 Fed. Reg. 46191
(September 10, 1991) or any similar policy. Neither the Company nor any
Subsidiary of the Company, nor any officer, employee or agent of either the
Company or any Subsidiary of the Company, has been convicted of any crime
or engaged in any conduct for which debarment is mandated by 21 U.S.C. sec.
335a(a) or any similar Legal Provision or authorized by 21 U.S.C. sec.
335a(b) or any similar Legal Provision.
(vi) Except as disclosed in the Filed SEC Documents, neither the Company
nor any Subsidiary of the Company has received any written notice that the
FDA or any other Governmental Entity has commenced, or threatened to
initiate, any action to withdraw its approval or request the recall of any
product of the Company or any Subsidiary, or commenced, or overtly
threatened to initiate, any action to enjoin production at any facility of
the Company or any Subsidiary which would reasonably be expected to have a
Material Adverse Effect.
(z) Year 2000 Compliance . The Company has adopted and implemented a
commercially reasonable plan to provide (x) that the change of the year from
1999 to the year 2000 will not materially and adversely affect the information
and business systems of the Company or its Subsidiaries and (y) that the
impacts of such change on the vendors and customers of the Company and its
Subsidiaries will not have a Material Adverse Effect on the Company. In the
Company's reasonable best estimate, no expenditures materially in excess of
currently budgeted items previously disclosed in the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1999 will be required in order to
cause the information and business systems of the Company and its Subsidiaries
to operate properly following the change of the year 1999 to the year 2000.
Between the date of this Agreement and the Effective Time, the Company shall
continue to use reasonable best efforts to implement the plan previously
disclosed in the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999.
Section 3.2. Representations and Warranties of Parent and Sub. Except as set
forth on the disclosure schedule delivered by Parent to the Company prior to
the execution of this Agreement, which disclosure schedule specifies the
section or subsection of this Agreement to which the exception relates (the
"Parent Disclosure Schedule"), Parent and Sub represent and warrant to the
Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated
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and has all requisite corporate power and authority to carry on its business as
now being conducted. Each of Parent and Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of
its business or the ownership, leasing or operation of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed individually or in the
aggregate would not have a Material Adverse Effect on Parent. Parent has made
available to the Company complete and correct copies of its Restated
Certificate of Incorporation and Bylaws and the Certificate of Incorporation
and Bylaws of Sub, in each case as amended to the date hereof.
Sub was formed solely for the purpose of effecting the Merger and, since the
date of its incorporation, Sub has not engaged in any activities and has not
incurred any liabilities or obligations other than in connection with its
formation and in connection with or as contemplated by this Agreement.
(b) Subsidiaries. As of the date hereof, Parent has no Subsidiaries other
than Sub. All the outstanding shares of capital stock of, or other equity
interests, in Sub have been validly issued and are fully paid and nonassessable
and are owned directly or indirectly by Parent free and clear of all Liens, and
free of any restriction on the right to vote, sell or otherwise dispose of such
capital stock or other ownership interests.
(c) Capital Structure. The authorized capital stock of Parent consists of
120,000,000 shares of Parent Common Stock and 5,524,525 shares of Preferred
Stock, par value $.01 per share ("Preferred Stock"). At the close of business
on September 20, 1999, (i) 63,271,596 shares of Parent Common Stock were issued
and outstanding, (ii) no shares of Parent Common Stock were held by Parent in
its treasury, (iii) 7,016,237 shares of Parent Common Stock were issuable
pursuant to outstanding Parent Stock Options, (iv) no shares of Preferred Stock
were issued or outstanding, and (v) 1,200,000 shares of Series B Junior
Preferred Stock were reserved for issuance in connection with the rights issued
pursuant to the Amended and Restated Rights Agreement, dated as of October 31,
1998, by and between the Company and American Stock Transfer & Trust Company,
as Rights Agent. Except as set forth above in this Section 3.2(c) at the close
of business on September 20, 1999, no shares of capital stock or other voting
securities of Parent were issued, issuable, reserved for issuance or
outstanding. Except as set forth above in this Section 3.2(c), as of the date
hereof there are no outstanding stock appreciation rights or rights to receive
shares of Parent Common Stock on a deferred basis granted under any employee or
director benefit plans or arrangements of Parent or otherwise (the "Parent
Stock Plans"). All outstanding shares of capital stock of Parent are, and all
shares which may be issued pursuant to Parent Stock Plans will be, when issued
in accordance with the terms thereof, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. Except as set
forth above in this Section 3.2(c), as of the date hereof there are no bonds,
debentures, notes or other indebtedness of Parent having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of Parent may vote. Except as set forth above
in this Section 3.2(c) or resulting from the issuance of shares of Parent
Common Stock pursuant to options or other benefits issued or granted pursuant
to the Parent Stock Plans outstanding as of the close of business on September
20, 1999, as of the date hereof (x) there are not issued, issuable, reserved
for issuance or outstanding (A) any shares of capital stock or other voting
securities of Parent, (B) any securities of Parent convertible into or
exchangeable or exercisable for shares of capital stock or voting securities of
Parent, (C) any warrants, calls, options or other rights to acquire from Parent
or any Subsidiary of Parent, and no obligation of the Parent or any Subsidiary
of Parent to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of the Parent, and (y) there are not any outstanding obligations of
the Parent or any Subsidiary of Parent to repurchase, redeem or otherwise
acquire any such securities or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities.
(d) Authority; Noncontravention. Each of Parent and Sub has all requisite
corporate power and authority to enter into this Agreement (and, in the case of
Parent, the Option Agreement), and to consummate the transactions contemplated
by this Agreement (and, in the case of Parent, those contemplated by the Option
Agreement). The execution and delivery of this Agreement (and, in the case of
Parent, the Option Agreement) and the consummation of the transactions
contemplated by this Agreement (and, in the case of Parent, those
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contemplated by the Option Agreement) have been duly authorized by all
necessary corporate action on the part of Parent and Sub and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement (and, in the case of Parent, the Option Agreement) or to consummate
the transactions contemplated hereby (or, in the case of Parent, those
contemplated by the Option Agreement). This Agreement (and, in the case of
Parent, the Option Agreement) has been duly executed and delivered by Parent
and Sub, as applicable, and, assuming the due authorization, execution and
delivery by each of the other parties thereto, constitute legal, valid and
binding obligations of Parent and Sub, as applicable, enforceable against
Parent and Sub, as applicable, in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally or by principles governing availability of equitable remedies).
The execution and delivery of this Agreement and the Option Agreement do
not, and the consummation of the Merger and the other transactions contemplated
by this Agreement and the Option Agreement and compliance with the provisions
of this Agreement and the Option Agreement will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of Parent or any of
its Subsidiaries under (i) the Restated Certificate of Incorporation or Bylaws
of Parent or the comparable organizational documents of any of its
Subsidiaries, (ii) any loan or credit agreement, bond, note, mortgage,
indenture, lease or other contract, agreement, obligation, commitment,
arrangement, understanding, instrument, permit or license applicable to Parent
or any of its Subsidiaries or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following paragraph, any (A) statute, law, ordinance, rule or regulation or (B)
judgment, order or decree, in each case applicable to Parent or Sub or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not have a Material Adverse Effect on
Parent.
No consent, approval, order or authorization of, action by or in respect of,
or registration, declaration or filings with, any Governmental Entity is
required by or with respect to Parent or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by Parent and Sub (and, in
the case of Parent, the Option Agreement) or the consummation by Parent and Sub
of the Merger or the other transactions contemplated by this Agreement (and, in
the case of Parent, those contemplated by the Option Agreement), except for (1)
the filing of a premerger notification and report form under the HSR Act and
any applicable filings and approvals under similar foreign antitrust laws and
regulations, (2) the filing with the SEC of (A) the Form S-4 and (B) such
reports under Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may
be required in connection with this Agreement or the Option Agreement and the
transactions contemplated by this Agreement or the Option Agreement, (3) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business and such filings with
Governmental Entities to satisfy the applicable requirements of state
securities or "blue sky" laws, (4) filings with the Nasdaq and (5) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made individually or in the
aggregate, would not have a material adverse effect on Parent.
(e) Parent SEC Documents. Parent has timely filed all reports, schedules,
forms, statements and other documents (including exhibits and other information
incorporated therein) with the SEC required to be filed by the Company since
January 1, 1998 (the "Parent SEC Documents"). As of their respective dates, the
Parent SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
Documents, and none of the Parent SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any Parent SEC Document has been revised or
superseded by a later-filed SEC Document filed by Parent and publicly available
prior to the date of this Agreement, none of the Parent SEC Documents contains
any untrue statement of a material fact or omits to state any material fact
required to be
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stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of Parent included in the Parent SEC Documents comply in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
financial position of Parent and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments not material in amount). Except (i) as set forth in
the Parent SEC Documents or (ii) for liabilities set forth in this Agreement or
the Option Agreement, neither Parent nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which, individually or in the aggregate, would have a Material
Adverse Effect on Parent.
(f) Information Supplied. None of the information supplied or to be supplied
by Parent or Sub specifically for inclusion or incorporation by reference in
the Form S-4 will, at the time the Form S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading, and the Proxy Statement will not at the date it is first mailed
to the Company's stockholders and at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Form S-4 will comply in all material respects with the
requirements of the Securities Act and the rules and regulations thereunder,
except that no representation or warranty is made by Parent or Sub with respect
to statements made or incorporated by reference therein based on information
supplied by the Company specifically for inclusion or incorporation by
reference in the Form S-4.
(g) Absence of Certain Changes or Events. Except for liabilities set forth
in this Agreement, since December 31, 1998, there has not been any Parent
Material Adverse Change.
(h) Litigation. There is no suit, action or proceeding pending or, to the
Knowledge of Parent, threatened against or affecting Parent or any of its
Subsidiaries or any of their respective properties that individually or in the
aggregate would have a Material Adverse Effect, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against, or, to the Knowledge of Parent, any action, demand,
requirement or investigation by any Governmental Entity involving, Parent or
any of its Subsidiaries that individually or in the aggregate would have a
Material Adverse Effect.
(i) Compliance with Laws. Each of Parent and its Subsidiaries is in
compliance with all Legal Provisions applicable to its business or operations,
except for instances of possible noncompliance that individually or in the
aggregate would not have a Material Adverse Effect on Parent. Each of Parent
and its Subsidiaries has in effect all Permits necessary for it to own, lease
or operate its properties and assets and to carry on its business and
operations as now conducted, except for the failure to have such Permits that
individually or in the aggregate would not have a Material Adverse Effect on
Parent. There has occurred no default under, or violation of, any such Permit,
except for defaults under, or violations of, Permits that individually or in
the aggregate would not have a Material Adverse Effect on Parent. The Merger,
in and of itself, would not cause the revocation or cancellation of any such
Permit that individually or in the aggregate is reasonably likely to have a
Material Adverse Effect on Parent.
(j) Accounting Matters. Neither Parent nor any of its Affiliates has taken
or agreed to take any action that would prevent Parent from accounting for the
business combination to be effected by the Merger as a pooling of interests.
Parent's management has consulted with and has made representations to its
advisors regarding Parent's management's conclusion that the Merger will
qualify as a pooling of interests business combination. Based upon Parent's
management's consultations with its advisors, nothing has come to Parent's
management's attention that would preclude the Merger from qualifying as a
pooling of interests business
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combination, subject to the occurrence of any events between (i) the initiation
and the consummation of the Merger and (ii) for a period of two years
subsequent to the consummation of the Merger that would preclude the Parent
from accounting for the Merger as a pooling of interests business combination.
(k) Tax Matters. Neither Parent nor any of its Affiliates have taken or
agreed to take any action or knows of any fact or circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code. Neither Parent nor any of its
Subsidiaries has distributed the stock of any corporation in a transaction
satisfying the requirements of Section 355 of the Code since April 16, 1997.
Neither the stock of Parent nor the stock of any of its Subsidiaries has been
distributed in a transaction satisfying the requirements of Section 355 of the
Code since April 16, 1997.
(l) Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
(m) Parent Stockholder Approval. This Agreement and the transactions
contemplated hereby, including the issuance of shares of Parent Common Stock
pursuant to ARTICLE II hereof, does not require the approval of the holders of
Parent Common Stock.
(n) Parent Common Stock. All outstanding shares of Parent Common Stock are,
and all shares of Parent Common Stock which may be issued pursuant to this
Agreement shall be when issued duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
(o) Brokers. No broker, investment banker, financial advisor or other
Person, other than Merrill Lynch & Co., the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's, financial advisors or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent.
(p) Year 2000 Compliance. Parent has adopted and implemented a commercially
reasonable plan to provide (x) that the change of the year from 1999 to the
year 2000 will not materially and adversely affect the information and business
systems of the Parent or its Subsidiaries and (y) that the impacts of such
change on the vendors and customers of Parent and its Subsidiaries will not
have a Material Adverse Effect on Parent. In Parent's reasonable best estimate,
no expenditures materially in excess of currently budgeted items previously
disclosed in Parent's Quarterly Report on Form 10-Q for the quarter ended June
30, 1999 will be required in order to cause the information and business
systems of Parent and its Subsidiaries to operate properly following the change
of the year 1999 to the year 2000. Between the date of this Agreement and the
Effective Time, Parent shall continue to use reasonable best efforts to
implement the plan previously disclosed in Parent's Quarterly Report on Form
10-Q for the quarter ended June 30, 1999.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1. Conduct of Business.
(a) Conduct of Business by the Company. During the period from the date of
this Agreement to the Effective Time, or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 7.1, and except as may be
agreed in writing by Parent, as may be expressly permitted pursuant to this
Agreement or as set forth in Section 4.1 of the Company Disclosure Schedule,
the Company shall, and shall cause its Subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past practice and
in compliance in all material respects with all applicable laws and regulations
and, to the extent consistent therewith, use all reasonable best efforts to
preserve intact its current business organizations, keep available the services
of its current officers and key employees and preserve its relationships with
customers, suppliers,
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licensors, licensees, distributors and others having business dealings with
them with the intention that its goodwill and ongoing business shall be
preserved. Without limiting the generality of the foregoing, during the period
from the date of this Agreement to the Effective Time, or the date, if any, on
which this Agreement is earlier terminated pursuant to Section 7.1, and except
as may be agreed in writing by Parent, as may be expressly permitted pursuant
to this Agreement or as set forth in Section 4.1 of the Company Disclosure
Schedule, the Company shall not, and shall not permit any of its Subsidiaries
to:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property), in respect of, any of
its capital stock, other than dividends or distributions by a direct or
indirect wholly owned Subsidiary of the Company to its parent, (y) split,
combine or reclassify any of its capital stock or amend the terms of any
outstanding securities (including Stock Options) or (z) purchase, redeem or
otherwise acquire any shares of its capital stock or any other securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other securities
or any rights, warrants or options to acquire, any such shares, or
securities (other than (x) the issuance of shares of Company Common Stock
upon the exercise of Stock Options outstanding on the date hereof and in
accordance with their terms on the date hereof, (y) the issuance of shares
of Company Common Stock pursuant to the Option Agreement or (z) the
issuance of Company Common Stock pursuant to Warrants outstanding as of the
date of this Agreement in accordance with their terms on the date hereof),
or any "phantom" stock, "phantom" stock rights, stock appreciation rights
or stock based performance units ;
(iii) amend its Certificate of Incorporation or Bylaws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing assets of, or by any other manner, any Person or division,
business or equity interest of any Person other than assets which in the
aggregate do not exceed $500,000 or purchases of raw materials or supplies
in the ordinary course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets (including
securitizations), except sales of inventory in the ordinary course of
business consistent with past practice and sales of goods and services not
in excess of $500,000 in the aggregate;
(vi) (x) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its Subsidiaries, guarantee any debt securities of another Person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another Person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with past
practice or (y) make any loans, advances or capital contributions to, or
investments in, any other Person, other than in the ordinary course of
business or to or in any direct or indirect wholly owned Subsidiary of the
Company;
(vii) make or agree to make any new capital expenditure (including
leases and in-licenses), or enter into any agreement or agreements
providing for payments which are in excess of $100,000 individually or
$500,000 in the aggregate;
(viii) (w) pay, discharge, settle or satisfy any claims, liabilities,
obligations or litigation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities disclosed,
reflected or reserved against in the most recent consolidated financial
statements (or the notes thereto) of the Company included in the Filed SEC
Documents or incurred since
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the date of such financial statements in the ordinary course of business
consistent with past practice, (x) cancel any indebtedness, (y) waive or
assign any claims or rights of substantial value or (z) waive any benefits
of, or agree to modify in any respect (A) any standstill or similar
agreements to which the Company or any of its Subsidiaries is a party or
(B) other than in the ordinary course of business, any confidentiality or
similar agreements to which the Company or any of its Subsidiaries is a
party;
(ix) except in the ordinary course of business consistent with past
practice, modify, amend or terminate any material contract or agreement to
which the Company or any of its Subsidiaries is a party, including, without
limitation, the agreements referred to in Section 4.1(a)(ix) of the Company
Disclosure Schedule;
(x) enter into any contracts, agreements, binding arrangements or
understandings relating to the distribution, sale, license, marketing or
manufacturing by third parties of the Company's or its Subsidiaries'
products or products licensed by the Company or its Subsidiaries, other
than pursuant to any such contracts, agreements, arrangements or
understandings currently in place (that have been disclosed in writing to
Parent prior to the date hereof) in accordance with their terms as of the
date hereof;
(xi) except as otherwise set forth in this Agreement or as required to
comply with applicable law, (A) adopt, enter into, terminate or amend in
any material respect (I) any collective bargaining agreement or Benefit
Plan or (II) any other agreement, plan or policy involving the Company or
its Subsidiaries, and one or more of its current or former directors,
officers, consultants, or employees, (B) except as disclosed in writing
prior to the date hereof, increase in any manner the compensation, bonus or
fringe or other benefits of, or pay any bonus to, any current or former
officer, director or employee, other than in the case of employees who are
neither current nor former officers or directors, increases made in
connection with normal periodic reviews and related compensation and
benefit increases which are consistent with past practice, (C) pay any
benefit or amount not required under any Benefit Plan or any other benefit
plan or arrangement of the Company or its Subsidiaries as in effect on the
date of this Agreement, (D) increase in any manner the severance or
termination pay of any current or former director, officer or employee,
(E) enter into or amend any employment, deferred compensation, consulting,
severance, termination or indemnification agreement, arrangement or
understanding with any current or former employee, officer or director, (F)
grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, performance units, restricted
stock, "phantom" stock or other stock related awards), or remove any
existing restrictions in any Benefit Plans or agreements or awards made
thereunder, (G) amend or modify any Stock Option, (H) take any action to
fund or in any other way secure the payment of compensation or benefits
under any employee plan, agreement, contract or arrangement or Benefit
Plan, (I) take any action to accelerate the vesting of payment of any
compensation or benefit under any Benefit Plan;
(xii) except as otherwise set forth in this Agreement, enter into any
material agreement, other than contracts for the sale of the Company's or
its Subsidiaries' products in the ordinary course of business, other than
pursuant to any contracts, agreements, arrangements or understandings
currently in place (that have been disclosed in writing to Parent prior to
the date of this Agreement);
(xiii) except as required by GAAP, make any change in accounting
methods, principles or practices;
(xiv) take any action that would, or that could reasonably be expected
to, result in (i) any of the representations and warranties of the Company
set forth in this Agreement or the Option Agreement that are qualified by
materiality becoming untrue, (ii) any of such representations and
warranties that are not so qualified becoming untrue in any material
respect or (iii) any of the conditions to the Merger set forth in ARTICLE
VI not being satisfied;
(xv) transfer or license to any Person or otherwise extend, amend or
modify any rights to the Intellectual Property Rights of the Company and
its Subsidiaries other than pursuant to any contracts,
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agreements, arrangements or understandings currently in place (that have
been disclosed in writing to Parent prior to the date of this Agreement);
or
(xvi) authorize, or commit or agree to take, any of the foregoing
actions.
(b) Conduct of Business by Parent. During the period from the date of this
Agreement to the Effective Time or the date, if any, on which this Agreement
is earlier terminated pursuant to Section 7.1, and except as may be agreed in
writing by the Company, or as may be contemplated by this Agreement or Section
4.1(b) of the Parent Disclosure Schedule, (i) Parent shall and shall cause its
Subsidiaries to carry on their respective businesses in all material respects
in the ordinary course and (ii) Parent shall not, and shall not permit any of
its Subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property), in respect of, any of
its capital stock, other than dividends or distributions by a direct or
indirect wholly owned Subsidiary of Parent to its parent, or (y) split,
combine or reclassify any of its capital stock;
(ii) amend its Certificate of Incorporation or other comparable charter
or organizational documents;
(iii) take any action that would reasonably be expected to prevent,
impair or materially delay the ability of the Company or Parent to
consummate the transactions contemplated by this Agreement;
(iv) take any action that would, or that could reasonably be expected
to, result in (x) any of the representations and warranties of Parent set
forth in this Agreement that are qualified by materiality becoming untrue,
(y) any of such representations and warranties that are not so qualified
becoming untrue in any material respect or (z) any of the conditions to the
Merger set forth in ARTICLE VI not being satisfied; or
(v) authorize, or commit or agree to take, any of the foregoing actions.
(c) Advice of Changes. The Company and Parent shall promptly advise the
other party orally and in writing of (i) any representation or warranty made
by it (and, in the case of Parent, made by Sub) contained in this Agreement or
the Option Agreement that is qualified as to materiality becoming untrue or
inaccurate in any respect or any such representation of warranty that is not
so qualified becoming untrue or inaccurate in any material respect, (ii) the
failure of it (and, in the case of Parent, by Sub) to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement or the Option Agreement;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties (or remedies with respect
thereto) or the conditions to the obligations of the parties under this
Agreement or the Option Agreement, (iii) any fact or development which would
result in the failure of any condition hereto not to be satisfied, (iv) any
notice or claim by any third party that its consent is or may be required in
connection with the transactions contemplated hereby and (v) any communication
from any governmental entity in connection with the transactions contemplated
hereby.
(d) Certain Tax Matters. From the date hereof until the Effective Time, (i)
the Company will promptly notify Parent of any action, suit, proceeding, claim
or audit (collectively, "Actions") pending against or with respect to the
Company or its Subsidiaries in respect of any Tax where there is a reasonable
possibility of a determination or decision with respect to the Company's Tax
liabilities or Tax attributes that is reasonably likely to have a Material
Adverse Effect on the Company and the Company will not settle or compromise
any such Action without Parent's prior written consent, which consent shall
not be unreasonably withheld, and (ii) the Company and its Subsidiaries will
not make any material Tax election, or change any material Tax accounting
method, principle or practice, without the prior written consent of Parent,
which consent will not be unreasonably withheld.
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Section 4.2. No Solicitation.
(a) The Company shall not, nor shall it authorize or permit any of its
Subsidiaries, any of their respective officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other advisor or
representative retained by the Company or its Subsidiaries, directly or
indirectly through another Person, (i) to solicit, initiate or encourage
(including by way of furnishing information), or take any action designed or
reasonably likely to facilitate, the making of a proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal or (ii)
participate in any discussions or negotiations regarding any Takeover Proposal;
provided, however, that if, at any time prior to the Stockholder Approval, the
Board of Directors of the Company determines in good faith, based on advice of
outside counsel, that failure to do so would be reasonably likely to result in
a breach of its fiduciary duties under applicable law, the Company may, in
response to a Superior Proposal that was unsolicited and that did not otherwise
result from a breach of this Section 4.2, and subject to providing prior
written notice of its decision to take such action to Parent (the "Company
Notice") and compliance with Section 4.2(c), (x) furnish information with
respect to the Company to the Person making the Superior Proposal pursuant to a
customary and reasonable confidentiality agreement no less favorable to the
Company than the Confidentiality Agreement (as defined below) and (y)
participate in discussions or negotiations regarding such Superior Proposal.
The Company and its Subsidiaries, their respective officers, directors and
employees and any investment banker, financial advisor, attorney, accountant
and other advisor or representative retained by the Company or its Subsidiaries
shall immediately cease any existing discussions regarding any Takeover
Proposal.
(b) Neither the Company, nor the Board of Directors of the Company nor any
committee thereof shall withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to Parent or Sub, the approval or recommendation by
such Board of Directors or any such committee of this Agreement or the Merger.
Neither the Company, nor the Board of Directors of the Company nor any
committee thereof shall (i) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Takeover Proposal,
(ii) approve or recommend, or propose publicly to approve or recommend, any
Takeover Proposal, (iii) (x) redeem the Rights, (y) waive or amend any
provisions of the Rights Agreement or (z) take any action with respect to, or
make any determination under, the Rights Agreement, or (iv) waive or fail to
enforce the terms of any confidentiality or standstill agreement, in any such
case to permit or facilitate a Takeover Proposal. Notwithstanding the
foregoing, at any time before the Stockholder Approval, in response to a
Superior Proposal which was unsolicited and which did not otherwise result from
a breach of this Section 4.2, the Board of Directors of the Company may
(subject to this sentence and the definition of the term "Superior Proposal")
terminate this Agreement and concurrently with such termination cause the
Company to enter into a definitive Acquisition Agreement with respect to such
Superior Proposal (the determination of whether a proposal is a Superior
Proposal to be made after consideration of any modification proposed by
Parent), but only (x) at a time that is after the fifth day following Parent's
receipt of written notice advising Parent that the Board of Directors of the
Company is prepared to accept such Superior Proposal, specifying the material
terms and conditions of such Superior Proposal (including a copy of any
proposed agreement) and identifying the person making such Superior Proposal
and (y) after Parent shall have received the Termination Fee and the Expenses.
(c) In addition to the obligations of the Company set forth in Section
4.2(a) and Section 4.2(b) hereof, the Company promptly shall advise Parent
orally and in writing of any request for information or of any Takeover
Proposal, or any inquiry with respect to or which could lead to any Takeover
Proposal, the material terms and conditions of such request, Takeover Proposal
or inquiry, and the identity of the Person making any such request, Takeover
Proposal or inquiry. The Company will keep Parent informed on a prompt basis of
the status and details (including amendments or proposed amendments) of any
such request, Takeover Proposal or inquiry. The Company will promptly provide
Parent with a copy of any written materials received from any third party with
respect to or which could lead to any Takeover Proposal and of any materials
provided to such third party. The Company shall immediately provide Parent with
any such information or materials if so requested by Parent.
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(d) Nothing contained in this Section 4.2 shall prohibit the Company from
(x) taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or (y) making any disclosure to the
Company's stockholders if, in the good faith judgment of the majority of the
members of the Board of Directors of the Company, based on advice of outside
counsel, failure to so disclose would be inconsistent with its duties under
applicable law; provided, subject to Section 4.2(b) that neither the Company
nor its Board of Directors nor any committee thereof shall withdraw or modify,
or propose publicly to withdraw or modify, its position with respect to this
Agreement or the Merger or approve or recommend, or propose publicly to approve
or recommend, a Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1. Preparation of the Form S-4 and the Proxy Statement;
Stockholders Meeting.
(a) As soon as practicable following the date of this Agreement, the Company
and Parent shall prepare and the Company shall file with the SEC the Proxy
Statement and Parent shall prepare and file with the SEC the Form S-4, in which
the Proxy Statement will be included as a prospectus. Each of the Company and
Parent shall use its reasonable best efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable after such
filing. The Company will use its reasonable best efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after the Form S-4 is declared effective under the Securities Act. Parent shall
also take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified or to file a general consent to service of
process) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in the Merger and the
Company shall furnish all information concerning the Company and the holders of
Company Common Stock as may be reasonably requested in connection with any such
action and the preparation, filing and distribution of the Proxy Statement. No
filing of, or amendment or supplement to, the Form S-4 will be made by Parent,
or to the Proxy Statement will be made by the Company, without providing the
other party the opportunity to review and comment thereon. Parent will advise
the Company, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective, the issuance of any stop order, the suspension
of the qualification of Parent Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Form S-4 or comments thereon and responses thereto or requests
by the SEC for additional information. The Company will advise Parent, promptly
after it receives notice thereof, of any request by the SEC for amendment of
the Proxy Statement or comments thereon and responses thereto or requests by
the SEC for additional information. If at any time prior to the Effective Time
any information relating to the Company or Parent, or any of their respective
Affiliates, officers or directors, should be discovered by the Company or
Parent which should be set forth in an amendment or supplement to any of the
Form S-4 or the Proxy Statement, so that any of such documents would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party which discovers such
information shall promptly notify the other parties hereto and an appropriate
amendment or supplement describing such information shall be promptly filed
with the SEC and, to the extent required by law, disseminated to the
stockholders of the Company.
(b) The Company will, as soon as reasonably practicable, establish a record
date for, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Stockholder Approval. Unless the Company has terminated this Agreement pursuant
to Section 4.2(b) hereof, the Company will, through its Board of Directors,
recommend to its stockholders adoption of this Agreement. Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant
to this Section 5.1(b) shall not be affected by the commencement, public
proposal, public disclosure or communication to the Company of any Takeover
Proposal.
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Section 5.2. Letters of the Company's Accountants.
(a) The Company shall use its reasonable best efforts to cause to be
delivered to Parent two letters from Ernst & Young LLP, the Company's
independent public accountants, one dated a date within two Business Days
before the date on which the Form S-4 shall become effective and one dated a
date within two Business Days before the Closing Date, each addressed to Parent
and the Company, in form and substance reasonably satisfactory to Parent and
customary in scope and substance for comfort letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4.
(b) The Company shall use its reasonable best efforts to cause to be
delivered to Parent a letter from Ernst & Young LLP, addressed to Parent and
the Company, dated as of the Closing Date, stating that (i) Ernst & Young LLP
concurs with the Company management's conclusion that, subject to customary
qualifications, the Company meets the requirements to be a party to a pooling
of interests transaction for financial reporting purposes under Opinion 16 of
the Accounting Principles Board and applicable SEC rules and regulations and
(ii) the basis for such a concurrence is Ernst & Young LLP's belief that the
criteria for such accounting treatment have been met.
Section 5.3. Letters of Parent's Accountants.
(a) Parent shall use its reasonable best efforts to cause to be delivered to
the Company two letters from PricewaterhouseCoopers LLP, Parent's independent
public accountants, one dated a date within two Business Days before the date
on which the Form S-4 shall become effective and one dated a date within two
Business Days before the Closing Date, each addressed to the Company and
Parent, in form and substance reasonably satisfactory to the Company and
customary in scope and substance for comfort letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4.
(b) Parent shall use its reasonable best efforts to cause to be delivered to
the Company a letter from PricewaterhouseCoopers LLP, addressed to the Company
and Parent, dated as of the Closing Date, stating that (i)
PricewaterhouseCoopers LLP concurs with Parent's management's conclusion that,
subject to customary qualifications, the Merger qualifies for pooling of
interests treatment for financial reporting purposes under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations and (ii)
the basis for such a concurrence is PricewaterhouseCoopers LLP's belief that
the criteria for such accounting treatment have been met.
Section 5.4. Access to Information; Confidentiality.
(a) Subject to the Confidentiality Agreement dated as of September 7, 1999,
between Parent and the Company (as it may be amended from time to time, the
"Confidentiality Agreement"), the Company shall afford to Parent, and to
Parent's officers, employees, accountants, counsel, financial advisors and
other representatives, reasonable access during normal business hours during
the period prior to the Effective Time or the termination of this Agreement to
all its properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall furnish promptly to Parent (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of United States Federal or
state securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except as required
by law, Parent will hold, and will cause its officers, employees, accountants,
counsel, financial advisors and other representatives and Affiliates to hold,
any nonpublic information received from the Company, directly or indirectly, in
accordance with the Confidentiality Agreement. Parent will make all reasonable
best efforts to minimize disruption to the business of the Company and its
Subsidiaries which may result from the requests for data and information
hereunder. All requests for access and information shall be coordinated through
senior executives of the parties to be designated.
(b) Subject to the Confidentiality Agreement, Parent agrees to provide to
the Company, from time to time prior to the date on which Stockholder Approval
is obtained, such information as the Company shall reasonably
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request to evaluate Parent and its business, financial condition, operations
and prospects and shall furnish promptly to the Company a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of United States Federal or state
securities laws. Except as provided by law, the Company will hold, and will
cause its officers and employees to hold, any nonpublic information received
from Parent, directly or indirectly, in accordance with the Confidentiality
Agreement. The Company will make all reasonable best efforts to minimize
disruption to the business of the Parent and its Subsidiaries which may result
from the requests for data and information hereunder. All requests for access
and information shall be coordinated through senior executives of the parties
to be designated.
Section 5.5. Reasonable Best Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement and the Option Agreement, including
using reasonable best efforts to accomplish the following: (i) the taking of
all reasonable acts necessary to cause the conditions to Closing to be
satisfied, (ii) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals
or waivers from third parties (provided that if obtaining any such consent,
approval or waiver would require any action other than the payment of a nominal
amount, such action shall be subject to the consent of Parent, not to be
unreasonably withheld), (iv) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the Option Agreement or the consummation of the transactions contemplated
hereby or thereby, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed and
(v) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement and the Option Agreement. In connection with and
without limiting the foregoing, the Company and its Board of Directors shall if
any state takeover statute or similar statute becomes applicable to this
Agreement, the Option Agreement, the Merger or any other transactions
contemplated by this Agreement or the Option Agreement, take all action
necessary to ensure that the Merger and the other transactions contemplated by
this Agreement and the Option Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and the Option
Agreement and otherwise to minimize the effect of such statute or regulation on
this Agreement, the Option Agreement, the Merger and the other transactions
contemplated by this Agreement and the Option Agreement. Nothing in this
Agreement shall be deemed to require Parent to agree to, or proffer to, divest
or hold separate any assets or any portion of any business of Parent, the
Company or any of their respective Subsidiaries.
Section 5.6. Stock Options.
(a) As of the Effective Time, each outstanding option to purchase shares of
Company Common Stock (a "Stock Option") granted under any plan or arrangement
providing for the grant of options to purchase shares of Company Common Stock
to current or former officers, directors, employees or consultants of the
Company or its Subsidiaries (the "Company Stock Plans"), whether vested or
unvested, shall be converted into an option to acquire, on the same terms and
conditions as were applicable under the Stock Option, the number of shares of
Parent Common Stock (rounded to the nearest whole share) determined by
multiplying the number of shares of Company Common Stock subject to such Stock
Option by the Exchange Ratio, at a price per share of Parent Common Stock equal
to (A) the aggregate exercise price for the shares of Company Common Stock
otherwise purchasable pursuant to such Stock Option divided by (B) the
aggregate number of shares of Parent Common Stock deemed purchasable pursuant
to such Stock Option (each, as so adjusted, an "Adjusted Option"); provided
that such exercise price shall be rounded up to the nearest whole cent. The
transactions contemplated by this Agreement constitute a change in control' for
purposes of the Company Stock Plans.
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(b) The adjustments provided herein with respect to any Stock Options that
are "incentive stock options" as defined in Section 422 of the Code shall be
and are intended to be effected in a manner which is consistent with Section
424(a) of the Code.
(c) At the Effective Time, by virtue of the Merger and without the need of
any further corporate action, Parent shall assume the Company Stock Plans, with
the result that all obligations of the Company under the Company Stock Plans,
including with respect to Stock Options outstanding at the Effective Time,
shall be obligations of Parent following the Effective Time.
(d) At or prior to the Effective Time, Parent shall take all corporate
action necessary to reserve for issue a sufficient number of shares of Parent
Common Stock for delivery upon exercise of Stock Options. As soon as
practicable after the Effective Time, Parent shall file a Registration
Statement on Form S-3 or Form S-8 as the case may be (or any successor or other
appropriate forms), with respect to the shares of Parent Common Stock subject
to such Stock Options, and shall maintain the effectiveness of such
registration statement and the current status of the prospectus or prospectuses
contained therein, for so long as such Stock Options remain outstanding.
(e) Parent shall take, and shall cause the Surviving Corporation and its
Subsidiaries and all other affiliates of Parent to take, the following actions:
(i) waive any limitations regarding pre-existing conditions and eligibility
waiting periods under any welfare or other employee benefit plan maintained by
any of them for the benefit of employees of the Company or any of its
Subsidiaries immediately prior to the Effective Time (the "Employees") to the
extent such pre-existing condition or waiting period did not apply to the
Employee under a comparable plan of the Company immediately prior to the
Effective Time, (ii) provide each Employee with credit for any co-payments and
deductibles paid prior to the Effective Time for the calendar year in which the
Effective Time occurs, in satisfying any applicable deductible or out-of-pocket
requirements under such welfare plans or other employee benefit plans, and
(iii) for all purposes (other than for purposes of benefit accruals under any
defined benefit pension plan) under all compensation and benefit plans and
policies applicable to the employees, treat all service by the Employees with
the Company or any of its Subsidiaries or Affiliates before the Effective Time
as service with Parent and its Subsidiaries and Affiliates.
Section 5.7. Indemnification, Exculpation and Insurance.
(a) Parent agrees that all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
now existing in favor of the current or former directors or employees or
officers of the Company as provided in the Company Certificate of
Incorporation, the Bylaws or any indemnification agreement between such
directors or officers and the Company (in each case, as in effect on the date
hereof) shall be assumed by the Surviving Corporation in the Merger, without
further action, as of the Effective Time and shall survive the Merger and shall
continue in full force and effect in accordance with their terms.
(b) For six years after the Effective Time, Parent shall cause the Company
to maintain in effect the Company's current officers', directors' and
employees' liability insurance in respect of acts or omissions occurring at or
prior to the Effective Time, covering each Person currently covered by the
Company's officers' and directors' liability insurance policy (a copy of which
has been heretofore delivered to Parent), on terms with respect to such
coverage and amount no less favorable than those of such policy in effect on
the date hereof; provided that Parent may substitute therefor policies of
Parent containing terms with respect to coverage and amount no less favorable
to such directors and officers; provided, however, that in satisfying its
obligation under this Section 5.7(b) Parent shall not be obligated to pay
premiums in excess of 200% of the amount per annum paid by the Company in its
last full fiscal year; and provided further that if Parent is not able to
obtain such coverage for such 200% amount, Parent shall nevertheless be
obligated to provide such coverage as may be obtained for such 200% amount.
(c) The provisions of this Section 5.7 are (i) intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) in addition to, and not in
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substitution for, any other rights to indemnification or contribution that any
such Person may have by contract or otherwise.
Section 5.8. Fees and Expenses.
(a) Except as provided below, all fees and expenses incurred in connection
with this Agreement, the Option Agreement, the Merger and the other
transactions contemplated by this Agreement and the Option Agreement shall be
paid by the party incurring such fees or expenses, whether or not the Merger is
consummated, except that each of Parent and the Company shall bear and pay one-
half of (i) the costs and expenses incurred in connection with filing, printing
and mailing the Proxy Statement and the Form S-4 and (ii) the filing fees for
the premerger notification and report forms under the HSR Act and any similar
foreign antitrust laws.
(b) In the event that (1) a bona fide Takeover Proposal shall have been
publicly disclosed or has been made directly to the Company's stockholders or
any Person has announced an intention (whether or not conditional) to make a
bona fide Takeover Proposal and thereafter this Agreement is terminated by
either (x) Parent or the Company pursuant to Section 7.1(b)(iii) or (y) by
Parent pursuant to Section 7.1(d) (provided that the breach or failure to
perform giving rise to Parent's right to terminate under Section 7.1(d) shall
be willful and material) and, in either case, within 12 months of termination
the Company enters into an Acquisition Agreement with respect to a Takeover
Proposal or a Takeover Proposal is consummated or (2) this Agreement is
terminated (x) by the Company pursuant to Section 7.1(f) or (y) by Parent
pursuant to Section 7.1(e), then the Company shall pay Parent a fee equal to
$15 million (the "Termination Fee"), payable by wire transfer of immediately
available funds, such payment to be made (A) in the case of the termination
contemplated by clause (1), on the earlier of the date the Company enters into
an Acquisition Agreement or a Takeover Proposal is consummated, (B) in the case
of a termination contemplated by clause (2)(x), no later than immediately prior
to such termination and (c) in the case of termination contemplated by clause
2(y), no later than the date of such termination. Simultaneously with the
payment of the Termination Fee, the Company shall reimburse Parent for all of
its documented out-of-pocket expenses incurred in connection with this
Agreement and the transactions contemplated hereby (including documented fees
and expenses of accountants, attorneys and financial advisors) up to an
aggregate of $2,000,000 (the "Expenses"). The Company acknowledges that the
agreements contained in this Section 5.8(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement. If Parent shall
successfully bring an action to enforce its rights under this Section 5.8(b),
the Company shall reimburse Parent for its reasonable fees and expenses in
connection therewith and shall pay Parent interest on the Termination Fee and
Expenses from the date the Termination Fee becomes payable to the date of
payment at the publicly announced prime rate of Citibank, N.A. in effect on the
date the Termination Fee became payable.
Section 5.9. Public Announcements. Parent and the Company will consult with
each other before issuing, and give each other the opportunity to review and
comment upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Merger and the
Option Agreement, and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement and the Option
Agreement shall be in the form heretofore agreed to by the parties.
Section 5.10. Affiliates.
(a) As soon as practicable after the date hereof, and in no event more than
45 days prior to the date of the Stockholders Meeting, the Company shall
deliver to Parent a letter identifying all Persons who are at the time this
Agreement is submitted for adoption by the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act
or for purposes of qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and its related
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interpretations and applicable SEC rules and regulations. The Company shall use
its reasonable best efforts to cause each such Person to deliver to Parent at
least 30 days prior to the Closing Date a written agreement substantially in
the form attached as Exhibit A hereto.
(b) As soon as practicable after the date hereof, and in no event more than
45 days prior to the date of the Company Stockholder Meeting, Parent shall
deliver to the Company a letter identifying all Persons who are at the time
this Agreement is submitted for adoption by the stockholders of the Company,
"affiliates" of the Parent for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting Principles
Board and its related interpretations and applicable SEC rules and regulations.
Parent shall use its reasonable best efforts to cause each such Person to
deliver to Parent at least 30 days prior to the Closing Date a written
agreement substantially in the form attached as Exhibit B hereto.
Section 5.11. Stock Exchange Listing. To the extent Parent does not issue
treasury shares in the Merger which are already listed, Parent shall use its
reasonable best efforts to cause the shares of Parent Common Stock to be issued
in the Merger to be approved for listing on the Nasdaq, subject to official
notice of issuance, prior to the Closing Date. The Company shall use its
reasonable best efforts to cause the shares of Company Common Stock to be
issued pursuant to the Option Agreement to be approved for quotation on Nasdaq,
as promptly as practicable after the date hereof, and in any event prior to the
earlier of (x) the Closing Date or (y) termination of this Agreement under
circumstances where the Option issued pursuant to the Option Agreement is or
may become exercisable by Parent.
Section 5.12. Pooling of Interests. Each of the Company and Parent will use
reasonable best efforts to cause the Merger to be accounted for as a pooling of
interests under Opinion 16 of the Accounting Principles Board and its related
interpretations and applicable SEC rules and regulations, and such accounting
treatment to be accepted by each of the Company's and Parent's independent
public accountants, and by the SEC, respectively, and each of the Company and
Parent agrees that it will voluntarily take no action that would cause such
accounting treatment not to be obtained.
Section 5.13. Tax Treatment. Parent and the Company intend that the Merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Code. Parent and the Company shall each use all reasonable efforts to cause the
Merger to so qualify.
Section 5.14. Stockholder Litigation. The Company shall give Parent the
opportunity to participate, on an advisory basis, in the defense of any
stockholder litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement or the Option Agreement.
Section 5.15. Rights Agreement. The Board of Directors of the Company shall
take all further action (in addition to that referred to in Section 3.1(x)
hereof) requested in writing by Parent in order to render the rights (the
"Rights") issued pursuant to the Rights Agreement inapplicable to the Merger
and the other transactions contemplated by this Agreement and the Option
Agreement.
Section 5.16. Conveyance Taxes. The Company and the Parent shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar taxes which
become payable in connection with the transaction contemplated by this
Agreement that are required or permitted to be filed on or before the Effective
Time.
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ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Stockholder Approval shall have been obtained.
(b) Nasdaq Listing. The shares of Parent Company Stock issuable to the
Company's stockholders as contemplated by this Agreement shall have been
approved for listing on Nasdaq, subject to official notice of issuance.
(c) HSR Act. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other judgment or order issued by any
court of competent jurisdiction or other statute, law, rule, legal restraint or
prohibition (collectively, "Restraints") shall be in effect preventing the
consummation of the Merger; provided, however, that each of the parties that
have used its reasonable best efforts to prevent the entry of any such
Restraints and to appeal as promptly as possible any such Restraints that may
be entered.
(e) Form S-4. The Form S-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceedings seeking a
stop order.
(f) Pooling Letters. Parent and the Company shall have received letters from
Ernst & Young LLP and PricewaterhouseCoopers LLP, dated as of the Closing Date,
in each case, addressed to Parent and the Company, stating in substance the
matters to be stated by Ernst & Young LLP and PricewaterhouseCoopers LLP,
pursuant to Section 5.2(b) and Section 5.3(b), respectively.
(g) No Governmental Litigation. There shall not be pending any suit, action
or proceeding by any Governmental Entity, (i) challenging the acquisition by
Parent or Sub of any shares of Company Common Stock, seeking to restrain or
prohibit the consummation of the Merger, or seeking to place limitations on the
ownership of shares of Company Common Stock (or shares of common stock of the
Surviving Corporation) by Parent or Sub or seeking to obtain from the Company,
Parent or Sub any damages that are material in relation to the Company, (ii)
seeking to prohibit or materially limit the ownership or operation by the
Company or its Subsidiaries, Parent or any of Parent's Subsidiaries of any
material portion of any business or of any assets of the Company, Parent or any
of Parent's Subsidiaries, or to compel the Company, Parent or any of Parent's
Subsidiaries to divest or hold separate any material portion of any business or
of any assets of the Company, Parent or any of their respective Subsidiaries,
as a result of the Merger or (iii) seeking to prohibit Parent or any of its
Subsidiaries from effectively controlling in any material respect the business
or operations of the Company or its Subsidiaries.
Section 6.2. Conditions to Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger are further subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. Each representation and warranty of the
Company contained in this Agreement that is qualified as to materiality shall
be true and correct, and each representation and warranty of the Company
contained in this Agreement that is not so qualified shall be true and correct
in all material respects, in each case as of the date of this Agreement and as
of the Closing Date as though made on the Closing Date, except to the extent
such representations and warranties expressly relate to an earlier date, in
which case as of such earlier date. Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer and the chief
financial officer of the Company to such effect.
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(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such effect.
(c) Letters from Company Affiliates. Parent shall have received from each
Person named in the letter referred to in Section 5.10(a) an executed copy of
an agreement substantially in the form of Exhibit A hereto.
(d) No Material Adverse Effect. No fact or development shall have occurred
and be continuing which has had or would be reasonably likely to result in any
change, effect, event, occurrence or state of facts (or any development that
has had or is reasonably likely to have any change or effect) that is
materially adverse to the business, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole.
(e) Consents. All consents, the absence of which, in the aggregate, would be
reasonably likely to have a Material Adverse Effect, shall have been obtained.
(f) Environmental Laws. Any consents and authorizations required under any
Environmental Law for the operation of the Surviving Corporation after the
Closing shall have been obtained.
Section 6.3. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the satisfaction or waiver
on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. Each representation and warranty of
Parent and Sub contained in this Agreement that is qualified as to materiality
shall be true and correct, and each representation and warranty of Parent and
Sub contained in this Agreement that is not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties expressly relate to an earlier date,
in which case as of such earlier date. The Company shall have received a
certificate signed on behalf of Parent by an executive officer of Parent to
such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed on behalf of Parent by an executive
officer of Parent to such effect.
(c) No Material Adverse Effect. No fact or development shall have occurred
and be continuing which has had or would be reasonably likely to result in any
change, effect, event, occurrence or state of facts (or any development that
has had or is reasonably likely to have any change or effect) that is
materially adverse to the business, financial condition or results of
operations of Parent and its Subsidiaries, taken as a whole.
(d) Tax Opinion. The Company shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, special tax counsel to the Company, dated as
of the Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. The issuance
of such opinion shall be conditioned upon the receipt by such special tax
counsel of customary representation letters from each of Parent, Sub, and the
Company, in each case, in form and substance reasonably satisfactory to such
special tax counsel. Each such representation letter shall be dated on or
before the date of such opinion and shall not have been withdrawn or modified
in any material respect. The Company may not waive or amend this condition
without the express written consent of Parent.
Section 6.4. Frustration of Closing Conditions. None of the Company, Parent
or Sub may rely on the failure of any condition set forth in Section 6.1,
Section 6.2 or Section 6.3 as the case may be, to be satisfied if such failure
was caused by such party's failure to use reasonable best efforts to consummate
the Merger and the other transactions contemplated by this Agreement and the
Option Agreement, as required by and subject to Section 5.5.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after the Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by March 31, 2000 for
any reason; provided, however, that the right to terminate this Agreement
under this Section 7.1(b)(i) shall not be available to any party whose
action or failure to act has been a principal cause of or resulted in the
failure of the Merger to be consummated on or before such date;
(ii) if any Restraint having any of the effects set forth in Section
6.1(d) shall be in effect and shall have become final and nonappealable;
provided that the party seeking to terminate this Agreement pursuant to
this Section 7.1(b)(ii) shall have used reasonable best efforts to prevent
the entry of and to remove such Restraint; or
(iii) if the Stockholder Approval shall not have been obtained at the
Stockholders Meeting duly convened therefor or at any adjournment or
postponement thereof;
(c) by the Company, if Parent shall have breached or failed to perform any
of its representations, warranties, covenants or agreements set forth in this
Agreement, which breach or failure to perform (A) would give rise to the
failure of a condition set forth in Section 6.3(a) or Section 6.3(b), and (B)
is not cured by Parent within 15 calendar days following receipt of written
notice of such breach or failure to perform from the Company;
(d) by Parent, if the Company shall have breached or failed to perform any
of its representations, warranties, covenants or agreements set forth in this
Agreement, which breach or failure to perform (A) would give rise to the
failure of a condition set forth in Section 6.3(a) or Section 6.3(b), and (B)
is not cured by the Company within 15 calendar days following receipt of
written notice of such breach or failure to perform from Parent;
(e) by Parent, if the directors of the Company shall have (i) withdrawn,
modified or changed the approval or recommendation of the Board of Directors of
the Company or any committee thereof of this Agreement or the Merger in a
manner adverse to Parent or Sub, (ii) approved or recommended to the
stockholders of the Company a Takeover Proposal, (iii) approved or recommended
that the stockholders of the Company tender their shares of Company Common
Stock into any tender offer or exchange offer that is a Takeover Proposal or is
related thereto or (iv) indicated any intention to do any of the foregoing; or
(f) by the Company in accordance with Section 4.2(b).
(g) by the Company as set forth in Section 2.1(e) unless Parent shall have
delivered a Top-Up Notice as contemplated by such Section.
Section 7.2. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of Section 3.1(t)[brokers], the penultimate sentence of Section
5.4(a) [Parent to keep confidential nonpublic information received from the
Company], the last sentence of Section 5.4(b)[Company to keep confidential
nonpublic information received from Parent] and Section 5.8[fees and expenses],
this Section 7.2 and
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ARTICLE VIII, which provisions shall survive such termination, and except to
the extent that such termination results from the willful or material breach by
a party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
Section 7.3. Amendment. This Agreement may be amended by the parties hereto
at any time before or after the Stockholder Approval; provided, however, that
after any such approval, there shall be made no amendment that by law requires
further approval by the stockholders of the Company without such approval. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 7.4. Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document
delivered pursuant hereto or (c) subject to the proviso of Section 7.3, waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 8.2. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given, and
shall be effective upon receipt, if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
if to Parent or Sub, to:
MedImmune, Inc.
35 West Watkins Mill Road
Gaithersburg, Maryland 20878
Telephone: (301) 417-0770
Telecopier: (301) 527-4200
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telephone: (212) 259-8000
Telecopier: (212) 259-6333
Attention: Frederick W. Kanner
if to the Company, to:
U.S. Bioscience, Inc.
One Tower Bridge
100 Front Street, Suite 400
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West Conshohocken, Pennsylvania 19428
Telephone: (800) 898-4404
Telecopier: (610) 832-4500
with a copy to:
Skadden, Arps, Slate Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Telephone: (212) 735-3000
Telecopier: (212) 735-2000
Attention: Margaret L. Wolff
Section 8.3. Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person;
(b) "Business Day" means any day other than Saturday, Sunday or any other
day on which banks are legally permitted to be closed in New York;
(c) "Knowledge" of any Person that is not an individual means, with respect
to any matter in question, the actual knowledge of any of such person's
executive officers or other employees having primary responsibility for such
matter;
(d) "Material Adverse Change" or "Material Adverse Effect", as used with
respect to the Company or Parent, as the case may be, means any change, effect,
event, occurrence or state of facts (or any development that has had or is
reasonably likely to have any change or effect) that is materially adverse to
the business, financial condition or results of operations of such entity and
its Subsidiaries, taken as a whole, or which would prevent or materially delay
the consummation of the transactions contemplated hereby;
(e) "Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity;
(f) a "Subsidiary" of any Person means, with respect to such Person, any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the Board
of Directors or other governing body of such corporation or other legal entity;
(g) "Superior Proposal" means any bona fide proposal made by a third party
(i) to acquire, directly or indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration consisting
of cash and/or securities, more than 50% of the combined voting power of the
shares of Company Common Stock then outstanding or all or substantially all the
assets of the Company and its Subsidiaries taken as a whole, (ii) that is
otherwise on terms which the Board of Directors of the Company determines in
its good faith judgment (based on advice from a financial advisor of nationally
recognized reputation) to be more favorable to the Company and its stockholders
than the Merger after taking into account the terms of this Agreement (as it
may be proposed to be amended by Parent), (iii) which is reasonably capable of
being consummated on a prompt basis, (iv) for which financing, to the extent
required, is then committed or which, in the good faith judgment of the Board
of Directors of the Company, is reasonably capable of being obtained by such
third party and (v) for which no regulatory approvals, including antitrust
approvals, are required that are not reasonably be expected to be obtained on
prompt basis; and
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(h) "Takeover Proposal" means any bona fide inquiry, proposal or offer from
any Person relating to any direct or indirect acquisition or purchase of a
business or assets that constitute 15% or more of the net revenues, net income
or the assets of the Company or its Subsidiaries, taken as a whole, or 15% or
more of any class of equity securities of the Company or its Subsidiaries or
any tender offer or exchange offer that if consummated would result in any
Person beneficially owning 15% or more of any class of equity securities of the
Company or any of its Subsidiaries or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
Section 8.4. Interpretation. When a reference is made in this Agreement to
an Article, a Section, Exhibit or Schedule, such reference shall be to an
Article of, a Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein
or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a Person are also to its permitted successors and
assigns.
Section 8.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties.
Section 8.6. Entire Agreement; Third-Party Beneficiaries. This Agreement,
the Option Agreement and the Confidentiality Agreement (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement, the Option Agreement and the Confidentiality Agreement and (b)
except for the provisions of Section 5.7, are not intended to confer upon any
Person other than the parties any rights or remedies.
Section 8.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 8.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned Subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
Section 8.9. Enforcement. The parties agree that irreparable damage would
occur and that the parties would not have any adequate remedy at law in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or
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in any state court in the State of Delaware, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of Delaware or of any
state court located in the State of Delaware in the event any dispute arises
out of this Agreement or the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or the transactions
contemplated by this Agreement in any court other than a Federal court located
in the State of Delaware or a state court located in the State of Delaware.
Section 8.10. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
Medimmune, Inc.
/s/ Wayne T. Hockmeyer
By: _________________________________
Name: Wayne T. Hockmeyer, Ph.D.
Title: Chairman and Chief Executive
Officer
Marlin Merger Sub Inc.
/s/ Wayne T. Hockmeyer
By: _________________________________
Name: Wayne T. Hockmeyer, Ph.D.
Title: Chairman and Chief Executive
Officer
U.S. Bioscience, Inc.
/s/ C. Boyd Clarke
By: _________________________________
Name: C. Boyd Clarke
Title: President and Chief Executive
Officer
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Annex 2
STOCK OPTION AGREEMENT (this "Agreement"), dated as of September 21, 1999,
between MedImmune, Inc., a Delaware corporation ("Grantee"), and U.S.
Bioscience, Inc., a Delaware corporation ("Issuer").
RECITALS
A. Grantee, Marlin Merger Sub Inc., a wholly owned subsidiary of Grantee
("Sub"), and Issuer have entered into an Agreement and Plan of Merger, dated as
of the date hereof (the "Merger Agreement"; defined terms used but not defined
herein have the meanings set forth in the Merger Agreement), providing for,
among other things, the merger of Sub with and into Issuer; and
B. As a condition and inducement to Grantee's willingness to enter into the
Merger Agreement, Grantee has requested that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase that number of shares which equals 19.9% of the issued and outstanding
Issuer Common Shares (the "Option Shares") immediately prior to the exercise of
this Option at a price per share (the "Option Price") equal to $16.50, payable
in cash. The number of Option Shares and the Option Price are subject to
adjustment as set forth herein.
2. Exercise and Termination of Option. (a) If Grantee is not in material
breach of the Merger Agreement, subject to the terms and conditions hereof,
Grantee may exercise the Option in whole at any time after the occurrence of a
Trigger Event and prior to the close of business on the Termination Date (the
"Exercisability Period"). "Trigger Event" shall mean an event which obligates
Issuer to pay the Termination Fee pursuant to Section 5.8(b) of the Merger
Agreement. "Termination Date" shall mean the earliest of (i) the Effective Time
of the Merger, (ii) 180 days after the date full payment contemplated by
Section 5.8(b) of the Merger Agreement is made by Issuer to Grantee thereunder,
(iii) the termination of the Merger Agreement so long as no Trigger Event has
occurred or could still occur pursuant to Section 5.8(b) the Merger Agreement
or (iv) 13 months after the termination of the Merger Agreement under
circumstances which could result in Grantee's becoming entitled to receive the
Termination Fee from Issuer pursuant to Section 5.8(b), unless during such 13
month period a Trigger Event shall occur. Notwithstanding the occurrence of the
Termination Date, Grantee shall be entitled to purchase the Option Shares
pursuant to the exercise of the Stock Option, on the terms and subject to the
conditions hereof, to the extent Grantee exercised the Stock Option prior to
the occurrence of the Termination Date.
(b) If Grantee is entitled to and wishes to exercise the Option, it shall
deliver to Issuer a written notice (the date of receipt of which is referred to
as the "Notice Date") specifying (i) it intends to such exercise and (ii) a
place and date not earlier than three business days nor later than 15 business
days from the Notice Date for the closing of such purchase; provided that if
the closing of the purchase and sale pursuant to the Option (the "Closing")
cannot be consummated by reason of any applicable judgment, decree, order, law
or regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and, provided further that,
without limiting the foregoing, if prior notification to or approval of any
regulatory authority is required in connection with such purchase, Grantee and,
if applicable, Issuer shall promptly file the required notice or application
for approval and shall expeditiously process the same (and Issuer shall
cooperate with Grantee in the filing of any such notice or application and the
obtaining of any such approval), and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which, as the
case may be, (i) any required notification period has expired or been
terminated or (ii) such approval has been obtained, and in either event,
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any requisite waiting period has passed. Issuer shall take any action
reasonably requested by Grantee to cause the Closing to occur as promptly as
practicable. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto. Any extensions of the periods specified in this Section
2(b) shall extend the Exercisability Period on a day for day basis.
(c) Notwithstanding anything herein to the contrary, it shall be a condition
to the exercise of this Option and the purchase of the Option Shares that (i)
no preliminary or permanent injunction or other order, decree or ruling against
the sale or delivery of the Option Shares issued by any federal or state court
of competent jurisdiction in the United States is in effect at such time, (ii)
any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") shall have expired or been terminated
at or prior to such time, and (iii) any approval required to be obtained prior
to the delivery of the Option Shares under the laws of any jurisdiction shall
have been obtained and shall be in full force and effect.
3. Payment and Delivery of Certificates.
(a) At the Option Closing, Grantee will pay to Issuer in immediately
available funds by wire transfer to a bank account designated in writing by
Issuer an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased at such Option Closing; provided that failure or refusal
of Issuer to designate such a bank account shall not preclude Grantee from
exercising the Option.
(b) At the Option Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer will deliver, or cause to
be delivered, to Grantee a certificate or certificates representing the Option
Shares to be purchased at such Option Closing, which Option Shares will be
fully paid and non-assessable and free and clear of all Liens (except for any
such Lien due to the issuance of the Option Shares not being registered under
the Securities Act and Liens arising from acts of Grantee). If at the time of
issuance of Option Shares pursuant to an exercise of the Option hereunder,
Issuer shall have issued any securities similar to rights under a shareholder
rights plan, then each Option Share issued pursuant to such exercise will also
represent such a corresponding right with terms substantially the same as and
at least as favorable to Grantee as are provided under any such shareholder
rights plan then in effect.
(c) Certificates for the Option Shares delivered at the Option Closing will
have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
It is understood and agreed that such legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have
been registered pursuant to the Securities Act, or Grantee has delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in customary form to the effect that such legend is not required for purposes
of the Securities Act.
(d) Subject to applicable laws, when the Grantee provides the Exercise
Notice and the tender of the applicable purchase price in immediately available
funds (or offer of such tender if the proviso to the Section 3(a) is
applicable), the Grantee shall be deemed to be the holder of record of the
Issuer Common Shares issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or that certificates
representing such Issuer Common Shares shall not then be actually delivered to
the Grantee.
4. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Issuer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The execution, delivery and
performance by Issuer of this Agreement and the consummation of the
transactions contemplated hereby (i) are within Issuer's corporate powers, (ii)
have been duly authorized by all necessary corporate action, (iii) require no
action by or in respect of, or filing with, any Governmental Entity, except for
compliance with any applicable requirements of the HSR Act and any applicable
filings and
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approvals under similar foreign antitrust laws and regulations and such filings
with and approvals of the American Stock Exchange necessary to permit the
Options Shares to be traded on the American Stock Exchange, (iv) do not
contravene, or conflict with the certificate of incorporation or by-laws of
Issuer, (v) do not contravene or conflict with or constitute a violation of any
provision of any law, regulation or judgment, injunction, order or decree
binding upon Issuer or any of its subsidiaries and (vi) will not require any
consent, approval or notice under and will not conflict with, or result in the
breach or termination of any provision of or constitute a default (with or
without the giving of notice or the lapse of time or both) under, or allow the
acceleration of the performance of, any material obligation of Issuer or any of
its Subsidiaries under, or result in the creation of a Lien upon, any of the
properties, assets or business of Issuer or any of its Subsidiaries under any
indenture, mortgage, deed of trust, lease, licensing agreement, contract,
instrument or other agreement to which Issuer or any of its Subsidiaries is a
party or by which Issuer or any of its Subsidiaries or any of their respective
assets or properties is subject or bound other than, in the case of each of
(iii), (iv), (v) or (vi), any such items that would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on Issuer or
prevent or materially impair the ability of Issuer to consummate the
transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by Issuer and constitutes a valid and binding agreement
of Issuer, enforceable in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratiorium or other similar laws affecting creditors' rights
generally or by principles governing availability of equitable remedies).
(c) Except for any filings required to be made under the HSR Act and any
applicable filings and approvals under similar foreign antitrust laws and
regulations and such filings with and approvals of the American Stock Exchange
necessary to permit the Options Shares to be traded on the American Stock
Exchange, Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof until such time as the obligation to deliver Option Shares upon the
exercise of the Option terminates, will have reserved for issuance, upon any
exercise of the Option, the number of Option Shares subject to the Option. All
of the Issuer Common Shares to be issued pursuant to the Option are duly
authorized and, upon issuance and delivery thereof pursuant to this Agreement,
will be duly authorized, validly issued, fully paid and nonassessable, and free
and clear of all Liens (except for any such Lien due to the issuance of the
Option Shares not being registered under the Securities Act and Liens arising
from acts of Grantee), and not subject to any preemptive rights.
5. Representations and Warranties of Grantee. Grantee hereby represents and
warrants to Issuer that:
(a) Grantee is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The execution, delivery and
performance by Grantee of this Agreement and the consummation of the
transactions contemplated hereby (i) are within Grantee's corporate powers,
(ii) have been duly authorized by all necessary corporate action.
(b) The Option Shares or other securities acquired by Grantee upon exercise
of the Option will not be and the option is not being acquired by Grantee with
the intention of making a public distribution thereof and the Option Shares
will not be transferred or otherwise disposed of except in a transaction
registered, or exempt from registration, under the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc.
(a) In the event of any change in Issuer Common Shares by reason of stock
dividends, stock splits, split-ups, spin-offs, recapitalizations,
recombinations, extraordinary dividends or the like, the type and number of
Option Shares, and the Option Price, as the case may be, shall be adjusted
appropriately to reflect such event and proper provision shall be made in any
agreement governing any such transaction to provide for such adjustment and the
full satisfaction of the Issuer's obligations hereunder, provided that in no
event shall the number of shares of Issuer Common Stock subject to the Option
exceed 19.9% of the number of shares of Issuer Common Stock issued and
outstanding on the date of exercise.
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(b) Without limiting the parties' relative rights and obligations under the
Merger Agreement, if the Issuer enters into an agreement with respect to an
Takeover Proposal or other transaction involving the exchange or conversion of
Issuer Common Shares for shares or other securities of the Issuer or another
person, then the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option with identical terms appropriately adjusted
to acquire the number and class of shares or other securities or property that
Grantee would have received in respect of Issuer Common Shares if the Option
had been exercised immediately prior to the consummation of such Takeover
Proposal, or the record date therefor, as applicable.
(c) If, at any time during the Exercisability Period, Grantee sends to
Issuer a notice (a "Cash-Out Notice") indicating Grantee's election to exercise
its right pursuant to this Section 6(c), then Issuer shall pay to Grantee, on
the date specified in the Cash-Out Notice, which shall be a date not earlier
than three business days nor later than 15 business days from the Cash-Out
Notice, in exchange for the cancellation of the Option (if the Option has not
been exercised) or the repurchase of any Issuer Common Shares issued to Grantee
pursuant hereto which Grantee then beneficially owns and has requested that
Issuer repurchase (if the Option has been exercised), at a price per share
equal to the higher of (x) if applicable, the highest price per share of Common
Stock paid or proposed to be paid by any Person pursuant to any Takeover
Proposal (non-cash consideration to be valued as set forth in Section 7(e)
hereof) or (y) the average of the closing prices of the shares of Common Stock
on the principal securities exchange or quotation system on which the Common
Stock is then listed or traded as reported in The Wall Street Journal (or
another authoritative source) for the five consecutive trading days immediately
preceding the date of the Cash-Out Notice, less, if the Option has not been
exercised, the Option Price in respect of each Option Share being cancelled.
Notwithstanding the termination of the Option, Grantee will be entitled to
exercise its rights under this Section 6(c) if it has exercised such rights in
accordance with the terms hereof prior to the termination of the Option. The
payment contemplated by this Section 6(c) shall be made in immediately
available funds to an account specified by Grantee. Amounts paid under this
Section shall be subject to Section 7(a) hereof.
7. Profit Limitations.
(a) Notwithstanding any other provision of this Agreement, in no event shall
the Total Option Profit (as hereinafter defined) exceed in the aggregate $17
million minus the sum of any Termination Fee plus Expenses actually received by
Grantee pursuant to the terms of the Merger Agreement (such amount, the "Profit
Limit") and, if any payment to be made to Grantee otherwise would cause such
aggregate amount to be exceeded, the Grantee, at its sole election, shall
either (i) reduce the number of Issuer Common Shares subject to this Option,
(ii) pay cash to Issuer, (iii) waive rights under this Agreement or (iv) any
combination thereof, so that the Total Option Profit shall not exceed the
Profit Limit after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of Issuer Common Shares as would, as of the date
of exercise, result in a Notional Total Option Profit (as hereinafter defined)
which would exceed in the aggregate the Profit Limit and, if it otherwise would
exceed such amount, the Grantee, at its sole election, shall on or prior to the
date of exercise either (i) reduce the number of Issuer Common Shares subject
to such exercise, (ii) pay cash to Issuer, (iii) waive rights under this
Agreement or (iv) any combination thereof, so that the Notional Total Option
Profit shall not exceed the Profit Limit after taking into account the
foregoing actions, provided that this paragraph (b) shall not be construed as
to restrict any exercise of the Option in whole that is not prohibited hereby
on any subsequent date.
(c) As used herein, the term "Total Option Profit" shall mean the aggregate
amount (before taxes) of the following: (i) any amount received by Grantee
pursuant to the Cash-Out Right and (ii)(x) the net consideration, if any,
received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, valuing any non-cash consideration at its fair market value
(as defined below), less (y) the Exercise Price and any cash paid by Grantee to
Issuer pursuant to Section 7(a)(ii) or Section 7(b)(ii), as the case may be.
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(d) As used herein, the term "Notional Total Option Profit" with respect to
the number of Issuer Common Shares as to which Grantee may propose to exercise
the Option shall be the Total Option Profit with respect to such number of
Issuer Common Shares as to which Grantee proposes to exercise and all other
Option Shares held by Grantee and its affiliates as of such date, assuming that
all such shares were sold for cash at the closing market price for Issuer
Common Shares as of the close of business on the preceding trading day (less
customary brokerage commissions or underwriting discounts).
(e) As used herein, the "fair market value" of any non-cash consideration
consisting of:
(i) securities listed on a national securities exchange or traded on
NASDAQ shall be equal to the average closing price per share of such
security as reported on such exchange or NASDAQ for the five trading days
before the date of determination; and
(ii) consideration which is other than cash or securities of the form
specified in clause (i) above shall be determined by a nationally
recognized independent investment banking firm mutually agreed upon by the
parties five business days prior to the event requiring selection of such
banking firm, provided that if the parties are unable to agree within three
business days as to the investment banking firm, then the parties shall
each select one firm, and those firms shall select a third nationally
recognized independent investment banking firm 48 hours, which third firm
shall make such determination as promptly as reasonably practicable. The
third firm's determination shall be final and binding on each of the
parties.
8. Registration Rights. Issuer will, if requested by Grantee at any time and
from time to time within three years of the exercise of the Option, as promptly
as practicable (but in no event later than 90 days after receipt of such
request) prepare and file up to three registration statements under the
Securities Act if such registration is necessary in order to permit the sale or
other disposition of any or all shares of securities that have been acquired by
or are issuable to Grantee upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by Grantee, including a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer will use its best efforts to qualify such
shares or other securities under any applicable state securities laws. A
Registration Statement shall not be deemed filed if it is withdrawn by Issuer,
subject to a stop or similar order or not kept effective in accordance with the
following sentence. Issuer will use reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or waivers
of other parties which are required therefor, and to keep such registration
statement effective for such period not in excess of 180 calendar days from the
day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. The obligations of Issuer
hereunder to file a registration statement and to maintain its effectiveness
may be suspended for up to 60 calendar days in the aggregate if the Board of
Directors of Issuer shall have determined that the filing of such registration
statement or the maintenance of its effectiveness would require premature
disclosure of material nonpublic information that would materially and
adversely affect Issuer or otherwise interfere with or adversely affect any
pending or proposed offering of securities of Issuer or any other material
transaction involving Issuer. Any registration statement prepared and filed
under this Section 8, and any sale covered thereby, will be at Issuer's expense
except for underwriting discounts or commissions, brokers' fees and the fees
and disbursements of Grantee's counsel related thereto. Grantee will provide
all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If, during the time periods
referred to in the first sentence of this Section 8, Issuer effects a
registration under the Securities Act of Issuer Common Shares for its own
account or for any other stockholders of Issuer (other than on Form S-4 or Form
S-8, or any successor form), it will allow Grantee the right to participate in
such registration, and such participation will not affect the obligation of
Issuer to effect demand registration statements for Grantee under this Section
8; provided that, if the managing underwriters of such offering advise Issuer
in writing that in their opinion the number of Issuer Common Shares requested
to be included in such registration exceeds the number which can be sold in
such offering, Issuer will include only the shares requested to be included
therein by Grantee that may be included therein without adversely affecting the
success of the offering. In connection with any registration pursuant to this
Section 8, Issuer and Grantee will
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provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification, and contribution in
connection with such registration.
9. Listing. If Issuer Common Shares or any other securities to be acquired
upon exercise of the Option are then listed on The Nasdaq National Market (or
any other national securities exchange or national securities quotation
system), Issuer, upon the request of Grantee, will promptly file an application
to list the Issuer Common Shares or other securities to be acquired upon
exercise of the Option on The Nasdaq National Market (or any such other
national securities exchange or national securities quotation system) and will
use reasonable efforts to obtain approval of such listing as promptly as
practicable.
10. Loss or Mutilation. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date.
11. Miscellaneous.
(a) Expenses. Except as otherwise provided in this Agreement or in the
Merger Agreement, each of the parties hereto will bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants, and counsel.
(b) Amendment. This Agreement may not be amended, except by an instrument in
writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to waive any
provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
(d) Entire Agreement; Third-Party Beneficiaries. This Agreement, the Merger
Agreement (including the documents and instruments attached thereto as exhibits
or schedules or delivered in connection therewith) and the Confidentiality
Agreement (i) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter of this Agreement, and (ii) except as provided in
Section 8.06 of the Merger Agreement, are not intended to confer upon any
Person other than the parties any rights or remedies.
(e) Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
(f) Notices. All notices, requests, claims, demands, and other
communications under this Agreement shall be sent in the manner and to the
addresses set forth in the Merger Agreement.
(g) Assignment. Neither this Agreement, the Option nor any of the rights,
interests, or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise, by Issuer or Grantee
without the prior written consent of the other, except that Grantee may assign,
in its sole discretion, any of or all its rights, interests and obligations
under this Agreement to any direct or indirect wholly owned Subsidiary of
Grantee, but no such assignment shall relieve Grantee of any of its obligations
hereunder. Any assignment or delegation in violation of the preceding sentence
will be void. Subject to the first and second sentences of this Section 11(g),
this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
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(h) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other actions that may be reasonably necessary in
order to consummate the transactions provided for by such exercise. Issuer will
not take any actions which would frustrate the exercise of the Option or the
other transactions contemplated hereby.
(i) Section 16(b). Any time period hereunder shall be extended to the extent
necessary for any Grantee to avoid liability under Section 16(b) of the
Exchange Act.
(j) Enforcement. The parties agree that irreparable damage would occur and
that the parties would not have any adequate remedy at law in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties will be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Federal court located in the State of Delaware or in
any state court located in the State of Delaware, the foregoing being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any state court located in the State of Delaware in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement, (ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and
(iii) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than
a Federal court sitting in the State of Delaware or a state court located in
the State of Delaware.
(k) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
Medimmune, Inc.
/s/ Wayne T. Hockmeyer
___________________________________
Name: Wayne T. Hockmeyer, Ph.D.
Title: Chairman and Chief Executive
Officer
U.S. Bioscience, Inc.
/s/ C. Boyd Clarke
___________________________________
Name: C. Boyd Clarke
Title: President and Chief Executive
Officer
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Annex 3
MORGAN STANLEY DEAN WITTER 1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000
September 21, 1999
Board of Directors
U.S. Bioscience, Inc.
One Tower Bridge
100 Front Street, Suite 400
West Conshohocken, PA 19428
Members of the Board:
We understand that U.S. Bioscience, Inc. (the "Company"), MedImmune, Inc.
("MedImmune") and Marlin Merger Sub Inc., a wholly owned subsidiary of MedImmune
("Acquisition Sub") propose to enter into an Agreement and Plan of Merger
dated September 21, 1999 (the "Merger Agreement"), which provides, among
other things, for the merger (the "Merger") of Acquisition Sub with and into the
Company. Pursuant to the Merger, the Company will become a wholly owned
subsidiary of MedImmune and each outstanding share of common stock, par value
$0.01 per share (the "Common Stock") of the Company, other than shares held in
treasury or held by MedImmune or Acquisition Sub, will be converted into the
right to receive a certain number of shares of common stock, par value $0.01 per
share (the "Buyer Common Stock"), of MedImmune, determined pursuant to a certain
formula set forth in the Merger Agreement. The terms and conditions of the
Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration to be received by
the holders of shares of Common Stock pursuant to the Merger Agreement is fair
from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company and MedImmune;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management
of the Company;
(iii) reviewed certain financial projections prepared by the management of
the Company;
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MORGAN STANLEY DEAN WTITER
(iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the
Company;
(v) reviewed the pro forma impact of the Merger on MedImmune's
earnings per share;
(vi) reviewed the reported prices and trading activity for the Common
Stock and the Buyer Common Stock;
(vii) reviewed the financial performance of the Company and MedImmune
and the prices and trading activity of the Common Stock and the
Buyer Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(viii) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
(ix) reviewed certain internal financial statements and other
financial and operating data concerning MedImmune prepared by the
management of MedImmune;
(x) discussed the past and current operations and financial condition
and the prospects of MedImmune with senior executives of
MedImmune;
(xi) participated in discussions and negotiations among
representatives of the Company and MedImmune and their financial
and legal advisors;
(xii) reviewed the signed Merger Agreement and certain related
documents; and
(xiii) performed such other analyses and considered such other factors
as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, including information
relating to certain strategic, financial and operational benefits anticipated
from the Merger, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
future financial performance of the Company and Medlmmune. In addition, we have
assumed that the Merger will be consummated in accordance with the terms set
forth in the Merger Agreement, including, among other things, that the Merger
will be accounted for as a "pooling-of-interests" business combination in
accordance with U.S. Generally Accepted Accounting Principles and the Merger
will be treated as a tax-free reorganization and/or exchange, each pursuant to
the Internal Revenue Code of 1986. We have not made any independent valuation or
appraisal of the assets or liabilities of the Company, nor have we been
furnished with any such appraisal. Our opinion is necessarily based on
financial, economic, market and other conditions as in effect on, and the
information made available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of the Company
or any of its assets nor did we negotiate with any parties, other than
MedImmune, in the possible acquisition of the Company or certain of its
constituent businesses.
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MORGAN STANLEY DEAN WITTER
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates ("Morgan Stanley")
have provided financial advisory and financing services for the Company and
MedImmune and have received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Company except that this opinion may be included in its
entirety in any filing made by the Company with respect to the transaction with
the Securities and Exchange Commission. In addition, this opinion does not in
any manner address the prices at which the Buyer Common Stock will trade
following consummation of the Merger, and Morgan Stanley expresses no opinion or
recommendation as to how the shareholders of the Company should vote at the
shareholders' meeting held in connection with the Merger.
Based upon subject to the foregoing, we are of the opinion on the date hereof
that the consideration to be received by the holders of shares of Common Stock
pursuant to the Merger Agreement is fair from a financial point of view to such
holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Susan S. Huang
-----------------------------
Susan S. Huang
Principal
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PART II
Information Not Required in Prospectus
Item 20. Indemnification of Directors and Officers
Subsection (a) of Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") empowers a corporation to indemnify any person who was or
is a party or who is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that the person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that the person acted in
any of the capacities set forth above, against expenses (including attorney's
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
Section 145, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith; that indemnification
provided for by Section 145 shall not be deemed exclusive of any other rights
to which the indemnified party may be entitled; the indemnification provided
for by Section 145 shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of such person's heirs,
executors and administrators; and empowers the corporation to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liabilities under Section 145.
MedImmune provides liability insurance for its directors and officers which
provides for coverage against loss from claims made against directors and
officers in their capacity as such, including liabilities under Securities Act
of 1933.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation of its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of
II-1
<PAGE>
law, (iii) under Section 174 of the DGCL, or (iv) for a transaction from which
the director derived an improper personal benefit. Article EIGHTH of
MedImmune's Certificate of Incorporation limits the liability of directors to
the fullest extent permitted by Section 102(b)(7).
Item 21. Exhibits and Financial Statement Schedules
<TABLE>
<CAPTION>
Exhibit No. Exhibit
----------- -------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of September 21, 1999,
among MedImmune, Inc., Marlin Merger Sub Inc. and U.S. Bioscience,
Inc. (included as Annex 1 to the Proxy Statement/Prospectus filed
as part of this Registration Statement).
5.1 Opinion of Dewey Ballantine LLP together with consent. *
8.1 Tax opinion of Skadden, Arps, Slate, Meagher & Flom LLP together
with consent. *
10.1 Stock Option Agreement, dated as of September 21, 1999, between
MedImmune, Inc. and U.S. Bioscience, Inc. (included as Annex 2 to
the Proxy Statement/Prospectus filed as part of this Registration
Statement).
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants. *
23.2 Consent of Ernst & Young LLP, independent certified public
accountants. *
23.3 Consent of Morgan Stanley & Co. Incorporated. *
24.1 Power of Attorney (included on the Signature Page of this
Registration Statement).
24.2 Power of Attorney *
99.1 Form of Proxy *
</TABLE>
- --------
* Filed herewith.
Except as otherwise indicated, all exhibits were previously filed with this
Registration Statement on October 12, 1999.
Item 22. Undertakings
(1) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Act"), each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(2) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is part of this Registration Statement, by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(3) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (2) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act, and is used in connection with
an offering of securities subject to Rule 415, will be filed as part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions hereof, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
II-2
<PAGE>
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
(6) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Gaithersburg, State of
Maryland, on October 21, 1999.
Medimmune, Inc.
By: /s/ Wayne T. Hockmeyer, Ph.D.
----------------------------------
Wayne T. Hockmeyer, Ph.D.
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Wayne T. Hockmeyer, Ph.D Chairman.and Chief Executive October 21, 1999
- ---------------------------------- Officer and Director
Wayne T. Hockmeyer, Ph.D. (Principal executive officer)
* Vice Chairman and Chief October 21, 1999
- ---------------------------------- Financial Officer and Director
David M. Mott (Principal financial and
accounting officer)
* Chief Operating Officer and October 21, 1999
- ---------------------------------- Director
Melvin D. Booth
* Executive Vice President, October 21, 1999
- ---------------------------------- Medical Director and
Franklin H. Top, Jr., M.D. Director
* Director October 21, 1999
- ----------------------------------
M. James Barrett, Ph.D.
* Director October 21, 1999
- ----------------------------------
James H. Cavanaugh, Ph.D.
* Director October 21, 1999
- ----------------------------------
Lawrence C. Hoff
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director October 21, 1999
- --------------------------------------
Gordon S. Macklin
* Director October 21, 1999
- --------------------------------------
Barbara Hackman Franklin
*By: /s/ Wayne T. Hockmeyer, Ph.D.
----------------------------------
Wayne T. Hockmeyer, Ph.d., Attorney-
in-fact
</TABLE>
II-5
<PAGE>
Exhibit 5.1
[Letterhead of Dewey Ballantine LLP]
October 21, 1999
MedImmune, Inc.
35 West Watkins Mill Road
Gaithersburg, Maryland 20878
Ladies and Gentlemen:
We have acted as special counsel to MedImmune, Inc., a Delaware corporation
(the "Company"), in connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by the Company under the Securities Act of 1933
(the "Act"), for the purpose of registering under the Act up to 5,655,560
shares (the "Shares") of the Company's common stock, par value $0.01 per share,
proposed to be issued in connection with the merger (the "Merger") between U.S.
Bioscience, Inc., a Delaware company ("USB"), and Marlin Merger Sub Inc., a
Delaware corporation and a wholly owned subsidiary of the Company ("Sub"),
contemplated by the Agreement and Merger Agreement, dated as of September 21,
1999 (the "Merger Agreement"), among the Company, Sub and USB.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such documents,
corporate records, certificates and other instruments as we have deemed
necessary or appropriate as a basis for the purpose of expressing the opinion
contained herein, including, without limitation, the Restated Certificate of
Incorporation of the Company, the Amended Bylaws of the Company, the
Registration Statement, the Merger Agreement and resolutions adopted by Board
of Directors of the Company. With respect to all of the documents reviewed, we
have assumed, without investigation, the legal capacity of all natural persons,
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals and the conformity to originals of all documents submitted
to us as certified or reproduced copies. As to any facts which we have not
independently established or verified, we have relied upon statements and
representations of representatives of the Company and others.
We are admitted to the Bar of the State of New York and express no opinion
as to the laws of any other jurisdiction other than the General Corporation Law
of the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that the
Shares, when issued in accordance with the terms and conditions of the Merger
Agreement, will be validly issued, fully paid and nonassessable.
The foregoing opinion is rendered as of the date hereof, and we assume no
obligation to update such opinion to reflect any facts or circumstances which
may hereafter come to our attention or any changes in the law which may
hereafter occur. This opinion is rendered solely to you in connection with the
above matter, and may not be relied upon by you for any other purpose or relied
upon by or furnished to any other person without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this Firm under the caption
"Legal Matters" in the Proxy Statement/Prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7
of the Act or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ Dewey Ballantine LLP
<PAGE>
Exhibit 8.1
[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]
October 21, 1999
U.S. Bioscience, Inc.
One Tower Bridge
100 Front Street
West Conshohocken, PA 19428
Ladies and Gentlemen:
We have acted as special tax counsel to U.S. Bioscience, Inc., a Delaware
corporation ("U.S. Bioscience"), in connection with (i) the Merger, as defined
and described in the Agreement and Plan of Merger, dated as of September 21,
1999 (the "Merger Agreement"), among MedImmune, Inc., a Delaware corporation
("MedImmune"), Marlin Merger Sub Inc., a Delaware corporation ("Merger Sub"),
and U.S. Bioscience, and (ii) the preparation and filing of the MedImmune
Registration Statement on Form S-4 with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), on October 21, 1999 (the "Registration Statement"), which
includes the proxy statement of U.S. Bioscience and the prospectus of MedImmune
(the "Proxy Statement/Prospectus"). Unless otherwise indicated, each
capitalized term used herein has the meaning ascribed to it in the Merger
Agreement.
In connection with this opinion, we have examined the Merger Agreement, the
Proxy Statement/Prospectus, and such other documents and corporate records as
we have deemed necessary or appropriate in order to enable us to render the
opinion below. For purposes of this opinion, we have assumed the validity and
accuracy of the documents and corporate records that we have examined and the
facts and representations concerning the Merger that have come to our attention
during our engagement, that the Merger will be consummated in the manner
described in the Merger Agreement and the Proxy Statement/Prospectus, and that
the representations made to us by U.S. Bioscience and MedImmune as of the date
hereof, and delivered to us for purposes of this opinion, are accurate and
complete.
In rendering our opinion, we have considered the applicable provisions of
the Code, Treasury Department regulations promulgated thereunder, pertinent
judicial authorities, interpretive rulings of the IRS, and such other
authorities as we have considered relevant. It should be noted that statutes,
regulations, judicial decisions, and administrative interpretations are subject
to change at any time (possibly with retroactive effect). A change in the
authorities or the accuracy or completeness of any of the information,
documents, corporate records, covenants, statements, representations, or
assumptions on which our opinion is based could affect our conclusions.
Subject to the assumptions set forth above, and in particular that the
Merger will be consummated in the manner described in the Merger Agreement and
the Proxy Statement/Prospectus, and the assumptions and qualifications set
forth in the Proxy Statement/Prospectus under the heading "The Merger--Material
United States Federal Income Tax Consequences of the Merger" (the
"Discussion"), we are of the opinion that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code.
The foregoing opinion does not address all of the United States federal
income tax consequences of the Merger. This opinion is being rendered with the
understanding that it is a condition to the consummation of the Merger that
this opinion be rendered again as of the Effective Time. We express no opinion
as to the United States federal, state, local, foreign, or other tax
consequences, other than as set forth in the Discussion and herein. Further,
there can be no assurances that the opinion expressed herein will be accepted
by the Internal Revenue Service (the "IRS") or, if challenged, by a court. This
opinion is expressed as of the date hereof, and we are under no obligation to
supplement or revise our opinion to reflect any changes (including changes that
have retroactive effect) (i) in applicable law or (ii) in any information,
document, corporate record, covenant, statement, representation, or assumption
stated herein which becomes untrue or incorrect.
<PAGE>
This letter is furnished to you for use in connection with the Proxy
Statement/Prospectus, and is not to be used, circulated, quoted or otherwise
referred to for any other purpose without our express written permission. This
opinion is delivered in accordance with the requirements of Item 601(b)(8) of
Regulation S-K under the Securities Act. Furthermore, in accordance with the
requirements of Item 601(b)(23) of Regulation S-K under the Securities Act, we
hereby consent to the filing of this opinion as an exhibit to the Registration
Statement, to the reference to our firm name under the heading "The Merger--
Material United States Federal Income Tax Consequences of the Merger" in the
Proxy Statement/Prospectus. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section
7 of the Securities Act or the rules and regulations of the Commission
thereunder.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher &
Flom LLP
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of MedImmune, Inc. of our report dated January 25, 1999,
except for Note 18, which is as of February 24, 1999, relating to the financial
statements and financial statement schedule, which appear in MedImmune, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1998. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ PricewaterhouseCoopers LLP
McLean, Virginia
October 20, 1999
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Accounting Treatment" in the Proxy Statement of U.S. Bioscience, Inc. that is
made part of Amendment No. 1 to the Registration Statement (Form S-4 No. 333-
88835) and Prospectus of MedImmune, Inc. and to the incorporation by reference
therein of our report dated February 15, 1999, with respect to the consolidated
financial statements of U.S. Bioscience, Inc. included in its Annual Report
(Form 10-K) for the year ended December 31, 1998, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
October 20, 1999
<PAGE>
Exhibit 23.3
We hereby consent to the use in the Registration Statement of MedImmune Inc.
on Form S-4 (file no. 333-88835) and in the Proxy Statement of U.S. Bioscience
Inc., which is part of the Registration Statement, of our opinion dated
September 21, 1999 appearing as Annex 3 to such Proxy Statement, to the
description therein of such opinion and to the references therein to our name.
In giving the foregoing consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended (the "Securities Act"), or the rules and regulations
promulgated thereunder, nor do we admit that we are experts with respect to any
part of such Registration Statement within the meaning of the term "experts" as
used in the Securities Act or the rules and regulations promulgated thereunder.
Morgan Stanley & Co. Incorporated
/s/ Susan S. Huang
By: ____________________________
Susan S. Huang
Principal
New York, New York
October 20, 1999
<PAGE>
Exhibit 24.2
POWER OF ATTORNEY
Know all men by these presents, that each of the persons whose signature
appears below appoints and constitutes Wayne T. Hockmeyer, Ph.D. and David M.
Mott, and each of them, his or her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or her and in his
or her name, place and stead, in any and all capacities, to execute any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully and to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that each said attorney-in-fact or any of
them, or their substitute, may lawfully do or cause to be done by virtue
hereof.
Dated: October 18, 1999
/s/ Barbara Hackman Franklin
_____________________________________
Barbara Hackman Franklin
Director
<PAGE>
Exhibit 99.1
U.S. BIOSCIENCE, INC.
One Tower Bridge, 100 Front Street, West Conshohocken, PA 19428
This Proxy Is Solicited on Behalf of the Board of Directors of U.S. Bioscience,
Inc.
for the Special Meeting of Stockholders to be Held November 23, 1999
The undersigned, a record holder of shares of common stock of U.S.
BIOSCIENCE, INC. as of October 22, 1999, hereby constitutes and appoints C.
BOYD CLARKE, ROBERT I. KRIEBEL and MARTHA E. MANNING, and each of them acting
individually, as the attorney and proxy of the undersigned, with full power of
substitution, for and in the name and stead of the undersigned, to attend the
Special Meeting of Stockholders of the Company to be held on November 23, 1999,
at 10:00 a.m. at The Philadelphia Marriott West, 111 Crawford Avenue, West
Conshohocken, Pennsylvania, and any adjournments or postponements thereof, and
thereat to vote as specified in this proxy all shares of Common Stock, which
the undersigned would be entitled to vote if personally present, upon the
matter set forth below and described in the accompanying proxy
statement/prospectus and upon all matters that may properly come before the
Special Meeting.
Please be sure to sign and date the Proxy on the reverse side. (Continued and
to be signed on reverse side)
<PAGE>
[X] Please mark your
votes as in this
example.
The U.S. Bioscience Board Of Directors Recommends A Vote For The Following
Proposal:
The proxy will be voted as you specify above with respect to the matter set
forth above. If this proxy is executed but no choice is indicated, the shares
represented by this proxy will be voted for the approval and adoption of the
agreement and plan of merger and otherwise in the discretion of the proxy
holders.
FOR AGAINST ABSTAIN
To consider and vote upon a proposal to adopt [_] [_] [_]
the merger agreement, dated as of September 21, 1999,
among MedImmune, a wholly-owned subsidiary of MedImmune
and U.S. Bioscience. In the merger, U.S. Bioscience will
become a wholly-owned subsidiary of MedImmune, and all
outstanding shares of U.S. Bioscience common stock will
be converted into the right to receive shares of
MedImmune common stock.
Signature(s): _________ Date: _______ Signature(s): _________ Date: ________
NOTE: Please sign this Proxy exactly as name(s) appears on this Proxy. When
signing as attorney-in-fact, executor, administrator, trustee or guardian,
please add your title as such. If signer is a corporation, please sign in
full corporate name by duly authorized officer or officers. Where stock is
issued in the name of two or more persons, all such persons should sign.
The undersigned hereby acknowledges receipt of the Notice of the Special
Meeting and of the Proxy Statement/Prospectus.
PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
